On the 24th April 1886 the funds in the hands of the National Debt Commissioners on account of trustee savings banks were £46,162,515, and post office savings banks £19,881,896, a total of £96,044,411.

To these may be added the cash and assets in the hands of the banks and the postmaster-general, which at the beginning of the previous year amounted to £764,804, and also the following investments in stock on account of depositors:—trustee savings bank, £729,522; post office savings bank, £2,626,928; total, £3,356,450;—making the aggregate funds belonging to depositors in savings banks more than £100,000,000.

The largest savings bank in the United Kingdom is that at Glasgow, as shown by the following table of the 21 principal banks :— [table]

From this table some interesting conclusions may be drawn as to the operations of savings banks in the larger towns. These 21 banks have together more than 50 per cent. of the depositors, more than 45 per cent. of the deposits, and more than 65 per cent. of the transactions of all the 411 savings banks of the United Kingdom.

The progress of savings banks and the large amount that the deposits have now reached are evidence of the general fitness of the organization for its purpose. So far as regards trustee savings banks, the provisions of the Acts of 1817 are still to a great extent the same as those by which they are now regulated, though the law has been frequently amended in matters of detail, and twice (1828 and 1863) consolidated. Its main feature is the requirement that the whole of the funds should be invested with the Government through the Commissioners for the Reduction of the National Debt. The local management of the banks has been left entirely to the trustees, who are precluded from receiving any remuneration for their services or making any profit. They are, however, required to furnish the commissioners with periodical returns of their transactions. This blending of private management with state control has had many advantages in knitting together class and class, and in many places the voluntary trustees and managers have been able to render real service to the depositors in various ways. A new savings bank requires for its establishment the consent of the National Debt Commissioners and the certificate of the registrar of friendly societies to its rules; but since the opening of the post office savings banks in 1861 few have been established, and many old savings banks have been closed, not being able to offer to their depositors the same advantages as the new system. The savings banks, which numbered 640 in 1861, have thus been reduced to 411, and their capital has been maintained rather by the accumulation of interest than by fresh deposits.

The legislation of 1817, among other inducements to thrift, offered that of a bounty to the savings bank depositor in the shape of a rate of interest in excess of that given to the ordinary public creditor, or—which is the same thing—in excess of that which could be earned by the investment of the deposits in the purchase of Government stock. The interest offered in the first instance was 3d. per day, or £4, 11s. 3d. per cent. per annum; and that rate continued to be granted until the passing of the Act of 1828 (9 Geo. IV. c. 92). That Act reduced the rate of interest allowed to the trustees of savings banks to 2½ d. per day, or £3, 16s. 0½ d. per annum, and prohibited them from allowing more to their depositors than 2 1/4 d. per day, or £3, 8s. 5 1/4 d. per annum, requiring them to pay the surplus, if any, into a separate fund held by the National Debt Commissioners, but bearing no interest. In 1844 the interest to trustees was further reduced to 2d. per day, or £3, 5s. per cent., the maximum to be allowed to depositors being fixed at £3, 0s. 10d. Finally, in 1880 the interest to trustees has been reduced to £3, and that to depositors to £2, 15s.

The result of the bonus on thrift offered by the earlier statutes was a loss to the state, which ought to have been made good by an annual vote. Between 1817 and 1828 the difference between the interest credited and that earned amounted to £744,363; and this led to the reduction in the rate of interest effected by the Act of the latter year. The deficiency, instead of being paid off, was allowed still to accumulate, and as the price of stock rose and the deposits increased fresh deficiencies arose, so that by 1844 the deficiency, which would have been 1½ millions by the mere accumulation of interest on the previous £744,363, had become £3,179,930. The reduction of interest in 1844 was about enough to make the fund self-supporting, though savings banks are always, as Mr Scratchley clearly shows, liable to loss from the fact that deposits are in excess when the funds are high and withdrawals when they are low; but the past deficiency was still allowed to accumulate, and it was not till 1880 that the plan was adopted of voting the deficiency every year. Had the accumulated deficiency been then liquidated, there would have been no necessity for an annual vote. The bad political economy of the legislators of 1817 has left us this legacy of annual deficits. Had they provided the bounty at their own expense instead of that of their descendants, there would have been little to be said against it. The offer of a bonus on thrift was of necessity accompanied by provisions to guard against its being used by others than the classes it was intended to encourage. This was done by limiting the amount that each depositor should be permitted to pay in. In the first instance, in England the limit was fixed at £100 for the first year, and £50 a year afterwards. In 1824 these limits were reduced to £50 for the first year, £30 a year afterwards, and £200 in the whole. In 1828 the limit was adopted which still remains in force of £30 a year or £150 in the whole, allowed by addition of interest to increase to £200 but no further. Attempts have been frequently made to raise the annual limit to £50, but have always been defeated. This is to be regretted, for the limit is of doubtful utility, now that the rate of interest has been so reduced as to prevent loss to the state. It is within the common experience of savings banks managers that persons come to deposit an amount exceeding £30 and are disappointed when they find they cannot do so. The Act of 1882, permitting investment in Government stock, may diminish the mischief.

