A savings bank may be defined as an institution for the receipt of small sums of money, to be placed at compound interest, and returned on demand. It may, and in practice frequently does, embrace other and collateral objects—such, for example, as the granting of annuities—but its primary characteristics are (1), the capitalization of interest on the sums deposited; (2), the holding of those sums at call—whether with or without notice, as the specific rules may prescribe.
Pithy sayings about the universal duties of frugality and foresight are much older than the earliest attempts to broaden the path of their performance by giving increased facilities of access to the multitude. The first essays of this kind, when at length they were made, seem always to have connected themselves with ideas of compulsion rather than of persuasion. In England, in the first half of the eighteenth century, for instance, the most favourite project was to effect a legislative substitution of savings for poor's-rates; by passing "acts of Parliament which," as Defoe says, "shall make drunkards take care of wife and children; spendthrifts lay up for a wet day; lazy fellows diligent; and thoughtless, sottish men careful and provident." Francis Maseres, in 1771, took a somewhat wiser course when he proposed to give powers to incorporate the ratepayers of any parish for the purpose of receiving "some part of the money people could save out of their wages," or of investing this money in stock, and of granting deferred annuities to the depositors. A bill based on this proposal, open as it was to grave objections of detail, passed the Commons, but was rejected by the Lords. Precisely the same fate attended another, but compulsory, scheme advocated a few years later by the Rev. John Acland, of Exeter, for establishing a great "Provident Society," to which all persons between twenty-one and thirty years of age, not being landowners, were by law to belong.
The earliest "savings banks," properly so called, with which we are acquainted are those of Hamburg, founded in 1778, and of Berne, about nine years later in date. Both were restricted, more or less closely, to the use of domestic servants, handicraftsmen, and the like. The Hamburg bank, too, formed part of a general scheme for the administration of poor's funds. Neither of them appears to have attracted any attention in England.
For the first British savings bank we must look to the suburban village of Tottenham, near London, where a "children's bank" was begun by Priscilla Wakefield, in 1798, followed by one for adults in 1804. The first in Scotland was established by the Rev. John Muckersy, of West-Calder in Mid-Lothian, in October 1807, under the title of "West-Calder Friendly Bank." But the virtual founder of savings banks in the British empire was Dr Henry Duncan, minister of Ruthwell, in Dumfriesshire, whose attention was first attracted to the subject in reading one of the many tracts on matters of social economy written by John Bone.
I. HISTORY AND STATISTICS OF THE SAVINGS BANKS OF GREAT BRITAIN AND IRELAND.
Between the little experiment for children at Tottenham in 1798, and that decisive experiment at Ruthwell, in Dumfriesshire, in 1810, which placed the value and success of savings banks beyond question, the only very noticeable institution of this kind was that founded at Bath, exclusively for domestic servants, in 1808. The originator was Lady Isabella Douglas. The sums receivable from any one depositor were limited to £50. On the attainment of that sum facilities were offered for its investment in the public funds, so that a new account might be immediately opened. Bank for Interest was allowed at the rate of 4 per cent. per annum. The scheme was for a time so prosperous that, in 1813, an endeavour was made to convert the "servants' bank" into a general bank for savings, but the attempt did not then succeed, apparently from the want of satisfactory channels for investment. It was not until 1815 that the "Provident Institution of Bath," afterwards designated the "Bath Savings Bank," was effectively established.
When Dr Duncan began his enterprise at Ruthwell he had for his encouragement the general good character and well-saving habits of the people amongst whom he laboured. On the adverse side was the want of resident heirsitors to support the scheme at its outset, and also the circumstance that a majority of the best parishioners were already members of friendly societies, the obligations of which they were barely able to meet. In about four years, however, the benevolent and energetic founder had the satisfaction of seeing in his bank a fund amounting to £1,160, and bearing interest at 5 per cent. Dr Duncan started with the wise axioms that "the very prejudices of the people should be carefully consulted, and treated with tenderness and delicacy," and that they should themselves take a share in the management. As to the time and amounts of the deposits, his first intention was to leave them to the depositors, and to avoid any fines or forfeitures, such as were imposed by the Friendly Societies; but eventually he found it desirable to make a regulation, that upon any account being once opened with the bank, there must be a deposit of at least four shillings annually, under the penalty of forfeiting one shilling. At Ruthwell, as at most other places in which savings banks were established at an early period, there were many considerable deposits in single sums, which had been long hoarded, without interest and without security.
Edinburgh followed in December 1813, but, curiously enough, without knowing what had been done at Ruthwell, although the proceedings there had already attracted Edinburgh attention in many other parts of the United Kingdom. The chief mover in the matter at Edinburgh, Mr J. H. Forbes, was familiar with the experiments at Tottenham and at Bath many years before, but knew nothing of Dr Duncan's exertions in Dumfriesshire, just as Dr Duncan himself was unacquainted (until after the first appearance of his Essay on Parish Banks) with the little bank at West-Calder, established by the Rev. John Muckersy three years earlier. Within the first nine months, the Edinburgh bank—which, for a considerable period, continued to be a branch or section of the "Society for the Suppression of Beggars"—numbered 106 depositors. Within three years, it had received savings from 1837 several depositors, amounting in the whole to £3316, 14s., of which sum £1,460 had been exchanged for interest notes of £10 each, on the bank of Sir William Forbes and Company. During the first year, 4 per cent., but afterwards 5 per cent., was the rate of interest both on current accounts and on the notes. No deposit of less than one shilling was received. The transfer to Messrs Forbes' bank, or withdrawal by the depositor, became necessary as soon as the amount standing to the credit of any account reached £10. The yearly summary for this initiative period ran thus:
Giving Alms no Charity, 1704. The banks of Bath (on the establishment of its "Provisional Institution" in January 1815), Southampton (in November of the same year), Exeter (in February 1816), and Hertford (in the following March), rank at once amongst the earliest and amongst the most successful of those which were established in English towns prior to the legislative regulation of savings banks. The early experience of all of them presents matter which has still its interest; but we restrict ourselves to the two latter. The rules adopted at Exeter limited the sums to be paid in by any one depositor during the first year to L50; to the like amount during the second year; and to L25 in each succeeding year. It allowed 4 per cent. interest. But its characteristic feature was the establishment of about sixty receiving offices in all parts of Devonshire, on a plan which entailed little expense—the only item of charge being for printing and postage or portage—and which largely increased the business of the parent institution in the county town. Most of the receivers were clergymen. The expenses were defrayed out of a fund which had been raised by voluntary subscription. Within two years this bank had received 1380 deposits from 946 depositors, amounting in the aggregate to L14,325, and bearing interest amounting to L246. It had repaid the sum of L984 to 73 depositors, leaving a balance to depositors' credit of L13,709, in addition to a surplus of L372 on the establishment and expenses fund. The bank at Hertford had been preceded by one of a peculiar kind, called "The Sunday Bank," which had been established by a benevolent vicar—the Rev. Thomas Lloyd—some two or three years earlier. Sums from six pence to two shillings, paid by parishioners, chiefly of the labouring class, to the vicar, after morning service on Sundays, amounted for several years to upwards of L300 a year; but these sums (prior to March 1816) were always returned to the depositors every New Year's Day, with interest, usually at the rate of twelve per cent., a rate arising, not of course from profitable investment exclusively, but from the addition of certain beneficences to the legitimate interest. On the establishment of the savings bank, the "Sunday Bank" became, so to speak, a feeder to it. In the evidence given by Mr Lloyd before the Lords' Committee on the Poor Laws of 1817, he assigned, as one of the causes which had promoted the success of the banks, the evils arising from Benefit Clubs or Friendly Societies as then constituted—"For there is almost always," he said, "a regulation that when two-thirds of the members choose to assemble and unanimously agree to break up the clubs, they can; the consequence is, that the other third, the old members, who ought to be deriving an assistance during the last period of their lives from these clubs, are deprived of it. We have had... six clubs broken up within these two years in the neighbourhood of Hertford." He also stated, as one of the difficulties he had to contend with, a very general fear on the part of the labourers "of the persons employing them knowing what they can save; that is, what they can live upon. There certainly always has been a fear that, if it were known, their masters and employers would reduce their wages... It almost invariably happens that, when a deposit is made by a labourer, the great anxiety is, that nobody should know it; and... one of our regulations is... secrecy. The man at the next door does not know that his neighbour puts into the savings bank... The labourers bring their book on Sunday instead of Saturday; they bolt the door regularly, and bring the book out with great secrecy, for the entry to be made in it."
The first savings bank established (in March 1815) in Foundation Ireland was that of Stillorgan, called the "Parochial Bank," of savings and was due to the exertions of the Rev. John Reade, banks in who, on removing shortly afterwards to Clondalkin, established a second bank there. In both places the small deposits of the peasantry were kept in the bank, each depositor having his special receptacle—"the poor," wrote Mr Reade, "are always pleased to see their money at every period they make their deposit"—until they amounted to L1, when they were invested in stock. Both these original banks, like the earliest banks of England and of Scotland, have long since been absorbed in larger institutions of later date. The third Irish bank, that of Belfast, was opened in January 1816, and received, within the first year and three-quarters, 3428 deposits from 646 depositors, amounting in the aggregate to L4416. The sums withdrawn during this period amounted, but to L1518. "The class of people," says the first report, "who generally deposit money in this bank is that of servants; there were a great many spinners at the commencement, but the misfortunes of their trade obliged them to desist." The Belfast bank continues to flourish.
At the end of the year 1816, there were in England and Wales 74, and in Ireland 4 savings banks, each managed according to its particular rules, and all resting, as respects the security of the deposits, upon personal knowledge and confidence between depositors and managers. In July 1817, the first parliamentary enactments for Parliamentary regulation of savings banks were passed, the one being 57 Geo. III., c. 130, intituled "An Act to Encourage the Establishment of Banks for Savings in England;" the other, 57 Geo. III., c. 105, intituled "An Act to Encourage the Establishment of Savings Banks in Ireland." Geo. III., Both measures required that the rules of every savings bank should be deposited with the clerk of the peace. In England, every depositor was restricted to the investment of sums not exceeding L100 in the first year, and L50 in each succeeding year; in Ireland, the limit was L50 in any year. The trustees and managers of the banks were prohibited from receiving any profits, and were empowered to pay over the monies received from depositors into the Bank of England or of Ireland respectively (in sums not less than L50 in England, or L100 in Ireland), to the account of the Commissioners for the reduction of the National Debt, and as "the fund of the banks for savings." The Commissioners were to invest the monies so received in 3 per cent. bank annuities, and were to issue debentures bearing interest at 3d. per cent. per diem (L4, 11s. 3d. per annum), payable twice a year, in May and November, and were to lay annually before Parliament an account of all monies received and stock purchased. Finally, in Ireland, the trustees might place a portion of their deposits on interest with bankers, provided the sums so placed did not exceed one-fifth of the whole amount of deposits, but no similar power was given by the English act.
The next session brought its "Act to amend an Act 58 Geo. passed in the last Session of Parliament to Encourage the Establishment of Banks for Savings in England" (58 Geo. III., c. 48), by which the forms of the debentures were altered; power was given to the justices at sessions to reject the rules deposited with the clerk of the peace; and the payment into any savings bank by ticket or number, without disclosing the name of the depositor, of any sums exceeding L10 in the year, was prohibited.
In March 1818, 164 banks in England and Wales had paid to the account of the National Debt Commissioners sums amounting in the aggregate to L657,187, with which stock had been purchased to the amount of L816,547. The largest payment—viz., L32,000—was State of the that of the Exeter Bank; the smallest—viz., L160—that of the bank at St John's, Wapping, near London. Two months later, the number of banks in England and Wales had increased to 227, the amount of payments to L949,835, bearing an annual interest of L43,836, and the stock purchased to L1,182,385. The sums similarly invested by seven Irish banks amounted in March 1818 to L12,533, producing in stock L13,322. In the year ending 5th January 1819, the payments from Irish banks, the number of which is not stated in the parliamentary return, amounted to L50,030, producing in stock L55,304.
An act of 1820 (1 Geo. IV., c. 83) repealed so much of the preceding acts as related to the issuing of debentures; directed that interest should be calculated twice in the year, and carried to account as additional principal; and enabled charitable societies to deposit with the Commissioners either the whole or any portion of their funds. The Irish banks continued to be regulated by 57 Geo. III., c. 105, until, in 1824, one act, for the first time, comprised both kingdoms. This act (5 Geo. IV., c. 62) extended to Ireland the main provisions of the act last mentioned. It repealed so much of the 57 Geo. III., c. 105, as limited the deposits to L50 in one year, and permitted trustees to place any portion of their funds, not exceeding a fifth, in the hands of a banker. It also repealed so much of the 57 Geo. III., c. 130, as provided that deposits should not exceed L100 in the first year, and L50 in any succeeding year; and also so much of the 58 Geo. III., c. 48, as allowed deposits by ticket or number to the amount of L10 a year, and enacted that in future no anonymous deposits should be made. The deposits of any one depositor, either in England or in Ireland, were thenceforth restricted to L50 in the first year, and to L30 in any year afterwards; and it was provided that the whole should not exceed L200, exclusive of interest. This act further repealed that recent provision of 1 Geo. IV., c. 83, which authorized charitable societies to deposit their funds.
The new law came into force on the 20th November 1824. The aggregate investments of each depositor were then first subjected to legal restriction. At that date there had been received by the National Debt Commissioners, from the trustees of savings banks and friendly societies (during a period of seven years and a quarter), a total sum of L12,361,919, 6s. 4d.—viz., in Great Britain, L11,636,271, 4s. 4d.; in Ireland, L725,648, 2s. The repayments, during the same period, interest included, amounted to L632,670, 18s. The total amount of stock standing to savings bank account in the Commissioners' names was L13,384,350, 17s. 7d., the actual cost of which had been L11,544,017, 8s. 2d.; the gross amount of interest received thereon by the Commissioners was L1,317,332, 3s. 10d., and the gross amount of interest paid or credited by the Commissioners to savings banks and friendly societies was L1,540,557, 4s. 11d.
