Savings Bank, an institution for the deposit and safe keeping of small sums of money. Savings banks were originally established by benevolent individuals with a view to enable the poor to find places in which small savings could be deposited on interest, and thus to offer inducements to make such savings. Unlike ordinary banks, savings banks do not usually lend money on personal security, but upon mortgage of real estate, stocks, and bonds of governments and incorporated companies. In some countries these banks are only permitted by law to invest in the national securities. The earliest savings bank of which there is any record was founded in Hamburg in 1778; but little is known of its history or operations. The next was in Bern, Switzerland, in 1787. In that country recently existed at Zürich the oldest savings bank in Europe, it having been founded in 1805. Francis Maseres in 1771 published in England a proposal that the rate payers of any parish should be incorporated for the purpose of receiving the savings of the people and of investing the same, and granting deferred annuities to the owners thereof. A bill based on this proposal passed the house of commons, but failed in the house of lords.
In 1797 Jeremy Bentham suggested the plan of what he called "frugality banks" in connection with the management of paupers. In 1798 a " Friendly Society for the Benefit of Women and Children " was established at Tottenham High Cross, Middlesex, by Mrs. Pris-cilla Wakefield, and in or before 1801 there were combined with it a fund for loans and a bank for savings. In 1804 this bank was regularly organized with Mr. Eardley Wilmot, M. P., and Mr. Spurling as its first trustees. In 1799 the Rev. Joseph Smith of Wendover, Bucks, circulated in his parish proposals to receive sums on deposit during the summer, and to return them at Christmas with an addition of one third as a bounty on the economy of the depositors. The peasantry of the parish readily embraced this offer. In 1806 the "Provident Institution" of London was established. A savings bank was at first attached to it, but was soon discontinued, and the institution became simply a life insurance company. In 1807 the Rev. John Muckersy established in Scotland the "West Calder Friendly Bank for the Savings of the Poor." In 1808 a society was opened in Bath, chiefly through the instrumentality of ladies, for receiving the deposits of female servants.
In 1810 the Rev. Henry Duncan, D. D., minister of Ruthwell, Dumfriesshire, Scotland, established a parish bank in that town, and at the end of four years had therein accumulated £1,160, at 5 per cent. interest. His attention had been directed to this subject by reading the writings of John Bone on social economy. He himself also wrote various essays, including "An Essay on Parish Banks." The institution established by him served as a model for various others. In gratitude to Dr. Duncan, a savings bank house was erected to his memory in the town of Dumfries soon after his death in 1846. In December, 1813, the Edinburgh savings bank was founded, mainly through the instrumentality of J. H. Forbes, who was connected with the banking house of Sir William Forbes and co., and within three years he had received deposits amounting to £8,316 from 1,837 depositors. At first the rate of interest was 4 per cent., but after the first year it was fixed at 5 per cent. In January, 1815, the "Provident Institution of Bath," afterward called the Bath savings bank, was established.
Southampton followed with a savings bank in November of the same year, Exeter in February, 1816, and Hertford in March. The bank of Exeter established agencies for receiving deposits throughout Devonshire, and within two years held deposits to the amount of £14,525. The Hertford bank had been preceded by the "Sunday Bank" established in the same place by the Rev. Thomas Lloyd. The first savings bank in Ireland was established at Stillorgan, county Dublin, in March, 1815. By the end of 1816 there were 74 in England and Wales, and 4 in Ireland. The first legislation by parliament for the regulation of these banks was "An act to encourage the establishment of banks for savings in England " and "An act to encourage the establishment of savings banks in Ireland," both passed in 1817. Among other provisions of these acts were those by which the trustees and managers of the banks were empowered to pay over the money received from the depositors to the bank of England or the bank of Ireland for the account of the commissioners for the reduction of the national debt, and as "the fund of the banks for savings," and the commissioners were to invest them in 3d. per cent. bank annuities and issue debentures bearing interest at the rate of 3d. per cent. per diem (£4 l1s. 3d. per annum). In Ireland the trustees might place not more than one fifth of their deposits with bankers.
Alterations as to England were made in 1817 and 1820, and in 1824 an act was passed covering both kingdoms. Between 1849 and 1857 the great frauds and defalcations in these banks had a tendency to destroy the confidence of the people in their stability. In 1861 the amount to the credit of depositors and the reserves of these banks were £41,546,475. - As early as 1806 Mr. Whitbread had proposed the establishment of savings banks in connection with the post office. In 1859, at the meeting of the social science association at Bradford, a paper was read on the subject by Mr. C. W. Sikes, of the Huddersfield banking company, which attracted the attention of the postmaster general and others; and finally a plan, to a great extent based upon Mr. Sikes's suggestions, was matured by George Chetwynd. and Frank I. Scudamore, with the cooperation of Sir Rowland Hill. This plan, embodied in a bill, was carried through parliament by Mr. Gladstone, and became a law on May 17, 1861, and went into effect Sept. 17. By Dec. 31, 1862, the total balance on hand was £1,694,724. During the year 1873, 2,917,698 deposits were received, of the aggregate amount of £7,955,740, the average being £2 14s. 6d.
The total amount of deposits at the end of the year 1873 was £21,745,442. The rate of interest allowed is 2 1/2 per cent., and the amounts received are from time to time paid over to the commissioners for decreasing the national debt, by whom they are invested in consols. Out of an amount due to depositors Dec. 31, 1872, of £19,860,874, but £301,070 remained on that date in the hands of the postmaster general. Similar systems have been successfully introduced into Australia and Canada. The rate of interest allowed by the ordinary savings banks of the United Kingdom is 3 1/4 per cent., and the deposits are invested in consols, which pay about 3.35 per cent. The total amount of deposits in these banks and post-office banks, as stated in parliament May 27, 1875, was £65,673,000. - In the United States the first savings bank was the "Philadelphia Saving Fund Society," suggested by Condy Raguet and organized in 1816. It still exists in a flourishing condition, and on Jan. 1, 1875, held deposits amounting to $10,275,-752 83. The second was established in Boston in the same year; the third in New York in 1819. In the various states there are laws regulating these institutions, and some of them are managed with great probity and have been eminently successful, although there have been very disastrous failures.
Complete statistics of these banks are not accessible, but the following for 1874-'5 will give some idea of the business done by them in the United States:
In France the savings banks are under the surveillance of the state, and their funds are deposited in the caisse des dépôts et consignations, which is administered under guarantee of the public treasury, which pays the interest; but the depositors have no other security than the banks themselves. The earliest savings bank established in France was in Paris, July 29, 1818; there was one in Bordeaux in 1819, and one in Marseilles in 1821; these were joint-stock companies. Generally from 1821 they have been municipal institutions established by the town councils. In 1874 there were 508 savings banks in France, with 2,079,196 depositors, and deposits amounting to $107,019,-347. In 1875 a bill was discussed by the national assembly providing for post-office savings banks, but was rejected for several reasons, among others because the bill permitted women and minors to open accounts and withdraw deposits when no opposition was made by the husbands of the one or the parents of the other class. Danger also was apprehended that if the government made itself responsible for too large sums of money payable on demand, difficulty might be experienced in their payment.
In Belgium savings banks exist in most of the principal towns, and are under the direction of the towns themselves or of financial establishments. Switzerland has long been famous for its savings banks. In 1874 it had 303, with deposits amounting to $57,600,000. In the various states of the German empire savings banks exist, one having been founded in Berlin as early as 1818. In Austria the deposits in these institutions amount to $179,-475,824. Throughout Europe the deposits in savings banks are estimated at $1,180,000,000.