A History of Banks for Savings in Great Britain and Ireland

by William Lewins

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The agitation was at its height in Tralee when news came that the neighbouring Savings Bank at Killarney had stopped payment. Mr. Pratt had not even finished his awards in the one case before he was required to investigate this fresh iniquity. It would seem that the exposure of the one actuary had led to closer investigation on the part of the trustees of the Killarney bank, and the earlier development of the fraudulent proceedings of the other official. Here again the frauds were found to be of an ingenious character, and might have been continued over an indefinite period, but that the trustees were compelled by the force of public opinion in the neighbourhood to do the work they had taken upon themselves. As it was, the deficiency was found to amount to 20,000l.: the entire liabilities of the Killarney bank were 36,000l., but the money in hand and the property of the actuary, who decamped, which was calculated to realize about 5000l., reduced the loss to the former sum. As the average amount due to each person was 45l. we may well conclude that the majority of the depositors were of the poorer classes. Though the real loss was less than in the case of the Tralee Bank, the bank at Killarney was found to have been managed with greater carelessness; the trustees and managers professed to make a yearly audit of accounts, but this to all intents and purposes meant nothing more than taking the actuary's word for everything. The details of this fraud have never, so far as we can find, been made the subject of a searching public investigation, so that little more is known than that the frauds in question were of the usual character. Mr. Pratt, in a short report which he presented to the Lords of the Treasury after he had visited the place, said that he found the one case to be very similar to the other (Tralee), both as regards the actuary and the managers. In both cases the accounts of the treasurer were correct, and in both had the trustees grossly neglected their duties. Here again he made awards against the bank to a large amount, and in one respect these awards were much called in question. This public officer received much blame, both in and out of Parliament, for the character of his decision, whereas it seems quite evident now that he simply endeavoured to carry out the regulations of a most imperfect law.

The law of 1844, there can be no doubt, was unjust in the case of one class of depositors at Killarney. On the clauses of this Act, Mr. Pratt was compelled to award to those depositors who had contributed their money after 1844, only the surplus money which was left after the depositors who had made legal deposits[120] before 1844 had been paid their claims in full. This decision was, of course, come to on the ground that the trustees had not assumed the responsibility provided by Mr. Goulburn's Act. In this way the depositors before 1844 got 20s. in the pound, whereas those coming after that year only got 3s. in the pound, and a further small instalment afterwards when the actuary's property was realized. The decision might be right in the eyes of the law, but the law was most unjust that rendered such a decision possible, or proper.

The next Savings Bank failure in the order of its occurrence, which has been made the subject of any investigation, was that at Auchterarder, in Scotland, in 1848. The Committee of 1849 were appointed to inquire into the case, as well as the Irish cases already spoken of, but we do not find that any evidence was taken on the failure in question. It seems, however, that the Auchterarder Savings Bank was a branch of the important institution at Perth: notwithstanding this, it was locally managed, the local trustees, furthermore, being held responsible for any irregularity. This small bank was originally established in 1841, the principal landed proprietors and ministers of various denominations taking part in its organization. In seven years the number of depositors had reached to 2,000, and as the total amount standing to the credit of each person was less than the average of 10l. they must have consisted of the very poorest part of the population of this rural district. The number of managers amounted in all to forty; but the ruling power was John Findlay, cashier and parochial schoolmaster, and the sole paid officer of the bank. In December, 1848, a trifling inaccuracy was found out in his accounts, when he lost no time in absconding. It was then seen that he had within seven years appropriated 1,500l. to his own use. The liabilities of the bank were 4,300l., whilst the available assets only realized 2,774l. The dividend, given out of this money, a subscription entered into by the trustees and their friends, and the sale of the defaulting actuary's small estate, ultimately reached to eighteen shillings in the pound. What benefit it was to the poor people at Auchterarder to be connected, as one of several branches, with the flourishing concern in the neighbouring county town, we are at a loss to understand. This connexion did not preserve the accounts from being tampered with; it seems to have afforded no check: and when a paltry sum of 150l. was needed to reimburse this deserving population in full, the Perth institution came forward with—nothing better than advice![121] It surely cannot be a matter of surprise that the bank was “never re-opened,” and that “no private gentlemen could be found to undertake the trouble or risk for the future.”