We now arrive at the first of the present "governing statutes" of savings banks, viz., the 9 Geo. IV., c. 92, passed on the 28th July 1828, and intituled, "An Act to Consolidate and Amend the Laws relating to Savings Banks," which repealed all the statutes previously in force. This act then provided that the rules of every savings bank should be entered in a book, be deposited with the clerk of the peace for the county in which such bank was held, and be then submitted to a barrister appointed by the Commissioners, to be by him certified and laid before the justices in quarter-sessions, who might reject the same or any part thereof. If admitted, the rules became binding on depositors and officers. Such of its minor enactments (still History in force) as appear to be important, will be mentioned in a subsequent section of this article.
The following table will show the progress of the banks (exclusive of friendly societies) under the working of the legislation of 1824 and 1828, until the period (1833) of the passing of the important act of 3 Will. IV., c. 14:
| Year ending 30th Nov. | Amount received by the Commissioners from Savings Banks | Interest Paid or Credited to Savings Banks | Total Amount Creditable to Savings Banks in the Year | Total Amount of Deposits during the Year | Balance to Credit of Savings at close of each year | |----------------------|-------------------------------------------------|----------------------------------------|------------------------------------------|----------------------------------------|----------------------------------------| | 1817-1824 | 10,814,279 | 1,538,455 | 12,352,836 | 632,208 | 11,720,629 | | 1825 | 1,207,229 | 562,759 | 1,769,988 | 229,909 | 13,527,708 | | 1826 | 599,985 | 699,890 | 1,391,659 | 1,261,149 | 14,788,857 | | 1827 | 1,058,621 | 675,533 | 1,734,154 | 1,794,574 | 15,582,404 | | 1828 | 396,150 | 563,983 | 960,142 | 1,527,151 | 15,701,485 | | 1829 | 501,105 | 555,478 | 1,656,684 | 897,250 | 14,808,188 | | 1830 | 487,519 | 550,116 | 1,037,632 | 1,199,182 | 14,609,006 | | 1831 | 536,255 | 543,013 | 1,090,268 | 1,381,118 | 14,416,885 | | 1832 | 894,693 | 554,257 | 1,448,751 | 540,942 | 15,224,794 | | **Total of 17 years** | **17,314,855** | **6,751,721** | **24,066,581** | **8,741,787** | ... |
A more striking illustration of the value of the savings bank system can hardly be conceived than that which is afforded by the figures of the memorable years 1826 and 1829-32, as they stand in this table. These are the only years in which the nett funds of savings banks decreased, until we reach the commercial crisis of 1847.
The salient provisions of the act of 1833, intituled, "An 3 Will. IV., Act to enable depositors in Savings Banks and others to purchase Government Annuities through the medium of Savings Banks," &c., are—(1.) The powers given to the National Debt Commissioners for the purchase of government annuities, not exceeding L20 per annum, nor to be granted on the life of any nominee under fifteen years of age, on depositors' account. This portion of the act occupies clauses 1 to 24 inclusive, and clauses 26 and 27, and has since been repealed. (2.) The obligation imposed on all executors, administrators, and assignees of savings bank officers to pay any money owing by such officers to any savings bank before any other debt. (3.) The repeal of so much of the 9 Geo. IV., c. 92, as relates to the withdrawing of deposits and re-depositing; and the enactment in lieu thereof, that no sums exceeding L30 in the aggregate shall be deposited in any one year. (4.) And finally, The enactment, in clause 25, "That it shall be lawful for the said Commissioners . . . , from time to time, and as they shall think fit, to sell and dispose of the bank annuities and Exchequer bills, or any part thereof which may be now standing, or may hereafter stand in their names, . . . in pursuance of the said act, . . . and with the proceeds thereof to purchase in lieu thereof any other description of Bank annuities, or annuities for terms of years, or Exchequer bills." Another act, 5 and 6 Will. IV., c. 57, intituled, "An Act to extend to Scotland certain provisions of an Act of His late Majesty to consolidate and amend the Laws relating to Savings Banks," &c., repealed c. 57 the 59 Geo. III., c. 62, except in relation to such savings banks as had been established under it, and had not conformed to the provisions of 9 Geo. IV., c. 92. With respect to such banks, the former act was to continue in force until the time of such conformation.
In each year, from 1834 to 1841 (which year completed the first quarter of a century from their legal establishment), the nett amount of the deposits in savings banks continued to increase, as will be seen if we resume the table of their transactions with the Commissioners for the reduction of the National Debt, in similar form:— The total number of savings banks in the United Kingdom at the date (20th November 1841) was 555, viz., in England (including Guernsey and Jersey), 428; in Wales, 23; in Scotland, 28; in Ireland, 76. The total number of current accounts in these banks was 841,204; of which 824,162 belonged to individual depositors, 8778 to charitable institutions, and 8624 to friendly societies. The aggregate amount of the deposits, with interest, in 554 of these banks (the remaining bank having made no return), was L24,474,680, of which sum L22,915,940 stood to the account of individual depositors, L478,096 to that of charitable institutions, and L1,080,653 to that of friendly societies. The average amount standing to the credit of each individual depositor was L28; to that of each charitable society, L54; to that of each friendly society, L131. The details for the respective portions of the United Kingdom were as follows:
| Class | Number of Depositors in each Class | Total Amount of Deposits in each Class | Average Amt. held by each Depositor | |-------|-----------------------------------|--------------------------------------|-----------------------------------| | | In England | In Wales | In Scotland | In Ireland | England | Wales | Scotland | Ireland | England | Wales | Scotland | Ireland | | Depositors not exceeding L.20 each | 384,634 | 8186 | 41,045 | 36,537 | 2,228,654 | 64,183 | 203,155 | 271,676 | 6 | 7 | 5 | 7 | | 50 | 175,679 | 4835 | 7,127 | 29,196 | 5,438,897 | 149,676 | 217,019 | 800,923 | 30 | 30 | 30 | 31 | | 100 | 76,498 | 1769 | 1,578 | 9,042 | 5,283,164 | 122,907 | 107,918 | 609,923 | 69 | 69 | 68 | 67 | | 150 | 26,483 | 545 | 226 | 2,531 | 3,191,335 | 65,268 | 205,295 | 255,364 | 116 | 119 | 120 | 117 | | 200 | 14,849 | 236 | 42 | 1,004 | 2,533,056 | 49,066 | 6,002 | 180,553 | 179 | 161 | 165 | 163 | | Of 200 & upwards | 2,835 | 54 | none | 122 | 631,028 | 12,588 | none | 27,787 | 240 | 238 | none | 228 |
The Depositors of the whole United Kingdom, collectively, at the end of 1841, may be classified thus:
| Depositors | Number of Depositors | Amount of Deposits | Average held by each Depositor | |-----------|---------------------|-------------------|-------------------------------| | 1. Not exceeding L.20 each | 470,462 | 3,667,668 | 7 | | 2. " 50 | 215,855 | 6,666,315 | 31 | | 3. " 100 | 88,887 | 1,20,312 | 69 | | 4. " 150 | 29,785 | 3,579,640 | 120 | | 5. " 200 | 16,221 | 2,760,902 | 170 | | 6. Exceeding 200 | 3,012 | 721,703 | 240 | | Total | 824,162 | 22,915,940 | 28 | | Friendly Societies | 8,294 | 1,980,653 | 54 | | Charitable Institutions | 8,778 | 478,096 | 131 | | Total number of accounts | 841,204 | 24,474,689 | 29* |
* Mean average.
As compared with the population, there was at this period, in England, 1 depositor to every 22 inhabitants; in Wales, 1 to 58; in Scotland, 1 to 52; in Ireland, 1 to 105.
The remarkable success of the savings bank system, so greatly beyond any the most sanguine expectations that could have been preconceived of it, had of course its alloy. There had been several instances of defalcation by actuaries of the banks. Although not covered by the guarantee bonds exacted by law, the amount of these defalcations was inconsiderable. But it was none the less obviously important that effective precautions should be taken to preclude their recurrence. Other points of anxiety presented themselves in respect to the exercise of the powers vested in or assumed by the National Debt Commissioners of varying, for other than savings bank purposes, the securities held in trust by them on savings banks account; and also in respect to the considerable and increasing difference between the total amount of the debt owing by the Commissioners to the savings banks, and that of the securities in which that debt was invested. In the course of the eager controversy which was then carried on, it was alleged, on the one hand, that the deficit was the inevitable consequence of the parliamentary enactments as to the interest to be allowed by the Commissioners to the banks; and, on the other, that no deficiency would have existed had there been no trafficking for extraneous purposes in the securities in which the money of depositors was invested.
It is obvious that the immediate, or almost immediate, investment of the deposits as they are received by the Commissioners—which investment is the fundamental principle of our savings banks' legislation—entails the frequent purchase of stock at high prices in prosperous times, when deposits are pouring in; and that immediate repayment of deposits on demand—which repayment is also and equally fundamental—must, conversely, involve the frequent sale of stock at low prices in times of depression, when deposits fall off and withdrawals are numerous.
The following table exhibits (1) the amount of interest received by the National Debt Commissioners on account of the investments made for savings banks in each year from 1817 to 1843 inclusive; and (2) the amount of interest paid and credited by the Commissioners to the trustees of savings banks during the same period, at the parliamentary rate of L4, 11s. 3d. per cent., until the year 1828 inclusive; and at that of L3, 16s. 0½d. from 1829 to 1843 inclusive: The total excess paid to the banks under the Ls. 11s. 3d. per cent. rate was L744,362, 17s. 4d.; that paid under the Ls. 16s. 0d. rate, to the year 1843 inclusive, was L1,333,897, 4s. 4d. In 1841, Mr Goulburn's Act (7 and 8 Vict., c. 83), reduced the rate of interest to be allowed to the trustees, from the close of the then current year, to Ls. 5s. per cent.; and enacted that the rate to be allowed to depositors should not exceed Ls. 0s. 10d. per cent. per annum. As that act was at first framed, it proposed to reduce the interest to trustees to Ls. 1s. 4d. per cent., and the maximum interest to depositors to Ls. 2s. 10d. per cent.; but the opposition of the principal banks led to a compromise.
The excess of interest paid to the banks during the last year of the old rate (ending 20th November 1844) was L101,673, 7s. 3d., making the total excess up to that date L2,179,933, 8s. 11d. The like excess paid during the first year of the new rate (ending 20th November 1845) was L20,185, 4s. 3d.
Another important alteration in the law of savings banks, introduced by the Act of 1844, was that relating to the responsibilities of trustees and managers. The Act of 1828 declared that no such officer "should be personally liable, except for his own acts or deeds, or for anything done by him... in cases where he should be guilty of wilful neglect or default." Prior to that Act of 1828, it had been judicially declared that "deposits are made by parties, not on the faith of the person acting as actuary or cashier, but upon the faith of the gentlemen who act as trustees... If, therefore, the clerk or other person employed by them is guilty of peculation, they are themselves liable for any defalcation which may ensue." The Act of 1844 provides "that no trustee or manager of any savings bank shall be liable to make good any deficiency which may hereafter arise in the funds of any savings bank, unless such persons shall have respectively declared, by writing under their hands, and deposited with the Commissioners for the reduction of the National Debt, that they are willing so to be answerable; and it shall be lawful for each of such persons, or for such persons collectively, to limit his or their responsibility to such sum as shall be specified in any such instrument. Provided always that the trustee or manager of any such institution shall be, and is hereby declared to be, personally responsible and liable for all monies actually received by him on account of, or to and for the use of such institution, and not paid over or disposed of in the manner directed by the rules of the institution; and an abstract of the above provisions shall be enrolled as one of the rules of the institution." This change also was opposed—but apparently on insufficient grounds—by some of the leading banks. It was further enacted that deposits not exceeding L50, exclusive of interest, belonging to persons dying intestate, and to whom no letters of administration shall be taken out within one month of death, may be paid to the widow or other person entitled; and that disputes arising between any bank and a depositor, or the representatives of a depositor, shall be referred to the barrister appointed under the act.
As far as relates to Ireland, the provision of 7 and 8 Vict., c. 83, which we have just recited, with respect to the responsibility of trustees and managers, was repealed, four years afterwards, by the 11 and 12 Vict., c. 133, for the purpose of enacting in lieu thereof, "that after the 20th November 1848, any trustee or manager of a savings bank in Ireland who has declared or shall declare, in writing under his hand, deposited with the Commissioners for the reduction of the National Debt, that he is willing to be answerable for a specific amount only, such amount being in no case less than L100, shall not be liable to make good any deficiency which may thereafter arise in the funds of such savings bank, beyond the amount specified in such writing:" with a like proviso to that contained in the preceding act with respect to monies actually received by any individual trustee. This act of the 11 and 12 Vict. also provided that the rules of every savings bank in Ireland shall specify certain days, not less than two in every year, for the production at the bank of the pass-book of every depositor, subject to the penalty of the succeeding of interest in case of failure; and it further enacted, "that if it shall appear to the satisfaction of the Commissioners that the clauses of the said recited act and of this act, or the orders, directions, and regulations of the said Commissioners, signified by the comptroller-general to the trustees of any savings bank in Ireland, have not been complied with... it shall be lawful for the Commissioners to close the account of such savings bank, and to discontinue the keeping any further account with the trustees thereof," until they shall see cause to determine otherwise.
The latest enactment bearing upon the law of savings banks is the 16 and 17 Vict., c. 45, intituled "An Act Vict., c. 45, to Consolidate and Amend the laws, and to grant additional facilities in relation to the Purchase of Government Annuities through the medium of Savings Banks, and to make other provisions in respect thereof." This act permits contracts to continue to be made by depositors for the purchase of annuities through the medium of savings banks, but practically it severs such contracts from the ordinary business of those institutions, and makes them a special section of that of the National Debt Commission.
