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Bible Encyclopedias
Savings Movement
1911 Encyclopedia Britannica
or "SAVINGS MOVEMENT. - The origin and development of what became known in England as the " War Savings Movement " provides the subject-matter of one of the most interesting chapters in the economic history of the World War. In the United States, to which reference is made in a subsequent section, the Savings and Economy movement was no less remarkable.
UNITED KINGDOM Institutions for the normal encouragement of thrift on the part of the people of the United Kingdom were making steady progress up to the date of the outbreak of the war in 1914. From that date onwards the pace of their advance was materially accelerated. The amount due to depositors in the Post Office Savings Bank increased 28% in the decade 1903-13, while during the five years 1913-8 they increased by 42%. The amount due to depositors in the Trustee Savings Banks increased 3.2% in the decade 1903-13, while during the years 1913-20 it increased by 12.5%. These figures give a general indication of the growth of the savings of the people during the war period, but they do not tell the whole story. In the atmosphere created by the War Savings movement, and in the circumstances which for a time materially improved the financial position of the wageearning classes, not only did existing savings institutions develop rapidly, but a new national thrift machinery was brought into being and its operations met with remarkable success.
Cost of the World War. - Within six months of the outbreak of hostilities in Aug. 1914, it became evident to those who were more closely in touch with realities that the World War would be a prolonged struggle, in which it would be necessary for the combatant nations to marshal their entire resources of production. Modern warfare was seen to demand not only that there should be a high percentage of the population in the fighting forces, but also large numbers of civilians producing on a huge scale military equipment of the most varied character. The enormous volume of goods and services which had to be requisitioned is best expressed in terms of the national expenditure. The largest amount spent by Great Britain in war in a single year before 1914 was X71,000,000. The Revolutionary and Napoleonic wars cost in the aggregate 831,000,000 spread over 20 years, an average annual expenditure of £42,000,000; the Crimean War cost £675,000,000 in three financial years, or an average annual expenditure of £225,000,000; while the S. African War of1899-1902cost £211,000,000 spread over four years. In the face of the expenditure during the World War of 1914-9, these figures are insignificant. The money spent by the Government of Great Britain during the five financial years cannot he placed at less than from £8,000.000,000 to f9,000,- 000,000. At one period the average daily expenditure rose to the enormous figure of nearly £7,000,000 sterling.
It was not, however, till the year 1915 was well advanced that the full meaning of the cost of the World War in terms of goods and services began to be appreciated, even by those in high places. During the first few months of the war the inevitable dislocation of industry caused by the calling-up of men of military age and the interference with the normal markets led to a considerable amount of unemployment, and steps were taken by the Government and by the public for the relief of distress. This period of unemployment lasted but a short time and far less distress was caused than had been anticipated. The increased demand for men for the fighting forces and the rapid organization of special war work in many directions quickly absorbed the unemployed. Women were drafted into industry in ever-increasing numbers. In the meantime, the normal production of goods was reduced and stocks diminished. Prices rose rapidly owing to the excess of demand over supply and wages were raised sympathetically. Gradually alarge amount of overtime became general, and, in many instances, owing to several members of the same family being in receipt of good wages and on account of overtime, the incomes of working-class families reached very substantial figures. By the summer of 1915 the purchasing power of the people of the country had been very considerably increased.
With the increased demand for goods which followed this rise of the purchasing power of the masses, prices mounted still higher; and with the growth of credit, which was required to cover the increased payments of wages, a dangerous situation was created. By the middle of 1915 it was obvious that it was of paramount importance that the personal expenditure of the people of the country should be checked, and that, in fact, the stopping of individual expenditure was quite as important as the raising of money for the war. It was seen that while from the financial point of view it was desirable that the expenditure on the war should be covered as far as possible by monies raised by taxation, and next by loans from money saved by the people of the country, it was equally important that the mass of the people should reduce their personal expenditure in order to release the resources of the country in capital and labour for the production of the essentials of war. The military advisers of the nation were calling for still larger numbers of men for the fighting forces. Recruiting became more and more urgent. The war factories were crying out for tens of thousands of hands for the production of the vast stores needed on all the fighting fronts. At the same time, the demand of the people through their daily expenditure, stimulated by high wages and big incomes, was automatically retaining labour in the production of things which were not only not necessary for their subsistence, but were often mere luxuries. Again, the expenditure of individuals tended to increase the purchase of imported goods, necessitating either increased exports demanding labour for their production, or adversely affecting the Exchanges and necessitating the export of gold or the sale of foreign securities. The real difficulty of the situation was seen to be the scarcity of human labour to produce the necessaries of war rather than the finding of money to pay for them. Thus the exigencies of the recruiting agencies and national factories led directly to the " goods and services " point of view and to an imperative demand for personal saving.
