liabilities, and calculated to afford them some secure and nonspeculative remedies for the difficulties which beset their position." It has been remarked, that1 "There is not a more painful chapter in the history of our social condition than that which records the usual fate of our most deserving labourers, artisans, domestic servants, clerks, and others, who, in the turn of life and the decline of power, attempt to get a better interest for their store than the 27. 15s. per annum, which is all that the savings bank can afford." But what if even this slender mode of investment be rendered unsafe and unsatisfactory? The long delay which has taken place in the introduction of some satisfactory measure on the present subject has led the public to consider whether, under the recent change in the law of partnership, they may not devise some mode of improving the present unsatisfactory state of savings banks, without the aid of Government. Accordingly, a company, with limited liability, has been recently incorporated under the "Joint-Stock Companies Act, 1856," under the title of "The National Savings Bank Association." This company, in their prospectus, give the following account of their objects :-"This association has been formed to consolidate and improve the savings bank system; to offer better interest than has hitherto been allowed; facilities for unlimited deposit; means of convenient withdrawal, and perfect security to the depositor. To the shareholder it offers an investment profitable to himself, and highly beneficial to his neighbours. poorer "It is well known that the savings bank system is partial in operation, insufficient in security, and comparatively unremunerative to the depositor. These drawbacks have been felt most severely; but the Government has not yet succeeded in mitigating the evil. Under these circumstances the directors have organized an extended, safe, and improved system, entitled 'The National Savings Bank Association.' "In the United Kingdom there were, in 1854, as follows:584 savings banks; 1,265,208 depositors; 33,408,1757. deposits. 1 Times, November 27,1850. Yet £70,000,000 are annually spent in intoxicating liquors, snuff, and tobacco; the poor-rate for 1854-5 was £7,864,149; crime costs the country 2,000l. per day; therefore, waste, poverty, and crime cost nearly 80,000,000l. per annum, against the accumulated savings of 33,408,1757.! Moreover, the system is so partial in operation, that in a population of 27,104,394, during the years 1851-4, only four additional banks were opened. "It is insufficient in security. Twenty-two savings banks have failed for an aggregate amount of more than 150,000l. Yet, in addition to 356,1707. secured by the unpaid, and 350,6551. by the paid, officers, the managers and trustees of only four of the savings banks in England and Wales have made themselves responsible to the depositors for losses that may occur. In the remaining 481 banks, the loss falls altogether on the depositors, or its remedy is a matter of alms rather than of right. "It is comparatively unremunerative to the depositor. The legal interest is 37. Os. 10d. per cent.; that is, 37. 5s., less 48. 2d. for working expenses. But that rate is much diminished by the excess of expenditure over allowance. And it may be asked, if a higher rate of interest may be given, why is it not given? Why is not all encouragement held out to the industrious and provident? The directors of the National Savings Bank Association propose to improve this state of things." The directors, after requesting attention to a "contrast of the old and new system," which is by no means favourable to existing savings banks, proceed to state as follows: "By these remarks the directors do not profess to deny the services that savings banks have rendered. The ends and objects of the system, however, are fairly open to correction; because public confidence is by such faulty execution greatly weakened. But that confidence may be regained, confirmed, and widely enlarged, if a more comprehensive system be presented, -with a true monetary basis,-adapted to the wants of the day, complete in proportion, supervision, and internal strength, -guaranteed by gentlemen of known position and probity. This is what the directors of the National Savings Bank Association desire to accomplish; and herein they invite public sympathy, co-operation, and support. "The proof of the necessity which exists for this Association will be found in the fact that there are no less than 483 places, with more than 3,000 inhabitants each, that have not a savings bank. To supply this deficiency, preparations are being made to bring before the nobility, gentry, clergy, ministers, and others, interested in our manufacturing and agricultural towns and districts, the claims of this Association." The leading journal, in referring to this company, says:1"The prospectus has been issued of the National Savings Bank Association, with a capital of 10,000l., to be increased to 100,000l. The object is to create an independent savings bank, presenting security of a more tangible nature, combined with greater freedom of action, than is possible under the existing system. The result of savings banks on the charitable or paternal system has been a heavy loss to the Government, while the depositors have also suffered, since twenty-two have failed