The extensive discussions to which the introduction of the act of 1844 gave rise, have had very important consequences. Until the date of those discussions, no account savings of savings banks' transactions had ever been rendered by bank stock, the Commissioners in detail, either to Parliament or to the public. It then, for the first time, appeared by papers laid before the House of Commons by Mr Goulburn (then Chancellor of the Exchequer), that transactions in stock, to the amount of several millions, had been effected, not for savings bank purposes, but for the general financial purposes of the State. Thus, it was shown, that in the years 1828-44, savings bank stock, amounting to L8,166,551, was sold, and other stock, amounting to L8,557,000, was purchased. Of the stock sold, considerably more than half (viz., During the same period, about L19,888,100 exchequer bills were held, of which about L13,041,550 were disposed of. Both stock and cash-balances were frequently employed in the purchase of exchequer bills when at a discount; and it is shown by the returns that such purchases were continued daily for considerable periods of time. We have here a serious element imported into savings bank finance, as heretofore managed, which stands wholly apart from those contingencies of investment and repayment that are inseparable from the savings bank system.
In 1842, the total amount which had been paid by the banks to the National Debt Commission was L26,460,042, and the total amount of interest paid or credited to the banks, L12,730,765, making in the aggregate, L39,190,814. The total repayments made by the Commission to the banks amounted to L14,653,844, and the total balance standing to the credit of the banks was L24,536,791. At this period the number of savings banks in the United Kingdom was 555, and the aggregate number of their depositors 824,162, exclusive of 17,402 societies. The progress from 1842 to 1857 may be thus epitomized:
| Year ending | Amount received by Commissioners from Savings Banks | Interest paid or credited to Savings Banks during the Year | Total Amount Credited to Savings Banks during the Year | Total Repayments during the Year | Balance to Credit of Savings Banks at Close of the Year | |-------------|--------------------------------------------------|-------------------------------------------------|-------------------------------------------------|--------------------------------|-------------------------------------------------| | 1817-1841 | 26,460,042 | 12,730,765 | 14,653,844 | 24,536,791 | 24,536,791 | | 1842 | 1,045,267 | 929,446 | 1,974,713 | 1,035,267 | 1,035,267 | | 1843 | 1,015,431 | 941,491 | 1,956,922 | 1,015,431 | 1,015,431 | | 1844 | 1,088,375 | 1,073,004 | 2,161,379 | 1,088,375 | 1,088,375 | | 1845 | 1,050,931 | 971,282 | 1,472,213 | 1,171,411 | 1,171,411 | | 1846 | 1,211,059 | 999,685 | 2,210,735 | 1,510,469 | 1,510,469 | | 1847 | 632,194 | 1,002,362 | 1,634,487 | 2,029,059 | 2,029,059 | | 1848 | 465,159 | 1,005,654 | 1,470,813 | 2,223,433 | 2,223,433 | | 1849 | 505,057 | 919,201 | 1,424,258 | 2,129,253 | 2,129,253 | | 1850 | 1,108,270 | 935,005 | 2,043,275 | 745,012 | 304,455,568 | | 1851 | 1,105,280 | 995,438 | 2,102,418 | 635,573 | 31,912,413 | | 1852 | 1,345,437 | 1,033,205 | 2,308,642 | 850,000 | 33,058,642 | | 1853 | 747,856 | 1,032,205 | 1,779,061 | 3,032,205 | 3,032,205 | | 1854 | 632,663 | 1,011,295 | 1,752,279 | 1,248,887 | 3,410,694 | | 1855 | 897,263 | 1,109,502 | 2,006,805 | 1,297,914 | 3,119,685 | | 1856 | 741,053 | 1,134,163 | 1,875,214 | 1,739,677 | 3,255,722 | | 1857 | 28,863,815 | 28,863,815 | 72,135,916 | 36,880,197 | ... |
During the seventeen years, 1841 to 1857 inclusive, there have been nine years (viz., 1841 to 1846 inclusive, and 1851–53 inclusive), in which the sums deposited with the savings banks have exceeded the sums withdrawn; and eight years (viz., 1847 to 1850 inclusive, and 1854–57 inclusive), in which the sums withdrawn have exceeded the sums deposited. In the two years, 1847–48, the amount of the withdrawals was more than five millions (L5,201,433) in excess of the amount of the deposits. Nor has the state of affairs in this respect at any subsequent period at all approached that which existed prior to 1846. So that, on the whole seventeen years there has been a nett excess of withdrawals over deposits, amounting to L3,114,436; the aggregate deposits having been but L116,159,005, against an aggregate of L119,273,441, deposits and interest withdrawn. No better exemplification of the power of compound interest need be desired than that which results from the juxtaposition of these figures, with those which indicate the comparative balances held by the National Debt Commissioners to the credit of the savings banks, at the beginning and end of the period referred to. That balance, at the close of the year 1841, was L24,536,971; at the close of the year 1857 it was L35,255,722.
The specific progress of the interest on the savings Continuans' fund has been shown in detail up to the close of the year 1843 inclusive, at which period an excess of the comparative statement of interest on savings banks securities received and credited by the Commissioners had accumulated to the amount of L2,078,260, 1s. 8d. We now resume that account to the close of the year 1857:
| Year ending | Dividends on Savings Bank's Securities other than those received by the Commissioners | Interest Paid or Credited by Commissioners to Savings Banks | Excess of Interest Paid to the Banks | |-------------|---------------------------------------------------------------------------------|---------------------------------------------------------------|-----------------------------------| | 1817-1841 | 12,564,152,132 1 s. 6 d. | 14,642,412 15 s. 6 d. | 2,078,260 1 s. 6 d. | | 1844 | 971,313 3 s. 5 | 1,973,004 10 s. 8 | 101,673 7 s. 3 | | 1845 | 951,057 12 s. 5 | 971,282 15 s. 8 | 20,185 4 s. 3 | | 1846 | 982,408 10 s. 11 | 990,685 15 s. 3 | 17,277 4 s. 4 | | 1847 | 984,038 16 s. 8 | 1,029,929 19 s. 10 | 17,891 4 s. 2 | | 1848 | 986,638 16 s. 8 | 2,029,929 19 s. 10 | 2,029,929 16 s. 8 | | 1849 | 988,707 19 s. 6 | 905,654 14 s. 6 | 36,863 8 s. 0 | | 1850 | 882,617 14 s. 5 | 919,301 2 s. 5 | 36,683 8 s. 0 | | 1851 | 909,856 9 s. 6 | 853,005 12 s. 11 | 43,149 3 s. 5 | | 1852 | 946,218 9 s. 6 | 886,458 4 s. 3 | 46,260 14 s. 9 | | 1853 | 953,898 14 s. 10 | 1,033,699 10 s. 10 | 45,801 11 s. 1 | | 1854 | 1,051,743 1 s. 1 | 1,074,105 6 s. | 22,362 5 s. 3 | | 1855 | 969,407 9 s. 5 | 1,091,223 3 s. 7 | 101,818 14 s. 2 | | 1856 | 1,008,711 12 s. 1 | 1,109,502 4 s. 4 | 100,790 12 s. 3 | | 1857 | 1,074,606 10 s. 6 | 1,134,161 6 s. 11 | 59,554 16 s. 5 |
The following official table will exhibit in detail the transactions, during the seventeen years 1841–57, of the depositors with the banks on the one hand, and of the banks with the Commissioners on the other:
| Year ending | Dividends on Savings Bank's Securities other than those received by the Commissioners | Interest Paid or Credited by Commissioners to Savings Banks | Excess of Interest Paid to the Banks | |-------------|---------------------------------------------------------------------------------|---------------------------------------------------------------|-----------------------------------| | 1817-1841 | 12,564,152,132 1 s. 6. | 14,642,412 15 s. 6. | 2,078,260 1 s. 6. | | 1844 | 971,313 3 s. 5. | 1,973,004 10 s. 8. | 101,673 7 s. 3. | | 1845 | 951,057 12 s. 5. | 971,282 15 s. 8. | 20,185 4 s. 3. | | 1846 | 982,408 10 s. 11. | 990,685 15 s. 3. | 17,277 4 s. 4. | | 1847 | 984,038 16 s. 8. | 1,029,929 19 s. 10. | 17,891 4 s. 2. | | 1848 | 986,638 16 s. 8. | 2,029,929 19 s. 10. | 2,029,929 16 s. 8. | | 1849 | 988,707 19 s. 6. | 905,654 14 s. 6. | 36,863 8 s. 0. | | 1850 | 882,617 14 s. 5. | 919,301 2 s. 5. | 36,683 8 s. 0. | | 1851 | 909,856 9 s. 6. | 853,005 12 s. 11. | 43,149 3 s. 5. | | 1852 | 946,218 9 s. 6. | 886,458 4 s. 3. | 46,260 14 s. 9. | | 1853 | 953,898 14 s. 10. | 1,033,699 10 s. 10. | 45,801 11 s. 1. | | 1854 | 1,051,743 1 s. 1. | 1,074,105 6 s. | 22,362 5 s. 3. | | 1855 | 969,407 9 s. 5. | 1,091,223 3 s. 7. | 101,818 14 s. 2. | | 1856 | 1,008,711 12 s. 1. | 1,109,502 4 s. 4. | 100,790 12 s. 3. | | 1857 | 1,074,606 10 s. 6. | 1,134,161 6 s. 11. | 59,554 16 s. 5. |
Comparisons of aggregate deposits with aggregate withdrawals, 1841–57.
1 Disregarding the fractions of a pound, which, here and elsewhere, occasion a trivial difference between the sums severally and their aggregate as stated in the text and tables. ### SAVINGS BANKS
#### TRUSTEES OF SAVINGS BANKS
| Year ending | Received from Depositors | Paid to Depositors | Excess | |-------------|--------------------------|--------------------|--------| | | Received | Paid | Received | Paid | Received | Paid | | 1841 | L5,694,908 | L5,487,723 | L207,185 | ... | L1,053,194 | L934,960 | L118,234 | ... | | 1842 | L5,789,203 | L5,656,160 | L133,043 | ... | L1,045,267 | L980,532 | L64,735 | ... | | 1843 | L6,327,125 | L5,333,015 | L994,110 | ... | L1,591,753 | L712,468 | L879,285 | ... | | 1844 | L7,165,465 | L5,716,275 | L1,450,190 | ... | L1,888,875 | L657,216 | L1,351,659 | ... | | 1845 | L7,153,176 | L6,697,042 | L456,134 | ... | L1,503,931 | L1,151,140 | L352,791 | ... | | 1846 | L7,045,575 | L6,524,752 | L520,823 | ... | L1,211,050 | L290,258 | L920,792 | ... | | 1847 | L6,649,698 | L6,066,075 | L583,623 | ... | L2,411,067 | L652,124 | L2,058,943 | ... | | 1848 | L5,862,742 | L5,653,108 | L209,634 | ... | L2,790,466 | L465,139 | L2,325,327 | ... | | 1849 | L6,195,883 | L5,622,760 | L573,123 | ... | L2,585,877 | L845,296 | L1,740,581 | ... | | 1850 | L6,363,590 | L6,760,328 | L1,396,738 | ... | L396,638 | L396,638 | L0 | ... | | 1851 | L6,782,059 | L6,205,568 | L576,491 | ... | L1,108,379 | L725,863 | L382,507 | ... | | 1852 | L7,281,178 | L6,684,908 | L596,270 | ... | L1,105,980 | L617,293 | L488,687 | ... | | 1853 | L7,559,390 | L7,120,842 | L438,548 | ... | L1,346,437 | L786,192 | L560,245 | ... | | 1854 | L7,400,141 | L7,958,347 | L558,206 | ... | L747,185 | L1,410,390 | L663,205 | ... | | 1855 | L7,209,902 | L7,655,169 | L554,733 | ... | L455,358 | L659,053 | L234,123 | ... | | 1856 | L7,741,453 | L8,023,583 | L282,130 | ... | L897,303 | L282,784 | L614,519 | ... | | 1857 | L7,581,415 | L8,375,095 | L793,680 | ... | L741,053 | L717,929 | L976,476 | ... |
Total of 17 years... 116,159,605 119,273,441 4,896,836 8,011,322 17,877,067 22,791,305 4,134,308 9,048,546
The amount standing to the credit of the "separate surplus fund" appears (by a return dated 16th March 1857) to have reached, at the close of the year 1855, L335,598, 10s. 2d., of which sum L322,288, 17s. 10d. belonged to the English and Welsh banks; L318, 1s. 9d. to Scottish banks; L10,691, 10s. 7d. to Irish banks; and L2,300 to banks in the smaller islands of the British seas. On this surplus account no interest is paid by the National Debt Commissioners.
In 1857 the total number of banks in the United Kingdom was 597, with 1,341,752 depositors, of whom 1,139,919 had sums not exceeding L50—viz., in the aggregate, L13,960,203, being on the average L12, 4s. 11d. for each depositor; 130,204 had sums exceeding L50, but under L100—namely, in the aggregate, L8,982,919, being on the average L68, 19s. 9d. for each depositor; 70,159 had sums exceeding L100, but under L200—viz., in the aggregate, L9,719,339, being on the average L138, 10s. 8d. for each depositor; and 1,470 had sums exceeding L200—viz., in the aggregate, L321,562, being on the average L218, 15s. for each depositor. The average deposit for the whole number of depositors was L24, 11s. 7d. The details stood thus:
| Class of Depositors in the order of their respective amounts. | No. of Depositors in each Class. | Amount Deposited in each Class. | Average Deposit in each Class. | Proportion per cent. of Deposits in each Class. | |---------------------------------------------------------------|---------------------------------|---------------------------------|---------------------------------|---------------------------------| | 1. Not exceeding L20 | 846,203 | 4,848,447 | 5,729 | 63,067 | | 2. Exceeding L20, but not exceeding L50 | 283,716 | 9,111,759 | 31,022 | 21,890 | | 3. Exceeding L50, but not exceeding L100 | 130,204 | 8,982,919 | 68,991 | 9,704 | | 4. Exceeding L100, but not exceeding L150 | 44,339 | 5,330,002 | 120,210 | 3,904 | | 5. Exceeding L150, but not exceeding L200 | 25,820 | 4,389,337 | 169,997 | 1,924 | | 6. L200 and upwards | 1,470 | 321,562 | 218,750 | 109 |
Totals... 1,341,752 32,984,023 24,582 ...