The dangers of the situation were emphasized by Mr. Lloyd George in May 1915, and it soon became evident that drastic steps would have to be taken to enforce economy throughout all ranks of the community and particularly among the wageearners, whose aggregate purchasing power had reached dimen sions which made their personal expenditure the largest factor in the situation.
Early Efforts for Saving
During the autumn of 1915, a vigorous mission was undertaken by a voluntary body known as the United Workers, who by the holding of lectures and meetings throughout the country did much to explain the facts to the people and prepared the ground for more concentrated effort later. About the same date a Parliamentary War Savings Committee was established, and through its efforts local war thrift committees were set up in a number of the larger towns of the country. All these efforts were, however, to a large extent ineffective, owing to the absence of any form of investment security specially adapted for persons of small means. The machinery of the Post Office Savings Bank and the Trustee Savings Banks, allowing for deposits at low interest, was inadequate to cope with the situation.
The history of the Post Office Savings Bank during the first year of the war fairly accurately indicates the trend of events. The outbreak of the war saw a sharp run on the Post Office Savings Bank deposits, a run accentuated by the actual shortage of coinage which persisted even up to the end of August. The net withdrawals from the Post Office Savings Bank Department from the declaration of war to the end of Aug. were £2,500,000 in excess of deposits. After Aug. 1914 confidence was quickly restored and deposits began to come in freely. Before the end of Sept. they had exceeded the withdrawals, and so completely did the tide turn that the deposits for the three months ended April 30 1915 exceeded the withdrawals by £4,400,000, or were £3,000,000 in excess of deposits in the corresponding quarter of 1914. For the five months from Jan. I 1915 to May 31 1915, the balance due to depositors increased by over £6, 50o,000 as compared with an increase of £1,700,000 during the corresponding period of 1914.
Good as these results were in themselves, it became, however, increasingly clear that the Post Office Savings Bank alone, with the rate of interest on deposits at 21%, was not sufficient to stimulate saving in the country to the extent that was necessary. Several times pressure was brought to bear on the Government with a view to getting the interest on the savings bank deposits increased, but this pressure was resisted. Other small attempts were made to attract saving. During the issue of the 41% War Loan in June 1915, scrip vouchers of 5s. and lips. and scrip certificates of £1 and £5 were issued by the Post Office. The scrip vouchers, when they amounted to £5 or a multiple of £5, and the scrip certificates could be exchanged at any money order postoffice during the first fortnight of Dec. 1915, the owner being duly registered as a holder of a corresponding amount of War Loan and being given a stock certificate. Interest was allowed on the scrip vouchers according to the month of purchase and provision was made for repurchase by the Post Office at face value of any vouchers in excess of the £5 multiple. The aggregate result was that, between Nov. 1915 and Dec. 1920, scrip certificates amounting to £3,967,965 and scrip vouchers amounting to £1,049,838 were exchanged for 41% or 5% War Loan or Exchequer bonds. The £5 scrip certificates were only exchangeable for 41% War Loan, but the scrip vouchers could be held for subsequent loans. These were the chief official steps taken to facilitate saving by the people up to the end of 1915. In Nov. of that year the Government was pressed to increase the maximum sum which depositors might pay into the Post Office Savings Bank in any one year, but it was pointed out that this would require fresh legislation, the existing limits having been fixed by the Savings Bank Acts of 1891 and 1893.
Expression had been given to the need for action in a letter to The Times in the summer of 1915 from " A Banker." 1 The force of his contentions was widely recognized, and this letter may be regarded as the germ from which the War Savings movement was started. This was followed by an important manifesto signed by some of the foremost men in the world of business published in The Times in November. It was a straight 1 The author was Mr. R. H. Brand, a partner in the London firm of Lazards, and a well-known writer on finance. (H. CH.) forward statement calling the nation to thrift and urging concentration on the production of essentials only, eschewing nonessentials by universal personal economy.
Montagu Report
Finally, in Dec. 1915, the Chancellor of the Exchequer (Mr. R. M'Kenna) set up a Committee under the chairmanship of the financial secretary to the Treasury (Mr.
E. S. Montagu) to consider the question of getting contributions to War Loans from the working-classes. The final report of this Committee (Cd. 8179), dated Jan. 26 1916, marked the birth of the War Savings movement as a national organization.
