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There are few, at present, who have facility to deposit their money where they can gain security, profit, and accumulation. It would cost too much money and time for poor people to obtain these at the Bank of England.
Time is money, or, as a learned scholar' wrote over his study door, Tempus meum est ager meus, or, " My time is my field, or estate ;" and it is frequently the only valuable field which the laborer in body or mind possesses. It is so valuable, that every cottager ought to write over his door," My time is my farm;" and he should give notice to those who unnecessarily break into it, that they are wilful trespassers, and do an irreparable injury to the produce.
Care should, therefore, be taken, that the facility of placing his money in the bank may be such, that he does not lose more by time than he gains by money, and that he may not be furnished with an idle pretence to make a holiday.
The Oriental proverb, That there is no treasure without a snake; and the admonition, Lay not up for yourselves treasures upon earth, where thieves break through and steal; sufficiently demonstrate to us what was the nature of banks in the simplicity of ancient times: but daily experience proves, that there is not less danger in modern banks, than in those so clearly described.
I myself was lately employed as a Commissioner of Bankrupt, where a country bank failed for 650,000l. How many thousand persons were ruined and rendered miserable, who might now have been happy, independent, and prosperous, if a County Provident Bank, such as I have recommended, had been established in the counties of Durham, North⚫umberland and York!
But the Bank of England itself does not afford that security which could be desired to persons of property resident in a remote county: they are frequently betrayed by the bankers, brokers, or agents, whom they are obliged to employ: they often find, to their cost and sorrow, that their money has never been placed in the funds as directed, or that it has all been sold out contrary to their direction and expectation. The instances had occurred so often, that they produced the statute 52 Geo. III. c. 63, which enacts, that if any banker, merchant, broker, attorney, or agent, shall embezzle any effects or security, or apply them to his own use, in violation of good faith, he shall be guilty of a misdemeanor, and shall be sentenced to transportation, fine, imprisonment, whipping, or pillory, at the discretion of the Court.
But the terror of these punishments has not been sufficient to suppress entirely the infamous practice.
If such a Provident Bank as I have recommended should be established in a county at a considerable distance from the metropolis, single ladies, probably, could not dispose of their fortunes, however large, to greater advantage, than by placing them in the Provident Bank. They would have their property immediately under their own eye, and always at their command, and they would be secure from failure and fraud. The next consideration is the profit.
The two former objects, facility and security, will not have sufficient attractions, unless there exists, also, great apparent profit, nearly as much as can be obtained by the public funds.
I have therefore thought it better to give the WHOLE of the dividends, and to deduct something from the principal for the expences, than in any degree to touch the dividends, which would operate as an odious income tax, and necessarily destroy the rapidity of the accumulation.
The rapidity of the accumulation must depend upon the largeness of the dividends, and the facility of immediately turning them again into principal stock. At the Bank, the dividends produce no interest or dividends: they must be drawn out, and stock to their amount must be purchased. But in the plan suggested, if they are not called for, they are converted into principal stock, and produce fresh dividends without any trouble, act, or interference of the proprietor. The existing proprietors will also have the benefit of the unclaimed dividends.
The means of compound accumulation resulting from this plan do not legally exist in any other application of money, which I am acquainted with; so that the poor man, who can save something considerable beyond his expenditure whilst he has sufficient, and is grateful for his daily bread, will see his loaves swell, as it were by a miracle, to feed the multitude of his present and future family.
Four years ago I took a morning ride to Hertford, where I was desired to assist in forming a Saving Bank. The subject was quite unknown to me at that time. There were only two then established in England; one, at Bath, under the superintendence of Dr. Heygarth; and another, at Southampton, under that of the Right Honorable George Rose.
The first invested the money deposited, in the funds, and gave the depositors the dividends, with some deductions to defray the expences: the other, four per cent. certain. We all preferred the Bath plan. I afterwards formed a plan of
paying the dividends in a more simple manner than was done at Bath, which was adopted at Hertford, with some slight variations.
In this Bank, and in that of Bath, there was no limit to the sum deposited, and an immense sum, from laborers, servants, tradesmen, and farmers, was immediately received; and in the Hertford Bank, 50,000l. have been deposited, 12,0007. withdrawn, and there are now 38,000/. and upwards.
But, by the statute 57 Geo. III. c. 130, it was proposed, that, if the money was placed in the Bank of England, Government would allow 3d. a day for every 100/.
As the stocks rose, this would have produced a much greater interest than the 3 per cents.; it therefore became necessary that the sums deposited should be limited. At present, no one is allowed to put, in the first year, into such a Bank, more than 100/.; and afterwards, more than 50%. ayear. This, in my opinion, is every way a national loss, and is one of the instances where the interference of the legislature, by offering a bounty, has done great harm, both to the funds and to the object they wished to promote.