On the interesting point of the social classification of depositors, the attainable information is but partial. A return of this kind was made to the House of Commons in 1853, but out of the whole number of savings banks then existing in the United Kingdom—namely, 376—172 failed to make the return required. It appears, however, that the returns made by the other 404 banks embrace not only 70 per cent. of the whole number of savings banks, but 78½ per cent. of the whole deposits in savings banks in the United Kingdom, and 79½ per cent. of the whole number of individual depositors. These returns may be thus epitomized:
### I.—Number of Depositors in each Class.
| Social Classification of Depositors in 404 Savings Banks of the United Kingdom. | In England | In Wales | In Scotland | In Ireland | Total in the United Kingdom | |--------------------------------------------------------------------------------|------------|----------|-------------|------------|---------------------------| | (1) Metropolitan Counties. (2) Agricultural Counties. (3) Manufacturing and Mining Counties. | Total. | | | | | | 1. Persons of independent means. | 4,402 | 4,134 | 331 | 8,917 | 344 | | 2. Professional men and their wives. | 1,995 | 1,636 | 485 | 4,017 | 137 | | 3. Persons engaged in education. | 3,359 | 2,975 | 1,396 | 7,721 | 2 | | 4. Tradesmen and their assistants, small farmers, clerks, mechanics and artisans described as journeymen, and their wives. | 55,767 | 70,758 | 63,090 | 189,555 | 4,373 | | 5. Soldiers, mariners, fishermen, and their wives. | 2,018 | 8,893 | 1,966 | 12,877 | 300 | | Carry forward. | 67,473 | 88,296 | 67,318 | 223,067 | 5,155 | | | 88,296 | 67,318 | 223,067 | 5,155 | 275,617 |
Total in the United Kingdom... 275,617 ### I.—Number of Depositors in each Class—Continued.
| Social Classification of Depositors in 604 Savings Banks of the United Kingdom | In England | In Wales | In Scotland | In Ireland | Total in the United Kingdom | |---|---|---|---|---|---| | (1) Metropolitan Counties | (2) Agricultural Counties | (3) Manufacturing and Mixed Counties | Total | | | | Brought forward | 67,473 | 88,295 | 67,318 | 223,087 | 5,156 | 25,859 | 21,515 | 275,017 | | 6. Policemen, letter-carriers, revenue-officers, pensioners, railway men, and their wives | 704 | 660 | 546 | 1,910 | 3 | 75 | 279 | 2,267 | | 7. Labourers, farm-servants, journeymen mechanics and their wives | 12,447 | 54,375 | 32,743 | 99,565 | 2,100 | 14,869 | 3,231 | 119,705 | | 8. Domestic servants, charwomen, nurses, and laundresses | 60,557 | 81,076 | 35,589 | 177,022 | 2,778 | 19,379 | 6,602 | 235,781 | | 9. Dressmakers, milliners, shopwomen, and female artisans | 9,223 | 7,687 | 2,962 | 19,172 | 17 | 338 | 499 | 20,025 | | 10. Females described only as married women, widows, or spinsters | 19,179 | 45,879 | 23,125 | 88,184 | 1,893 | 12,193 | 8,131 | 110,401 | | 11. Minors having accounts in their own names, including apprentices | 25,936 | 72,283 | 30,927 | 129,146 | 1,333 | 10,533 | 3,720 | 144,762 | | 12. Trust accounts, principally for minors, including all joint accounts | 3,413 | 9,168 | 4,304 | 16,885 | 180 | 122 | 461 | 17,648 | | 13. Miscellaneous, and persons undescribed | 21,519 | 10,395 | 8,449 | 40,363 | 300 | 7,627 | 252 | 48,542 | | **Total** | **220,251** | **369,219** | **205,861** | **795,334** | **13,790** | **90,935** | **44,690** | **944,749** |
### II.—Amount of Deposits in each Class.
| Social Classification of the Depositors in 604 Savings Banks of the United Kingdom | In England | In Wales | In Scotland | In Ireland | Total in the United Kingdom | |---|---|---|---|---|---| | (1) Metropolitan Counties | (2) Agricultural Counties | (3) Manufacturing and Mixed Counties | Total | | | | 1. Persons of independent means | 89,869 | 145,349 | 14,651 | 249,869 | 8,285 | 12,667 | 44,683 | 315,804 | | 2. Professional men and their wives | 54,527 | 43,929 | 17,609 | 116,065 | 3,516 | 18,504 | 12,943 | 151,028 | | 3. Persons engaged in education | 97,038 | 93,038 | 49,897 | 241,943 | 87 | 902 | 18,280 | 261,201 | | 4. Tradesmen and their assistants, small farmers, clerks, mechanics and artisans not described as journeymen, and their wives | 1,242,136 | 2,244,338 | 1,839,535 | 5,326,027 | 150,161 | 382,556 | 535,332 | 6,394,079 | | 5. Soldiers, mariners, fishermen, and their wives | 70,931 | 201,537 | 74,933 | 447,401 | 8,853 | 7,271 | 46,380 | 509,905 | | 6. Policemen, letter-carriers, revenue officers, pensioners, railwaymen, and their wives | 21,538 | 23,166 | 18,090 | 63,703 | 112 | 908 | 10,907 | 75,720 | | 7. Labourers, farm-servants, journeymen mechanics, and their wives | 278,094 | 1,704,938 | 1,057,309 | 3,051,341 | 54,619 | 219,393 | 59,024 | 3,384,977 | | 8. Domestic servants, charwomen, nurses, and laundresses | 1,594,011 | 2,446,485 | 963,028 | 5,003,524 | 71,214 | 267,194 | 134,321 | 5,476,253 | | 9. Dressmakers, milliners, shopwomen, and female artisans | 197,333 | 169,496 | 81,650 | 448,489 | 433 | 5,056 | 8,257 | 462,235 | | 10. Females described only as married women, widows, or spinsters | 530,212 | 1,488,364 | 676,089 | 2,714,645 | 57,588 | 180,222 | 234,173 | 3,186,628 | | 11. Minors having accounts in their own names, including apprentices | 304,760 | 972,023 | 422,388 | 1,699,321 | 22,171 | 87,551 | 101,673 | 1,910,616 | | 12. Trust accounts, principally for minors, including all joint accounts | 67,744 | 163,377 | 74,460 | 300,581 | 7,386 | 1,390 | 12,960 | 327,317 | | 13. Miscellaneous, and persons undescribed | 328,401 | 339,128 | 278,470 | 945,999 | 12,352 | 136,906 | 6,747 | 1,102,004 | | **Total** | **4,897,594** | **10,137,368** | **5,578,946** | **20,613,908** | **395,777** | **1,320,010** | **1,225,572** | **23,507,167** |
Unquestionably valuable as is this classification of the social position and employment of depositors, it would absorb too much of our space to pursue it into further detail. In the Report of the Select Committee on Savings Banks of 1858, the tables we have quoted are supplemented by a calculated abstract of the depositors and the deposits in the 172 banks which omitted to make returns on this point, on the basis of those made by the other banks; and also by a general summary, comprehending alike the returns actually made and those so calculated. To these we must refer the reader who may be desirous of pursuing the inquiry.
During the last few years the expenses of local management have varied from an average of 6s. 6d. to one of 6s. 8d. per cent. throughout the United Kingdom. Thus, in 1852, there were 479 banks in England and Wales, Expenses with an aggregate expenditure of L.91,800, or, on the average of local management, 43 banks expended L.5300, or at the rate, over the whole, of 6s. 8d. per cent. In Scotland, 43 banks expended L.7200, or on the average, 9s. 11d. per cent. For the whole United Kingdom there were then 575 banks, expending L.104,500, or on the average 6s. 8d. per cent. In 1856, when the banks of England and Wales numbered 498, instead of 479, their aggregate expenses amounted to L.101,800 (against L.91,800 in 1852), being at the rate of 6s. 7d. per cent. In Scotland, 46 banks expended L.7400, being at the rate of 7s. 8d. per cent.; and, in Ireland, 51 banks expended L.7600, being at the rate of 9s. per cent. The details are as follow:— The many defalcations from the funds of savings banks by the frauds of their officers, sometimes followed by the failure and dissolution of the banks concerned, have been attended with an amount of public mischief which cannot be estimated by the mere sums of money that have been actually lost to the depositors. These, if compared with the aggregate of savings bank transactions, will seem of small amount; and in most instances vigorous exertion has been used, by trustees and others, to lighten the burden to the shoulders least capable of sustaining it. But the suffering thus occasioned to individuals and to families has still been great, and the hindrance to the good working of the system yet greater and more lasting. In some districts the discouragement thus given to provident frugality will outlive the existing generation.
We believe that a review of all the cases of defalcation that have occurred since the commencement of savings banks would lead to the conclusion that, in nearly every instance, the most common and obvious precautions against fraud have been disregarded. The necessary limits of this article will not admit of such a review, even in its briefest form. But we may glance at a few of the more conspicuous cases.
No case in the annals of savings banks is more deplorable than the failure of the Rochdale Bank in 1849, through the frauds of George Howarth, who had been its actuary from 1822 until 1849, and died in that office, without any suspicion of his malpractices having been excited. Here (it has been proved in evidence before a parliamentary committee) the sole control of the bank was left to its actuary ("who represented himself," said one witness, "as filling the office really as a matter of charity," and who "managed to deceive every body by an appearance of wealth") for a period of at least twelve years, and the official returns to the National Debt Commissioners were sometimes signed by men "who did not know that they were managers" until the actuary assured them they were so at the moment that they were asked to sign. No real audit of the accounts ever took place. When Howarth died the liabilities of the bank to depositors were £100,403; its deposits with the National Debt Commissioners were £26,898; its cash in hand, £1,788; making the total assets £28,686, and leaving a deficit of £71,717. Ultimately the trustees and managers raised by subscription a sum of about £17,000; and the sale of the actuary's property produced about £17,000 more,—raising the total assets to nearly £63,000, which paid the depositors 12s. 6d. in the pound.
Between 1851 and 1857, inclusive, defalcations occurred in the savings banks of the following towns:—Bradford (Wiltshire), Bromley, Dunmow, Leicester, Ongar, Newport (Isle of Wight), Rugby, Runcorn, Southport, West London, and Yoxall. In all these cases an investigation was instituted,—in the majority of them by the employment of Mr W. H. Grey, an accountant very conversant with the business of savings banks, and recommended for the task by the National Debt Commissioners. The general result of these inquiries is quite in harmony with the obvious conclusions from the Rochdale case. Great laxity of bookkeeping; absence of any effective audit; signature of the annual returns without even cursory examination,—these are the common features of almost every case. At Dunmow Dunmow (where the defalcations were small and much more than savings covered by the surplus fund), reports Mr Grey, "I find that bank, in one instance a balance of about £80 stood for several years in duplicate in the books, and must therefore have been counted twice over in the classified lists of those years; . . . and the required total must, on those occasions, also have been made up fictitiously." . . . . "For several years most of the ledger entries were made with pencil only; and although the accounts so posted which remained open were afterwards copied with ink into another book, yet those which were closed during that period still remain only in pencil."
At Newport, Isle of Wight (where the deficiency amounted to £1,8156), "Fictitious documents, purporting to be signed savings by depositors, giving notice of their intention to withdraw a part, or the whole of their deposits, have been produced by the secretary, on the faith of which cheques have been signed by the attending director without seeing the pass-book, and without ascertaining whether such sums were really standing in the ledger or not. These cheques have been entrusted to the secretary for delivery to the depositors at any time they might call for them, instead of insisting on personal attendance during bank hours. . . . Some of the sums for which cheques were thus obtained were not standing at all in the bank books; or, having formerly stood there, had already been withdrawn; others were standing there, but no real notice of withdrawal had been given by the depositors, who never received the cheques so obtained. . . . In some cases fictitious accounts have been raised in the ledgers, and closed again immediately with fraudulent repayments, and in other cases, in which the amounts had been previously withdrawn, the dates of the real withdrawals have been altered into those of the fraudulent ones." After illustrating other fraudulent practices at this bank, Mr Grey adds that no comparison of the cash-book and the ledgers had ever been instituted, and that "the system pursued has practically left the whole control of the receipt and payment of about £30,000 a year to one individual." But in 1849, when the failure of the Rochdale bank, and several frauds in other banks, aroused the closer attention of the National Debt Commissioners and of their comptroller to the methods pursued in the transaction of fraudulent local business, it was suggested to all the trustees of methods savings banks throughout the kingdom that depositors' pass-books should be called in and compared with the bank ledgers. The trustees at Newport speedily adopted this suggestion, and established the practice of having the "balance-book" (i.e., the list of balances due to depositors prepared at close of each year) always on the table when the bank was open, and of comparing it with every pass-book that came in, marking both pass-book and balance-book with the attending manager's initials. This made it necessary that the balance-book should contain all the open accounts, which it had never done before. Mr Grey thus explains the new deception that was adopted to conceal the deficiency in the funds:—"At the annual examination both ledger and balance-book were duly placed in the hands of the trustees or directors; but when they had satisfied themselves that all the balances had been correctly transferred, they shrank from the laborious task of adding together two or three thousand amounts, and invariably left that duty to the secretary, trusting to the correctness of his addition. In point of fact the addition of each page was correct, but the total of each page was brought into a summary-page at the end; and in doing so L1000 was dropped in one place, L1000 in another, in the capital column, and L20 here and L30 there, in the interest column, with some odd money to make up the required difference, and thus the total amount was made to agree with the actual assets of the bank. In 1852 a still higher step was taken. Instead of altering the sums brought forward in so many different places, only two sums were reduced by L1000 each, but L6000 was miscast in the addition of one of the columns of the summary-sheet, and the total amount was thus kept down to the required sum. From these practices it will be perceived how imperfect a system has been pursued, and how little it was calculated to prevent or discover fraud. In this Newport case the amount received from the surety of the late actuary was but L100. The assets of the bank were L58,622, its liabilities L66,778. No subscription appears to have been made towards supplying the deficiency. The depositors received a dividend of 17s. 6d. in the pound.
