In view of such facts, and before we attempt to describe the different plans which were produced in order to make these useful institutions once more progressive ones, let us try to ascertain why more of the money thus gained did not reach the Savings Bank. A careful examination of the Returns of Savings Banks will show beyond the possibility of doubt that the first and greatest check received by these institutions was when it became apparent that they did not possess within themselves that absolute security which they were thought almost universally to offer. We could not well exaggerate the result; this is the fountain from which all the ills have proceeded. The evil did not confine itself to the banks where the depredations had been carried on; it was not confined to the banks already established; but it extended to quarters where before there had been a manifest disposition to increase the facilities and to meet the wants of an advancing population, and this feeling was destroyed. The first effect of the frauds was, of course, to stop the deposit of money; in a smaller degree and among less educated people they even tended, as we have seen, to destroy the habit of laying by any money at all; but among all they produced a decided conviction that the financial arrangements of the system, especially with reference to the anomalous connexion between Savings Banks and the Government, were unsound.
We have several times referred to the state of the law as to the exact nature of this connexion, but it is necessary to return to it again as entering very largely into the consideration of the slow progress of Savings Banks. There can be no question that the great bulk of the British people, and not simply the lower and middle classes, imagined—up at least to the time of the great frauds of 1845-48—that Government was fully responsible for all the money placed in Savings Banks. In 1851 we find Mr. Bright saying in Parliament: “Nine out of every ten depositors believed that they had the security of Government for whatever money they invested, and that in placing that money in the local Savings Bank they were securing it better than if they lodged it in the hands of the wealthiest private banks in the country.”[136] Mr. Hume said the same on several occasions. Mr. H. A. Herbert, an Irish member, whose name deserves to be associated very intimately with legislative attempts to put Savings Banks on a proper footing, testified over and over again to this impression being the prevailing and universal belief. General Thompson told the House in 1848 that he “was struck with profound astonishment to learn that Savings Banks were not what in common parlance was called 'as good as the bank.'” He had advised servants on numerous occasions to put their money into such banks in the belief that they had complete Government security for their money. Such expressions of opinion from men who, though they had never penetrated into the mysteries of official life, could scarcely be thought ignorant in financial questions of this kind, show how wide-spread must have been the misapprehension, and are of themselves almost a sufficient justification of the ignorance of the bulk of the poorer classes.
Nor were there wanting excellent and numerous authorities who must have contributed to this improper impression. Mr. Scratchley, in his Practical Treatise on Savings Banks, pp. 72-4, has taken great pains[137] to string together a formidable list of those whom he finds inculcating the same view as that already expressed by prominent members of Parliament during debate. Suffice it to say, that when such books as McCulloch's Commercial Dictionary, Porter's Progress of the Nation, The Quarterly Review, Chambers's Information for the People, Chambers's Magazine, The Penny Magazine, and the Irish school books, laid it down that depositors had perfect security from Government for the money paid into Savings Banks, those of the class which relies to such a great extent on the intelligence of those above them may well be excused for falling into error, and may well be pitied when called upon to bear loss. Government took up the subject of Savings Banks at an early stage in their history, with the object of “protecting” them,[138] and to that end they made it an imperative duty on the part of the trustees of these banks to deposit their money with the State; unfortunately, however, no steps were taken to enforce this provision. Here lay the fatal mistake, and the source of all the trouble. “The whole success of Savings Banks,” says Mr. McCulloch in his Statistics of the British Empire, “depends upon the security the depositors have for their money. No one was accustomed to speak of Savings Banks without commenting on the increase in the stability of the country by giving the poorer classes a direct interest in the preservation of public credit; but it requires no great amount of penetration to see that so much entirely depends upon the fact that faith is kept with such depositors.” To all intents and purposes proper faith was not kept by the banks, and a proper knowledge of the real amount of risk the poor were running was wrongly withheld from them: hence the undoing of a great part of the good work accomplished in the first quarter of the present century by the establishment of Savings Banks. “What was the use,” indignantly asked a member of the House of Commons of the Government in 1851, “of preaching to the poor the duty of being honest, industrious, and self-dependent, if the fruits of their hard earnings were thus to be swept away?”