My attention having been drawn to the subject by the accident which led me to be present at the formation of the Hertford Provident Bank, the third in the kingdom, I gave my assistance to the establishment of two, 'some time afterwards, at Cambridge.
The following plan of the Unlimited Bank, at Cambridge, proposed by myself, was approved by Dr. Milner, the Professor of Mathematics at Cambridge, and by most of the best calculators there. We wished to have there an Unlimited Bánk, such as had been established at Bath, Hertford, &c. in which the young fellows of colleges, curates, the clergy, and where both master and servant might place their savings. But at a general meeting of the university and county, the university were outvoted, and it was resolved, that the Provident Bank should be confined to receive deposits from those only who got their living by their labor.
This induced some of the university to establish another Unlimited Bank such as they originally had wished and proposed. This, at the first, was much ridiculed; but a fellow of King's College having deposited in it £350 at once, and several other gentlemen of the university, and tradesmen, and servants in the town, considerable sums, it has begun to florish to an extent that will be sure to promote the independence of the members of the university, and the prosperity of the county of Cambridge, as long as either of
them shall have existence. Any number of noblemen and gentlemen may, in any place, still establish such a Bank, which I cannot but think is far preferable to those which have been generally adopted.
The accumulation of money or notes by individuals can produce no general benefit to the country, unless it produces, at the same time, a greater quantity of food, raiment, and the means of subsistence. These Banks necessarily excite a spirit of industry and frugality. By industry, the means of subsistence are augmented; by frugality, a greater population may be supported. From the general idleness and extravagance which now exist, must result poverty, misery, and criminality.
The Unlimited Provident Bank for the University, County, and Town of Cambridge.
His Grace the Duke of Grafton-Lord Viscount Palmerston -Right Hon. John Villiers-The Very Rev. the Dean of Ely The Rev. Dr. Douglas, Master of Corpus ChristiJ. H. Smyth, Esq. M.P.-Rev. J. H. Renouard, ViceMaster of Trinity College-Ed. Christian, Esq., Chief Justice of the Isle of Ely.
Rev.R.Tatham, Public Orator
Rev. J. H. Renouard
Rev. L. P. Baker
Rev. T. D. Atkinson
Rev. G. F. Tavel
Rev. J. Heckford,
And every Depositor of One Hundred Pounds or more. Treasurers:-Messrs. Stephensons, Remingtons, Smith, and Co., Lombard Street, London.
Deputy-Treasurers:-Rev. J. H. Renouard, Rev. L. P. Baker, Rev. F. Fallows.
Chief Clerk:-J. Harraden, St. Mary's Street.
I. No limit is fixed to the deposits in this Provident Establishment, because it is intended to be a Bank, in which the members of the university, benefit societies, executors, trustees, farmers, tradesmen, and all other inhabitants of the county and town of Cambridge, may have an opportunity of depositing all the sums they can save beyond their necessary expenditure. In this Bank the money thus deposited will be preserved with the most perfect security, and returned to the depositors at any time when it shall be requested, and after one year with compound accumulation, and where the larger the deposit, the greater will be the benefit, both to the poorest and to all the other depositors, for, whatever is deducted proportionably from each sum deposited will be applied to discharge the necessary and incidental expenses, and the remainder will be appropriated to the increase of the dividends, or will be applied in such an equitable manner as the managers shall direct to promote the great object of the Institution, which is to encourage care and frugality in every rank in society.'
II. All the money deposited will be invested, in the names of four of the trustees, in the three per cent. consolidated annuities.2
III. No sums less than one shilling will be received; and no deposits will be entitled to a dividend till they shall be
Surely in a country town, at a considerable distance from London, it must be much more convenient for a clergyman, farmer, tradesman, or a single lady, to place 100l. a-year, or any other sum, in a bank like this, of which they themselves have the superintendence, than to send it up to London, where they must have the trouble and expense of going, or sending, every half-year, to turn the dividends into principal; and if they place confidence in others, they are likely to incur greater risk than by keeping it at home, where they have it under their own immediate command and guardianship.
2 The Bank of England will not suffer money to be placed in the Funds, in the names of more than four trustees.
The money is deposited in the Bank, in the names of the four first trustees; and it cannot be got out again, unless all these four went to the Bank together to transfer the stock; or they must all sign a letter of Attorney to have it transferred.
They have never yet been called upon to do that in any degree.
If one were to die, then the power of selling out survives to the three; but at the Bank they require a certificate of the death of the fourth. Of men of such rank they would easily be satisfied.
The money afterwards would be placed there in the names of the three survivors and the next trustee in succession.
So, with four men of such rank, all danger from them is totally removed.