As to the Rugby Bank, Mr Grey reported that the former actuary "annually fabricated the classified statement of balances required by the National Debt Office, so as to make it appear that the liabilities of the bank corresponded exactly with its assets;" and as to the Farringdon Street, or "West London" Bank, that "there is no sign whatever that the ledger entries have ever been called over with the cash-journal. The consequence is, that the ledgers are full of errors;" and added that "the scattered manner in which about 5000 open accounts are mixed with more than 18,000 closed ones, in twelve large volumes," increased the difficulty of investigating them. In this case, in fact, the investigation was never fully carried out. The amount due to depositors on the 20th November 1855, appeared to be L96,577, and the total amount of assets L95,024, leaving a gross deficiency of L1553, a portion of which was known to exist independently of the fraud which had been committed. The reporter had good reason to tell the trustees: "You may congratulate yourselves that the deficiency is not greater than it appears to be; with the opportunities which have been afforded, and with so large a fund to work on, a great deal more mischief might as easily have been done; that which has been accomplished is not irremediable."
This, indeed, as respects the actual magnitude of the losses, might be alleged of nearly all the cases of savings bank defalcation. The trustees and managers of the S. Martin's Bank, accordingly, in their petition to the House of Commons against the proposed bill of 1853, said that "out of the 522 savings banks then established in Great Britain, there have been only six at which any loss whatever has been sustained by depositors since the year 1844 (comprising the entire period within which all the much-talked-of failures, with the exception of the more recent case in the Isle of Wight, have occurred;) and proceeded to show that the amount of loss sustained by the depositors of those six banks amounted in the aggregate to but L49,373,—viz., Rochdale, L37,433; St Helens, 4000; Spilsby, L2436; Reeth, L147; Poole, L5176; Newtown (Wales), L180; that in 14 other cases of default occurring during the like period, "all the depositors are stated to have been paid in full, either out of the assets of the banks, or by subscription raised amongst the trustees and managers, or the inhabitants of the neighbourhood where the banks were located;" and, finally, that "the percentage of these losses, when taken upon the gross total of sums received and paid by the savings banks in Great Britain, including interest credited, since their first establishment in 1817 (amounting to upwards of L73,000,000), will be found not to exceed 1s. 4½d. upon every L100;" and they add the inquiry, "Where, in this or in any other country, in any public or commercial institutions, involving money transactions of equal number and extent, can so just and satisfactory account of a stewardship be rendered, as is here shown?" But it must not be forgotten, that it would be at least equally difficult to produce an analogous series of defalcations so largely facilitated, if not absolutely caused, by the neglect of elementary principles of precaution and supervision. And pecuniary loss (we repeat) is not, in this matter, the just measure of public injury. Nor can it be very difficult to do in all savings banks (with more or less of completeness) what has already been so effectively done in the best of them. Improved organization and methods of working need to be diffused, not invented. To this part of the subject we have now to turn.
II. ORGANIZATION AND MANAGEMENT OF THE SAVINGS BANKS OF GREAT BRITAIN AND IRELAND.
The legislation which at present governs the savings banks of the United Kingdom is contained, or chiefly contained, in the several statutes, 9 Geo. IV., c. 92; 3 Will. IV., c. 14; 5 and 6 Will. IV., c. 57; 7 and 8 Vict., c. 83; 11 and 12 Vict., c. 133; and 16 and 17 Vict., c. 45. The main provisions, and the immediate circumstances of each of these acts of Parliament, have been recited in the course of our historical summary. No consolidated statute as yet exists. It is necessary, therefore, to give a connected view of these various and scattered enactments, in their direct bearings upon the daily business of a savings bank.
I. Formation.—Savings Banks are only to be established with the approval of the Commissioners for the reduction of the National Debt, or, on their behalf, of the comptroller-general, or assistant-comptroller, acting under the said commissioners. The proposed rules of the bank to be established are to be submitted, in duplicate, to the consulting barrister appointed by such Commissioners, who, on approval, is to return one copy to the originators, and to transmit the other to the Commissioners. A fee of one guinea is payable to 9 Geo. IV., the barrister. The rules are then to be filed in the National Debt Office, and to be preserved in a book at the bank, 7 and 8 Vict., c. 83.
The trustees are to forward a certificate of their own ap-
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1 John Bone, Outline of a Plan for reducing the Poor's Rate, &c. (1805); The Principles and Regulations of "Tranquility," &c. (1805); The Wants of the People and the Means of the Government (1807); The Friend of the People, &c. (1807); Hansard's Parliamentary History and Debates, 1808-1857; Duncan, An Essay on the Nature and Advantages of Parish Banks (Edinb. 1815, and 2d edit. 1816); A Short Account of the Edinburgh Savings Bank (3d edit., 1815); Reports of the Society for Bettering the Condition of the Poor, No. 50, &c.; Beaumont, An Essay on Provident or Parish Banks (1816); Rose, Observations on Banks for Savings (1816); Charles Taylor, A Summary Account of the London Savings Bank (1816); Horace Twiss, A Treat on Savings Banks (1816); Bowles, Reasons for the Establishment, and Management of Savings Banks (London, 1817); Report of the Select Committee on Savings Banks, together with the Proceedings of the Committee, Minutes of Evidence, and Appendix, 19th July 1853; various Reports and other papers of the savings banks specifically referred to. pointment, together with their signatures duly authenticated. They have then to apply for the form of instructions with respect to their appointment of a London agent, who alone is to transact their pecuniary business with the Commissioners, both in the payment and the withdrawal of deposits into or from the Bank of England.
11. Management.—Savings banks are usually governed by trustees and managers, at first elected by the founders, and duly registered in the Office of the National Debt Commissioners; and empowered to fill up vacancies in their own body from time to time, subject to like registration. In some banks the managers are styled a "committee," and are elected annually by the founders and other "patrons" of the bank. Such trustees and managers are not to have any salary or benefit whatever from the bank they administer. They may appoint and dismiss all needful officers for the transaction of the business, and may fix their respective salaries or other remuneration. All paid officers so appointed and all treasurers must give security to the comptroller-general of the National Debt Commission for the just execution of their respective trusts, on a form of bond furnished to the trustees by the Commissioners, and to such amount as may be determined by not less than two trustees and three managers, which determination shall be recorded on the minutes of the acting committee, and the bond be lodged with the comptroller-general. But neither Commissioners nor comptroller have any power to question the validity or adequacy of the security offered. It has been—as we have shown in our historical retrospect—expressly enacted that no trustee or manager shall incur personal responsibility, otherwise than for acts of personal and wilful neglect or default, unless he shall have declared in writing, under his own hand, to the National Debt Commissioners his willingness to be so responsible, which responsibility he may limit to a certain amount. This is the present state (1869) of the law as respects England and Scotland; but, in Ireland, every trustee and manager is liable, ex officio, and indefinitely, for any deficiency that may occur in the funds of his bank, unless he shall have signed a document limiting his liability to any sum not less than £100.
III. Investment of Deposits.—Monies deposited in savings banks are to be invested, to the credit of the Commissioners for the reduction of the National Debt, in the Bank of England or Bank of Ireland exclusively. Trustees are empowered to make their investments with the Commissioners in any sums not less than £50, after notice signed by two trustees, and to retain in their hands such sums only as may from time to time be required to meet withdrawals and other exigencies. The Commissioners are empowered to invest the monies paid to their account either in bank annuities or in exchequer bills.
IV. Methods, Limitations, and Conditions of Deposits, and of their Withdrawal.—All persons who are about to become depositors in a savings bank must state their names and residences, together with their respective profession, business, occupation, or calling; and must sign a declaration of the following purport:
"In pursuance of an Act of Parliament of the 9 Geo. IV., c. 92, § 34, I, A——B——, of ———, do hereby declare to the Trustees and Managers of the Savings Bank established at ———, that I am desirous, on my own behalf, to become a depositor in the said savings bank, and that I am not, directly or indirectly, entitled to any deposit in, or benefit from, the funds of this or of any other savings bank in Great Britain or Ireland, nor to any sum or sums standing in the name or names of any other person or persons in the books of the said savings bank above mentioned." [If the depositor belong to any friendly society, he must then add—"Save and except such benefit as I may be entitled to from being a member of a friendly society, legally established."] Witness my hand this day of 18——. Signed by the said A——B——in presence of me——.
If the declaration so made shall be false, or if the depositor shall afterwards place money in more than one savings bank at a time, the whole of his deposits become forfeited. The minimum deposit is not fixed by law, but ranges in the various banks from 1s. to 5s., according to their respective regulations. The maximum of the deposits of any one year is £30 (exclusive of interest thereon, and irrespectively of any withdrawals during the year); and that of the total sums receivable from any one depositor (inclusive of interest) is £150. When, by the addition of compound interest thereon, such maximum sum shall have reached £200, interest thereon shall cease. In respect, however, of accounts which, prior to the passing of the act of 9 Geo. IV., c. 92, viz., on the 28th July 1828, already amounted to or exceeded the sum of £200 in the whole, interest and compound interest are still payable. Every depositor, on making his or her first deposit, is to receive a copy of the rules, and a depositor's book or pass-book, in which shall be entered such first deposit, and all subsequent deposits; all notices of withdrawal, and sums withdrawn. The pass-book must be produced at the bank whenever any business is transacted, and must also be exhibited once at least in every year for the purpose of being examined. This book is the depositor's receipt and voucher; and its production by the depositor, or by any person authorized by the depositor, Viet., c. 83, is at all times, in the absence of any previous claim to the deposit-money made in writing, a sufficient authority for the repayment of money, notwithstanding the bankruptcy, insolvency, or other legal disability of such depositor. On the closing of the account, the book is to be re-delivered to the bank. Persons under twenty-one years of age are empowered to make and withdraw deposits in the same manner as if they were of full age. Any married woman c. 92, § 25, may receive money in respect of any deposit made by her, and unless her husband shall have given notice in writing of the marriage, and shall claim payment to himself. Trust-deposits are to be invested, jointly, in the name of the trustee and of the person interested; and the receipts, or joint-receipt, of both must be given in order to the validity of a repayment, except in case of the insanity or imbecility of the person on whose behalf the deposit shall have been made; upon proof of which, repayment may be made to the trustee. Friendly societies, legally established, may invest their funds in savings banks to any amount; and charitable societies or institutions may deposit to the amount of £100 c. 92, § 25, in any one year, and to the amount of £300 in the whole, exclusive of interest. Disputes between the trustees of a savings bank and any depositor, or any executor, administrator, next of kin, or creditor or assignee, of a depositor, who may have become bankrupt, are to be referred in writing to the barrister appointed under the acts of Parliament Viet., c. 83, to certify the rules of savings banks; who, on such reference, may inspect books and documents, and administer an oath to witnesses; and whose decision shall be final. Deposits may be transferred to or from other savings banks upon due notice. The regulations applicable to the withdrawal of deposits differ, more or less, in the various banks. At Glasgow, for example, no notice is required. But usually a notice of from seven to twenty-one days, according to the amount involved, must be given of the claim to repayment.
V. Interest on Deposits.—Since the 20th of November 1884, the rate of interest payable by the Commissioners for the reduction of the National Debt to the trustees of savings banks has been fixed at L3, 5s. per cent, per annum, and deposits, the maximum rate to be paid by the banks to depositors at L3, 0s. 10d. per cent, per annum. The precise rate per cent assigned to depositors depends, therefore, on the rules of each bank respectively, provided always that it shall not exceed L3, 0s. 10d. on deposits invested with the National Debt Com. § 2.
Organisers; and the precise rate actually received by depositors depends on the methods of calculation, which in various banks have a wide range of difference. At Edinburgh, for instance, interest at L2, 17s. 9d. per cent. is allowed on sums of 1s., 2s., 3s., 4s., and 5s., and on multiples of 5s., not only by months and weeks, but by portions of a week. Thus, the date of "Tuesday" in each week is used for Monday, Tuesday, Friday, and Saturday; and that of "Friday" for Thursday, Friday, and Saturday; and interest is credited wherever it amounts to the tenth of a penny. On Mondays or Thursdays the depositor of course loses one day's interest; on Wednesdays or Saturdays he gains one day's interest. At Cork, again, interest at the rate of L2, 17s. 9d.l is calculated every four days on all deposits of 5s. and upwards; no sum less than 5s. being received at that bank. At Manchester, depositors receive L3 per cent. per annum on every entire sum of 10s. sterling, calculated only by calendar months, and from the 20th day of each month; no interest being allowed on any less sum than 10s., or on any fractional part of 10s., or for any less period than one month. Finally, the Perth savings bank—a quite exceptional instance—paid interest to most of its depositors, in the year 1857, at the rate of L4, 5s. per cent. per annum, having transferred more than four-fifths of its capital from the National Debt Commissioners to the Union and Central Banks of Scotland, under the powers of a special proviso introduced into its rules in the year 1847 (at which period a very high rate of interest was given by the Scottish joint-stock banks), in these terms:—"It shall be lawful for the trustees of this bank, at the request of any depositor or depositors, to invest the monies deposited, or to be deposited, by them, in any of the banks of Scotland, incorporated by statute or royal charter, for the benefit of the several depositors, under the powers contained in the 12th section of the Act of the 9 Geo. IV., c. 92; and the interest to be paid on the deposits so invested will be fixed from time to time by resolutions of the committee of management, and which will be binding on the depositors without the necessity of the rate of interest being entered in their pass-books. The interest fixed by the committee of management will be computed yearly, up to the 20th day of November in each year, and added to the principal; the whole sum bearing interest thereafter." The average rate of interest paid by English and Welsh banks to their depositors is L2, 18s. 9d.; that paid by Scottish banks, L2, 17s. 9d.; and that paid by Irish banks, L2, 16s. 5d.; the average of the United Kingdom being L2, 18s. 8d.