for an aggregate amount of 150,000l. Yet the rate of interest allowed is, at the highest, only 31. Os. 10d. per cent.; in the majority of cases it is far below that sum; and there are at present 483 places, with more than 3,000 inhabitants, without a savings bank. Moreover, out of 485 savings banks in existence, there are only four in which the depositors have the responsibility of the managers and trustees as a protection. In all the others, these parties have declined to assume any personal liability, and in no case is there any subscribed capital to fall back upon. The promoters of the proposed Association believe that, adopting the ordinary rules of business, they could remedy these defects, pay at least three and a half per cent. to their depositors, and secure a remunerative profit for their shareholders. They are encouraged by several prudent and philanthropic persons, and whether they succeed or otherwise, there can be no question that, sooner or later, the system of Government meddling with the banking affairs of the humbler classes will be recognized as an anomaly that should be discontinued." Times Money Article, August 19, 1856. Such are the claims of the above Association to public support. We have no desire, however indirectly, to lessen that confidence which it is calculated to raise; but while upon this subject, we feel it to be our bounden duty to direct warning to the disastrous consequences which would ensue upon failure. We wish earnestly to call the attention of the Government and of the public to the necessity which has arisen for immediate reform in the system by which savings banks are at present regulated. The result of the present imperfect system has also been to lead to the establishment by private persons, sometimes publicans, of a species of savings banks, which, though generally, if not always, originating in the best and purest of motives, often lead to lamentable results. A time of pressure arrives, and the savings of the poor are too often diverted from their original purpose, to satisfy the wants of the gambler or the spendthrift, or in vain endeavours to stave off bankruptcy by the unfortunate or the imprudent. It has been suggested that there should be Government banks established with a guarantee, leaving the existing banks to continue their course as at present. We think it however important, that there should be no rivalry between different savings banks, but that the depositors should be rendered secure in all events. The true principle upon which savings banks should be established is, that the depositors should have the guarantee of the Government against loss, arising from whatever contingency,-that, in fact, every shilling deposited in a savings bank should be as safe as if invested in the funds. The difficulty of legislation on the present subject has arisen in great measure from the refusal of Government, on the one hand, to give its guarantee unless it have a control over the receipt and payment of the moneys deposited in savings banks, and from the disinclination, on the other hand, of trustees and managers to submit to Government control. We fear, also, that the mode in which the late war was conducted has not tended to increase the confidence of the public in establishments. placed in any degree under the control of the Government. The principle, indeed, seems to be very generally admitted; but the chief difficulty has arisen with reference to the manner in which it should be carried into practical effect. It has not been our intention to advocate any particular mode by which the Government guarantee should be secured to the depositors. Notwithstanding, however, the strong opinion to the contrary expressed by Mr. Gladstone, we should feel disposed to recommend, as most easy of adoption, that the guarantee of the Government should be at once extended to savings banks established under the present system, with the addition of some further precautions,—such as the appointment of auditors and inspectors, and the more regular transmission of statements and accounts. Without entering upon any political theories involved in the consideration of such a course, a few plain facts and figures will clearly show that the loss which would be thus incurred would be too insignificant to be taken into practical account, in comparison with the magnitude of the benefits which would be thereby conferred. In the debate in 1850, the Chancellor of the Exchequer (Sir Charles Wood) stated that the total amount of loss incurred by the Government in respect of savings banks, since their first establishment in 1817, amounted to the sum of 2,441,000l., or to the annual sum of 42,6701. Now we have seen that, up to the present period, twenty-two savings banks in England have failed for an aggregate amount of 150,000l. With reference to Ireland, the Dublin Savings Bank failed for nearly 50,0001, the Killarney Bank for about 36,000l., and the Tralee Bank for over 37,000l. We will take, then, the losses that have occurred in Ireland and also Scotland to amount to 170,000l. in round numbers, being probably greater than they really were. This sum, then, with the 150,000l. for England, would amount to 320,000l. Such sum, therefore, spread over a period of forty years, would amount to 8,000l. a year. It would therefore appear, according Hansard, vol. cx. 3rd series, p. 906. |