With the view of showing to what extent savings banks are used by the classes for which they were intended, a return was published for the year 1852, showing (as nearly as could be ascertained) the number of depositors belonging to various occupations, and the amount of their deposits, as follows :— [table]

Not two per cent. of the deposits, therefore, either in number or amount, are made by classes whom it may be supposed it was the intention of the legislature to exclude.

When a person comes with his first deposit to a savings bank he is required to sign a declaration, setting forth his name, address, and occupation, that he desires to become a depositor on his own account, and that he has no money in any other savings bank. If this declaration be not true, the deposits are liable to be forfeited; but it is to be feared that few depositors take the trouble to read what they are signing, or think much about the meaning of it. If the depositor cannot write, the actuary of the savings bank will usually ask him a few questions, such as his age, mother’s maiden name, &c., which may tend to identify him, or defeat any attempt to personate him for the purpose of withdrawal. The enactment that deposits are to be forfeited if the declaration be false was qualified in 1863 by a provision that the forfeiture should not be enforced unless in the opinion of the appointed barrister (now the solicitor to the treasury) the deposits had been made with a fraudulent intention.

The consequence of the determination by the solicitor to the treasury that the deposits have been made with the “fraudulent” intention which the Act contemplates is out of all proportion to the nature of the offence committed, being in fact the forfeiture of all the deposits. The prohibition of double deposits arose when the state was granting a rate of interest greater than that which it earned upon the investment of the money, and it has now ceased to have any real reason whatever, the rate of interest being less than earned. The intention to “defraud” now means merely the intention to evade a restriction that has ceased to be necessary, not an intention to deprive anybody of anything that belongs to him. If it be thought desirable to sanction by the infliction of a penalty the law that these institutions should be used only for the savings of the poorer classes, the loss of interest would be a sufficient if not an extravagant penalty, without forfeiture of the principal. Indeed, the present excessive penalty has, in one remarkable case, defeated itself. This was the case of a depositor in an Irish savings bank, who invested in fictitious names the sum of £2000. The solicitor to the treasury felt compelled to declare that these deposits were made with a fraudulent intention. The registrar in Ireland felt bound to act on this determination, and refused to award payment of the deposits. The High Court of Justice and the Court of Appeal refused to grant a mandamus, for the law would not assist a wrongdoer. But parliament itself voted £1000, or half the amount of the forfeiture, the legislature thus providing a remedy for an injustice it had itself committed. Another curious case was that of a young woman, the daughter of a postmaster, who in order that her father might be provided with funds to meet business claims as they became due, purloined money from him and invested it in false names in the post office savings bank kept at his house. In this case, the postmaster himself not being the guilty party, no forfeiture took place.

Among the benefits conferred by the legislature upon depositors in savings banks has been that of exemption from the jurisdiction of the ordinary courts of law in cases of dispute with the trustees. By the Acts of 1817 disputes were to be settled by arbitration. By that of 1828 the barrister appointed to certify the rules of the savings banks (then and until his death in 1870 Mr John Tidd Pratt) was made umpire in case of difference of opinion between the arbitrators. By that of 1844 the arbitrators were abolished, and an original and final jurisdiction was conferred upon the barrister. By an Act of 1876 the functions of the barrister in this respect were conferred upon the registrar of friendly societies. This in effect makes no change in the law, for the offices of barrister and registrar have been always held by the same persons. As early as 1832 it was determined in the case of Crisp v. Sir Henry Bunbury that the effect of these enactments is to oust the jurisdiction of all the superior courts of law and equity, and the authority of that decision has never been shaken or even doubted.

Since 1876 the registrar of friendly societies has made 147 awards in cases of disputes with savings banks, in addition to 169 on disputes with the post office savings bank. As the writer of the present article is one of the two persons in whom this jurisdiction is vested for England, he hopes he may be excused for expressing the opinion that its exercise has been highly beneficial to depositors in savings banks. The costs of the award are limited by treasury warrant to a few shillings, never exceeding £1. The procedure is simple and elastic, and the results are believed to be satisfactory. The central office, acting as registrar, determines law and fact, and adjusts all the equities of each case. Reference to the index to the registrar’s decisions appended to the chief registrar’s report for 1883, or to Mr Forbes’s useful work, will show that many interesting questions of law have had to be determined with regard to so small a matter as the ownership of a savings bank deposit.