VI. Annuities.—The trustees and managers of savings banks may receive from depositors, or from any other persons, any sum or sums of money (subject to the limitations hereafter mentioned), for the purchase of government annuities, immediate or deferred. All such sums received shall be entered in a book provided for that purpose, in the presence of the payer, who shall sign a declaration, in the form directed by the Commissioners for the reduction of the National Debt, that he or she neither possesses nor is entitled to any annuity or annuities under the statutes 3 Will. IV., Will. IV., c. 14, and 7 and 8 Vict., c. 83, exceeding in the whole, with the annuity now applied for, the sum of L30 per annum. The purchaser shall then receive a book containing an abstract of the rules, with a certificate of the contract for the annuity, signed by two trustees or managers, and also an account of the money paid, attested by the signature of the actuary. No annuity can be contracted for upon the life of any person who is under the age of fifteen; and no annuity or annuities can be possessed by any one individual exceeding, in the whole, the sum of L30 per annum; nor can any annuity be granted of less amount than L4 per annum. Should any individual become possessed at any one time of annuities granted under the provisions of the Acts of 3 Will. IV., c. 14, or 7 and 8 Vict., c. 83, exceeding in the whole the sum of L30 per annum, such annuities will immediately cease and be forfeited. Provided, nevertheless, that any married person may purchase or be possessed of an annuity not exceeding the amount last named, although an annuity of like amount may have been granted to or may be possessed by the wife or husband of such person. All contracts for annuities must be sanctioned by the National Debt Commissioners, for which purpose proof of age must be furnished to the managers of the savings bank contracted with. The money received for annuities must be paid to the Commissioners, to whom, fourteen days previous to the demand for payment of any life annuity, proof must be afforded of the existence and identity of the annuitant. All annuities when due are payable by two equal half-yearly payments; namely, on the 5th of January and 5th of July, in respect of all purchases which were completed at any time during the quarter ending on the 10th of the preceding October; and on the 5th April and 10th October, in respect of all purchases which were completed at any time during the quarter ending on the 5th of the preceding January; and so, conversely, with respect to purchases completed during the other quarters of the year. No annuity thus purchased can be transferred or assigned by the purchaser, so as to enable the assignee to receive the same during the purchaser's lifetime. If the intending purchaser of a deferred annuity, having made one or more payments on account, shall give due notice of his inability to continue such payments, the amount of the payments actually made shall (but without interest) be returned to such intending purchaser; and, in like manner, if any person who shall have contracted for the purchase of a deferred annuity shall die before the said annuity shall have become payable, the amount of his previous payments shall be repaid to his executors or administrators without interest. The acts recited, together with that of 10 Geo. IV., c. 24, §§ 40-44, impose heavy penalties for false statements, or for receiving annuities after the death of the person entitled.
VII. Bookkeeping.—The bookkeeping of savings banks will be best illustrated by describing the system generally pursued at some of the principal banks of the United Kingdom:
(1.) St Martin's Place Savings Bank, London.—Three distinct sets of journals or day-books are kept: the first, that kept by the auditors; the second, that of the cashiers; the third, that of the ledger-clerks; each of which sets records the entire business of the day, and all of which are compared at its close. In addition to his specific journal, each clerk has a certain number of ledgers, each of these corresponding with a certain numerical series of depositors' books. No other clerk is allowed to make any entry in these, without the express permission of the comptroller or weekly auditor. All "cash transactions with depositors," proceed the rules relating to bookkeeping (as given in evidence by Mr Boodle, the comptroller, before the Commons' Committee of 1858), "shall be first entered in the clerks' journals, cash-books, and managers' [elsewhere called auditors'] journals; and such books at the close of the business of each day shall be called over, and compared with each other by the weekly auditors and clerks, and all variations be rectified before the clerks be dismissed; and after the depositor's book has left the office, no alteration shall be permitted in the clerks' journals or cashiers' books, without reference to the managers' journal, and a careful examination of the number, name, and amount. Any alteration required to be made in a depositor's book is to be referred back to the ledger-clerk, to make the necessary correction in his journal. The ledger-clerks shall post the several entries from their respective journals into their ledgers, carefully examining the name as well as the number of each account, inserting at the same time in the 'ledgers'
check journal the number of each account in which the transaction is so posted. The cashiers, taking another's division, shall enter from the ledgers into the separate ledgers' check journals, against the number of each account, the amount so posted, whether receipts or payments, checking the accuracy of the additions or subtractions; such entries in the check journals being first carefully examined, both as to the numbers and the amounts, with the corresponding entries in the cashiers' journals, and then cast, and the castings checked; the officers examining such entries and checking the castings signing their initials in the check journal; every variation either in numbers or amounts, before correction, being carefully examined with the managers' [elsewhere called auditors'] journals, and all errors being noted in a separate 'error-book,' kept for each division, and weekly examined and checked by the chief cashier and accountant. The total of the entries so made from the ledgers into the separate ledgers' check journals shall be collected by the comptroller, and ascertained, by a weekly examination, to agree with the total amounts of each week's receipts and payments."
Further, with respect to the comparison from time to time of depositors' books with the ledgers, another rule—the twenty-fourth—directs, "That in all cases, when a depositor's book shall be first brought to the office after each 20th of November, the balance standing in the depositor's book on such 20th of November shall be ascertained by a careful examination, and by a separate addition of the interest extracted from the ledger account, to agree with the checked balance in the ledger to such period; and to certify to such correctness, and to record the date of the production of the depositor's book, the ledger-clerk examining the same shall sign his initials against such balance in the depositor's book, and also in the ledger." And the 25th rule directs, "That upon any variance, occasioned either by an error of commission or omission being found to exist between the balance in a deposit-book and the ledger, the same be at once reported to the comptroller, or in his absence to the chief cashier and accountant, before the deposit-book be returned to the depositor; and if the error shall be found to be in the ledger, a record shall be kept of the same, explaining the nature and particulars of the error occasioning such variance." It must be added, however, that no means are taken to ensure the production from time to time of the depositors' books, and that, in fact, a very large number remain unexamined, uncompered, and unseen for many years.
(2.) Edinburgh Savings Bank.—The bookkeeping of the admirably managed bank at Edinburgh was thus described to the Commons' Committee of 1858 by Mr Maitland, its honorary treasurer, and the author of an excellent tract on the accounts of savings banks, published in 1841:
Depositors are received by (1) the actuary or his assistant, who, having obtained satisfactory answers to the needful inquiries, makes the requisite entry in the depositor's book, and passes it on to (2) the accountant, or his assistant, who makes the new entry in the appropriate ledger account, with the interest—to credit for a deposit, or to debit for repayment—to the 20th November next following, puts the check mark, and passes the book on to (3) the cashier, who has before him "two cash-books, one for division No. 1; the other for No. 2 of the ledgers," makes the new entry in his cash-book, initials the depositor's book, and passes it on to (4) the teller, who enters the number and sum—debtor or creditor—in his cash jotting-book, announces the depositor's name and the new-made entry, initials or gets initialed, receives or pays the amount accordingly, and returns the depositor's book to the depositor. Thus far, it will be seen, the entries in the bank's books have all been made from the depositor's book: that book has been confronted with its duplicate in the ledger, and the depositor has approved of the last entry by acting on it. No money can be received or paid until these entries are so made. Mr Maitland adds, that about 250 depositors can be thus disposed of in one hour. Then, when the bank-door is shut to the public for the day: 1st, The cash is counted; the cash-book-keeper and the teller balance with each other, and each signs his own book; 2dly, The accountant disperses to their proper sections the reference numbers or accounts that day operated upon; and by these, from the ledgers (which are all kept in sections of thousands), obtains the individual-sums; these sums he transfers to the section check-sheets, and thus has obtained in sections, from the ledgers, a balance with the cash-book to the close of that day. On each Saturday this result is recorded by sections, in a formal way, for the weekly report; in the ledgers, however, an error of one kind—namely, of addition or subtraction—might escape this check, as well as the daily check, by direct inspection; therefore, 3dly, The ledgers are brought, once in every quarter, to a general trial balance; and 4thly, comes the general annual balance at the 20th of each November for the annual return.
The reader will perceive that the Edinburgh system bases the bank accounts upon the pass-books; ensures the reciprocal check of four several officers in the record of each transaction; and provides, first, a weekly summary; secondly, a quarterly trial balance; thirdly, a general annual balance. Nor have the benefits of this system been confined to the place of its birth. The improvements made at Edinburgh have been copied by other savings banks, and sometimes with modifications which have been themselves further steps in advance.
(3.) Manchester Savings Bank.—At Manchester the Manchester depositor's pass-book goes through the hands of five several savings clerks on the receipt of each deposit, and of four on occasion of each repayment; the receipt of the deposit-money occurs at the first manipulation of the pass-book instead of the last, as at Edinburgh; the receiving-clerk and the pay-clerk are always different officers; and a monthly audit is made by a professional accountant, not attached to the staff of the bank. The routine of receiving runs thus:—(1) The counter or receiving clerk takes from the depositor the money to be deposited and also his pass-book, in which he enters the amount both in figures and in words, and then hands the book and the money to (2) the cashier, who receives deposits, but makes no repayments. This officer enters the amount and the depositor's progressive number in the actuary's cash-book, signs the pass-book with his name in full, and then transmits it to (3) that particular ledger-clerk within whose section of progressive numbers it falls, who, first, posts the entry from it into the sectional ledger, and initials the pass-book to indicate such posting; and, secondly, enters in the ledger the amount of interest which will have accrued on this deposit up to the 20th of the following November. The pass-book proceeds (4) to the cash-book-keeper, who enters in the cash-book the depositor's number and name, and the amount of the deposit; he also writes his initials in the pass-book, and then hands it (5) to the pay-clerk, who calls out the name and the amount deposited, and returns the book to the responding depositor. The routine of repayment runs thus:—(1) The counter or receiving clerk takes from the depositor his pass-book, writes in it the date and the sum to be repaid, and hands it to (2) the ledger-clerk (as above), who deducts that sum from the depositor's ledger-account, and writes beneath it the balance, if any, remaining in the bank; sending on the pass-book (after attaching his initials to the entry) to (3) the cash-book-keeper, who enters in the cash-book the amount to be repaid, and adds his initials in the pass-book, which is then handed to (4) the pay-clerk, who takes a receipt from the depositor in a book kept on the counter for that purpose, pays the amount, signs the pass-book, and returns it to the depositor. As soon as the bank has closed its doors to the public, a daily balance is taken by the following process:—The deposits and the repayments of the day are entered on prepared "sectional slips," at present forty-two in number (the number of open accounts at the date of the last return having been 41,398),—each representing a section of the accounts in sequent thousands of their progressive numbers, and a certain group of them corresponding precisely with each of the "sectional ledgers." These prepared slips—each having its column for receipts, its column for repayments, and its initial thousand printed upon it—are distributed amongst the clerks, to whom the actuary calls over from the cash-book the whole of the transactions of the day. When, for example, he calls over the deposit made by a depositor whose pass-book is numbered 21,225, the clerk who has the slip headed "21,000" writes down "225" in the margin, and so with the remainder of the numbers, as respects both the receipts and the repayments of the day. When these have been wholly called over each clerk takes his group of slips to the corresponding sectional ledger, and copies therefrom, upon the slips, each amount therein entered against its appropriate progressive number, using of course the deposit-column for sums received, and the repayment-column for sums repaid. The total of each column upon each slip is then handed to the actuary, and is proved to be correct when it agrees with the aggregates of deposits and repayments of the day, as recorded in the cash-book. Each day's account being added to the aggregate of all the preceding days in the current financial year, every sectional slip shows the total amount deposited and the total amount repaid upon its specific thousand of sequent accounts during the year. It is, therefore, a cheque both on the accuracy of the daily posting and on the periodical balance-sheets, and is so taken that, whilst every clerk works in its preparation, no clerk reviews his own entries. In addition to these precautions, an independent monthly audit is made by a professional accountant, who examines every cash transaction between the depositors and the bank, and between the bank and its treasurer, and every payment for expenses, and makes a monthly report to the trustees.
(4.) Cork Savings Bank.—The banks of Cork, Limerick, and Carlisle have a method of bookkeeping which differs in some important particulars from those which have been mentioned, and is known as the "Craig system," having been devised by Mr John Craig, manager of the Cork Branch of the Bank of Ireland, and treasurer of the savings bank there. Mr Craig's own account of it is as follows:—
"The first and distinguishing feature upon which all the others depend . . . is, that we amalgamate the interest with the principal, besides calculating it in the prospective form; we amalgamate the interest with the principal on every occasion either of a receipt or a payment. That is one point. The second point is, that each separate sum received is, with its interest, at once added to the balance which stands in the pass-book, and each repayment, with interest thereon, is deducted. . . . Further, we have duplicate or 'check-ledgers,' posted entirely by the auditor; no other person is ever permitted to make a figure in them. They are kept in a very concise manner, occasioning very little trouble, . . . from a check-journal also kept by himself. By the keeping that check-ledger, after the balance of the 20th November has been abstracted by the bookkeepers and clerks from the deposit-ledgers, the auditor is able to make a balance of all the accounts in the bank, and to make out a book showing the amount due upon each account, which book is laid upon a table in the hall, and every depositor that enters the bank has nothing to do but to look at that book, refer to his number, and see whether his balance is accurate or not. That has the advantage of being a double balance, and made from other materials. . . . Then, besides that, there is a 'separate ledger balance-book' kept . . . not made up directly from the cash paid and received, but always by the difference between the past and the present balance; . . . the auditor's book consists of two columns,—in the first he enters the past balance, and in the next the present balance. . . . I have also to state that the check which is kept upon the cashier consists of a book which has four columns. In the book he enters the past balance, the cash, the interest, and the present balance; at the end of the day every page is totaled up. If you add the receipts of cash and the interest to the past balance, that will make the present balance; if it be repayments, then if you add the cash and interest to the present balance, it will be the past balance." Such is Mr Craig's exposition of his methods, as given to the Select Committee of 1858.
