The second Annual General Meeting of the Trustees and Managers of the Bank was held on January 13th 1829. The annual report was "presented
by the Committee", a body not mentioned in the previous report. To add to the mystery, one of the meeting's resolutions thanked "the
Committee for their very important and valuable services, and that they be requested to continue the same, and are hereby re-appointed;
and that the names of Mr R T Cadbury and Mr George Bacchus be added thereto". The members of the Management Committee were first listed
in the report of the Bank's activities for 1832.
The report of the Auditors was as follows:
The Auditors have great satisfaction in reporting the continued success of the BIRMINGHAM SAVINGS BANK, the beneficial effects of which are beginning to be extremely felt by the working classes and domestic servants of this town and neighbourhood, among whom the establishment of provident habits is so obviously important.
Our last report comprised the proceedings of the Institution from its commencement on the 24th of May, to
the 20th of November, 1827; from which date up to the 20th of November, 1828, 1219 new accounts have been opened, and 4143 deposits
made on old accounts, and the large amount of £768 4s. 9½d. interest has either been paid to depositors or carried to their credit
in their respective accounts. The repayments within this period have amounted to £5188 15s. 11½d.
The statement herewith presented shews that the number of accounts actually open and in operation, on the 20th November, 1828, was 1893, and the amount of deposits on them (including interest) was £39,229 9s. 3d.; of these accounts the large proportion of 1197 did not exceed £20 each. Eight FRIENDLY SOCIETIES have deposited their funds in the Savings Bank.
The expenses have been kept within the lowest possible limit, consistent with the efficient working of the Institution, and although the excess of the interest received from Government, over what has been paid to the depositors, has not hitherto been sufficient to defray all the expenses incurred since the commencement (there being still a deficit of £76 4s. 9½d., which has been supplied out of the Reserved Fund applicable to the purposes of the Friendly Institution), we still confidently anticipate that the surplus interest accruing in the current year will be adequate to meet every expense, and also to clear off this claim on the resources of the Savings Bank.
Since our last report, the Legislature has passed an Act "to consolidate and amend the Laws relating to Savings Banks" (9th Geo. IV. cap. 92.). This very important act appears to have been matured with the greatest care, and comprises every provision that seemed desirable; and in strict conformity to it, the Rules and Regulations of the Birmingham Savings Bank have been altered, approved, and confirmed. One of the most important alterations made by this act, is the reduction of the interest allowed by Government from 3d. per cent. per diem to 2½d. per cent. per diem, which has rendered it necessary for this Institution to allow interest at the rate of ½d. per month on every 15s. deposited after the 20th of November, 1828, instead of on every 12s. 6d. as was allowed before, under the provisions of the preceding acts.
No practical inconvenience, however, is likely to result from this change, the interest at present allowed to depositors being, perhaps, to the full as great as, under existing circumstances, it is desirable that it should be.
The Auditors beg very earnestly to impress on the Trustees and Managers the very great importance, on every account, of confining the operations of the Birmingham Savings Bank, as strictly as possible, to the objects contemplated by the legislature in the formation of such institutions. In all the acts recognised and encouraged as Benevolent Institutions "for the safe custody and increase of small savings belonging to the industrious classes of his Majesty's subjects" (see 9th Geo. IV. cap. 92, sec. 2) - and in the article prefixed to our own book of rules the "object" is declared to be, "to receive deposits of such small sums as tradesmen, mechanics, labourers, servants, and other industrious persons, may be enabled to save".
It is obvious that the spirit of the act would be departed from, the intention of the legislature defeated, and the declared objects of this Institution altogether lost sight of, if it were to become a depository for the profitable investment of capital by persons in comparatively easy circumstances, and therefore not coming fairly within any of the above designations, to persons so situated, other channels are open for the employment of their property, and as they are happily in a situation to take care of themselves, they need not the aid of our Savings Bank, which is instituted strictly and solely for the benefit and protection of those persons, whose poverty or circumstances in life disable them in a great degree from finding a suitable place of deposit "for the safe custody and increase of their small savings" at present, or of making provision for their families in future, in the way in which it is most desirable, that they should as far as possible be induced and enabled to do so.
The reasons which influenced the Directors to suspend the operations of the "FRIENDLY INSTITUTION" continue in force, and have subsequently, indeed, been sanctioned by the legislature, which, during the last session, passed an act to suspend the granting of Government Annuities, the rates for which were founded on the probabilities of life shewn by the Northampton Tables, on which basis also the calculations of payments and allowances by the Friendly Institution were founded.
