Chapter VIII (1)

ON PROPOSALS FOR GOVERNMENT SAVINGS BANKS.

"I do not imagine that there can be any more important end
and object of a State than to encourage frugality, and the
investment of the savings of the poor, and nothing in
which I should be more tempted to step out of my way to
encourage, if I were a legislator; but I think the great
test and object of whatever investment I provide specially
for them, must be extreme and perfect certainty, and great
facility of conversion.... Increase in amount of interest
or profit, is as nothing compared to security."--MR. H.
BELLENDEN KER.

For reasons which we have adduced at great length in the last chapter, the feeling grew that a sweeping change would require to be made in the institution of Savings Banks. Supplementary banks of different kinds were established, and they met in great part the object for which they were designed; meanwhile, the great majority of Savings Banks took no steps to provide more conveniences for the public, or they were powerless to effect them.[152] When reasonable changes were resisted between 1850 and 1860, it occurred to several that agencies might be contrived to do the same work after a different fashion, and that this project should be carried out, even were the ultimate result to diminish the usefulness of most of the older banks, or gradually to set them aside. It is to proposals having the former object in view that we must now turn.

It is not a little curious that long before Savings Banks were legalized by Act of Parliament, and even before Dr. Duncan began his earnest and self-denying efforts to establish them on a safe footing, at least two different efforts were made to promote the growth of provident habits by a system of Savings Banks which should extend throughout the entire country. We refer to Jeremy Bentham's scheme of "Frugality Banks," and Mr. Whitbread's "Poor Fund and Assurance Office."

The plan of the former is detailed in Bentham's works; the latter scheme, partly described in an earlier portion of this volume (pages 23-4) was submitted to Parliament in 1807, and a bill,--a full Abstract of which will be found in the _Appendix_,--founded upon it, actually passed the House in some of its earlier stages. Some of the provisions of this bill were admirable; and some, owing to the state of the Post Office of that time, would not have been so easily worked through that department as was intended. As it was, the country preferred the class of banks just then rising into notice; and in 1817 the Legislature forgetting Mr. Whitbread's scheme, gave its sanction and countenance to the banks which had been established on purely benevolent principles, and which were totally independent of each other. In the course of years, that system having been tried in every possible way without producing the safety and convenience so much desired in institutions of this sort, the principle of a uniform plan of banks in connexion with the Post Office advocated by Mr. Whitbread again came up, the story of the proposals for and the introduction of which we are about to tell.

Previously, however, we ought not to omit, for several reasons, to give the outline of the scheme proposed by Bentham even before Mr. Whitbread's proposals. The reader will perceive how thoroughly conversant the philosopher was with the every-day habits of the poor, and how completely he understood their wants and requirements, and sought to provide for them. It is only necessary to add that Bentham advocated this plan as one of many measures of pauper management; that the scheme was to be generally applied throughout the country, and to be taken up and worked by means of a company; the place where the banks should be held to be called "'Industry Houses,' in contradistinction to the 'Public Houses' of friendly Societies." "Should this not be enough," says Bentham, "the vestry room of each place of worship presents an office as near, and the clerk an officer or sub-agent as suitable, as can be desired."[153] After fully going into the hindrances to the spread of saving habits among the poor around him, and the difficulties incident to the laying up and improvement of their surplus moneys,--hindrances and difficulties which had not yet all been surmounted,--he gives the following comprehensive and exhaustive list, which shows how thoroughly he would have mastered the obstacles of a more recent period:--

"Properties to be wished for in a system of Frugality
Banks, commensurate to the whole population of the
self-maintaining poor: viz.

"1. _Fund_, solid and secure:--proof against the
several causes of failure.

"2. _Plan of Provision_, all _comprehensive_:
comprehensive, as far as may be, of all sorts of
exigencies, and at all time, as well as of all
persons, in the character of customers: thence the
amount of the deposits transferable from exigency
to exigency, at the will of the customer, at any
time.

"3. _Scale of Dealing_, commensurate to the peculiar
faculties of each customer: _i.e._ on each
occasion as large as or as small as his
convenience can require.

"4. _Terms of Dealing_ sufficiently advantageous to
the customer: (the more so, of course the better),
regard being had, in the necessary degree to
solidity.

"5. _Places_ of transacting business _suitable_:
adapted in point of _vicinity_, as well as in
other respect, to the conveniency of the customer.

"6. _Mode_ of transacting business _accommodating_:
suited to the circumstances of the customer in
respect of times of receipt and payment, and
_quantam_ of receipt and payment at each time.

"7. _Mode of operation, prompt_, consuming as little
of the customer's time in attendance as may be.

"8. Mode of book-keeping, clear and satisfactory."

There can be little doubt from the above extract, that if Bentham did not make a very practical proposal, he had an excellent idea of the description of agency required.

