The business of the Post Office savings banks commenced on the 16th September, 1861, when 300 offices were opened for the receipt of deposits, and on that day 435 deposits, amounting to £911, were received. Steps were taken by previous advertisement, and by special instructions given to the postmasters and receivers at whose offices the first facilities were offered to start the business, and these means of commanding the attention and securing the confidence of the public were so successful, that at the end of 1862, 2,535 offices were open, and a fund amounting to £1,698,221, including interest, had accumulated. Every year there is issued a report of the Postmaster-General on the Post Office, and from the twenty-third* or last report, issued in September, 1877, we extract the following particulars (see pp. 34, 35), which show at a glance the returns for the past year, and the progress made in the fifteen years since the Post Office savings banks were established. During 1876 there were 188 new offices opened for savings bank business: 153 in England and Wales, 23 in Scotland, and 12 in Ireland. The proportion of depositors to population was 1 to 19 in the United Kingdom; or 1 to about 15 in England and Wales, 1 to about 71 in Scotland, and 1 to about 87 in Ireland. Looking at the combined accounts of the two systems, it appears that since the establishment of Post Office savings banks the thrifty habits of the people have been so far influenced, that the number of depositors has been more than doubled, and the capital owing to them raised considerably more than one half. This is no doubt very satisfactory, but if the population of the United Kingdom, which is 33,891,237 and the inhabited houses, which number 5,632,682, are taken into consideration, it must be admitted that, while in these fifteen years 5,448 offices have been opened, while many facilities in the internal arrangements of the Post Office Savings Bank Department have been organized to expedite the forwarding of acknowledgments for money received and the payment of warrants to withdraw, and, generally, to make the working of the scheme more efficient, there has not been such a continued and unmistakably progressive increase in the business as might have been expected. While acknowledging that the scheme has been eminently successful, that it has been recognized as a universal boon,' that in many respects it is unquestionably the best system ever established in this or any other country, it is nevertheless true that it has not accomplished all that was anticipated, nor is it accomplishing all that its admirable machinery adapts it to fulfil. It will be well therefore to inquire what effect the establishment of Post Office savings banks has had upon the old bank system, and what hinders depositors in those old banks from accepting the greater advantages of the new; to point out a few defects in the system, which, if remedied, would make the institution infinitely more valuable than it now is; to suggest means for popularizing the subject and extending the education of the people in habits of thrift; to offer a few remarks upon the internal arrangements of the Savings Bank Department; and to inquire what influence the Post Office savings bank scheme has had upon foreign and colonial govern ments. Referring, then, to the effect the establishment of Post Office savings banks has had on the old bank system, we find that, whereas in 1860 there were 638 old banks in existence, there are now only 466, showing a decrease of 172; the number of depositors was 1,585,778, and is now 1,493,401, showing a decrease of 92,377, while the accumulated capital up to November, 1876, is £43,283,145, or £2,024,000 in excess of that held in the year 1860. Doubtless this result is attributable to the accumulation of interest, as it is probable that. many depositors of long standing do not disturb their accounts, being reluctant to forego the higher rate of interest as compared with that allowed in the Post Office savings banks. At the same time these figures prove that until the inequality in the rates of interest between the two systems,. which has existed from the commencement and continues to the present day, is adjusted by the legislature, the Post Office savings. banks will not hold that place in public estimation which it is proper they should.. Mr. Lewins thus adverts to the question in his admirable work : The old savings banks deposit their funds with government, and are allowed interest on their money at the rate of £3 5s. per cent. The Post Office banks of course deposit their money with government, and are allowed interest at the rate of £2 10s. per cent. the 15s. per cent. difference between the two rates, an average of half of it is given by the old banks to their depositors. Now it is well known that the average cost of each transaction in the Post Office banks is little more Out of These sums do not include the dividends accruing to the Post Office savings banks on the 5th January (that is, five days after the close of the account in each year), up to the year 1866 inclusive, but after that year the securities belonging to the banks have been valued by the Commissioners for the reduction of the National Debt, and the amount, including dividends due but not paid at the end of the year, has been inserted in the above return. The falling off in the cost per transaction and in the percentage of cost of management in 1863 and the increase in these items in 1864 are attributable to one and the same cause, viz., to the payment during 1864 of various charges properly belonging to 1863. Since 1868, the charge for postage, amounting to about d. per transaction, has ceased to be debited against the Savings Bank Department. § Certain exceptional expenses incurred in 1875 tended to increase the average cost