SAVINGS

BANKS  .1 The establishment of post office savings banks was practically suggested in the year 186o by Charles William Sykes of Huddersfield, whose suggestion was cordially received by W . E . Gladstone, then chancellor of the exchequer, to whose conspicuous exertions in parliament the effectual working-out of the measure and also many and great improvements in its details are due . Half a century earlier (1807) it had been proposed to utilize the then existing and rudimentary money order branch of the post office for the collection and transmission of savings from all parts of the country to a central savings bank to be established in London . A bill to that effect was brought into the House of Commons by S . Whitbread, but it failed to receive adequate support, and was withdrawn . When Sykes revived the proposal of 1807 the number of savings banks managed by trustees was 638, but of these about 350 were open only for a few hours on a single day of the week . Only twenty throughout the kingdom were open daily . Twenty-four towns containing upwards of ten thousand inhabitants each were without any savings bank . Fourteen counties were without any . In the existing banks the average amount of a deposit was 4, 6s . 5d .

Gladstone's Bill, entitled " An

Act to grant additional facilities for depositing small savings at interest, with the security of Government for the due repayment thereof, " be-came law on the 17th of May 1861, and was brought into operation on the 16th of September following . The banks first opened were in places theretofore unprovided . In February 1862 the act was brought into operation in Scotland and in Ireland . Within two years nearly all the money order offices of the United Kingdom became savings banks, and the expansion of the business was continual . The growth of business is shown in the following table: Savings Banks . Year ending Average Average Average Average Number 31st December . Number of Amount of Balance in of Offices . Accounts . Deposits. each Account . — £ s d T 1863-1868 663,000 7,000,000 11 3 5 3,390 1869-1874 1,373,000 18,000,000 13 5 3 4,498 1875-188o 1,889,000 29,000,000 15 12 5 5,742 1881-1885 3,088,000 42,000,000 13 11 3 7,348 1886-.1890 . 4,248,000 59,000,000 13 16 ro 9,025 1891-1895 5,776,000 83,000,000 14 7 0 ro,888 The code of the 1st of November 1888 did not enlarge the limits of deposits or make any great and conspicuous change in the general system, but the postmaster-general obtained power to offer certain facilities for the transfer of money from one account to another, for the easier disposal of the funds of deceased depositors by means of nominations, and in various ways for the convenience of the customers of the bank . Arrangements were made for reducing to Is. the cost of certificates of births, deaths and marriages required for savings bank purposes .

In

July 1889 Local Loans 3 % Stock was made available for purchase through the post office savings bank . " In July 1891," says the report of the postmaster-general in 1897, " another Act of Parliament was passed by which the maxi-mum amount which might be deposited was raised from £150 to £200, inclusive of interest . The annual limit remained at £30, but it was provided that, irrespective of that limit, depositors might replace in the bank the amount of any one withdrawal made in the same year . The object of this provision was to avoid curtailing the saving power of a person who might be driven by emergency to make an inroad upon his store, but who might nevertheless, when the emergency had passed, find himself none the poorer and able to replace the money withdrawn . " The act provided also that where on any account the principal and interest together exceeded £200, interest should cease only on the amount in excess of £200, whereas previously interest ceased altogether when it had brought the balance of an account up to £200 . " The next striking development of the Savings Bank arose out of the Free Education Act, passed in September 1891 . The 1 For a succinct account of the history of the post office savings bank, " so far as depositors and the general public are concerned," see Forty-third Report of Postmaster-General (1897), pp . 32 seq . government of the day desired that advantage should be taken of the opportunity to inculcate upon parents and children alike a lesson of thrift—that they should save the school pence which they were no longer bound to pay . The Education Department and the postmaster-general worked in concert to realize this end . School managers were urged to press the matter upon all concerned, special stamp slips were prepared and issued, managers were supplied on credit with stocks of stamps to be sold to the children, and clerks from the nearest post offices attended at schools to open accounts and receive deposits . The arrangement began in January 1892; about 1400 schools adopted the scheme at once, and three years later this number had risen to 3000 .

A sum of nearly £14,000 was estimated to have been deposited in schools in 5 months, and about £40,000 in the first year . Concurrently with the spread of the stamp-slip system in the schools, the

extension of School Penny Banks, connected intimately with the Savings Bank, was a conspicuous result of the effort to turn into profitable channels the pence which no longer paid school fees . " In December 1893 another Act of Parliament extended the annual limits of deposits from £30 to £50 . The maximum of £200 remained unchanged, but it was provided that any accumulations accruing after that amount had been reached should be invested in government stock unless the depositor gave instructions to the contrary . In December 1893 arrangements were made for the use of the telegraph for the withdrawal of money from the savings bank . Postmasters-general had hesitated long before sanctioning this new departure . It was known that the system was in force abroad, and it was recognized that there might be, and doubtless were, cases in the United Kingdom where the possibility of withdrawing money without delay might be all-important, and might save a depositor from debt and distress . But, on the other hand, it was strongly held that the cause of thrift was sometimes served by interposing a delay between a sudden desire to spend and its realization; and it was also held to be essential to maintain a marked distinction between a bank of deposit for savings and a bank for keeping current accounts." On the whole, the balance of opinion was in favour of the change, and two new methods of withdrawal were provided . A depositor might telegraph for his money and have his warrant sent to him by return of post, or he might telegraph for his money and have it paid to him in an hour or two on the authority of a telegram from the savings bank to the postmaster . The first method cost the depositor about 9d., the second cost him about is . 3d. for the transaction . On the 3rd of July 1905 a new system of withdrawal was instituted, under which a depositor, on presentation of his book at any post office open for savings bank business, can withdraw immediately any sum not exceeding D .

