THE LAW OF SAVINGS-BANKS.*
WHILE Mr. Forbes's work, as a thoughtful and well-arranged -statement of a branch of the law on which no text-book pre- viously existed, will earn him reputation as a lawyer, it has an interest of its own widely different from that of the ordinary law-book. Almost every village in the country now has its post-office savings-bank,—there were 5,448 such offices open at the date of the last statistics ; while most of the large towns have also a trustee savings-bank,—of these there were 463. Thus the advantage of saving, and the opportunity of effecting it, are brought home to every man's door. Probably, however, few who pass a post-office or other savings-bank stay to think of the -great extent to which these institutions are used, and the large classes of people to whom they are valuable. Fewer still, per- haps, reflect on the curious phases of human nature that are presented to a savings-bank manager, and the strange past history that some of these deposits might tell. Many a savings-bank • The Z,ate Relating to Trustee and Post-Office Sarings-Banks, with Notes of Decisions and Awards made by the Barrister and the Registrar of Friendly Societies, By Urquhart A. Forbes, Esq., of Lincoln's Inn, Barrister-at-Law. London : Hard- wicks e.nd Co. 1878.
account is a little romance in itself, and tells a tale, not merely of patient economy, but of domestic and social relations at once curious and interesting.
Let us state, first, what the nature of these institutions is. Most of the Trustee Savings-banks were established about or soon after the year 1817, when an Act was passed to encourage their formation and to regulate them when formed. They are under the control of trustees and managers, who usually appoint from their own body an executive committee. The trustees are, in general, the wealthy and influential persons of the neighbourhood ; the managers, persons in somewhat lower social position, who are not unwilling to devote a little time to attending at the savings-bank during the hours for receipt and payment of deposits. Every trustee and manager is by law prohibited from receiving any remuneration out of the funds, or deriving any profit out of the deposits. The trustees and managers appoint an actuary or secre- tary, clerks, a treasurer, and an auditor, who may be paid officers, and all of whom are required to give security for their honesty. The trustees, however, are not personally responsible for losses through fraud of their servants. It is greatly to the credit of their management that for many years past losses by fraud have been unknown. The most important fraud on a savings- bank was that at Rochdale, about thirty years ago, where the actuary died, having embezzled £71,000, half of which was lost by the depositors. It is a striking instance, however, of the great natural law that misfortune and suffering are but steps on the road to something better, that the savings which before 1849 were deposited in the Rochdale Savings-bank for mere safe custody, and fed the speculations of the defaulting actuary, have since that time been employed in the noble co-operative institu- tions of Rochdale, which as instruments of providence are to the savings-bank as manhood is to childhood. The losses in question led to more stringent legislation for the management of savings- banks, and to provision being made for constant returns to the National Debt Commissioners, and more efficient control by them. Some of the trustee savings-banks in consequence possess public confidence to a large extent. That at Glasgow has deposits ex- ceeding two millions of pounds sterling ; that at St. Martin's Place, London, has about a million and a half; while those at Moorfields, Liverpool, and Manchester have about a million each. The daily work in these larger banks is transacted by paid offi- cials; in the smaller banks, the attendance of an unpaid manager is required at every transaction of deposit or withdrawal.
The risk of fraud in a Post-Office savings-bank is undertaken by the community at large, and direct Government security is given to every depositor. In both classes of savings-banks the investments are limited to Government Securities, and are trans- acted by the National Debt Commissioners, who, in the ease of Trustee savings-banks, become responsible to the trustees for the amount of cash they deposit with the Commissioners, and guarantee the trustees against any loss from the investment or realisation of Securities.
The Post Office Savings-bank was commenced in 1861. At each receiving-office where savings-bank business is transacted the postmaster has authority to open deposit accounts and to receive deposits, but he is not entitled to pay out money on withdrawal until a warrant is presented to him, issued from the office of the Controller in London. All the accounts are kept at the Controller's Office, where a staff of some hundreds of clerks, male and female, is employed.