We have hitherto been concerned almost entirely with Irish Bank frauds; henceforth we shall have to deal exclusively with English ones. Not only on account of the date of its occurrence, but from its magnitude and enormity, the fraud on the Rochdale Savings Bank deserves the first place. It is not too much to say that no Savings Bank defalcation equalled this one in the depth of its iniquity and cunning, and in the disastrous effects which followed, affecting as they did the growth of provident habits not merely in that particular locality, but throughout the entire kingdom.

The Rochdale Savings Bank was commenced in 1818, or immediately after those institutions were recognised by the State. It seems to have been started in the usual way, and to have progressed with great rapidity,—the community about Rochdale forming a very favourable specimen of the Lancashire people. In 1822, George Haworth, a young man of twenty-one, succeeded his father, John Haworth, who had been actuary of the bank since its commencement. As the son remained with the bank almost till its affairs were wound up in 1849, he may be said to have been associated with it through its whole course of thirty years. When very young, this man appears to have shown extraordinary energy and talent for business, and each year he not only added to his engagements, but seemed to accomplish all he undertook with equal readiness. In addition to his duties at the bank, he first took an agency for the sale of wool, then, as now, the staple trade of the town; then he obtained an agency for the sale of porter, both from a Dublin and a London house. Latterly, however, he had advanced himself to the dignity of cotton spinner, and was occupier of a large factory; was at the same time a land agent, estate agent for several gentlemen who possessed large properties in the neighbourhood, an insurance agent, and valuer and receiver of rents for the Lancashire and Yorkshire Railway Company. Not less on account of his more private character than from those multifarious matters with which he was connected, Mr. Haworth was a man of mark in the place. He was a member of the Society of Friends, and this of itself was a password to the trust and confidence of many men.[122] Whenever anybody wanted a chairman, or sought a little patronage for anything literary, scientific, or charitable, resort was had to “Friend Haworth;” “he always patronised such things as far as he could;” and who could do more, especially one who was “not himself a particularly talented man?”[123] “Talented” he might not be in the ordinary acceptation of the term, nor indeed need he have been, to do this much; but never was there a man more talented in the art of deception. “He deceived everybody by an appearance of wealth.” He lived handsomely, “though scarcely with any particular extravagance;” he was above mere “gig respectability,” and rode in his carriage. “For the reputation of honesty, probity, and wealth,” said Mr. Taylor, “there was no man in Rochdale who stood higher;” and so far did he disguise his real character, that his most intimate friends were those who were most deceived by him. “He was not only,” says a friend of ours, who himself suffered by his frauds, “never suspected of doing wrong, but he was regarded as above suspicion and uncommonly safe.”

It is true that some persons now and then expressed their surprise that George Haworth should act as actuary to a Savings Bank, and moreover attend so closely to his duties there when his hands were otherwise so full; but Haworth deceived even these people by putting his connexion with the bank on the ground of charity, and an anxious desire to promote the happiness of his poor fellow-tradesmen,—for whom indeed he was each day laying up increased stores of untold misery. Clever to the last, but supposed by some—of course wise after the event—to have gradually failed in heart and strength after losing his father-in-law, who it now seems was his confidential assistant and accomplice, he escaped his justly-merited punishment in this world, and by an inscrutable Providence was allowed to die unmolested on the 19th of November, 1849. Deluded to the last, his fellow-townsmen considered his loss irreparable; it was a general feeling that this man should have a public funeral, and it was nearly being so concluded when the relatives of the deceased stepped in and wisely put their veto upon it. Strange to say, but only in keeping with the unnatural strangeness of the whole affair, suspicion never entered into the heads of any one, high or low, in connexion with the bank, till this man was far beyond the reach either of earthly anger or law. The trustees and managers were called together after the funeral; and so ignorant were they of the real state of the case and the true nature of their late actuary, that they thought they were met simply to elect his successor, and were actually prepared with different nominations, and not to hear from the dead man's attorney that the “wealthy and respected man” had been for twenty years trading on the falsest of false pretences, and fattening on the hardly-earned scrapings of the poor whom he had so patronized.