An interim report had been issued on Dec. 28 1915, recommending the removal for the period of the war and six months after of the restrictions which limited the amount deposited by any one depositor in the Post Office and Trustee Savings Banks to £50 in any one year and £200 in all. The Committee also recommended that Exchequer bonds of the denominations of £5, £20 and Aso should be placed on sale at all post-offices, provision being made for the deposit of the bonds at the post-office and the issue of books in which the deposit of the bonds would be recorded. The Chancellor of the Exchequer recommended the adoption of these proposals and they were concurred in by a Treasury minute of the same date. Two series of bonds, with interest at the rate of 5% per annum and 6% per annum respectively, were on sale in 1916 and brought into the Exchequer nearly £44,000,000.
The final report of the Committee pointed out that there were two separate objects to be attained by the successful solution of the problem of the small investor: (a) the reduction of general consumption, which would tend to check the rise in prices; and (b ) the raising of a certain amount of money for the prosecution of the war. The needs of the small investor were described as being: (a) a simple method of investing savings; (b ) a guarantee that the capital value of the investment will not depreciate; (c ) the ability to withdraw savings at short notice; and (d ) the knowledge that as high a rate of interest is paid on the money of the small investor as on that of the large. It was further pointed out that both propaganda and organization were essential to success in making any appeal for savings. The report recommended the appointment of two committees - one to carry on propaganda and to establish on a large scale voluntary War Savings associations for cooperative saving, and the second to devise and approve various schemes of saving and to safeguard their financial soundness. In order to meet the needs of the small investor the Committee recommended the issue of a new form of Government security in the shape of " War Savings Deposits " of 15s. 6d. each, each deposit entitling the subscriber to receive -CI on the fifth anniversary of the date of the deposit.
National War Savings Committees
The Chancellor of the Exchequer adopted the recommendations, and on Feb. 8 1916 the two committees were appointed. (These two committees were amalgamated in the following April under the title of the " National War Savings Committee," separate committees being established for Scotland and Ireland.) War Savings Certificates. - On Feb. 19 1916, the projected savings deposits were issued under the revised title of " War Savings Certificates." The War Savings certificate must rank as one of the most ingenious and successful financial instruments ever conceived. For the first time in history a security was offered to the people which by its nature tended to concentrate the mind on the growth of capital value through the accumulation of interest, rather than on the annual return in the form of dividends. This feature of the " small investor's Treasury bill," as it has been called, has had, undoubtedly, a far-reaching psychological effect. It may be said to have projected the mind of the investor towards an ultimate personal use of the accumulated proceeds of his investment after a considerable term of years, and to have reduced the motive of investment merely as a means of providing an annual sum to be spent on its arrival. To the intrinsic merits of the certificate the success of the War Savings movement is, to a great extent, attributable. The certificates were purchasable for 15s. 6d. and could be cashed at any time. At the end of 2 months a certificate could be cashed for 15s. 9d. After this period its cash value increased by a penny a month, and at the end of five years it could be cashed for Li; that is to say, an additional 3d. was added to the value at the end of the fifth year beyond the increase of a penny a month. Subsequently, by Section 4 of the War Loans Act, 1919, the life of the certificates issued, or to be issued, was automatically increased to ten years, the value of the certificates rising after the end of the fifth year by a penny a month until the end of the tenth year, when a further is. would be added, making the final encashment value 26s. By the Finance Act, 1918, Section 41, and the War Loans Act, 1919, Section 4, it was provided that the encashment of certificates held by any individual owner could be postponed beyond the period of maturity until the maturity of the lastdated certificate in his possession, such certificates held over increasing in value at a flat rate of a penny a month. Section 42 of the Finance Act, 1916, provided that the accumulated interest payable in respect to any War Savings certificate issued by the Treasury through the Post Office, under which the purchaser by virtue of an immediate payment of i 5s. 6d. became entitled after five years to receive the sum of f i, should not be liable to income tax so long as the amount of the certificates held by the purchaser did not exceed the amount for the time being authorized to be held under regulations made by the Treasury. To avoid the serious consequences which would result to the revenue if income taxpayers generally were to use this form of investment, it was originally arranged to confine the issue of War Savings certificates to persons whose total income from all sources did not exceed boo a year. Experience, however, showed this limitation to be undesirable. The necessity for a declaration as to income at the time of the purchase of the certificates caused administrative difficulties, and by reason of the income limit many wage-earners who were temporarily drawing large wages were unable to buy certificates. In view of these facts, the Committee recommended the Treasury to abolish the income limit, and the restriction was removed on June io 1916. All formalities in regard to deduction and recovery, proof of exemption or title to abatement from income tax were dispensed with, and a limit of 500 certificates was put on the number allowed to be held by any one person.