per transaction. a The amount of outstanding warrants on 31st December, 1874, was 36,217., but the amount in the Postmaster-General's hands to meet payment of these warrants was 21,4997. only. It will be seen that the total number of accounts open at the end of 1876 shows an apparent decrease of 74,729 in the accounts open to the end of 1875. This is due to a Departmental arrangement by which small balances on accounts in which no transaction has taken place for a considerable period have been transferred to what are technically called 'dormant ledgers. But for this arrangement an increase would have been shown of 92,649. accrued at the end of The total amount de The total amount of the balances at the credit of depositors, together with interest 1876, was 26,996,550., being an increase of 1,809,205%. on the total of the previous year. posited in the Post Office savings banks from the commencement, inclusive of interest credited to depositors, was in round figures 90,999,000l., and the amount withdrawn 64,002,000., leaving a balance remaining in deposit on the 31st December, 1876, of 26,996,000. than half the average cost of a transaction in the ordinary savings banks.* If government can still afford to pay the old savings banks the higher rate of interest, it might afford, at the lowest computation, to give 10s. per cent. more to depositors in the Post Office savings banks. If government cannot afford to pay the higher rate, it ought to discontinue its charity, which, like all other charitable doles, excites discontent among those who think they have, and really have the right de facto, if not de jure, to share it. That the rate should be equalized in one way or other admits, we think, of little question; but that the government should pay more than it can pay without loss admits of less.* This is not the case with the old banks. Only very recently a case of fraud occurred at Chertsey, the secretary having embezzled the sum of £2,000, exclusive of interest. The prosecutor urged the case as one of much gravity, considering the position. the prisoner (an old man nearly eighty, and, as usual in such cases, much respected in the neighbourhood) held in the bank, and remarked that, had it not been for the liberality of the trustees and managers in subscribing upwards of £2,000, the depositors would have been deprived of the provision they had made for their old age.' According to the report of the case in the ed that 19s. in the pound would be paid to 'Times' of September 8, 1875, it was statthe depositors. The losses from fraud in the Post Office savings banks are insignificant in comparison with the extent and magnitude of the business. From the outset to the end of 1875 the total number of transactions, that The total loss to the government on the old banks up to the end of 1876 was £3,250,676! It was caused in this way. From 1818 to 1828 inclusive, interest was allowed at the rate of £4 11s. 3d. per cent., and from 1829 to 1844 it stood at £3 16s. per cent. Both of these rates were in excess of the amount earned by the government, so that in the year 1844 the deficit was £2,179,934. In that year the rate of interest al- is, deposits and withdrawals, was 36,344,lowed to depositors was reduced to £3 5s. 353, amounting in the aggregate to £137,607,593. Yet the total loss from fraud up per cent., and the present deficit is that of 1844 and the interest since accumulated and to that time was only £4,387, or at the rate still accumulating thereon. If on two ocof three farthings per cent. To the end of casions the government could reduce the 1876 there was neither increase nor diminurate of interest, why should not the interest tion of this rate, and the experience of the be again reduced, so that the two systems of its safeguards for the prevention and deDepartment is conclusive as to the efficiency may be placed on an equality? The ques-tection of fraud. Contrast this with the tion was recently discussed in parliament, and a bill was introduced on the subject, but was withdrawn. Equalize the interest, either by reducing that allowed to old banks, or increasing that allowed to Post Office savings banks, and the result would be that the depositors in the old banks would, without doubt, in process of time transfer their accounts to the Post Office banks, and in doing so they would avail themselves of many advantages which it is impossible for any private enterprize to offer. For example, absolute security is guaranteed, and every depositor bas the satisfaction of knowing that the credit of the whole British government is pledged to pay back with interest whatever he may invest. No matter what defalcations may be made by postmasters, or by officers in the Savings Bank Department, the money is as safe as the Bank as far as the depositor is concerned, so long as he complies with the terms of the Act in demanding an acknowledgment of the money deposited. This was written in 1866. The average cost of a transaction in the Post Office savings banks during the whole period of their existence, has been 6 d., as compared with 1s. in the old sav ings banks. losses by fraud in the old savings banks, losses which fall upon depositors themselves, recommendation. From returns laid before and the new system requires no stronger the House of Commons in 1857, it was shown that during a period of thirteen amount of defalcations in old savings banks, years, viz., from 1844 to 1857, the total Office, was £179,280, of which sum a loss officially reported to the National Debt of £117,732 was borne by the depositors. But there are other advantages. Depositors in the old banks have only a choice of 466 banks, which may or may not be conings banks can deposit at any of the 5,448 venient depositors in the Post Office savoffices. In the old banks depositors must pay in and withdraw