Desirable as the Friendly Institution unquestionably is as an adjunct to the Savings Bank, and with it calculated to do much good among the poorer classes of society in this town and neighbourhood, it is yet of such vital importance to found it on accurate data, and on a secure basis, that until the question as to the actual probability of life is settled and fully recognised, there seems to be no safe alternative but to suspend its operation; it is gratifying to know that this very important question, in all its bearings, is receiving the attention to which it is so eminently entitled, and that, during the approaching session of Parliament, it will be resumed, and, it is to be hoped, finally settled.
The Managers of the Savings Bank have attended punctually in rotation, and by their exemplary attention, and the exertion of their influence, individually and collectively, have accomplished all that the public or the Institution could wish or expect from them. The Treasurers are entitled to the best thanks of the supporters of the Institution, for the punctuality and attention with which they have gratuitously executed the duties of their office. The accounts have been kept with perfect regularity; and your Secretary is entitled to your approbation.
In
concluding, this (their second) report, the Auditors beg to congratulate the Trustees and Managers on the success of their efforts
for the good of their poorer neighbours. Each succeeding year the sphere of usefulness of the Birmingham Savings Bank will be enlarged
- the prevalence of sober and provident habits in some, and the obvious advantages by which these habits are always accompanied, will
ensure their adoption by others, and, as the temporal condition of the dense population by which we are surrounded becomes improved,
its moral temper and habits will be ameliorated.
GEO. NICHOLLS,
J F LEDSAM,
P M TWELLS,
The printed report again
provided an analysis of the number of depositors, and their balances, although the addition of the former statistic indicates that
at least one of the figures was incorrect. The analysis confirms that the Bank is achieving its "object" of providing a facility for
small savers by showing that only eighty depositors have balances exceeding £50. The average balances is less than £16.
|
No of Depositors |
November
20th, 1828 |
£. s. d. |
|
1179 |
Balances not exceeding £20 |
7,412 - 9 - 0 |
|
608 |
Above £20, not exceeding £50 |
17,518 - 18 - 6½ |
|
77 |
Above
£50, not exceeding £100 |
4,569 - 13 - 7 |
|
2 |
Above £100, not exceeding £150 |
219 - 14 - 0 |
|
1 |
Above £150, not exceeding £200 |
152 - 16 - 5 |
|
1885 |
Total
No. of Depositors |
29,873 - 11 - 6½ |
|
8 |
Friendly Societies |
355 - 17 - 8½ |
|
1893 |
Total No. of Accounts |
30,229 - 9 - 3 |
In addition to the resolution regarding the Committee detailed above, the printed report also reproduced the following resolutions carried at the Annual General Meeting:
Resolved - That the [report] be approved and confirmed, and that a summary of the accounts be published in the two Birmingham papers.
Resolved - That the recommendation contained in the report, for restricting the Savings Bank to the declared
"OBJECTS" of the Institution, is particularly important, and requires the constant care of the Managers to carry it into effect, and
to prevent any deposits being received except from parties whose situation in life comes fairly within the contemplation of the legislature.
The Auditors' report again made reference to "the Friendly Institution", updating the position by giving details of the Government's decision to suspend annuities. Reference is made to the "Northampton Tables" - during the 18th century mortality tables were produced from records of deaths in several towns in order to show how many people, out of a certain number living there at each age, die annually. These enabled actuaries to calculate what level of annuity would be sufficient to provide for the payment of a fixed sum, say £100, at death. One of the first and most widely used mortality tables was that produced by Richard Price (a mathematician, 1723 - 1791) for Northampton. Although the Bank took a decision to postpone the introduction of an annuity facility, during the year it opened six new accounts for Friendly Societies.
Reference is also made to the Government's decision to reduce the rate of interest paid to the savings banks. This was consequent to the passing of the Savings Bank Act of 1828. As noted above, at that time, the savings banks were costing the state over £67,000 a year. The rate of interest payable was reduced from 3d. to 2½d. per cent per day, which in terms of an annual rate meant a reduction from £4 11s. 3d. to £3 16s. 0½d. per cent. The Government had postponed reducing the uneconomic rate being paid to the banks for some years on the basis that this was a cheaper option than discouraging the saving habit that they hoped would see less people claiming benefit under the Poor Law.