By the Finance Act of 1918, it was provided that if a person's holding was brought by inheritance above Soo fi certificates or their equivalent, the excess might be held without liability to any penalty or to income tax, so long as the person did not purchase for his own benefit, or have purchased for him, any further certificates while holding more than soo certificates in all.
The War Savings certificate was ingenious not only from the financial standpoint, but also in its form. The certificates were issued in books, upon the cover of which the name of the holder and his address had to be inscribed. The book was of no value except to the person whose name was written upon it. The certificate contained a small panel on its right-hand side, to which the receipt for the purchase price had to be affixed, and the certificate was not valid until this had been done. The receipt was printed on green paper, and each receipt had a number which became the official number of the certificate. The certificate was registered at the money order department of the Post Office as belonging to the particular individual in whose name it was issued. It was necessary to have the signature of the owner to prevent the certificate being cashed by any unauthorized person. In order to provide for this, the receipt which was affixed to the certificate was only the lefthand portion of an original form of receipt, while the right-hand portion, having upon it the corresponding number, had to be filled in by the applicant and handed back to the postmaster. This portion contained the full name and address and signature of the purchaser and formed the basis of the registration system. When the certificate was cashed at a later date, the number on the certificate and the signature of the applicant on the request for repayment could be compared with that portion of the receipt which had been filed. Certificates might be bought by one person on behalf, and in the name of, another person, the signature of the beneficial owner being, if possible, supplied. A cut-out signature from a letter or other document was accepted, but if a signature was not available, it was obtained later by the Post Office. In the case of children under seven years of age the signature was not required. After the receipt had been stuck in the certificate book and a certificate had thus been completed, it could only be transferred to another person in exceptional circumstances and by permission of the Postmaster General. A fee of is. was charged in respect to each transferee. Certificates were not negotiable, and their value would not be paid to anyone but the holder whose signature was registered by the Post Office. Holders over 16 years of age could make nominations of their holdings in case of death. Every nomination had to be on a proper form, which could be obtained from the Controller of the money order department, and required to be received by the Controller during the lifetime of the holder. In addition to the receipts for the payment for single certificates costing 15s. 6d., each of which was stuck into a certificate book, single documents representing 12 or 25 certificates could be obtained from any money order post-office and most banks. These consisted of two parts divided by a perforation, the left-hand portion for registration, and the right-hand portion to be retained by the purchaser. Books were not supplied for these certificates. Documents were also issued for any number of certificates from 26 to 500, both inclusive. These were not kept at local post-offices, but were issued by the Controller and Accountant General of the Post Office, to whom application with remittance was made direct or through a bank. They were applied for on a special form and issued a day or two after receipt of the application. If a certificate, or book of certificates, were lost, a new certificate, or book of certificates, would be issued at a charge of is., provided the serial numbers could be furnished to the Controller of the money order department.
On Dec. 4 1920, the old print of War Savings certificates was withdrawn from sale at post-offices and banks, and on Dec. 6 " National Savings " certificates were substituted. The change was legalized by the Savings Bank Act of 1920, and was one of title only. The conditions attaching to the old certificates still applied.
The savings certificate formed the basis of the operations of the War Savings associations, which were established under the auspices of local War Savings committees and affiliated to the National War Savings Committee.