Another proposal which shared the same fate as did those of Bentham and Whitbread was ventilated in the _Quarterly Review_ for 1827, in an article on "The Substitution of Savings Banks for Poor Laws." This was no new scheme, though the agency by which the scheme was sought to be carried out certainly was original. During the eighteenth century the plan of masters compulsorily deducting payments from the wages they were expected to pay to their servants, in order that the money might form a fund for a time of need, was frequently recommended, and even proposed to Parliament. De Foe, in his "Giving Alms no Charity," tells us how at his own period attempts were made to effect a legislative substitution of savings for poors' rates, and to pass Acts of Parliament which "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." But all the plans, as might be expected, came to nothing. In 1827, however, the Savings Bank principle having become recognised, and the Post Office machinery tolerably efficient it was said that the scheme might be made to work. The writer advocated the establishment of a National Savings Bank, to which the Savings Banks in the country might contribute; "and perhaps," said the _Quarterly Reviewer_, as if recognising the fact of the insufficient distribution of banks, "the remittances to be made might, especially in rural districts, be allowed to be paid into the nearest Post Office, and remitted with its own money to the General Post Office, by whom it might be paid over to the Commissioners of the National Debt." This scheme attracted little or no attention at the time, and nothing came of it. In more than one respect, however, it contained the germ of a plan subsequently carried out, and it is not impossible that some of the numerous claimants for the honour of having originally proposed Savings Banks in connexion with the Post Office may have carefully studied the details.

And this brings us to the early history of Post Office Savings Banks, and to the numerous suggestions which at one time or another seem to have been made with regard to them. No less in respect to the place which these banks are designed to occupy as important public institutions--the people's principal purse--(and that their position in the country will at no distant period be a commanding one there cannot be a reasonable doubt) than for their present attained position and intrinsic value, the question of their early history is a matter for most careful investigation, and one which must not be lightly passed over. The matter of the authorship of the scheme was the subject of considerable discussion at an early stage in its history; and that discussion was not without its value in elucidating some points of considerable importance, and as affording materials for more deliberately investigating many claims which have been put forward. It naturally forms part of our plan, not only to offer a description of the working of the new class of banks--as will be done in a subsequent chapter--but to show, as we propose to do here, in a strictly impartial manner, to whom the country is indebted for the agency now in operation.[154]

Confining ourselves at present to the origination of the _principle_ of Post Office Banks, without reference to the wonderfully simple and efficacious scheme afterwards organized, we find that several different gentlemen had between the years 1850 and 1860, and acting entirely unknown to each other, matured plans, and in one way or another actually proposed them, to remedy the deficiencies of the existing banks, on some such principle as that eventually adopted. To Mr. Sikes, of Huddersfield, however,--of whose previous labours in the cause of Savings Bank reform we have already spoken,--belongs the undoubted merit and honour of having independently originated and matured a plan of operation more or less equal to the object in view; of having persevered in the object of bringing the matter prominently before the public; and of being so fortunate as to have proposed his scheme at a period when the country possessed in Mr. Gladstone a statesman of extraordinary versatility and power at the head of its financial operations, and who has given abundant evidence of his willingness to grapple with uncommon difficulties where a need is proved and the principles of a measure are shown to be sound. As we shall show presently, the same propositions, only differing as to details, were submitted once, if not twice, to Sir Charles Wood when Chancellor of the Exchequer, and once more, by a totally different individual, to Sir George C. Lewis when he held that office. How much, therefore, the measures subsequently carried are primarily due to Mr. Gladstone's sharp-sightedness and energy the reader may judge.

Returning to an account of those who have been represented as suggesting the principle of Postal Banks, we think the number may be fairly reduced by several names. And in that number we would class Dr. W. Neilson Hancock, of Dublin. Of Dr. Hancock's exertions in connexion with the frauds in Savings Banks, and his description of the feeling of insecurity which they engendered, we have already spoken; those exertions related exclusively, so far as we can gather from his pamphlets, to a remedy for this grievance. In a paper[155] read by Dr. Hancock before the Dublin Statistical Society in 1852, and republished in a pamphlet form four years afterwards, we find him saying, that private enterprise had not had a fair trial,--if it had, and failed, then Government should undertake the work, _as it did Money Order business_:--

"That part of the natural business of bankers which
consists in receiving deposits from the poor might be
undertaken by some public officers appointed for the
purpose, _just as_ the granting of Money Orders, another
part of the same business, is carried on by the officers
of the Post Office. Such an institution would be called a
Savings Bank; and in it the Government would be
responsible to the depositors for the acts of the clerks.
So that the entire responsibility of management would rest
with the members of Government in charge of that
department, and the depositors would have perfect security
for any money actually paid to a clerk.... My own
impression is, that if our laws were framed with a view to
allow of small deposits and small investments, private
enterprise is quite adequate to supply a complete system
of safe investments for the poor. But whether that opinion
be sound or not, a Government institution _like the Money
Order Office_, with Government officers and Government
security for those officers, would be infinitely better
than the present system of divided responsibility and
absence of security."

In a further paper, read and published in a pamphlet form in 1855,[156] Dr. Hancock made no further proposal towards the object immediately in our view, although he said--

"The Money Order Office of the Post Office shows that a
large part of the business of banking for the poor can be
cheaply and efficiently conducted by the officers of a
public department. The first step towards the adoption of
such measures is to produce in the public mind a
conviction of the utter instability of banks as now
constituted, and that conviction I have endeavoured to
create."

