deposit even before the beginning of 1894, were not appreciable enough to include 1893 in the second period, but were too marked to allow of its inclusion with the first period.

Other disturbing influences have of course been at work. The "Liberator" failure opened the eyes of many small depositors to the danger of any but state securities; the Argentine crisis, and the Australian banks suspensions exposed the risks of the foreign market even in the case of English colonial shares, and concurrently the abnormally low rate of interest given by joint stock banks all assisted in swelling the volume of money in the hands of the State. But the Savings Bank Act of 1893 which raised the maximum allowed to be deposited in cash in one year from £30 to £50, gave depositors the right, over and above their maximum deposit, to replace any one withdrawal made in the year, doubled the annual maximum amount of stock allowed to be purchased (it had been £100) and increased the stock limit from £300 to £500, has undoubtedly been the chief cause of the sudden, unprecedented and continued rise in the gross amount of deposits, and of the resultant difficulties. As depositors can always transfer stock into their own names at the Bank of England, the only real restrictions upon savings now remaining are the generous annual limitation of £50 cash and £200 stock and the depositor's length of purse, without taking into account the fact that he can in addition buy an immediate annuity or an old age deferred annuity of no less than £100.

was

The result of such legislation has inevitably tended towards the inclusion among the ranks of Savings Bank depositors, of classes which were never originally intended to have such benefits conferred upon them, although it is quite open to question whether the working classes have any greater right to claim the security of the State for the safety of their savings than have the middle or upper classes, for the very root idea of government is the protection of the life and property of the individual. The intention of the early Savings Bank legislation is however evident and explicit. Prominence. constantly given to the statement that Savings Banks were the protection of the savings of the lower classes. Such restrictions. have now however been removed from the statute book, and the State becomes trustee for the savings of all sorts and conditions of men. In the House of Commons on 15th March 1895 commenting upon the unprecedented progress of savings in consequence of the Act of 1893 Sir William Harcourt, then Chancellor of the Exchequer, expressed his great satisfaction at the enormous increase as "showing the power and the will of the humbler classes to save money." His opinion, however, as to the source of the abnormal increase does not appear to be verified by the returns for the last four years of the numbers of depositors who have invested £50-the maximum annual cash deposit-in one sum. The figures speak for themselves, proving beyond doubt the fallacy that the

increase of savings was due either to the power or the will of the humbler classes-unless indeed the term be used in a much broader sense than is usually understood.

TABLE IV.-NUMBERS OF DEPOSITORS WHO PAID IN £50 IN A SINGLE PAYMENT IN THE YEAR.

If this Table be compared with No. 1, and allowance be made for thousands of depositors who must have invested the maximum although not in a single payment, it becomes at once evident what a large portion of the abnormal increase is accounted for in this way alone. The additional facilities given by the Act of 1893 appealed to a section of the community, who in no sense of the word came within the designation of "the humbler classes," and they availed themselves of the privilege to the full. To withdraw such a privilege after its having been in force for five years is decidedly difficult. Indeed, probably the only persons to gain by such retrogressive policy would be the company promoters whose schemes might then appeal far more powerfully to the class of people who are able to save upwards of £50 per annum. It would however form an interesting and valuable statistical adjunct, were the numbers of depositors included in future returns who in the course of the year paid in £50 or more whether in one or several sums for cash deposit or for stock investment. It would be conclusive evidence for whom Government Savings Banks are catering. The evidence adduced in the recently issued Report of the Savings Bank Inspection Committee tends to prove that the larger proportion of Savings Bank business is still that of harvesting the small savings of the poor.

The Inland Revenue Commissioners appear to be under no misapprehension as to the probability of some depositors being persons entitled to be assessed to Income Tax, for in 1894 the interest on deposits of persons in possession of incomes in excess of £160 per annum was specially referred to as liable to Income Tax in the annual Finance Act.

On 7th March last year when speaking of the deficiency of interest upon Post Office Savings Banks, Sir Michael Hicks-Beach said he was watching the matter very closely and as soon as he saw that a greater burden was placed on the taxpayers than they should be

called upon to bear he would take action; at the same time throwing out the suggestion that such a step might well be deferred until the reduction of interest upon the National Debt in 1903. The question at once arises-What has been the cost to the State of the subvention of thrift? To all trustees and managers of Savings Banks, who like the writer, have been in the habit for many years past of obtaining copies of the various official publications in connection with Savings Banks intended to keep the public informed (or ignorant ?) and who have kept newspaper reports of parliamentary and other references, it is no secret. Mr. Gladstone viewed the cost with anything but concern, being of opinion that the country had gained far more by the use of Savings Bank money than it had paid by way of interest. That happy state of matters has, we are afraid, long ceased to exist. To go no further back than 1880, the capital deficiency of the Trustee Savings Bank Fund was at that date estimated at £3,573,405, to extinguish which an annuity of £83,672 12s., to expire in the year 1908, was created payable out of the consolidated fund. According to the last available return £1,380,598 had been paid. over by the Exchequer on account of this annuity at 20th November 1897, to which another year's payment must now be added, making a total of £1,464,270. That amount represents deficiency of capital only. In the same return the amount of deficiency of interest made good by the Exchequer is stated as £428,751, and since the date of that return a further sum of £23,496 was voted by Parliament for the ascertained deficiency of the year 1897. From the columns of the Daily News the writer gathers that the deficiency for last year to be made good amounted to £37,395. A deduction, however, must be made from the total for surplus interest surrendered to the Exchequer to the amount of £102,201, leaving the net loss. on account of interest £387,441.