A further aspect of the 1828 Act concerned the liabilities of trustees, an aspect of the savings bank system that was to be a factor in the eventual closure of the Birmingham Savings Bank thirty-six years later. The matter of trustee liability seems to have been ignored by the founders of the early savings banks and was not a subject covered by any legislation prior to 1828. No doubt cases of minor dishonesty occurred before 1828 but only one case (in Caernarvon, in 1824) came before the courts and in that case the judge confirmed that the trustees were responsible. However, the funds of most banks were small, and the Government guaranteed the sums that had been invested with it. The risk, therefore, seemed to be considered (erroneously) as being confined to small balancing sums held by the actuary or treasurer.
The 1828 Act, however, gave the trustees some measure of protection by limiting their liability to their "own acts and deeds" and to cases in which they were "guilty of wilful neglect or default". These reasonable provisions placed the onus on the trustees to see that the bank's rules were observed and that proper precautions were taken against fraud.
Although total deposits in the Birmingham Savings Bank have increased during the year from £10,299 to £30,229, withdrawals have amounted to £5,189, illustrating a fact that is essential to the success of a savings bank - that depositors have confidence that their money can be withdrawn without aggravation.
The Bank's third Annual General Meeting was held at "The Office, 6, Cannon-street, on Tuesday the 12th day of January, 1830". This address was the Bank's location until it moved to Temple Row in 1831.
The Auditors' report was as follows:
The auditors in this, their Third Report, are enabled to speak with undiminished satisfaction of the progress of the BIRMINGHAM SAVINGS BANK, and of the important benefits which it is become the medium of dispensing among the inhabitants of this district; this will obviously appear on reference to the statement of the accounts (made up to the 20th of November last), from which one important fact only need be selected, viz - that the sum of £1117 13s. 5½d. - interest on deposits - has been distributed among the working classes of Birmingham and its vicinity during the past year.
In conformity with the resolution of the last general meeting, the utmost care has since been taken to adhere as closely as possible to the declared "objects" of the Institution as prescribed by the legislature; and the Managers have, in every case, refused to receive deposits from parties not coming fairly within the contemplation of the Savings Bank Act. It is earnestly recommended that similar care be continued to be exercised in this respect.
The necessity of strict economy in the management of the Institution has, from the outset, been felt and acted upon, and notwithstanding the reduction of interest by the late Act (9th Geo. IV. cap. 92), it is with great satisfaction we have to report that the surplus of interest received from the government during the year just expired, has been sufficient to clear off the debt of £76 4s. 9½d. remaining due at out last audit, and to leave a surplus in hand of £24 17s. 7d. we confidently anticipate that the "surplus fund" will hereafter be sufficient to defray all the current expenses of the Institution.
The business of the Savings Bank has now become considerable, and the labour of keeping the books and attending to the necessary details, is of course greater than it was at first, and actually occupies nearly the whole of the Secretary's time; we recommend therefore an increase of salary to Mr Clarke commensurate to the increase of duties which he has to perform, and that some gratuity be voted to him for the past year out of the surplus now in your Treasurer's hands. We are more readily induced to offer this recommendation in consequence of your Secretary's general attention, and the very satisfactory state in which we have found the books and accounts of the Institution.
The present office, though dark, and in many respects inconvenient, has hitherto answered the purpose pretty well, but it is too small for the present business; and we recommend that more suitable rooms be sought after in some central part of the town.
The Managers have continued the same punctual attention as heretofore; the effects of which are apparent in the
success of the Institution, and the correctness and regularity of all its details. The Treasurer has on all occasions most kindly
attended to the interest of the Institution, and is entitled to the thanks of its promoters.
GEO. NICHOLLS,
J F LEDSAM,
P M TWELLS,
Auditors.
|
No
of Depositors |
November 20th, 1829 |
£. s. d. |
|
1607 |
Balances not exceeding £20 |
9,782 - 1 - 5 |
|
665 |
Above £20, not exceeding £50 |
19,568 - 7 - 2 |
|
205 |
Above £50, not exceeding £100 |
13,172 - 19 - 6 |
|
3 |
Above £100, not exceeding £150 |
342 - 18 - 9 |
|
2480 |
|
42,866 - 6 - 10 |
|
3 |
Charitable Societies |
185
- 17 - 0 |
|
16 |
Friendly Societies |
829 - 6 - 3 |
|
2499 |
Total No. of Accounts |
43,881 - 10 - 1 |
Over the next thirty-four years the Birmingham
Bank continued to progress until it became the eighth largest as measured by the amount of total deposits. The top ten banks being:
1
St Martin's Place, London
2 Exeter
3 Manchester
4 Bishopgate
5 Liverpool
6 Glasgow
7 Bloomsbury
8 Birmingham
9 Edinburgh
10 Bristol
During the period 1830 to 1863, Acts concerning the operation of savings banks were passed in 1835, 1844, 1860, and 1863. Additionally, there were a number of developments in that period that may have had an impact on the decision of the trustees to cease operations at the Birmingham Savings Bank.