We believe Dr. Hancock went somewhat further than this, by calling the attention of the Post Office authorities to the matter though, as he presented no distinct scheme to their consideration, it is not very wonderful that the question should rest where he left it. Though Dr. Hancock does not seem ever to have gone so far as to propose "the opening of banks for the poor in connexion with the Money Order Office," much less to develop a plan which should have that end in view--a construction which has been put upon his references to the Post Office machinery,[157]--it is only fair to that gentleman to say that he was one of the first to recognise the merits of such a measure when it was proposed, and to urge its full adoption.

Another name, which has in our opinion been very unnecessarily and erroneously connected with the early history of Post Office Banks, is that of Mr. Ayrton, the member for the Tower Hamlets. To all who remember the strong opposition which Mr. Ayrton offered, not only to the project when before Parliament, but previously to other reasonable reforms in the Savings Bank institution, this association of his name with the origination of the present plan must be very amusing; and yet this is an error into which several have fallen, though traceable, perhaps, to one source.[158] Mr. Ayrton certainly seems to have had a notion, though not till 1858, that the Post Office might be more useful to Savings Banks than it was; and in the Committee of that year, of which he was a member, he asked one of the witnesses--who was actuary to a bank that had several branches in country places--a series of questions, with the object of eliciting the opinion that it would be an advantage to Savings Banks if money orders could be procured in country places at a cheaper rate than 3_d._ and 6_d._, when any person desired to send a Savings Bank deposit to an adjacent town.[159] In the draft report proposed by Mr. Ayrton after the close of the investigation (which was not carried), the following clause appeared:--"That the Committee recommend the Postmaster-General to afford every facility practicable for the remittance of money to Savings Banks, but they do not deem legislation in this respect expedient;" and in our humble view it would have been exceedingly cool if they had! There can be no question that this simple incident has given rise to the misapprehension to which we have just alluded.

We can now come to veritable proposals. Though it is due to Mr. Sikes to say that the fact of prior proposals, with the same object in view, were either forgotten or only came to light for the first time after he had publicly made and urged his plans on the country, it seems not to admit of question that two gentlemen had been, quite unknown to him or the public generally, over the same ground before him, and, whether wisely or not we will not attempt to decide, had desisted from pressing their plans after obtaining an adverse decision with regard to them. So far as the Post Office is concerned, it is only fair to say that the authorities up to quite a recent period have had their hands sufficiently full in completing the plan of Penny Postage Reform which, for several years after the passing of the Act of 1839, was almost held in abeyance; and that, inundated with crude and undeveloped schemes, it was requisite that a plan in which so much was involved should be well matured, and go weighted with the stamp of public approval. Whether, however, the Post Office system was prepared so early as 1851,--the date of the earliest proposal,--to undertake Savings Bank business, is a question which, considering the transition state in which it then was, admits of some doubt.

In 1852, the Rev. George Hans Hamilton, the Vicar of Berwick-upon-Tweed, and now Archdeacon of Lindisfarne, proposed through his relative, Mr. G. A. Hamilton of the Treasury, a national system of Savings Banks to be worked by means of the Post Office,[160] which it is but justice to say presents many, if not most, of the features of the plan eventually produced. Mr. Hamilton met with varying success; his proposals were not taken up warmly, but were understood by him to present difficulties which might ultimately be overcome. Had this gentleman persevered in the advocacy of the scheme which he propounded, or had he had the good fortune, to have fallen on more favourable times, with Mr. Gladstone as Chancellor of the Exchequer, there can be little doubt that his plan would have been cordially taken up and his name ever associated with it. As it was, his exertions were recognised by Mr. Gladstone when he came to deal with the matter, that gentleman referring on one occasion to the valuable suggestions he had made. It should be added, that Mr. Hamilton has, since the plans came into operation, urged a modification of one of its features (to be referred to hereafter), and it is little to say, considering the value and the shrewdness of his original suggestions, that he is well entitled to be heard on the point.

The other gentleman who somewhat later than Mr. Hamilton, and quite unknown to him, made proposals to the same effect, was Mr. John Bullar, the eminent counsel, of the Temple. Mr. Bullar himself informs us that his attention was attracted to the subject by observing the working of a Penny Bank at Putney, which was established in the year 1850. Being a member of the Committee of this bank, he was led to think much over "the then existing system of Savings Banks, and how some of the defects of the system could be remedied." After thinking the matter well over, he drew up the memorandum which we give _verbatim_:--

It is admitted that the present system of Savings Banks is
defective, and that a new system is much wanted.

Among the defects of the present system are:--Want of
perfect security to depositors: risk of loss to trustees
by defaulting clerks, and want of opportunities for the
labouring classes to make deposits as soon as they have
anything to deposit.

Many of the present Savings Banks are only opened for two
or three hours once a week; so that those who would
deposit in them are forced to be their own bankers during
the rest of the week, and are exposed to the constant
temptation of spending what they have in their pockets;
the particular temptation from which Savings Banks were
intended to relieve them.