Depositors have availed themselves extensively of this system . During 1906, 4,758,440 withdrawals, considerably more than one-half of the

total number of withdrawals, were made "on demand," and as a consequence the number of withdrawals made by telegraph fell to I22,8oz, against 168,036 in the previous year (during only half of which the " on demand " system was in force) . By an act which came into force on the 1st of January 1895 building societies, duly incorporated, were enabled to deposit at any one time a sum not exceeding £300, and to buy government stock up to £50o through the savings bank . Savings Bank Finance.—The increase in the deposits lodged in the post office savings bank must be ascribed to a variety of causes . Numbers of trustee banks have been closed, and have transferred their accounts to the post office bank; greater facilities have been offered by the bank; the limits of deposit in one year, and of total deposit, have been raised; and, since October 1892, deposits may be made by cheque; while the long-continued fall in the rate of interest made the assured 21% of the post office savings bank an increasing temptation to a class of investors previously accustomed to look elsewhere . The high price of consols, due in part to the magnitude of purchases on savings bank account, proved a serious embarrassment to the profitable working of the bank, which had shown a balance of earnings on each year's working until 1896, after paying its expenses and 21% interest to its depositors . Economical working minimized, but did not remove the difficulty . The average cost of each transaction, originally nearly 7d., has been brought down to 54d . Down to the year 1896, £1,598,767 was paid into the exchequer under § 14 of the Act 40 Viet . C . 13, being the excess of interest which had accrued year by year . But since 1895 there have been deficits in each year, and in 1905, owing principally tc the reduced rate on consols, the expenditure exceeded the income by £88,094 .

The central savings bank having outgrown its

accommodation in Queen Victoria Street, London, a new site waspurchased in 1898 for £45,000 at West Kensington, and the foundation-stone of a new building, costing £300,000, was laid by the prince of Wales on the 24th of June 1899 . The entire removal of the business was carried out in 1903 . Under the Workmen's Compensation Act of 1897, sums awarded as compensation might be invested in the post office savings bank . This arrangement proved so convenient that an act of 1900 authorized a similar investment of money paid into an English county court in ordinary actions at common law, and ordered to be invested for the benefit of an infant or lunatic . In 1906 a committee was appointed to go into the question as to whether the post office should provide facilities for the insurance of employers in respect of liabilities under the Workmen's Compensation Acts, but no scheme was recommended involving post office action either as principal or agent . Post offices, however, exhibit notices drawing attention to the liabilities imposed by the act of 1906, and sub-postmasters are encouraged to accept agencies in their private capacity for insurance companies undertaking this class of insurance . Inducements to Thrift.—By arrangement with the war office in July 1893, the deferred pay of soldiers leaving the army was invested on their behalf in the post office savings bank, but it was found that the majority of the soldiers draw out practically the whole amount at once, and the experiment was discontinued in 1901 . At the request of large employers of labour, an officer of the savings bank attends at industrial establishments on days when wages are paid, and large numbers of workmen have thus been induced to become depositors . The advantages of the savings bank appear to be now thoroughly appreciated throughout the United Kingdom, as shown by the following table: On the 31st of December 'goo . Number of Totai Amount Amount aS Depositors. to Credit of to Credit o o Depositors. of each 'C a Depositor . ~ a a°, England and Wales . 7,685,317 £ s. d .

I in 4 Scotland . . . 372,801 122,365,193 15 18 5 I in 12 Ireland . 381,865 5,126,299 13 15 0 I in 12 Totals . 8,058,153 21 2 1 8,439,983 1135,549,645 16 13 I in 5 On the 31st of December 19os . England and Wales . 9,027,112 £ s. d . I in 3.8 135,668,450 15 0 7 Scotland . . . . 451,627 6,205,339 13 14 10 1 in Io.4 Ireland . . . 484,310 10,237,351 21 2 9 1 in 9.1 Totals 9,963,049 152,111,140 15 5 4 I in 4.3 Between the foundation of the bank and the end of 1899, upwards of £648,000,000, inclusive of interest, was credited to depositors, of which £474,000,000 was 'withdrawn .

There were 232,634,596 deposits, 81,804.509 withdrawals, 27,071,556 accounts opened, and 18,631,573 accounts closed . The

cross-entries, or instances where the account is operated upon at a different office from that at which it was opened, amounted to 33 % . It is chiefly in respect of this facility that the post office savings bank enjoys its advantage over the trustee savings bank . In 1905, 16,320,204 deposits were made, amounting to £42,300,617 . In the same year the withdrawals numbered 7,155,283, the total sum withdrawn being £42,096,037 . The interest credited to depositors was £3,567,206, and the total sum standing to their credit on the 31st of December 1900 was £152,I II,14o .