The Postmaster-General in his forty-fourth Report has a very different tale to tell. Between the years 1876 and 1895 surplus interest amounting to no less a sum than £1,598,766 had been paid over to the Exchequer. In 1896 for the first time a deficiency of interest occurred but only to the extent of £6,162, in 1897 it was £9,232, and (again quoting from the Daily News) it was in 1898 £9,674; a net gain to the State of £1,573,698.

From a study of the following Table it would appear at first sight as if the Trustee Savings Bank system were an extremely extravagant one when compared with its great rival. Yet the average rate per cent. for management expenses during the years 1897 was 5s. 3d. for the Trustee Savings Banks and 7s. 6d. for the Post Office Savings Bank. To the uninitiated it may seem incredible that in spite of these figures the former has been the cause of such a loss to the Exchequer and the latter exactly the reverse. The difficulty is explained when it is pointed out that the trustees of Savings Banks

receive 23 per cent. interest on the amount of their funds invested with the National Debt Commissioners while allowing interest to depositors at rates not exceeding 2 per cent., and that whatever savings are made out of the working margin do not revert to the State, but are added to the separate surplus or reserve fund of the particular Savings Bank, upon which fund, or at least that portion of it which has recently accumulated, interest is now allowed a privilege which the trustees might justly be called upon to relinquish so long as the State has to make good annually such a large deficiency in interest. No doubt when the last Trustee Savings Bank closes its doors there will be a very large sum to be disposed of, for the total of the separate surplus funds of the various Savings Banks was £552,878 on 20 November 1896, and had increased by 20 November 1897 to £569,612. Although some of the Trustee Savings Banks have a very strong hold upon their localities, especially north of the border, where the Post Office has never proved a success so far as its banking business is concerned, it is open to doubt whether the Trustee Savings Bank system will be able to stave off amalgamation in some shape or form for another quarter of a century. It is the tendency of the times. The elimination of the personal relationship, which often exists

between the trustees and the depositors is much to be deplored, and it is one which no huge state-organised department can ever replace. It must die with the Trustee Savings Bank system: to the highly centralised Department the personality of the individual depositor becomes utterly lost: he is but a unit in a huge sum, as such to be treated numerically and in no other manner whatever. Such a result is inevitable where personal relationship does not and cannot exist, and none but the school of Mr. Gradgrind could look upon it with equanimity. Perhaps however the writer may be biased from his almost life-long connection with one of the old savings Banks.

To arrive at the real reason for the heavy losses incurred by the State on account of Trustee Savings Banks it is necessary to study for a few minutes the life history of these institutions. The policy systematically pursued in the earlier years of their existence as semi-state institutions was to encourage thrift among the working classes by allowing interest at rates which it was impossible for Government to earn by its investments. Between 1817-the date of the first Savings Bank Act and 1828, Government allowed interest to the trustees at the rate of £4 11s. 3d., while the average rate of interest yielded by Consols varied (according to " Whitaker") from £4 8s. 4d. to £3 6s. 1d. From 1828 to 1844 the Trustees received £3 16s. Od., while Consols yielded from £3 15s. 3d. to £3 Os. 8d. From 1844 to 1880 Government allowed £3 5s. Od. per cent., while the rate of interest upon Consols varied between £3 10s. 7d. and £3 Os. 8d. From November 20, 1880, the rate of interest allowed was 3 per cent., which was again reduced in 1888 to 2 per cent., at which it still remains. The above generalisations show clearly enough the constant trend of the Savings Bank Fund towards insolvency, but it may be as well to give a specific example. In the year ended 20th November, 1858, the investment of the Commissioners for the Savings Bank Fund earned £1,057,930 interest, while the amount paid and credited to the various savings banks was £1,129,820. Further between the date mentioned and 21st January, 1859, £629,463 was invested in the purchase of £650,542 per cent. stock, the dividend upon which would amount to £19,516, while the Commissioners would pay interest on the amount invested at 31 per cent. to the extent of £20,457. It is not surprising, therefore, to find that never between 1853 and 1880 did the capital deficiency of the Trustee Savings Bank Fund decrease below £2,500,000 in spite of several attempts to check its growth. Until 1876 there was no provision for the annual replacement of loss to the fund caused by deficiency of interest, so that the depletion of the capital account would ultimately have resulted in the insolvency of the fund. The cause of the loss to the State is therefore through no mismanagement in the present, it is the fatal legacy of the encumbered estate of a past generation. The theories which obtained in these days we now may