In order to give perfect security to depositors, they
ought to have the security of the nation.

The establishment of Savings Banks for the whole of the
labouring classes being a matter of national importance,
they ought to be a national, and not merely a
philanthropic institution.

In order that they may confer the greatest amount of
benefit on the labouring classes, they ought to be open
during the whole of every working day.

The principle of a National Savings Bank as a National
institution is already admitted in the Savings Banks for
the Army, the Navy, and the Mercantile Marine.

The principle of Government acting as Banker for the
Nation is already admitted in the Money Order department
of the Post Office.

That department is, in fact, a National Bank. It receives
money from all comers; it retains the money for divers
periods, from four-and-twenty hours to several weeks; and
it pays the money to those who are entitled to demand it.

It would be a mere extension in point of detail if that
department received more money from more comers, retained
the money for longer periods, and paid it out with the
addition of interest upon it.

It is therefore suggested that the Money Order department
of the Post Office should be made a National Savings Bank,
investing the deposits in Government securities, paying a
moderate rate of interest (say two and a half per cent.)
and paying interest only on round pounds deposited for not
less than a quarter of a year.

The trustees of existing Savings Banks should be
authorized (except so far as any depositors might object)
to transfer their deposits to the department.

In all probability the deposits with the department would
amount to at least thirty millions in the course of a year
or so; and at the present price of Consols, this would
give to the Post Office about 200,000_l._ beyond the
interest which they would have to pay to the depositors.

If this would not meet the expenses, the rate of interest
might be 2_l._ per cent., giving to the department an
additional 150,000_l._ a year.

The principle being admitted, there would be no
insuperable difficulty in arranging the details.

JOHN BULLAR.

_Temple, November 8, 1856._

This memorandum was written in November, 1856. Mr. Bullar describes that at that period he was too much occupied to enter into the matter so fully as was necessary, or to agitate by means of the press for some such scheme; but Mr. Bullar's friend, Mr. Joseph Burnley Hume (eldest son of the late Mr. Joseph Hume, M.P.), who had some leisure at command, and perhaps some of his father's desire to achieve an amendment of the Savings Bank system, undertook to bring the matter forward in the proper official quarters. He early saw Mr. Frederic Hill, who was in charge of the Money Order department of the Post Office, and learned from him that the same scheme had already been suggested to the Post Office, and rejected after full consideration. A month afterwards Mr. Hume saw the Duke of Argyll, who was then Postmaster-General, and received a courteous hearing from him. The Duke also said that the Post Office had had the question, or something like it, before them, and that he thought the Chancellor of the Exchequer still had something of the kind under consideration; but gave no definite reply. Subsequently he saw Sir Alexander Spearman, the Comptroller of the National Debt Office, and Mr. Tidd Pratt. "He gathered from them," to use Mr. Bullar's own words, "that they were with him in principle, but regarded the proposed Money Order department as visionary, and that the Government had under consideration a different scheme, which they preferred."[161] Having in this way met with enough discouragement to hinder them--or any other person who might be cognizant of the proceedings that had been taken--from going further, they dropped any further steps to bring about this desirable change.

Happily, however,--for happy, in one sense, it was,--these schemes and the hitherto abortive attempts to carry them into execution, did not reach the public ear, or others might have desisted from entertaining similar plans. As it was, it was still open to any one else to take up the matter _de novo_; and this is what actually did happen. We can well believe, without the assurance with which he has favoured us, that the next adventurer in these apparently difficult seas had no notion that they had been previously navigated. This circumstance does not take from his merit; but it certainly increased his difficulties. How the matter was eventually brought about in the face of the adverse decisions which we have just given, though somewhat better known, is within our province to tell.

In the hands of Mr. Sikes, of Huddersfield, any matter once taken up was not likely to fail for want of thorough ventilation and earnest advocacy. This gentleman had for years interested himself in the extension of Savings Banks. We have already spoken of the fruits of his industrious pen; and now he was once more to propose in a similar manner, and with his accustomed eagerness, another new scheme which he had carefully thought over and developed in his own mind. Once sure of it himself, he resolved to devote himself to its advocacy; to bring it not only before the proper authorities, "but before the public, at the proper time." Mr. Sikes evidently did not dally with the matter. As he made no sort of mention of the Post Office in his evidence before the Savings Bank Committee of 1858, we may fairly assume that at that time the idea of using the Post Office had not occurred to him. He himself states, that, occupied with a favourite idea which he had long cherished, of bringing a Savings Bank "within less than an hour's walk of the fireside of every working man in the kingdom," the organization of the Post Office suddenly occurred to him, and he dwelt upon it till he had struck upon some scheme for applying the one to the other.