Questions between husband and wife as to property including deposits in savings banks are now, under the Married Women’s Property Act, settled by the judges of county courts. Where a depositor, as often happens, is of illegitimate birth, a special provision is made by the Savings Bank Act in favour of his relatives, to whom the solicitor to the treasury may award his deposits. It is open to any depositor to nominate a person to whom the amount due to him at his death shall be payable, provided it does not exceed £100 and the nominee is not an officer or servant of the bank, unless indeed such officer or servant is related to the depositor. This privilege, derived from the Provident Nominations and Small Intestacies Act passed in 1883, is not yet sufficiently known to the bulk of depositors, and has not been used to any large extent, but may be expected in time to become very valuable. It is an extension of a privilege enjoyed by members of friendly societies since 1855, and also by industrial and provident societies and trade unions.

A painful chapter in the history of savings banks is that occupied by the frauds of actuaries, which have caused losses to depositors of not less than £150,000. It too often happens that, where the only supervision is that of honorary officers, a paid servant may commit frauds unchecked over a long period of time. In the case of a savings bank at Rochdale, £71,715 was stolen by the actuary, and £37,433 of this loss had to be borne by the depositors. In one at Dublin the loss was £56,000, and in one at Tralee £36,000. These unhappy events must have greatly discouraged the poor, and checked the progress of savings banks. There is, however, the compensating fact that the savings made by the people of Rochdale since 1849, when the savings bank there was closed, have taken the more favourable direction of promoting the great co-operative enterprises of that town. Savings banks, valuable and important as their benefits are, are still only elementary teachers of providence, and it is well for the workman to learn not merely to save money but to employ his savings to advantage. The stringent legislation as to audit of 1863 has diminished frauds on savings banks, and they are now rarely heard of.

In connexion with savings banks, and as auxiliaries to them, are penny banks. An ordinary savings bank will not accept a deposit of less than 1s. (or in some cases 5s.) on account of the expense of management. It seems to have occurred to Dr Chalmers to supplement the work of the Edinburgh Old Savings Bank by establishing in a Free Church congregation in Edinburgh a bank, managed entirely by voluntary agency, in which a deposit of 1d. or 6d., or any sum not exceeding 10s., would be received. When the deposit amounted to £1, the owner was requested to transfer it to the savings bank, and the funds were invested with the savings bank to the extent of £100 a year or £300 in the whole. Similar banks, called “territorial savings banks,” were established in other congregations. An organization of penny banks has existed in Glasgow for thirty years, and another has been set on foot in Liverpool by the exertions of Mr T. Banner Newton, the able actuary of the savings bank there. On 20th November 1885 there were 173 such banks open in Liverpool, with 17,492 depositors. When a deposit reaches £1 it is transferred to the depositor’s credit in the Liverpool Savings Bank. The amounts thus transferred were £56,122, and £8432 remained to the credit of depositors in the penny banks. The transactions of the year numbered 677,686 and amounted to £42,194. Penny banks require no certificate from the registrar or other legal organization, but if they desire to deposit more than the limit above mentioned the permission of the National Debt Commissioners must first be obtained.

Savings banks for the army were established in 1842, and are now regulated by Acts of Parliament—22 and 23 Vict. c. 20 (1859), 26 and 27 Vict. c. 12 (1863), for the Royal Navy and Marines by 29 and 30 Vict. c. 43 (1866), and for seamen generally by 17 and 18 Vict c. 104, § 180 (1854), 18 and 19 Vict. c. 91, § 817 (1855), and 19 and 20 Vict. c. 41 (1856). Into these, or indeed into any trustee or post office savings bank, seamen’s wages may be paid under allotment notes by 43 and 44 Vict. c. 16, § 3 and sch. 1 (1880). The amounts in the hands of the National Debt Commissioners belonging to depositors in savings banks of these various classes at 23d September 1885 were :—

Military savings banks £285,631

Naval savings banks 175,445

Seamen’s savings banks 138,816

Total £599,892

Voluntary savings banks, unconnected with the Government, have also been established, the most important of which are the Yorkshire Penny Bank and the National Penny Bank. The depositors in these rely solely on the character of the persons by whom they are managed, and in some institutions of the kind have met with severe disappointment in consequence. As they are under no responsibility to the state, these institutions make no returns to parliament, and no trustworthy information as to the extent of their operations can be given.

The railway companies, which are private corporations empowered by special Acts of Parliament, have in several cases availed themselves of these Acts to take power for establishing savings banks for the benefit of their servants. The Manchester, Sheffield, and Lincolnshire Railway Savings Bank has been established 25 years, and has 2443 depositors, whose accounts amounted on 31st March 1885 to £249,282; its transactions for the year were —£66,702 deposits, £33,756 withdrawals, in number 26,596. Six other railway companies have submitted the rules of their savings banks to the registrar of friendly societies in pursuance of their private Acts, and the aggregate of their annual returns for the year 1884-5 is as follows :—

Deposits during the year £171,246

Balance due to depositors £661,177

Number of depositors 8,729

Increase during the year 749

Number of transactions (estimated) 61,621

Interest credited £24,033

In addition, five other banks had been established by railway companies without reference to the registrar, and these in 1876 received £72,505 deposits and had 4120 depositors. The total deposits in railway savings banks may therefore be estimated at a...