As noted above, the 1835 Act enabled the Scottish banks to also place their funds with the Government, thus creating a national Trustee Savings Banks (TSB) movement.
The 1844 Act resulted in a further reduction in the rate of interest paid by the Government, whose attitude towards the savings banks had changed - it was no longer a question of encouraging thrift at a high cost to the Exchequer. The rate of interest paid to the banks was reduced from £3 16s. 0½d. per cent to £3 5s. 0d. per cent, and the maximum rate payable to depositors was fixed at £3 0s. 10d. per cent. But the reduction only equalised expenditure with income, it did nothing to solve the insolvency of the 'Fund for the Banks for Savings' that had built up over previous years. The 1844 Act also removed the liability of trustees as noted below.
A major development in this period was the increasing occurrence of incidents of fraud. A few previous cases of embezzlement of funds by dishonest officials had caused local concern, but the implied responsibility of the trustees provided the depositors with confidence. This confidence was shaken by a series of frauds, first in Ireland, and then in England.
The St Peter's Parish Savings Bank in Dublin suffered a loss of £56,000, as a result of frauds committed by the parish sexton who had been put in charge of the bank at its commencement in 1818 at a remuneration of only £5 per year. Defalcations were committed over a number of years but it was not until 1848 that the true amount of the loss was determined. Shortly after that date, two other Irish banks, Tralee (£36,000) and Killarney (£20,000), were also discovered to have suffered very large frauds.
In 1835, the bank at St Albans in Hertfordshire had reported England's first large fraud: some £24,000 had been embezzled by a clergyman. However, this bank had a very opulent board of trustees (including the Prime Minister, Lord Melbourne) and the depositors were repaid in full. In another case, at Reading, a few years later, the trustees again covered the loss - this time some £3,000.
The Savings Banks Act of 1844 was a product of Henry Goulburn who, in that year, was serving his second period as Chancellor of the Exchequer. The growth of the savings banks' funds, and the corresponding increase in difficulty for trustees to monitor security, caused the trustees to petition the Chancellor to relieve their anxiety. Goulburn took the easy, and as it transpired, disastrous action of removing the liability of trustees without substituting it with an adequate alternative. The new Act declared that no trustee would be personally liable to make good a deficiency unless he had agreed in writing to do so. Unsurprisingly, few trustees chose to do so.
In the years following the passing of the 1844 Act, a series of defalcations came to light. In addition to the three major frauds in Ireland described above, there was a huge loss of £71,715 at the Rochdale Bank which was discovered on the death, in 1849, of the Bank's actuary, George Haworth. Haworth had perpetrated the fraud over many years by listing people as Managers without their knowledge or consent, and by keeping two sets of books. This case was the largest of twenty-two frauds that came to light between 1844 and 1857, including serious cases in Spilsby, Poole, St Helens, Mitcham, and the Isle of Wight, in England; and Auchterarder in Scotland.
Many proposals were made in the 1850s to address the problems of the savings banks, particularly the question of the security of deposits and the performance of the 'Fund for the Banks for Savings'. Bills drawn up by successive Chancellors were successfully opposed by the banks, many of the trustees being men of political influence. The Birmingham Savings Bank appointed special committees to monitor the Government's proposed legislation. However, many of the banks were still only small operations; as late as 1861 only 20 of the 638 banks had a daily opening; some were open two or three times a week; but 355 only once a week; 54 once a fortnight; and 10 once a month. In 1861, the Birmingham bank was open on Mondays, Wednesdays, Thursdays, and Saturdays for a total of 12 hours per week.
A Select
Committee met in 1858, had twenty-five meetings, and produced a 450-page report. The terms of reference were wide ("to enquire into
the Acts relating to Savings Banks and the operations thereof") but most of its attention was focussed on the old issues of (1) what
alterations in the law or administrative arrangements were necessary to give the depositors greater security, and (2) whether the
criticisms of the manner in which the savings banks funds had been invested were well based, and if so, what safeguards should be
introduced in the interests of both savings bank depositors and the country.