As in the case of the other proposals, the leading principle of Mr. Sikes's plan was to employ the machinery of the Money Order Office to collect and forward deposits to a central bank which he proposed should be established in London. Among the principal details of the plan were--the opening in every town, not previously supplied with a Savings Bank, of a Money Order Office, for the reception of Savings Bank deposits; that the money should be remitted to London in the form of Money Orders; that the deposits should be in sums of not less than a pound; and that in return for these deposits or remittances, Savings Bank "Interest Notes" should be issued in London; and that the interest on these notes should be at the rate of 2-1/2 per cent. per annum. That Mr. Sikes did not proceed boldly enough, and that there were some defects and omissions in his scheme, we shall have to show further on; here it is sufficient to indicate in what his plan consisted.

On the reasons for a large and comprehensive reform of this kind, Mr. Sikes was most full and explicit; as, however, we have already been over this ground, and also said much in connexion with the name of this energetic Savings Bank reformer, it is quite unnecessary to repeat here his well-arranged statistics and his generally conclusive observations as they are given in the pamphlet before us.[162] Suffice it to say, that he adduced abundant evidence to show that additional facilities were required, and that if they were given, a proportionate increase of business would be the result; that the existing banks were totally inadequate to meet the requirements of the provident poor, much less to stimulate and increase the number of provident people; and that if his plan, or something like it, were carried out, both objects would be gained. Mr. Sikes argued that in a case of this sort, as in many others, increased facilities would bring increased business, and, in support, he adduced as an instance the Money Order Office itself. Quoting from the Postmaster-General's report for 1856, he gave an extract accounting for the increase of business in that office by the fact of the large additions that had been made to the number of Offices, and to further relaxations in the regulations regarding the issue and payment of Money Orders. "The establishment of a Post Office," said Mr. Sikes, with very great truth, "has unfailing influence in developing the correspondence; and of the Money Order Office, the remittances of a district." Mr. Sikes then instituted a comparison which, though not always to the point (for reasons quite obvious), was scarcely an unfair one, of the relative progress of Savings Banks with their small improvement as to facilities, and the Money Order Offices, with their increased facilities. Within the years 1846 and 1858, the former had progressed at the rate of seven and a half per cent.; the business of the latter had increased at the rate of seventy-nine per cent. He then asked if the stagnation in the business of Savings Banks was not to be traced to the non-increase of their number, their absence in many very populous localities, the slight accommodation given, and the arbitrary routine, and restrictions imposed. If Savings Banks were worth anything, were they not worth improving? And would not those supplementary banks do much themselves, and very probably cause an improvement in existing ones?

Having matured his plan in June, 1859, Mr. Sikes communicated it to Mr. Edward Baines, the member for Leeds, in the form of a printed Letter; and this gentleman, well known for his wide sympathy with the industrious classes, after studying its details, expressed his warm approval of the project, and engaged to bring it under the notice of Sir (then Mr.) Rowland Hill, the Secretary of the Post Office. That there was now no indisposition--if ever there was--on the part of the authorities to such a measure is evident from the reception it met with at their hands, as shown by the letter below.[163] Encouraged to persevere, Mr. Baines and Mr. Sikes had an interview with the Secretary and some of the principal heads of departments at the Post Office, when the draft of a plan was read to them for working such a measure, the official gentlemen concerned assuring them that this might be done "with great ease and simplicity."

The next step which Mr. Sikes took was to place himself in communication with the Chancellor of the Exchequer; and as a preparatory step, he printed his scheme afresh, extending it somewhat, in the form of a Letter to Mr. Gladstone. The communication was met by a cordial acknowledgment, in which that right hon. gentleman promised his best attention in examining the scheme, not only on account of the interest attaching to the subject, but "of the authority with which it was invested," in proceeding from the quarter whence it did. The letter was then given to the public, and immediately attracted general attention, and warm expressions of approval. It was read before the Social Science Association which met in Bradford in the autumn of that year, Lord Brougham having also mentioned the matter in his inaugural address. For a few weeks it was a common subject of discussion, public opinion being somewhat divided as to its advisability as well as practicability. Several Liberal newspapers, however, went warmly into an advocacy of the principles of the measure, if not of the measure itself; and in the early part of November, 1859, the members of the Huddersfield Chamber of Commerce strengthened the hands of their townsman, by passing an unanimous sentence of commendation upon it; and not only so, but they resolved to send Mr. Sikes's tract to all the Chambers of Commerce in the kingdom, recommending them to support the plan, which several of them eventually did.

During the interval, when the ball was kept rolling in this manner, Mr. Gladstone had amply fulfilled his promise to give the subject his best attention, as sufficiently appears from a letter which, belonging now to the history of Post Office Savings Banks, we append below.[164] Expressions of opinion on the advantage of some such scheme still continued to be sent to Mr. Gladstone and Mr. Sikes, which must have encouraged them both to persevere, and which made it very apparent that the public had made up its mind not to allow the matter to drop--at any rate, quietly.

The most important petitions sent to the Chancellor of the Exchequer emanated from Liverpool, Leeds, and York; but a resolution passed by the Dublin Statistical Society, presided over by Dr. Whately, the late Archbishop of Dublin, and signed by Dr. W. Neilson Hancock as secretary, deserves special notice, were it only for the weight attaching to Dr. Hancock's own name.[165] In answer to these and similar memorials, Mr. Gladstone seems to have generally replied that the matter was under his most careful consideration; "that he received with cordial satisfaction this expression of opinion, proceeding from persons well qualified to judge, and that he earnestly hoped it may be practicable to frame a plan by which the objects in view may be extensively attained."