Ten years afterwards a more powerful voice than Mr. Herbert's asked the same question, and appealed to the country for a reply. “If ever,” said the Times newspaper, speaking of Savings Bank money in a leading article, 17th January, 1862, “there was a sacred fund, this is one; if ever there was a class and a fund which deserved the protection of wise laws and stringent responsibilities, surely this is the class and this the fund.” Says an objector: “Irregularities will creep into the management of the best of funds, and frauds are as old as the world.” Says the Times: “How can people treat such cases as a matter of course! How can we look on while the poor commit their all to such institutions as these! It is useless to tell us that nine out of ten, or ninety-nine out of a hundred of these Savings Banks, are conducted with scrupulous care and constant supervision.” Referring, then, to the recent case at Bilston, it continued, “How can the depositors of a few hoarded shillings know where the Fletchers hold sway, and where the managers do their duty? The only sound advice to give the working classes under such circumstances is, to have nothing to do with institutions where such things can occur.” The argument was irrefutable; nor was the advice given hastily. The Postal Banks had then been introduced to the country, and the article thus winds up: “This advice would have been difficult to give some years ago; it is not so now. The Post Office Savings Banks offer an escape from danger, and at the same time remove the necessity of taxing the time and attention of philanthropic men in offices where negligence may occasion such wide-spread ruin. We confess that, in the face of such occurrences as those of Bilston, we hope the day will speedily arrive when these 531 fallible Savings Banks will all cease to exist.”[139]
We have said that the frauds in some of the Savings Banks led not only to their stoppage, but to the closing of others in the neighbourhood. Nothing can be clearer on this point than a reference to Ireland. In 1846, there were 74 Savings Banks in Ireland; in 1851, no fewer than 21 of them had ceased to exist. In 1846 there were eight in county Down; in 1851 only two remained. In county Kerry there were almost an equal number; in 1851 not one remained. Doubtless other causes besides the breaking of faith with the people led to this, partly and indirectly,—such, for example, as the failure of crops,—though still there was the fact, significant enough, that in the districts least visited by famine, and where the people were most industrious and frugal, there had been the greatest diminution of these banks. Bearing in mind such facts, and also that it can be proved that the frauds to which Savings Banks have been so liable have led directly or indirectly to the breaking up of no less than fifty of these institutions in the United Kingdom, let us proceed to some inquiries as to how far the banks, uncertain and insecure as they were in 1861, met the requirements of the country in other respects.
Before 1861 there were in the United Kingdom 638 Savings Banks; of which 498 were in England, 33 in Wales, 51 in Scotland, 54 in Ireland, and 2 in the Channel Islands. Computing from the census of that year, there was one Savings Bank to every 43,000 inhabitants. In England, though the 498 banks were distributed through every county except one, there were many populous districts and numbers of large towns not supplied with them. Rutlandshire with its 22,983 inhabitants was the exceptional county in England: but in Scotland there were nine, and in Ireland four counties, entirely without Savings Bank accommodation. The following is a list of those thirteen counties:—
| SCOTLAND. | ||
|---|---|---|
| Ayr, | with a population of | 189,858 |
| Clackmannan | " " " | 22,951 |
| Haddington | " " " | 36,386 |
| Kinross | " " " | 8,924 |
| Linlithgow | " " " | 30,135 |
| Orkney & Shetland | " " " | 62,533 |
| Peebles | " " " | 10,738 |
| Sutherland | " " " | 25,793 |
| Wigtown | " " " | 43,389 |
| IRELAND. | ||
| Carlow, | with a population of | 68,078 |
| Kerry | " " " | 238,254 |
| Leitrim | " " " | 111,897 |
| Longford | " " " | 82,348 |
One of the Channel Islands, Alderney, and the Isle of Man with its three or four market towns, had likewise no Savings Bank. Thus fourteen counties and the above islands, containing an aggregate population of at least a million persons, could not count upon a single Savings Bank to assist those of that great number who were inclined to provident habits, or those who might have become so had these facilities been within reach.
So much for the counties in the length and breadth of which no bank for savings could be found. Applying the same test to towns and villages already applied to counties, we find that of places above the position of hamlets there were, in 1861, no less than 3,500 without banks; and not only so, but 150 of this number were towns of more than 10,000 inhabitants, and 500 of the places which had no Savings Bank accommodation had each one or more private or joint-stock banks.
But we have another consideration to urge here; and that is, the insufficiency in the number of Savings Banks in many counties where their extent and population required them. No one will say that Berkshire, Dorsetshire, and Cheshire required as many banks as did Middlesex, Lancashire, and Yorkshire—the vast centres of population and the busy hives of industry—and yet the facilities of which we are speaking happened to a great extent to be so arranged. In 1861 we find the relative number of the population and the depositors in Savings Banks in our English counties to vary very considerably—a difference ranging from one in eight to one in thirty-six. In the county of Berks, there was one Savings Bank for every 17,000 persons; in Dorsetshire one for 18,500 of the population. On the other hand, to take the rich and thriving county of Lancashire, which had the lowest relative number of banks, we find there was only one to every 68,000 persons, and in the West Riding of Yorkshire only one to every 66,000 persons. From a careful calculation which we have made from these and similar facts, it would appear that of the two and a half millions of persons for whom Savings Banks were specially designed, and who in 1861 were not depositors, at least half of them were the breadth of an English county distant from any place where they could place their money had they been desirous to save it, and the rest were distant from six to twenty miles from any such repository.