When a person comes with his first deposit to a savings-bank or to a post-office, the first thing he has to do is to sign a declara- tion 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 deposits when received are credited with compound in- terest,—in the Post Office at 21 per cent. per annum, in other savings-banks at a somewhat higher rate. The depositor is re- quested to bring or send his deposit-book once a year, to have the interest calculated and the account checked. Not more than £30 in one year or £150 in the whole can be received from any depositor, though interest on the £150 is allowed to accumulate until it reaches £200, when all interest stops. When the depositor in a Post-Office bank wishes to withdraw any of his money, he applies to any postmaster for a form of application to withdraw, which he fills up and sends to the Office -of the Controller in London. In the course of a few days he re- ceives a warrant, payable at any post-office which is convenient to him. This is an advantage which the Post Office has over
the Trustee Savings-banks, as in the latter the depositor can of course only withdraw at the place where the deposit was made. A deposit may, however, be transferred from one savings-bank to another, and to or from the Post Office. On the other hand, some depositors prefer a Trustee savings-bank, because they wish to keep the fact of their having money in a savings-bank secret from other inmates of the places where they live, and therefore do not desire to receive the warrant for withdrawal through the post at their homes. One clause of the statutes bears on this point, and illustrates the secret history of many deposits. It is that by which deposits of married women are made payable to them without the con- sent of their husbands, unless the husband had before-hand given notice to the savings-bank to pay the deposit to him. Before the passing of the Married Women's Property Act, many a hard- working woman had adopted this means of putting aside some of her earnings without the knowledge of her husband. In this respect, the Savings-bank Act had tempered the injustice of the ancient law, which gave to a lazy or drunken husband the right to appropriate the fruits of the labour of his wife. By the Married Women's Property Act, which was passed in 1870, all deposits of married women made after that date are declared to be the separate property of such women. One of the most romantic instances of secret deposits related in Mr. Forbes's book is w here the daughter of a postmaster, anxious that her father should have funds to meet an impending claim, systematically abstracted from his business receipts considerable sums of money, and deposited them, in amounts of £30 each, in a variety of fictitious names, in the post-office savings- bank kept at his house. The reasoning upon which the Registrar, by a judgment worthy of Solomon, avoided the hard necessity of declaring the deposits of this abnormally filial young lady for- feited, may be found in Mr. Forbes's book. The statutes allow of deposits being made by one person in trust for another, and this is a means frequently resorted to of making provision for children. Children, however, may themselves become depositors, and give receipts for withdrawals in such manner as the regulations of the Savings-bank direct.
If we glance at the extent to which these institutions have been made available as centres of economy, the figures are in- deed encouraging. The Post-Office Savings-bank had on February 9, 1878, accumulated not less than £29,851,096, while the Trustee Savings-banks still held as much as £44,042,856,—a grand total of economy practised through the means of savings-banks alone of £73,896,952. England has not the honour of having originated Savings-banks, which appears now to belong to Brunswick, where one was established in 1765; but this country has far outstripped all others in developing these institutions, and their real history -dates from 1817, when the English and Irish Savings-bank Acts were passed for their encouragement. The depositors in Great Britain and Ireland in the two kinds of Savings-banks exceed three millions in number, and belong in the main to the class for which Savings-banks were intended. The working-classes, male and female, including domestic servants, constitute the majority of the depositors, not to mention the considerable sums which belong to working-men associated in Societies.
For a constituency such as this, it might have been expected, by any one inexperienced in the methods of English law-making, that the statutes would have been short, plain, simple, consistent, and in everybody's hands. It need hardly be said that the reverse is the case. The Post-office Savings-bank was established, as we have said, in 1861. It is regulated by a series of Acts which date from 1828. For Trustee Savings-banks, all these Acts were repealed in 1863, and a Consolidating Act passed in lieu of them, but it was carefully provided that this Act should not apply to the Post-Office, which was accordingly deprived of the ad- -vantage of the few amendments which the framers of the Act ventured to introduce into the law. Thus some ancient enact- ments which were intended for the Trustees of Savings-banks are to be applied as near as may be to the Postmaster-General, while ,a few improvements in the law which the first half-century's ex- perience of Savings-banks had suggested are denied to the more modern system.