And now the curtain may be said to have fallen upon the scheme, and for fully twelve months it is beyond the public gaze, and entirely beyond public criticism. We find that now and then Mr. Sikes was busy during the period in answering objections to his plan, with as much energy and good sense as he had previously displayed in his advocacy of it, before he had the good fortune to enlist the services of Mr. Gladstone in its behalf. Now, however, it may be said to have passed out of his hands, and to have fallen into those of others, who, no way averse or unfriendly to his project, saw that it would be necessary largely to remodel it, in order to make it fit into the machinery, (of the working of which Mr. Sikes was necessarily ignorant,) upon which it would have to be engrafted. Furthermore, among much approving criticism of the scheme, there had been not a little feeling exhibited among influential organs of the public press, that Mr. Sikes had not gone far enough in his proposals, and that on some points the details were not nearly so liberal as they ought to be made. As an ardent friend to the Savings Bank system, Mr. Sikes had doubtless well considered the objections which Savings Bank managers were likely to urge; and, to stave off opposition on the part of many of his friends, had apparently sacrificed a detail here and there in a matter where boldness of action was most essential to success. If one thing is more clear than another in the history of our great reforms, it is that the projector who plunged right into the stream was always surer of ultimate success than he who paddled about in the shallows, or kept as close as possible to the brink. In this way, therefore, it seems to have come about that not only must modifications be made, but steps must be taken to perfect the plan, and present it in such a shape as a measure of reform as should silence cavil and complaint. Twelve months for such a work might seem long--might, indeed, be unnecessary; but few will say that the scheme,--so much remodelled as fairly to be considered a new one, did not amply atone for the delay.

The task of adopting Mr. Sikes's proposals just as they originally stood, and which proposals the Post Office authorities had generally acquiesced in, seems to have been abandoned on account of the practical difficulties which stood in the way; one of which Mr. Gladstone indicated in the letter we have already given. The object now, therefore, was to originate a mode of working altogether independent of Mr. Sikes's plan, in which the desirable modifications to be made in Mr. Sikes's scheme should also be introduced. Before, however, we show how this was eventually accomplished, it is necessary to say in what these important modifications consisted.

1. Mr. Sikes's scheme was proposed to be worked by a
Commission who should preside over a central bank and
employ the agency of the Post Office. Such a division of
authority would have been unprecedented, and must have led
to confusion and great expense, if even it could have been
so arranged.

2. The Commissioners were to have been empowered to
receive Money Orders as deposits and acknowledge them in
the form of an expensive description of "Interest Notes."
The Money Orders and the "Notes" themselves would have
required all the surplus interest to have been expended
upon them, and there would have been little chance of the
scheme turning out self-supporting.

3. Mr. Sikes proposed to open only 1,527 Money Order
Offices as Savings Banks. He proved at great length that
the system he proposed was not only the best, but the
cheapest; yet at the solicitation, we believe, of several
Savings Bank actuaries, he did not go the length of
including any town where provision had been made for
provident people. This, of course, restricted the
inhabitants of 600 towns to the dearer mode of operation,
though the cheaper one was shown to hold out anticipations
of producing by far the best article. Such considerations
could not, we should imagine, weigh with the Post Office
when once the matter was taken in hand, and no arbitrary
test of the above nature could ever have been entertained.

4. Most unsatisfactory, however, was the proposal to make
1_l._ the minimum sum that could be received. There were
thousands of depositors in the ordinary banks whose
average deposits were not half that sum. Moreover, the
plan was designed to meet the wants of the poorest; to
encourage and foster the habit of small savings among
those who had not yet begun to save. No provision,
therefore, could have been more unfortunate; and it is
well that Mr. Sikes's fears--such as, that if a less sum
were taken the measure would not pay--were soon shown to
be groundless.

It is not our intention to trouble the reader with much detail as to what passed during the preparation, or, we may call it, the organization of this interesting and beneficent measure. It is, perhaps, sufficient to say, that differences of opinion rose upon it--that some of the authorities of the Post Office thought Mr. Sikes's scheme, with many important modifications, might be worked; while others of them held that no amount of alteration would enable the department to work it by means of Money Orders. In this way several months passed in discussion, and it is scarcely too much to say, that but for the unceasing vigilance of Mr. Gladstone, who continued to urge further efforts to overcome the natural obstacles that presented themselves, the temporary fate of many a good measure might have been the fate of this.