War Savings Associations
Not less important than the War Savings certificate was the system of association, or club, proposed by the Montagu Committee. In their final report the Committee pointed out that the would-be investor should not, if it could be avoided, be left to himself to seek for an investment. Facilities for investment should be provided by agencies in close touch with him; and these agencies, having succeeded in inducing him to save, should endeavour by careful propaganda and by thorough organization to persuade him to make the continuance of saving a matter of habit. The Committee emphasized the advantages of placing an agency between the small investor and the State which could collect and manage the savings of the small investor. It was pointed out that the Government could enter into no contractual relationship with the individual investor, unless it assumed complete control over the schemes adopted and also supervised in detail the actual administration of the societies themselves. They added that the organization of such control and supervision would require the creation of a new Government department, which, apart from the question of the expense involved, it would have been impossible to staff during the war. Also, the rigidity of procedure which a State system would inevitably involve would be fatal to the free local initiative on which the success of such a scheme would depend. At the same time, if societies, many of which have at their command no expert financial knowledge, were left free to develop schemes without supervision or control, some of them would not unlikely become insolvent. The problem was to obtain the best safeguards which could be secured for the financial soundness and efficient administration of the different schemes, while leaving the responsibility for both administration and results with the societies themselves, and they recommended that the committee which should be appointed by the Government, and to which the various investment societies might be affiliated, should be regarded, not as representing the Government, but as an independent body of experts acting on behalf of the societies themselves. Its duties would be primarily of an advisory character, but it could properly refuse to recognize any society the constitution and rules of which it did not approve and withdraw recognition from any society which might fail to satisfy the committee that it was being properly administered. The committee could, if it saw fit, organize a system of inspection and audit of the operations and accounts of the affiliated societies and by these means secure a very substantial measure of control over their operations.
Local War Savings Committees
In accordance with these views, the War Savings Committee embarked upon a widespread scheme for the promotion of savings associations, delegating the propagandist work in a large measure to local committees which were set up throughout the country. Before the war was over there were in existence in England and Wales 60 county committees and 1,840 local war savings committees acting as propagandist agencies under the general control of the central body, while the War Savings associations set up under their auspices numbered over 40,000 with a membership of approximately 4,000,000 people. (At the end of 1920 there were still 1,701 local committees and over 28,000 associations.) A savings association could be formed by any number of people who were willing to work together to secure the attainment of its objects. In practice it was found that an association could readily be formed by those who were already corporate in some way; for example, by those who were members of a trade union, a friendly society or a cooperative society, by fellow workers in a shop or factory, or by the members of a church, chapel or social club. Each association had its governing committee, secretary and treasurer.
Scotland and Ireland, with their separate organizations, developed the movement on similar lines. The total number of voluntary workers in the movement was estimated to be between 200,000 and 250,000.
Official Agents
By the end of 1917, when nearly 30,000 War Savings associations had been affiliated, there had been established on an average one association for every 1,200 inhabitants in England and Wales. Most of the social and industrial groups were covered, but it was realized that a large section of the wageearning population and, possibly, the most highly paid, did not readily join War Savings associations. Many employees objected to joining associations to whose books their employers might have access. They were of opinion that knowledge of the fact that they were saving money might tend to diminish the force of any claim they might make for enhanced wages on account of the increased cost of living. With a view to reaching the prospective small investors of this class, it was decided to add to the number of places where War Savings certificates and National War Bonds could be bought. Certificates were on sale at all money order offices and at most banks, but the majority of the class of persons under consideration had no banking account and had no reason to enter a bank. The Post Office staff was obviously unable to make any special effort to push the sale of Government securities, having regard to the heavy mortgage on their time caused by the manifold additional duties which the exigencies of the war period cast upon them. It was therefore arranged to license certain tradesmen and firms as official agents for the sale of certificates and bonds. These agents purchased the securities outright with their own funds and received the certificates and bonds dated, but unregistered. They then resold the certificates and bonds to their customers and others. By the end of the war, these securities were on sale at more than 14,000 shops and other establishments throughout the country. Very large numbers of certificates in the aggregate were sold in this way. The success of the system is noteworthy in that it involved the sacrifice by the official agents of the interest upon the capital used for the purchase of stocks of certificates between the dates of purchase and sale.
Savings Schemes.
The National Committee, following the guidance of the Montagu Committee, had also set itself the task of preparing various model schemes of cooperative saving to meet the requirements of the people. The following schemes were evolved at various times: Scheme i. - Money subscribed through a savings association was invested in Post Office Exchequer bonds. For each 5 Exchequer Bond a subscriber paid 2s. a week for 50 weeks, or ios. a month for 10 months. All sums subscribed were remitted to the Treasury each week, the Treasury paying interest on the amounts received at the rate of 5% per annum. The bonds and cash payments due to members were distributed half-yearly, e.g. in the case of subscriptions beginning May 1916 bonds and cash were distributed June I 1917, weekly subscribers receiving a cash payment of 2s., and monthly subscribers Is. 9d. The cash distributed was free of income tax, but had to be included in the income-tax return of mem bers. It could be paid at the Post Office or could be credited to an account in a savings bank. This scheme was not adopted on a wide scale and was abandoned at a later date. Schemes involving subscriptions for certificates were found in practice to be more popular and more easily worked.