The perverse ingenuity of the English Legislature has been exercised even in determining the authority by which questions 'arising with relation to Savings-bank deposits are to be settled. If the question involve the relation of husband and wife, it will lam :to be determined by the County Court, under the Married Women's Property Act ; if the depositor—as too often happens— owe his origin to a union unsanctioned by matrimony, the case will belong to the Solicitor to the Treasury, who administers a special privilege granted by the statutes to illegitimate depositors ; so also if the depositor have made deposits in two different banks, contrary to the law, the Solicitor to the Treasury will determine whether the intention of the depositor had the fraudulent quality which requires the forfeiture of the deposits ; while all other disputes are to be referred to the Registrar of Friendly Societies.
Under this latter provision—for the settlement of disputes re- lating to deposits generally by a barrister appointed for the pur- pose, who always having been in fact the Registrar of Friendly
Societies, is now made so by law—a jurisdiction has been estab- lished, most cheap and easy of application, most elastic and simple
in procedure, and it is believed most satisfactory in its results.
Mr. Forbes has had access to such records as remain of the deci- sions of the successive Registrars, and has done his best to elicit from them guiding principles. There is no appeal whatever from the judgment of the Registrar ; he determines law and fact, and adjusts all the equities of the case ; hence it is of essential service that not only the person charged with the duty of Registrar, but those who appear before him, should have a guide to the prin- ciples established by his predecessors,—and this service Mr. Forbes has rendered.
That his book will reach the hands of depositors generally would be too much to expect, and they are of a class who would
probably not derive much information directly from it ; but the actuaries and managers of Savings-banks, and the officers of the Postmaster-General, who, as a rule, emulate the actuaries of the old Banks in the desire to be of real service to the depositors, would do well to have Mr. Forbes's work at their fingers' ends,
and would save the depositors much needless trouble and some loss by becoming familiar with its contents. For it is curious to observe that the Savings-banks Acts, while obviously intended to encourage provident habits, are positively draconic in their severity on certain offences, which are often committed in mere careless- ness and in utter ignorance of the consequences. When savings- bank depositors were allowed 44 per cent, interest for their money, the Legislature thought it necessary to provide against persons who could deposit more than £30 a year availing themselves of this bonus on small economies, and accordingly the absurdly heavy penalty of forfeiture of all the money deposited was attached to the offence of depositing money in two savings-banks, or more than £30 a year in any bank. When the Post-Office Savings-bank was established, giving to de-
positors only 24 per cent., and becoming rather a source of profit to the community than of loss, this monstrous penalty was en- acted to be applicable to deposits with the Postmaster-General, though the mischief it was to prevent could not possibly arise.
It will be seen from all we have said that the laws relating to Savings-banks require revision and modernisation. An excellent opportunity for effecting this was lost when the Friendly Societies Act of 1875 was passed. A slight extension of its provisions— another clause or two—would have brought the enactments relating to all institutions dealing with the industrious classes into uniformity, but the chance of doing so was missed. Take, as an example of the consequences of this piecemeal legislation, the case of a man who has insured his life in a friendly society, has a share in a co-operative society, another in a building society, a little money invested in a loan society, and a deposit in a savings- bank. Under the statutes as they exist, if such a paragon of providence were to die, his little economies might reach fiver different persons,—at any rate, they would be disposed of under five different statutes.
Mr. Forbes's excellent work may serve to pave the way for much-needed reform, and will in any case be of no little value to all who are concerned in administering the Savings-banks Acts.