It was when matters were in this state of abeyance, and when the difficulties in the way fairly threatened to overwhelm the scheme altogether, that a gentleman, since prominently connected with all that relates to Post Office Banks, was induced to turn his attention to the subject. Mr. Chetwynd, one of the staff officers of the Money Order Office, took up the matter of applying the Post Office machinery to Savings Banks; and, discarding all the other plans for working then in dispute, addressed the Postmaster-General in November, 1860, and proposed a plan which he thought would, notwithstanding all the difficulties that had been experienced, meet all the reasonable requirements of the case. Mr. Chetwynd's scheme was based on the principle that Savings Bank business might be done "through the various Money Order Offices in a much more economical manner than by the issue and payment of Money Orders;" and that the plan should be so comprehensive as not to need the restriction which had been previously put upon it that sums under 1_l._ could not be received,--that sum, as Mr. Chetwynd truly said, being "so large as seriously to reduce the value of the benefit proposed to be conferred on the provident portion of the public."

The following outline, necessarily brief, gives all the material points of the plan proposed, and which has in its integrity been since carried out, and forms the basis of existing arrangements:--

1. That every holder of a Money Order Office shall act as
an agent of a Central Savings Bank, and shall receive
deposits of any amount within the limit fixed by statute.

2. That he shall enter each deposit in a numbered
depositor's book, to be kept by the depositor, and in an
account to be forwarded to London daily with his Money
Order account. That on the occasion of a first payment,
the depositor shall make the declaration prescribed by
statute, and also sign his name in his depositor's book.

3. That the holder of the Money Order Office shall charge
himself in his Money Order account with the total of the
deposits thus received.

4. That this account should, on arrival in London, be
regularly examined by the examiner of the Money Order
accounts; and that when this has been done the daily
schedule shall be forwarded to the Central Savings Bank.

5. That the Central Savings Bank shall immediately send an
acknowledgment for every deposit direct to the depositor
through the Post Office.

6. That a depositor who may wish to withdraw money, shall
give notice in writing[166] to the Central Savings Bank,
and shall receive therefrom a warrant for the required
amount, payable at the nearest Money Order Office.

7. That in presenting this warrant for payment, the
depositor must also present his depositor's book.

8. That the holder of the Money Order Office shall enter
withdrawals in the depositor's book, and shall account for
the money he shall pay, in the same manner as already
described in the case of deposits, and shall be credited
with the sums daily.

9. That the depositors' books shall be forwarded to London
annually, in order that they may be compared with the
ledgers in the Central Savings Bank, and in order that the
interest due may be inserted in them.

The first step which appears to have been taken in regard to the scheme of Mr. Chetwynd was to refer it to Mr. Scudamore, who then filled the office of Receiver and Accountant-General,--an office the holder of which is at the head of the financial operations of the Post Office. After going carefully over the plan which had been submitted to him, he came to the conclusion that it was the best of those which had as yet been framed; "that it will be productive of very great advantages to the working classes, and that it will be self-supporting." He also characterised it as exceedingly simple, and thought, that if the execution of the plan were difficult, that difficulty would be due to the amount rather than to the nature of the business to be transacted. In conjunction with the projector, Mr. Scudamore then proposed some important modifications and additions to the plan,[167] and proceeded to enter fully into arguments and calculations to show that it would offer the largest amount of convenience to the public, and be at the same time the least expensive mode of operations so far as the State was concerned. Into these and other purely technical matters there is no need that we should further enter, beyond saying that, so recommended, the scheme was warmly approved by the Postmaster-General; and in a month from the date of Mr. Scudamore's report, it fell into the hands of Mr. Gladstone, and became, as it were, the property of the nation. How the Legislature dealt with it will fittingly bring this chapter to a close.

On the 9th of February, 1861, _Mr. Gladstone_ took the first step towards bringing the subject forward in Parliament, by moving a resolution in the House, of which he had previously given notice:--"That it is expedient to charge upon the Consolidated Fund of the United Kingdom of Great Britain and Ireland the deficiency, if any such should arise, in the sums which may be held on account of Post Office Savings Banks, to meet the lawful demand of depositors in such banks, in the event of their being established by law." This, which was according to the usage of the House the first necessary preliminary, provided that the burden of the measure should be thrown upon the State. Mr. Gladstone stated[168] that in submitting this resolution he did not wish to pledge members either to the principle or the details of the bill which he intended to found upon it. His sole object was to afford new facilities for the deposit of small savings to those who did not possess them, or possessed them imperfectly. He would not only like to do this, but also to improve materially the existing facilities, so as to enable many more to take advantage of them; but this was a more difficult problem,--an object often attempted, yet little accomplished. The main difficulty, the responsibility of trustees, had baffled all attempts to deal with it. How true this was, the reader who has followed us in our account of the legislation on the subject will readily believe. In this difficulty he had been led to see if they could not avail themselves of another description of machinery altogether, "recommended by its incomparable convenience," for the purpose of carrying out the same objects for which Savings Banks were originally set on foot. He then went fully into such statistics of the number and conveniences of existing banks as those which we have already furnished, and compared that machinery with the Money Order system at the Post Office and its ramifications all over the country. Not only were the Money Order Offices open every day for a considerable number of hours, but the Postmasters were open and adequate to the transaction of increased business. Mr. Gladstone then dwelt on the want of facilities, which, he said, exercised an important influence on the amount of the savings of the poor; "the experience of this winter, 1860-61, must have demonstrated to anybody who thought upon the subject, that the resources of this class had not of late years increased in proportion to the rate of wages and the improvement in their standard of living." A smaller portion of their gross income was, he thought, laid by at that moment than was laid by twenty years before. He was sanguine enough to expect that, if readier means were afforded than of laying by in a season of prosperity, their ability to cope with the distress of the future must be largely increased. Now, the banks which he intended to propose would afford these means; and not only so, but under the arrangements of the measure, he would answer for it that the Post Office machinery should be applied carefully and gradually--the most neglected districts to be supplied first. Mr. Gladstone then went into the object and details of the measure. His proposal was that the Post Office should receive and return deposits, with interest, in the same way as Money Orders were dealt with, charging merely a fair remunerative price for the work performed. In one respect the principle upon which the new banks would be founded would be essentially different from that of the old ones. The latter had been established with the notion that the State might very fairly offer to the labouring classes a certain premium by way of inducing them to make deposits; but while he was far from desiring to cast any censure upon the principle, he did not deem it right in the present case to hold out to depositors the expectation of obtaining any high rate of interest. He proposed to give a rate of interest 10_s._ less than that given by the ordinary banks, with a proviso that it might be increased to that rate, if found necessary, "and within certain limits."