their money at the ings banks depositors may pay in or withsame office, whereas in the Post Office savdraw where they like, and they have the run of 5,448 to select from. The convepossible in connection with the stupendous nience of this arrangement-which is only machinery of the Post Office, and forms the system-cannot be too widely known. one of the most distinguishing features of It is a great boon for every one to have a banking account in every town in the king dom, to be able to withdraw money when travelling on business, at the seaside, or elsewhere; and that the system is recognized as valuable, is shown by the following statement in the Postmaster-General's Report of 1876 Of the total number of deposits and withdrawals last year, 28 per cent. were made at offices other than those at which the accounts were originally opened. In 1874 the proportion of such transactions was 26 per cent.; in 1868, 19 per cent.; and in the first year of the establishment of Post Office savings banks, only a little over 4 per cent.' Among other advantages of the Post Office system should be mentioned the fact that secrecy is enforced upon all officers connected with the banks; that all correspondence is sent free through the post; that there are no fines, pains, or penalties, of any description; that deposits and withdrawals can be made as often as may suit the convenience of the depositors; and that the offices are open every day, and almost at all hours. Any depositor wishing to leave an old bank, has only to apply for a certificate of transfer, and, with little further trouble, his account will be transferred. During the year 1876 the total amount transferred from old banks to the Post Office savings banks was £132,937. Dr. W. Neilsou Hancock, of Dublin, in a paper read at the recent Glasgow meeting of the British Association, stated that he considered the continued maintenance of the trustee savings banks a waste of charitable effort, seeing that the Post Office savings banks offer so many more facilities; and he recommended that the State should withdraw from its connection with them, as their maintenance involves an annual expense of £250,000. The security they offer is imperfect, and it is bad teaching for the poor to offer them a bounty at the public expense to invest their savings in a less perfect security than the Post Office savings bank. Dr. Hancock then proceeded to show how the State could effect an immediate saving of £140,000 a year, and an ultimate saving of £280,000 a year, by closing the trustee savings banks altogether. There is one defect in the Post Office savings bank system-common also to the old savings banks-which, if remedied, would make it infinitely more valuable than it now is, namely, in the annual and total limit of deposits. It would be an inestimable boon to thousands of middle class folk if they could invest in the Post Office savings banks a hundred pounds or so, instead of being limited to the sum of £30 per annum, or £150 in all. There are many who can save £50 to £100 per annum, who have in the distance some lucrative investment, but who have in the meantime no safe place for their money. It is difficult to conceive what objection there can be to extending the limit to, say, £100 per annum, or £500 in all, except the selfish interest of the banking community, who have persistently opposed their own imaginary grievance to the public good. Referring to the subject of extending the limit of deposits, the Controller of the Savings Bank Department, in one of those admirable reports which form so important a feature in the appendices of the Postmaster-General's annual reports, remarks :— The large and constantly increasing number of communications received from persons who are desirous of depositing in excess of the prescribed amount, shows a growing desire, throughout the saving portion of the community, that the statutory limit should be exevidence of being made by persons who are tended. The applications, as a rule, give no likely to invest their money in public securities, or to whom the amount of interest to be obtained is not so much an object, as that they may have a ready means of making deposits and withdrawals, and the absolute certainty of being able to withdraw the precise amount paid in. In some cases the applicants sought to deposit small legacies; in others, hoarded money which had become an increasing source of anxiety (as in one case, where a person had secreted £100 in the thatch of his house); and another application was on behalf of seamen generally, a class of persons to whom, it was alleged, an extension of the system would be of special service. As a proof that many to any other investment, it may be stated that, persons prefer the Post Office savings bank in numerous instances where the amount they wish to deposit is over the limit, they, in a measure, evade the restriction, by depositing portions in trust for other persons; and it further appears that some depositors, whose balances have reached the final limit of £200, although warned that no further interest will accrue until the balance is reduced below that sum, yet fail to make a withdrawal. From these facts it may safely be inferred that, as the Post Office savings banks have induced many persons of small means to become depositors, so, if the limit were extended, others would be attracted whose savings would be comparatively large, and whose requirements could not be so fully met in any other way.* The annual limit of deposits in France is £40; in Belgium £120; in Denmark there is no limit; in Prussia it varies from £3 15s. to £150, and in some institutions there is no limit; in Switzerland it varies from a very small sum to £400; and in Austria,' from £50 to £1,500. Eighteenth Report of the Postmaster-General on the Post Office. 1872. Page 43. |