Scheme 2A . - Monies subscribed through an association are invested in War Savings certificates. Subscriptions of 6d. or any number of sixpences are accepted. War Savings certificates are purchased from the Post Office with the cash received by the secretary from the members, and they are dated at the time of purchase, but they are not registered. Each member when he pays his first subscription is given a book. His subscriptions are entered in the book as and when they are paid. When the subscription of any member amounts to 15s. 6d., he is given a certificate and the registration portion of the certificate is then filled in and lodged at the Post Office. The method of distributing certificates of different dates and consequently of different encashment values is settled by the committee of each association. Members can withdraw before reaching the full 15s. 6d. and the amount deposited is repaid, but without interest. The advantage of the scheme lies in this, that if 31 people individually save 6d. a week for 31 weeks, they will each have a certificate at the end of 31 weeks, but if they join an association to which they pay 6d. a week, the association is able to buy one certificate each week, and at the end of 31 weeks it will have 31 certificates. The first of these certificates is dated 30 weeks earlier than a certificate bought by any member acting alone. On the average, they will be dated 15 weeks earlier and consequently will mature 15 weeks earlier. The hooks are provided free of cost by the National Committee. The book-keeping is necessarily somewhat detailed, but it is essential for the protection of members.
This scheme was probably the most widely adopted.
Scheme 2B is similar to Scheme 2A, but the certificates are not distributed until one year after the subscriptions of any member amount to 15s. 6d. The scheme was not widely adopted, people preferring to get their certificates immediately they had made up their 15s. 6d.
Scheme 3 is in essence a savings bank - all the money received being invested in War Savings certificates. The minimum subscription is one penny. Any number of pennies are accepted. Subscriptions are withdrawable at 14 days' notice, or without notice in urgent cases. Each member has a book in which subscriptions are entered. On the completion of the payment of 15s. 6d. the member is registered as being entitled to the payment of £1 at the end of five years. The certificates are not distributed but are held by the association until they mature. A few associations in schools adopted this scheme, but after a time the majority ended by distributing the certificates to their members and adopting Scheme 2A.
Scheme 4 was a scheme for investment by instalments in Exchequer bonds and War Savings certificates, the Treasury paying interest on the amounts received at 5% per annum. During the war no part of the amounts paid into the Treasury were withdrawable in cash. When an Exchequer bond or certificate was fully paid for the Treasury issued the security to the association for delivery to the member entitled to it, the cost of the securities being charged to the amount standing to the credit of the association with the Treasury. Cash was to be returned to the association three months after the end of the war. This scheme was not found satisfactory and was little adopted.
Scheme 5 is a scheme similar in principle to Scheme 2A, but subscriptions are paid by buying from the association sixpenny coupons. The coupons are of a special " Swastika " design and can only be used for subscribing to associations by whom they are issued. The association is supplied on credit with coupons issued by the Central Committee and these have to be accounted for. The association overprints its coupons with its own serial number. Members get a coupon for each 6d. and place the coupon on a card. When the card is full it is exchanged for one of the certificates already purchased by the combined subscriptions of the members. As full cards of coupons come in they are sent to the Central Office in reduction of the association's liability for those supplied on credit. (At a later date the coupons were issued to the associations in the standing imprest system.) This scheme involved little or no ordinary book-keeping. A register of the issue of certificates was kept. The only clerical work involved of necessity was the keeping of a careful stock of the coupons. The scheme was adopted on a large scale and by some of the largest associations. As a general rule, local committees handled the distribution of the coupons in their districts. This threw a heavy burden on the local secretaries. Considerable difficulty was experienced in many instances in clearing coupon stock accounts, and the distribution of coupons on an enormous scale threw a large amount of work on the head office. The scheme is gradually being replaced by a more simple system of cards and savings stamps procurable from any post-office.
Scheme 6 is a special scheme under which employers purchase certificates in advance for employees with their own funds. The certificates are purchased in blank, that is to say, unregistered, and sold to the employees by any form of instalment system preferred. The employer in effect makes a free grant to his employees of the interest accruing on the money between the date of purchase and the date of sale.
Scheme 7 is a development of an earlier system under which the Post Office issued cards upon which 31 ordinary sixpenny postage stamps could be affixed by anyone. A card when filled with stamps was exchangeable at any money order office for a War Savings certificate. There was no advantage from cooperation. It was merely a simple device to enable people to save the money for a certificate by instalments of 6d. each.