VIII. Accounts and Returns to National Debt Commissioners.—At the close of every four weeks the trustees of every savings bank have to return to the Commissioners for the reduction of the National Debt the receipts and payments of each week severally, the expenses of management, and the certified balances. Complete annual accounts are c. 92, § 46; also to be rendered, made up to the 20th of November in 7 and 8 each year, and transmitted to the Commissioners within nine weeks next thereafter. If the trustees neglect to render such accounts within the prescribed term, the Commissioners are empowered to close their account; and also (by another enactment) to publish the name of the defaulting savings bank in the London Gazette. A copy of the annual account is to be affixed in the savings bank office, and every depositor is entitled to receive a printed copy on payment of one penny. The Commissioners are to lay an abstract of the accounts rendered annually before Parliament; and they or their comptroller may require from trustees a detailed statement of all the expenses whatsoever which shall have been incurred in the management of any bank. In 1858 the annual accounts for the preceding financial year were due by law, on or before the 22d of January. On that day 502 banks had duly lodged them at the National Debt Office, and 102 banks had yet to furnish them. Of these, 45 were furnished during the remaining days of January; 49 others between the 1st and 22d of February; and, at the last-named date, 8 were still outstanding.
IX. Dormant Deposit Accounts.—There is no provision in the law of savings banks of the United Kingdom for the extinction of accounts lying dormant, however long the interval which may have elapsed since the last operation upon them, or however small the balances which they may respectively show. No complete returns, with respect to such accounts, have ever been prepared; but in 1831 Sir A. Y. Spearman, comptroller-general, called for a partial return of this kind, selecting 47 of the larger banks for the purpose, by which it appeared that in those 47 banks only there were about 52,000 accounts, which had been neither increased (otherwise than by accretion of interest) nor diminished during the five years ending on the 20th November 1830, and that the amount standing at the credit of those accounts was £655,000.
X. Separate Surplus Funds.—Prior to the passing of the Surplus Governing Statute of 1828, the trustees of savings banks funds were authorized to make rules for the application of increased stock or property; but no application of such surplus funds was to be made until ten years had elapsed from the establishment of the bank to which they belonged; one-half of such surplus was always to be reserved to answer deficiencies, and thirty days' notice was to be given to the Commissioners of any intended appropriation. The statute of 1828 directed that, within six weeks after the 9 Geo. IV., 20th November next following, the trustees should ascertain the amounts of their respective surplus funds, and appropriate the same in the manner provided for by their respective rules; and in the event of there being no such provision, then according to the judgment of the trustees in general meeting assembled; and it was then enacted that from 20th November 1828 the surplus was to be paid over annually to the Commissioners, and that trustees and managers might claim and receive from the Commissioners, for the purposes of the institution, upon such certificate as the Commissioners should appoint, any sum of money equal to the whole, or to any part of the principal monies which might have been discharged from the account of the savings bank concerned, as surplus.
III. SUGGESTED IMPROVEMENTS IN THE ORGANIZATION AND MANAGEMENT OF THE SAVINGS BANKS OF GREAT BRITAIN AND IRELAND.
The elaborate inquiries of the Commons' Committee of 1858, although they have not as yet led to any amended legislation, appear sufficiently to have established certain facts and principles which may usefully govern such legislation, whenever the subject shall be fairly grappled with by Parliament hereafter. Amongst all the varieties of opinion which the recent inquiry elicited, no one will be found to have affirmed the advantage of leaving the law of savings banks scattered, as it is at present, in a multitude of statutes, many of them partially repealed, and some of them conflicting. It may be taken, therefore, as admitted on all hands, that, as a first point of improvement, the law of savings banks should be consolidated into a single act for the whole kingdom.
Again, however opinions may differ on the question, whether the terms of the existing statutes do or do not really confer on the Commissioners for the reduction of the National Debt, or on the Chancellor of the Exchequer as chief acting Commissioner, that large control over the investments of savings banks, which it has been in practice, for more than thirty years past, assumed that they confer, there is small likelihood of disagreement on the recommendation of the Select Committee of 1858, that, for the future, the powers and duties of the Commissioners—be they whom they may—entrusted with the superintendence of savings banks and the investment of their funds, shall be strictly and accurately defined in the consolidated statute; and that no sale, transfer, or conversion of savings bank stock shall thereafter be permitted, except for savings bank purposes, nor any addition be made to the funded national debt, without the sanction of Parliament.
It may be true that in 1835, by Lord Althorp, and again in 1844, by Mr Goulburn, the sale of savings bank stock provided a fund "under the safeguard of which great reductions were made in the interest of the national debt, and the nation was relieved of an annual charge of many thousand pounds." It may also be true that, at a much more recent period, the purchase of exchequer bills on savings bank account furnished the government with necessary supplies at a critical moment—the commencement of the Crimean war—when a loan could not have been obtained, except at a serious discount. But it is equally true that the power of thus relieving the exchequer "withdraws from the cognizance of Parliament large financial transactions during the time when they are in a course of being accomplished; and also occasions discredit to savings banks by putting them in the light of institutions burdensome to the country, when, in truth, it is plain that if their money were duly invested in consols and bills as it accrued, little or no deficiency would now exist." The Committee recommends that for the future the National Debt Commissioners shall be relieved from the office of investing the monies of savings banks, and that this duty shall be confided to a new commission of five members, of whom the Chancellor of the Exchequer and the Governor of the Bank of England shall always be two; the other three being nominated by the crown, and one of them being a paid member; that the expenses of the commission shall be paid out of the surplus funds belonging to the banks, that fund being invested in public securities, and the interest carried to its account. The Committee further recommends that three members of this commission shall be a quorum; that its ordinary meetings shall be held at fixed intervals; that all rules and regulations relating to the receipt and payment of monies, and the purchase and sale of stocks and other securities, shall be framed at meetings specially convened, and be subject to the approval of the Lords of the Treasury; that no (3.) Pro- sale, purchase, or variation of securities shall be made except hition when required for the purposes of the savings banks; and that any sale or variation of stock for other than exchequer bills held by the commission shall be funded by the special authority of an act of Parliament.
The amount due to the trustees of savings banks on the savings 20th November 1857 was L35,255,722; the amount of the securities held by the National Debt Commissioners, at the same date, was L34,399,082, 0s. 3d., in addition to which they held an uninvested balance of L53,200, 2s., making an aggregate of assets amounting to L34,452,282, 2s. 3d., against an aggregate of claims amounting to L35,255,722, which leaves a deficiency of L803,439, 17s. 9d. Whilst on the other hand, it has been shown, by the figures which we have already had occasion to quote in a preceding section of this article, that an excess of interest has been paid or credited by the Commissioners to the banks, beyond that received by the Commissioners upon their own investments, an excess amounting, in the aggregate, to L2,774,051, 9s. 3d.
On this point, the Committee expresses its opinion that the payment of interest and expenses of management ought not to be the source of annual loss to the State, and that by investing a portion of the capital of the savings banks in such parliamentary securities as will yield a larger return than 3 per cent., and by applying to the purpose of a "management fund" the interest of the present unappropriated surplus, and of all dormant claims after the expiration of ten years, the present rate of interest (viz. L3-, 5s.) might be provided, all expenses of the commission be defrayed, and even "a balance put by yearly, towards liquidating the deficiency arising from the transactions of former higher years." Be this as it may, a review of all the circumstances tending to the case will, we think, go far to justify the claim advanced on the part of the banks to a parliamentary indemnity of that deficiency, irrespective of mere expedients and possibilities.
The question as to the parliamentary replacement of the ten years' money of depositors in cases of defalcation is a widely different one. However generally the impression may have prevailed that government is in some way bound to make expressed good such losses, it is an impression unwarranted by the existing law. On this point, however, says the Committee of 1858, "It is difficult to maintain that Parliament having, and released local trustees from their liability, should not be a Parliament bound to provide some other guarantee for the money of monetary depositors who have no share themselves in the management of their bank;" and it then adds the opinion that "an alternative ought to be given and freely offered to the choice of trustees, either to secure the guarantee of Parliament upon such conditions as the commission shall prescribe, or themselves to undergo the same liability in regard to savings banks as was enacted in the 9 Geo. IV., c. 92, § 9."
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1 Rules, Regulations, and Reports of the principal bankers; Minutes of Evidence taken before the Select Committee of 1858, passim. 2 Report from the Select Committee on Savings Banks, p. ix. 3 Compare the stock accounts printed in Appendix to Report, p. 349. This proposition does not go far. The Act of the 9th Geo. IV., simply declares that no trustee or manager shall be personally liable except for his own acts and deeds, and not then, except in cases of wilful neglect or default. This enactment it was which limited the responsibility of trustees, although neither it nor any subsequent enactment can be truly said to have "released local trustees from their liability." Mr. Tidd Pratt's definition of the existing law, as given in evidence before the Committee, was thus expressed—In the case of an English trustee or manager, he is not liable to make good any deficiency, unless he has signed a paper limiting the amount; and he may limit the amount. In Ireland, every trustee and manager is liable for any deficiency, except he has signed a document limiting his liability, and which limit must not be less than L100. These words can have no reference whatever to cases of "wilful neglect or default." To revert to the enactment of 1828 (9 Geo. IV., c. 92, § 9) would, of course, remove the anomaly, whatever its extent, between the law for English and that for Irish banks, but would in no way impose on trustees that personal liability for the default of their officers, which was asserted from the bench of the Bankruptcy Court in 1826. That the existing law is doubtful and confused, the evidence of the consulting barrister under the acts abundantly proves. That to return to the liability clause of the 9th Geo. IV., c. 92, would not, of itself, have the effect the Committee attributes to it will, we think, become equally obvious on closer examination.
The evidence given by the actuaries of the principal banks of the United Kingdom, however it may differ on minor points, entirely accords on the fact that the receipt and payment of deposits may be so regulated both in large and small banks as to make fraud exceedingly difficult, even in isolated cases, and impossible in systematic continuance. The regulations by which this high degree of security has been here and there attained should be universally prescribed by law, and enforced by an official inspection and audit, wholly independent of the individual banks. On the report of the inspectors and the effectual audit of the accounts by the Commissioners, each bank should receive a special parliamentary guarantee for the whole amount of its deposits.
Prescribed rules for the receipt and payment of deposits to be uniformly observed, under penalty; frequent independent inspection and audit of banks by officers of the Savings Bank Commission; such an appropriation of surplus income as may, in course of time, form a guarantee fund against casual and unavoidable losses; publication and diffusion of full and distinct accounts of the progress of savings banks,—these are measures which will go far to preclude malversation, and to maintain the invaluable public advantages of savings banks in their integrity. It will also be desirable to include in the new act an express prohibition of the use of the term "Savings Bank" by any banking partnership, or other persons, not embodied under the act. It was shown in the evidence of 1858 that banking concerns in Scotland—of unhappy celebrity—were in the habit of designating their branches as "savings banks," and did actually receive deposits from persons, who believed that they were dealing with establishments legally authorized to receive them. The Western Bank of Scotland went to the length of issuing pass-books, which bore the name, "National Security Savings Bank."
If we include the funds of friendly societies, a sum of L37,000,000 is already so invested, that any portion of it may be demanded from the State at any moment of pressure. The possibility of public inconvenience thus arising was one of the points which came before the recent Committee. Its deliberations on that topic resulted in the recommendation to Parliament, that whenever any depositors' shall amount to L150, the Commissioners may, with the consent of the depositor, invest a portion of that deposit in the purchase, on his behalf, of L100 stock, the interest on which shall be received by the Commissioners, and be placed to the depositor's account.
IV. SAVINGS BANKS OF FOREIGN COUNTRIES.
In the brief space which remains for this concluding section of our article, our summary notices of foreign savings banks must needs be restricted to those countries only in which they have attained a wide development; and, even of these, a prominent part must sometimes be allowed to stand for the whole. Thus New York must represent the United States, and Prussia must almost suffice for Germany at large.
America possessed savings banks within a very few years United of their solid establishment in Great Britain. The earliest, States of example, of the sixteen banks which now exist in the city of New York dates from 1819. The aggregate amount of the 223,860 deposits paid into these banks during the year 1856 was L3,465,512 sterling. The withdrawals during the same period amounted to L2,707,261, showing an excess of payments over repayments amounting to L758,251. The total amount of the accumulated deposits of 167,250 depositors, at the close of that year, was L7,564,569; which, taking the population at that date to have been 850,000 persons, gives an average deposit of L8,175.10d. to each head of population, and of L45.48.6d. to each depositor: the depositors being nearly as one in five of the entire population. In New York the annual expenses were L30,957; being 17s. 7d. per cent. on the receipts of the year, and 8s. 2d. per cent. on the aggregate of the deposits held at its close.
The rates of interest allowed by these New York banks to depositors vary. The largest banks allow 5 per cent. to depositors on sums not exceeding 500 dollars, and 4 per cent. on larger sums. Some banks allow 6 per cent. and 5 per cent., respectively, on like sums. The rate is by law determinable according to the actual profits upon the investments of each bank, which must be made either (1) in the public stocks (of the Union, of the respective States of the Union, or of the incorporated cities of the State of New York); or, (2) in bonds and mortgages on real estate, worth double the amount lent upon them. Investments of the latter class usually realize from 6 to 7 per cent. per annum. Most of the savings banks, it is stated, restrict their investments on bond and mortgage to one-half of their aggregate deposits. As the law does not permit a greater accumulation of surplus than 10 per cent., some banks pay extra interest to their depositors from time to time, as their
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1 e.g. "69. Chairman.—Therefore, am I to understand that every Irish trustee is liable to an unlimited extent, unless he has limited it voluntarily to the sum of L100? Yes." 2 "70. Whereas, in England and in Scotland, no trustee is liable, unless he has signed a paper declaring that he is willing to be so? Yes." 3 "71. That is the state of the law? Yes; I have put it shortly thus: in Ireland, the liability of trustees and managers for deficiencies previously to the 25th July 1828 is unlimited, unless by the rules the trustees and managers had limited their liability." 4 "72. For deficiencies in Ireland between the 25th July 1828 (which is the date of the Act of 9 Geo. IV.) and the 9th August 1844, the liability is limited by the 9 Geo. IV., c. 92, § 9. Since the 9th August 1844 until 20th November 1848, the liability is the same as in England. Since the 20th November 1848 the liability is under the 9th Geo. IV., c. 32, § 9, except the trustee or manager has availed himself of the power to limit his liability under the 11th and 12th Vict., c. 133." 5 Minutes of Evidence before Select Committee on Savings Banks (Mr W. Meikle), 2412-2435.