Mr. Gladstone provided an ample set-off against a less remunerative return for the money, in the security which he now proposed to give for its safe custody. The responsibility of the State, on account of Savings Bank money had always been a subject of the greatest difficulty; he argued on this occasion with perfect reasonableness, as many of his predecessors in office had argued before, that the State could only be responsible for the acts of its own officers; and as up to this time no plan had been devised by which the State could participate in all the proceedings of Savings Banks, it was impossible to carry out the principle of a perfect Government guarantee. What, however, could not be done with the old banks, might and should be done with the new. In his proposals there was something so essentially different from anything they had been accustomed to, that a Government guarantee was an easy and a possible thing. The money would be received by Government officials: it would be invested by these servants in Government securities; and it would be inexcusable to refuse a Government guarantee for the full amount. Hence the motion which he had made. The only effective form which this guarantee could take was the technical one, to pass a resolution providing that if any difficulty arose in the means of meeting the lawful demands of lawful depositors, that difficulty might be met by a charge on the Consolidated Fund. Mr. Gladstone, in concluding, hoped honourable gentlemen would not be alarmed at his resolution, as he would expressly state then that the great basis of this new arrangement was that it should be self-supporting.[169]

_Mr. Francis Crossley_ (now Sir Francis) went over the ground of the very deficient means of investment for the surplus cash of the poor, producing statistics of a kind with which our readers are now sufficiently familiar, and stated that it was impossible to over-estimate the advantages which must accrue to certain classes in the country from the carrying out of the proposals which had been submitted to them. "A great deal of fault," said Mr. Crossley, "had been found with the improvidence of the working people in not saving money, but let them first see what the Government had done to help them. The State provided beer-shops in every street for working men to spend their money in as fast as they earned it; but hitherto he did not think it had been sufficiently forward in giving them facilities for saving their money." He then alluded to the fear which working men had of the ordinary banks, from their masters being connected with them, and who from that connexion would be able to see what they were able to save. "Under the Postmasters, this would, or should be, different." The country was indebted to Mr. Gladstone for the amount of attention he had bestowed on the proposals of Mr. Sikes. Mr. Crossley concluded: He "did not think Government ought to seek to make a profit on the new business; nor did he think they ought to lose by it. The working classes of the country did not want charity, they only wanted a fair field and no favour, and it seemed that at length they were about to get it. If at any time the rate of interest could be raised without loss or inconvenience, he hoped it would be done." _Colonel Sykes_ said that no praise could be too high for anything of this sort, which tended to induce the working classes to lay by against a bad time. He contented himself with referring to two or three subjects connected with the mode of working the scheme. _Mr. Arthur Kinnaird_ thought the scheme simple and practical. He "heartily congratulated the Chancellor of the Exchequer on having at last succeeded in one of the fondest hopes of his heart--that of creating a two and a half per cent. stock." Mr. Gladstone at once demurred to this, and stated that he had no notion of establishing a national bank. The money which came into the hands of Government by means of the bill would simply be applied as under the existing Savings Bank law. Mr. Gladstone, in closing the debate, took the opportunity of referring to Mr. Sikes, "who had devoted a great amount of labour to the subject. He felt greatly indebted to him. At the same time, the bill was not intended to embody altogether Mr. Sikes's plan, though this was a matter of detail into which he would not then enter."

Three days after this discussion the Post Office Savings Banks bill was introduced into the House of Commons _pro formá_ by Mr. Massey, the Chancellor of the Exchequer, and Mr. F. Peel. Mr. Sotheron Estcourt on this occasion commented on the importance of the bill, and objected to a first reading without an explanation of its provisions; all that was known of it being that the Government were about to frame on its provisions banks of deposit on a gigantic scale, and thus by a merely formal proceeding were about to lay the foundation for very important consequences.