When the Armistice was signed the National Committee gave careful consideration to devise some alternative scheme to avoid the heavy clerical labour entailed in the working of Schemes 2A, 2B, 3 and 5. This labour had been obtainable during the war on a voluntary basis and it is possible that the very labour itself indirectly assisted the movement in its early days in that it gave the officials of associations the knowledge that they were doing something definite for the benefit of the country in wartime. In 1918, the Post Office agreed to the issue of a distinctive adhesive war savings stamp with the Britannia head design. This stamp was placed on sale at all post-offices. Special savings cards containing 31 spaces were issued to savings associations. Treasurers and secretaries of associations provided themselves with stocks of the stamps, which they were authorized to procure as credit stocks, and they issued these to their members for cash. With the cash they purchased more stamps. The cards when filled were exchangeable for certificates at any money order office, and savings stamps purchased at any post-office or through any agency could be used. The scheme possessed considerable elasticity, as it enabled members of one association on transferring their residence to join another association and complete their subscriptions, or they could fill their cards with stamps purchased anywhere and exchange them for certificates anywhere. The disadvantage lay in the absence of the benefit of the early dating of certificates which was given by the other schemes - an advantage which, it was found in practice, was so generally appreciated that the new scheme, in spite of the saving of labour to the officials of associations, was not widely adopted. After considerable thought the scheme was revised and earl y in 1921 a system was introduced which, while maintaining the simplicity of Scheme 7, also gave the benefit of the early dating of certificates. The predating of certificates is secured by the use of date labels. The date labels (printed in pairs) are supplied by the National Savings Committee to the association officials. Whenever the official purchases Britannia head savings stamps, he can present at the post-office one pair of these date labels for every 31 sixpenny stamps purchased. The post-office official stamps the labels with a date stamp of that day. When a member of the association presents a card filled up with savings stamps all of which have been purchased from the association, the secretary affixes to the certificate which is issued in exchange for the card one of the officially dated date labels - one date label is affixed to the signature portion of the certificate and its fellow or counterpart is fixed on the counterpart of the certificate in the certificate book. This scheme therefore preserves the full benefit of early dating due to cooperative purchase and yet reduces the clerical work of the association official to the smallest compass. The only book which it is thought advisable for the official to keep is a control receipt book for acknowledging receipt of members' completed cards given in exchange for certificates, this serving also as a register of certificates, in case the member loses his certificate book.
The value of savings stamps sold to Nov. 30 1920 was £1,739,000, of which approximately £1,464,000 had been exchanged for savings certificates.
Municipal Savings Banks
The Municipal Savings Bank (War Loan Investment) Act, 1916, authorized the establishment, subject to certain restrictions, of municipal savings banks in municipal boroughs with populations exceeding 250,000. The only municipality to adopt this Act was Birmingham, where a bank was started at the end of Sept. 1916. The " Birmingham Corporation Act, 1919 " extended the powers. of the Corporation and authorized it to establish a savings and housing bank.
Navy, Army and Air Services. - Although military savings banks and facilities for saving in the army had existed since 1859, with the recruiting of large numbers of civilians for the new armies it was found that the normal methods of saving were insufficient to attract very large sums of money.
On the issue of the 42% War Loan in June 1915 it was felt right that due facilities should be afforded the men in the army for making their investments through the Post Office issue of the Loan. Arrangements were accordingly made for any soldier whose pay account was sufficiently in credit to invest by instalments of 5s., 10s., r ors, the amount being debited to his account and transferred to the Post Office through the regimental paymaster. Similar arrangements were made for the navy and the scheme was found to work so smoothly that it was eventually extended to Exchequer bonds and War Savings certificates as they became available, and ultimately for deposits in the Post Office Savings Bank. The Post Office undertook the safe custody of the War Savings certificates and bonds for the investors. Later in 1916, by arrangement with the War Office, a special officer was entrusted with the work of establishing war savings associations in the army, with very satisfactory results. In 1917, £186,682 was saved through the army associations; in 1918, £3,162,975; in 1919, £1,804,580; and in 1920, over £1,000,- 000, making a grand total of £6,000,000. In June 1920 the Army Council, finding the, savings associations had such a beneficial effect, made an order that all units both at home and abroad should form savings associations, and arrangements were made for command paymasters stationed abroad to hold stocks of certificates. The Air Ministry at the same time issued an order on similar lines. The War Savings movement was also carried into the navy and merchant service, suitable arrangements being made for remittance of monies through the paymasters and pay offices.
Schools.