The amount of deposits is not ordinarily restricted; but in some of the New York banks any one account is limited to L200, depositors being free to open as many accounts as they please, either in one bank, or in more banks than one.
According to a report presented to the Legislature of New York in 1858, the total amount of deposits in all the savings banks of the State, on the 1st of January of that year, was L8,284,534, and the total amount of their assets L8,777,198, showing an aggregate surplus of L492,664. Of the collective assets, L4,046,917 was invested in freehold securities, and L3,901,838 in stocks; L657,488 was cash deposited, by way of reserve, in various joint-stock banks; and L170,954 was cash in the hands of the respective treasurers.
In drawing the attention of the recent Committee on savings banks to these statistics of the New York banks, Mr C. W. Sikes, of Huddersfield, added, that during the severe commercial crisis of 1857, "the savings banks weathered the storm without one single suspension; and that, in consequence of their having invested their money judiciously and safely, they were enabled to realize sufficient, without any sacrifice of principal, to meet every claim made upon them."
The earliest French savings bank is that of Paris, which was incorporated on the 29th July 1818; Bordeaux followed the example in 1819, and Marseilles in 1821. All these banks were founded as joint-stock companies, and came, consequently, under the supervision of the Council of State. That body, however, having repeatedly expressed the opinion that a municipal organization was better suited to the character and objects of the new institutions, the fourth (in order of date) of the French savings banks was established by the town council of Troyes in August 1821. This plan has since been very generally followed; and for many years past it has been the only legal one. Three several banks—those, namely, of Avignon, Metz, and Nancy, and those only—have been formed upon a third method, being made branches of the Monts-de-Piété, or public pawnbroking establishments.
Until the commencement of the year 1834, the progress of savings banks in France was slow. They were then (after the lapse of sixteen years) only twenty-seven in number; but during that year the number was raised to seventy-five. Early in the following year (1835) the legislation affecting them was revised and codified; and, in its course, eighty-three new banks were founded, making the total number 158, with 121,327 depositors, and an aggregate deposit of 62,185,676 francs (L2,487,427).
The nine years which succeeded the improved legislation of 1835 carried up the total number of banks to 347; that of depositors to 638,984; and the aggregate deposits to 392,552,467 francs (L15,702,098). This very rapid growth was thought to need some legislative check; the maximum of deposits, on any one account, was therefore lowered, by a law of the 22nd June 1845, from 3000 francs to 1500; the holding of more accounts than one was prohibited, and increased facilities were given for the conversion of deposits into stock, for the individual account of the depositor.
On this last-named head, the desired result was speedily in course of attainment. At the close of 1848, the Paris bank alone had so invested L102,392. At the eve of the Revolution of 1848, the banks were 354 in number, with 175 branch banks; the depositors were 636,951; and their deposits 358,405,924 francs (L14,336,237). The "Days of February" brought a run upon the savings banks, and induced, on the 9th March, a decree of the Provisional Government, raising the interest from 4 to 5 per cent., and declaring the banks to be placed "under the guarantee of national faith." But the run continued. Two days later another decree suspended cash payments, as respected all accounts exceeding 100 francs; and offered, instead, one moiety of the amount in treasury bonds, at four or six months' date, and the other moiety in 6 per cent. stock at par. The bonds at this time were at a discount of from 30 to 40 per cent.; the 5 per cents. were quoted at 75, and were rapidly declining. The Constituent Assembly, in July, decreed the total and immediate conversion into stock of all deposits anterior to 24th February, and exceeding 50 francs, the price at which the conversion was to be effected. In November, another decree opened a special "compensation account" for every depositor concerned, which credited him with the difference between the price fixed in July, and the average market price (i.e., 71 francs 60 cents) of the three preceding months. "This measure," said M. François Delessert, president of the Paris bank, "was not merely an act of reparation; it was the salvation of the savings banks."
The immediate operation of these various enactments cannot be precisely shown. The ordinary returns for 1848 progress were never published. Those for 1848 and 1849, together, did not appear until 1853, and then only in a modified and incomplete form. But we gather from those returns, that during the two years above named, the accounts of 340,677 depositors were closed, and that 189,528 new accounts were opened. The aggregate amount of deposits converted into stock in the course of 1848 was 211,426,336 francs (L8,457,058); in 1849, 101,813,184 francs (L4,072,527). The aggregate of deposits in the savings banks at the end of 1849 was 73,917,556 francs (L2,956,702). It appears that at this date, twenty banks only had yet to complete their funding operations under the law of July 1848. When these were finally completed, the stock account stood thus:
| Savings Banks of | No. of Stock Accounts Opened | Amount of Capital Funded | Amount of Annual Dividends | |------------------|-------------------------------|--------------------------|---------------------------| | Paris | 107,899 | L12,087,054 | L167,916 | | Departments | 285,490 | 9,855,305 | 615,956 | | Total | 494,389 | L12,942,359 | L783,872 |
It deserves remark, that at the periods of greatest excitement, even during the terrific combats of June 1848, the deposit-receiving business of the savings banks was never really at a stand-still. The smallest sum ever received by the Paris bank on a deposit day, from the date of its first establishment, was that which came in on the 2d July 1848, immediately after the great struggle. But even on that day 121 depositors made small payments, which amounted, in the aggregate, to 12,749 francs (L510). The year 1850 witnessed a rapid progress throughout the country, or nearly throughout it,—for twenty-five of the banks are not included in the official accounts. The total deposits of the 340 banks which made returns amounted at the close of 1850 to L5,396,680. In 1851, the whole legislation of the subject came under the review of the Assembly, and a law was passed which enacted, (1) That no new deposit shall be received on any account already amounting to 1000 francs, interest included; (2) That whenever by accretion of interest any account shall exceed that maximum, it shall be reduced, if not by the depositor himself, then by an investment in stock on his account; and, (3) That the interest should be reduced from 5 to 4½ per cent. In May 1853, a further reduction of interest was made to 3½ per
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1 Letter of Mr A. Warner to Mr C. W. Sikes, printed in Appendix to the Report on Savings Banks of 1858, pp. 384, 385; Evidence of C. W. Sikes, Esq., in Minutes of Evidence, 2717-2727. The Swiss banks date from 1787. The example set by Berne was followed by Geneva in 1789, and by Basel in 1793. But in all these cantons the operations of the first twenty or twenty-five years were inconsiderable. In 1815 or 1816, they began to be importantly developed. In 1835 Switzerland there were in the whole of Switzerland 100 banks, with 65 land branches, or dependent "receiving-houses" and 60,028 depositors, to whose credit there stood, in the aggregate, a sum of 11,513,712 Swiss livres (L.537,306). At the end of 1852 the banks had increased to 167, exclusive of branches; the depositors to 181,172; the deposits to 60,368,759 francs (L.2,414,745). In 1835 the Swiss population appears to have been 2,179,526. At the end of 1852, it was 2,392,000. The depositors, therefore, were, in 1835, as 1 in 36; in 1852, as 1 in 13. The average amount to each depositor was, in 1835, L.11, 10s. 7d.; in 1852, L.13, 6s. 6d. Finally, the aggregate deposits gave a sum of 6s. 6d. per head of population in 1835, and a sum of L.1 per head in 1852.
The management of the Swiss banks seems to be in some points lax, as compared with the prevalent systems of England and France, but the chief point of difference lies in the investments. Most of the cantons have no public debt worthy of mention. None of them save Neufchatel permits a savings bank to invest money in foreign funds. Tessin and Glaris admit of government investments; but in all the other cantons the deposits are used in the way of loan upon mortgages, and in the discounting of mercantile bills. M. de Candolle, who, some years since, examined the Swiss system very elaborately, thus sums up his opinion as to its working:—"Throughout all the changes of government the savings banks have continued their useful career. Whatever the extent to which the government were compromised, private persons continued to find in those institutions a safe provision against all contingencies. Losses arising from the difficulty of recovering debts in disturbed times were met by the reserve funds previously created."
The earliest savings banks of Germany were, as such, on a very narrow scale. Usually, they were directly connected with the administration of poor's funds. Often they were also loan banks. The Berlin bank, founded in 1818, gave an impulse to the improvement and diffusion of a better system, although it has itself suffered many modifications. Its original regulations guaranteed to the depositors interest at the rate of 4½ per cent. on ordinary deposits, a rate which was reduced to 3½ in 1827. In 1829 its aggregate deposits amounted to 1,229,413 thalers (L.1,719,289). In 1837, the amount of individual deposits banked was limited to 20 thalers (L.2, 18s. 4d.) in any one month, and to 300 (L.43, 15s.) in the whole. Eighteen months later, the existing bank was wound up, and a new one established in its place. At the close of the year 1839, the new bank held deposits amounting to 469,354 thalers (L.68,447). At the close of 1840, the amount was 576,528 thalers (L.84,077). Although seven years elapsed before the aggregate deposits in the new bank attained the sum held by the old bank in 1829, it appeared that investments by a plurality of accounts continued to be made by persons of a class different from that for which the bank was designed; and, to check this practice, another dissolution and re-organization was determined on in August 1850. The minimum deposit was now reduced to sixpence (5 silver-groschen), and the maximum deposits to L.1, 9s. 2d. (10
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1 B. Delessert and F. Delessert, Comptes rendus des opérations de la Caisse d'Epargne de Paris, 1819-1857, passim; Lebrun, art. "Caisse d'Epargne," in the Dictionnaire de l'Administration Francaise, passim; Auguste de Boudard, Institutions de prêts et de banques; Les Caisse d'Epargne—Histoire, Legislation, Statistique (Valence, 1858), passim; C. A. von Malchus, Die Sparkassen in Europa, 315-329, and Beilagen 52-59; Journal des Economistes, xviii. 170-177; xxvii. 374-385; xxxvi. 222-291, 436-450; 25me série, i. 423-428; iv. 97-109, 276-282. 2 De Candolle, Les Caisse d'Epargne de la Suisse, passim; C. A. von Malchus, Die Sparkassen, &c., 251-300; De Boudard, Les Institutions, &c., 29, 30; Appendices to the Comptes rendus, &c., ut supra. thalers) in any one month, and L.14, 11s. 8d. (100 thalers) in the whole. If any person shall open more accounts than one, the first account only bears interest. The deposits paid into the new bank during 1851 amounted to 351,765 thalers (L.51,299); the transfers from the old bank to 510,846 thalers (L.74,498); whilst the withdrawals were 104,384 thalers (L.15,222); leaving an aggregate sum to depositors' credit, at the close of the year, of 901,289 thalers (L.131,438). At the close of 1852, this aggregate capital stood at 1,076,000 thalers (L.156,916), and belonged to 30,929 depositors. At the close of 1853, it had increased to 1,230,000 thalers (L.179,375), and the number of depositors to 34,842. On the 1st January 1855, the depositors were 35,590, and the total amount at their credit 1,249,000 thalers (L.182,145). On the 1st January 1857, the depositors were 40,700, and their aggregate deposits 1,424,000 thalers (L.207,666). At this date, therefore, the average sum possessed by each depositor was somewhat more than L.5, 2s., and the depositors were as 1 in 11 of the whole population of Berlin.
Throughout the Prussian dominions there were founded, during the first decade from the beginning of the Berlin bank (1818-27), 31 savings banks; during the next (1828-37), 37; and during the third (1838-47), 123. Even in the disturbed years 1848 and 1849, 20 new banks came into being. The total number on the 1st January 1850 was 211, to which 4 more were added during the year. At its close, these 215 banks comprised 278,147 depositors, holding an aggregate deposit of 18,119,851 dollars, or L.2,642,464. The relative proportion of banks to population varied from 1 in 502,984 in the circle of Dusseldorf, to 1 in 25,207 in the circle of Arnberg; the mean proportion for the whole of the kingdom being 1 in 70,091, and that of depositors 1 in 59. The average amount held by each depositor throughout the kingdom was, in 1849, L.9, 3s. 9d.; in 1850, L.10, 4s. 2d. The rates of interest varied considerably. In 23 banks it was 2½ per cent.; in 35 other banks, 3 per cent.; in about 150 others, 3½ per cent.; whilst in 5 banks it ranged from 4 to 5 per cent.
In some banks the rate varies with the amount of the Savings-deposit.
In the German provinces of Austria, the proportion of Other depositors to population was, according to the latest returns States of to which we have access, 1 in 49; in Hanover, 1 in 42; Germany, in Bavaria, 1 in 18; in Saxony, 1 in 16; in Frankfort-on-der-Maine, 1 in 11½; in Hamburg, 1 in 7½; in Altona, 1 in 2½. In Austria, the average aggregate deposit was, to each depositor, L.19, 6s. 9d.; and to each inhabitant 7s. 10½. In Bavaria, it was, respectively, L.5, 18s., and (nearly) 6s. 8d.; in Hanover, L.9, 10s., and 4s. 5½. The savings-bank statistics of the last-named country are remarkable for the rapid growth they indicate of the aggregate deposits since 1848.
In most of those parts of Europe which are yet unnoticed, the development of savings banks is comparatively recent and immature. This cannot, however, be said of Italy. In Piedmont and in Lombardy, for example, they have long formed an important feature of the economical condition of the country. But the institution which in Italy is called Cassa di risparmio differs materially from those which elsewhere bear that name. Its regulations attract the investments of persons of a much higher class than those for whom savings banks are usually intended. There are some exceptions to this rule; but, on the average, it has been estimated that hardly more than one-fourth of the deposits in Italian savings banks are held by depositors who would be ranked, socially, with those of the United Kingdom, of France, or of Germany. In Spain and Portugal, these institutions are yet in the cradle. In Russia, they have scarcely advanced beyond St Petersburg and Moscow. A wider intercommunication of the progress and results of the savings banks of different countries would doubtless give an increased impulse to the diffusion of establishments which have proved themselves to be powerful agents in the social elevation of the masses, even when very imperfectly organized and worked. Taken as a whole, their past history warrants high anticipations of the future.
(S.F.)