Haworth's solicitor told the unwelcome story of a deficiency. Enough was said to make the trustees at once decide to call in the depositors' books, and in the course of a few days it was ascertained—though it took a much longer time to credit it—that the liabilities of the bank amounted to 100,403l., that the total assets were calculated to realize 28,686l., and that the deficiency amounted to the enormous sum of 71,715l. In the course of two or three weeks the trustees made the announcement of the defalcations to the public, with what result may be better imagined than described. At first the depositors took the matter very calmly—a feeling in which was mingled incredulity; and a disbelief that they would be allowed to lose so much money got possession of the people's mind. The general opinion was, till undeceived, that the Government would have to stand to the loss.[124] Of course this made it all the more deplorable when the real facts became known. One of the witnesses who was examined before Mr. Slaney's Committee on the savings of the middle and working classes (1850), gave the following evidence of the feeling in Rochdale at the time:—“I was in Lancashire some time ago, meeting with large bodies of working men at the time of the failure, and I shall not soon forget some remarks that were made about the Government. One man said, 'Dr. McDowall came here, and told us that the Government was a set of robbers, and that they did not care about the property of the working men.' He said, 'I did not believe Mr. McDowall then; but when I see there is no security for the savings of the working men in the Savings Bank, and we supposed Government had them under their protection, I believe now that Mr. McDowall was right, and that Government cares nothing about either the poor man or his savings.'” Of course we give this extract simply to show the effects of the fraud on the minds of the poorer classes, for nothing could be more unfair than such conclusions. Soon the depositors came to look the loss fairly in the face; they elected a committee of their number to act for the rest, and Mr. Taylor, the witness before the Committee of 1858, was appointed chairman; they agreed to avoid litigation if possible, and relied on private benevolence and the possibility of a grant from Government to make up the deficiency. The sum of 17,000l. was readily subscribed among the trustees and their friends; another sum of 17,000l. was realized out of Haworth's estate, and ultimately the managers were enabled to give a dividend to depositors of 12s. 6d. in the pound.

Thanks to Mr. Taylor's intelligent evidence, we have not only gleaned the above particulars, but we are enabled to give some account of the way the Rochdale frauds, which entailed so much misery and so much loss, were accomplished. As the first question likely to arise in the mind of the reader would be, doubtless, to ask where were the trustees, it would be wise to dispose of it first. Haworth “was exceedingly respected, and everybody had faith in him,” says Mr. Taylor, naïvely; “but from what we discovered, he must have been exceedingly designing for many years.” In no instance that has come within our notice were the trustees, who ought to have been this man's master, so completely his tools. Haworth was so much the factotum of the bank that he really appointed the trustees; and so “designing” was he, that when he got some one appointed who was likely to attend to his duties, or be otherwise troublesome, he took care to keep the knowledge of the appointment to himself. Mr. Taylor gave his own case in corroboration. This gentleman found out afterwards, that he had been appointed a manager in 1838, and never was aware of the interesting fact till the bank failed in 1849. “I never was at any meeting; I never was called upon to attend any meeting; and I can name several others in the same way.”

Of course Haworth took care to make a show of having trustees. When the same witness was asked (qu. 3,175), if any attended, he said that “one or two attended occasionally; one very old man indeed, who was Haworth's tailor, really was a trustee, and he attended, I dare say, once or twice a month, and sat in the bank; but he was a very imbecile old man, and would do whatever George Haworth told him to do.” Sometimes Haworth had to manœuvre a little in order to get his returns signed, and then he would resort to the trustees whom he in a manner kept in stock. A case in point is recorded. A gentleman named Chadwick was passing the bank during one of Haworth's times of need, and the actuary called him in, and asked him to be kind enough to sign a return. Mr. Chadwick naturally hesitated, as having nothing to do with the bank. “But thou art a manager,” said Haworth, showing him his name, for the first time, in a printed list; and Mr. Chadwick, thinking that he had perhaps just received this mark of the actuary's esteem, at once fell in with his request, and signed the return.