A History of Banks for Savings in Great Britain and Ireland

by William Lewins

“The Money Order Office of the Post Office shows that a large part of the business of banking for the poor can be cheaply and efficiently conducted by the officers of a public department. The first step towards the adoption of such measures is to produce in the public mind a conviction of the utter instability of banks as now constituted, and that conviction I have endeavoured to create.”

We believe Dr. Hancock went somewhat further than this, by calling the attention of the Post Office authorities to the matter though, as he presented no distinct scheme to their consideration, it is not very wonderful that the question should rest where he left it. Though Dr. Hancock does not seem ever to have gone so far as to propose “the opening of banks for the poor in connexion with the Money Order Office,” much less to develop a plan which should have that end in view—a construction which has been put upon his references to the Post Office machinery,[157]—it is only fair to that gentleman to say that he was one of the first to recognise the merits of such a measure when it was proposed, and to urge its full adoption.

Another name, which has in our opinion been very unnecessarily and erroneously connected with the early history of Post Office Banks, is that of Mr. Ayrton, the member for the Tower Hamlets. To all who remember the strong opposition which Mr. Ayrton offered, not only to the project when before Parliament, but previously to other reasonable reforms in the Savings Bank institution, this association of his name with the origination of the present plan must be very amusing; and yet this is an error into which several have fallen, though traceable, perhaps, to one source.[158] Mr. Ayrton certainly seems to have had a notion, though not till 1858, that the Post Office might be more useful to Savings Banks than it was; and in the Committee of that year, of which he was a member, he asked one of the witnesses—who was actuary to a bank that had several branches in country places—a series of questions, with the object of eliciting the opinion that it would be an advantage to Savings Banks if money orders could be procured in country places at a cheaper rate than 3d. and 6d., when any person desired to send a Savings Bank deposit to an adjacent town.[159] In the draft report proposed by Mr. Ayrton after the close of the investigation (which was not carried), the following clause appeared:—“That the Committee recommend the Postmaster-General to afford every facility practicable for the remittance of money to Savings Banks, but they do not deem legislation in this respect expedient;” and in our humble view it would have been exceedingly cool if they had! There can be no question that this simple incident has given rise to the misapprehension to which we have just alluded.

We can now come to veritable proposals. Though it is due to Mr. Sikes to say that the fact of prior proposals, with the same object in view, were either forgotten or only came to light for the first time after he had publicly made and urged his plans on the country, it seems not to admit of question that two gentlemen had been, quite unknown to him or the public generally, over the same ground before him, and, whether wisely or not we will not attempt to decide, had desisted from pressing their plans after obtaining an adverse decision with regard to them. So far as the Post Office is concerned, it is only fair to say that the authorities up to quite a recent period have had their hands sufficiently full in completing the plan of Penny Postage Reform which, for several years after the passing of the Act of 1839, was almost held in abeyance; and that, inundated with crude and undeveloped schemes, it was requisite that a plan in which so much was involved should be well matured, and go weighted with the stamp of public approval. Whether, however, the Post Office system was prepared so early as 1851,—the date of the earliest proposal,—to undertake Savings Bank business, is a question which, considering the transition state in which it then was, admits of some doubt.

In 1852, the Rev. George Hans Hamilton, the Vicar of Berwick-upon-Tweed, and now Archdeacon of Lindisfarne, proposed through his relative, Mr. G. A. Hamilton of the Treasury, a national system of Savings Banks to be worked by means of the Post Office,[160] which it is but justice to say presents many, if not most, of the features of the plan eventually produced. Mr. Hamilton met with varying success; his proposals were not taken up warmly, but were understood by him to present difficulties which might ultimately be overcome. Had this gentleman persevered in the advocacy of the scheme which he propounded, or had he had the good fortune, to have fallen on more favourable times, with Mr. Gladstone as Chancellor of the Exchequer, there can be little doubt that his plan would have been cordially taken up and his name ever associated with it. As it was, his exertions were recognised by Mr. Gladstone when he came to deal with the matter, that gentleman referring on one occasion to the valuable suggestions he had made. It should be added, that Mr. Hamilton has, since the plans came into operation, urged a modification of one of its features (to be referred to hereafter), and it is little to say, considering the value and the shrewdness of his original suggestions, that he is well entitled to be heard on the point.

The other gentleman who somewhat later than Mr. Hamilton, and quite unknown to him, made proposals to the same effect, was Mr. John Bullar, the eminent counsel, of the Temple. Mr. Bullar himself informs us that his attention was attracted to the subject by observing the working of a Penny Bank at Putney, which was established in the year 1850. Being a member of the Committee of this bank, he was led to think much over “the then existing system of Savings Banks, and how some of the defects of the system could be remedied.” After thinking the matter well over, he drew up the memorandum which we give verbatim:—

It is admitted that the present system of Savings Banks is defective, and that a new system is much wanted.

Among the defects of the present system are:—Want of perfect security to depositors: risk of loss to trustees by defaulting clerks, and want of opportunities for the labouring classes to make deposits as soon as they have anything to deposit.

Many of the present Savings Banks are only opened for two or three hours once a week; so that those who would deposit in them are forced to be their own bankers during the rest of the week, and are exposed to the constant temptation of spending what they have in their pockets; the particular temptation from which Savings Banks were intended to relieve them.

In order to give perfect security to depositors, they ought to have the security of the nation.