It would be impossible to give even the briefest summary of the War Savings movement without reference to the work done by the savings associations in the schools of the country. Thanks to the influence of the Board of Education, and, particularly, to the efforts of a number of inspectors of the Board who were lent for service with the National Committee and who acted as the secretaries of the county committees and as local representatives of the Committee in the provinces, but, above all, thanks to the whole-hearted efforts of thousands of schoolmasters and mistresses throughout the country, there was scarcely an elementary school in the United Kingdom without an efficient and vigorous association. Before the war a very large number of schools had their penny banks. No attempt was made to supplant these. With the cooperation of the savings banks in connexion with which these penny banks were operated, arrangements were 'made to continue the penny bank system with the savings association methods, and often the two systems were carried on in the same school side by side. The old penny bank system as a " short term " saving machinery had a value which it would have been undesirable to destroy, while it naturally led by stages to the " long term " saving by means of the certificate. Most of the schools continued their banks and associations after the Armistice, and in no section of the community is the movement more alive and progressive to-day. It is impossible to say what proportion of the savings of the country stand in the names of the children, but it must amount to many millions sterling and this alone must have an incalculable effect on the future.
Propaganda
The human machine created by the National Savings Committee was stimulated, from time to time, by every kind of publicity method. Thousands of public meetings were held and lectures given; educational pamphlets and leaflets dealing with the elements of economics were distributed; special campaigns with such stimulating machinery as " tank banks " were inaugurated; a system of commissioners and organizers in touch with headquarters kept closely in touch with the local committees; special organizations dealt with the army and the navy, munition works and other factories. The local authorities rendered invaluable assistance to the local committees by the loan of staff, the provision of office accommodation and in many other ways. The London and provincial press were consistently sympathetic to the movement and gave freely of their space to record its activities and assist its campaigns. During the war the organization was, from time to time, utilized by the Chancellor of the Exchequer to assist in the public issues of War Bonds and War Loans. During these periods invaluable help was given by leading press experts, who, in cooperation with the National War Savings Committee, undertook the control of special publicity campaigns (see WAR Loan Publicity Cam Paigns). These campaigns for the special issues greatly stimulated the small investor. On each occasion of the issue of a great public loan numbers of new associations came into being and the weekly purchases of certificates were very much increased. One of the most significant results of the adoption of these methods of publicity and propaganda was the great extension of the numbers of individual citizens holding Government securities. Whereas before the war it was estimated that there were some 345,000 holders of Government securities, it is calculated that no less than 17 million people have to-day a holding in some form of State loan; while the aggregate amount subscribed by small investors through the Post Office for War Loans and other Government securities, including savings certificates, was nearly £500,000,000 at the end of 1920.
Withdrawals
The Montagu Committee laid emphasis on the fact that the small investor wishes to be able to withdraw his savings at short notice without loss of capital. " The financial emergencies of life come upon the working man with startling suddenness. He may be thrown out of employment, or an illness or death in the family may result in an immediate call. He has not the facilities for credit which the wealthy or even the middle classes enjoy and money only obtainable at six or twelve months' notice is of little use to him." There is no doubt that the losses sustained by the working-classes from their investments through the Post Office in Consols and other similar long-dated securities through the automatic fall in capital value due to the rise in the general rate of interest has had in the past an adverse influence on thrift. Hence the arrangements that War Savings certificates should be repayable at a definite value which is never less than the amount invested, and within two or three days of demand, that is to say, allowing time for identification of the registered holder to avoid payment to a wrongful possessor.
An analysis of the withdrawals of savings certificates is interesting. The total number of certificates sold in the United Kingdom from Feb. 16 1916 to the end of Dec. 1920, was 440,076,000 in £i units, of a total value at 15s. 6d. each of £343,259,000. The total repayments due to withdrawals, including interest, amounted to £61,404,089, of which £3,521,948 8s. 7d. represented interest. The percentage of the value of certificates repaid (excluding interest) to total value of certificates issued was 1801 per cent. This percentage may be considered satisfactory when one considers the calls upon the small investor and the fact that the current rate of interest on the shares of well-established commercial and industrial concerns since the Armistice has been very attractive. Much money has been withdrawn for housing, as is evidenced by the case of Higham Ferrers in Northants, a town of 2,500 people, where no less than 50 men have bought their houses through investments in savings certificates.
| County | Population | Business Firms | Churches | Schools | Friendly Societies | Clubs andIiscel- Institutes | laneous | Totals | England:- | Beds. | 194,588 | 73 | 27 | 92 | 3 | 6 | 59 | 260 | Berks . | 271,009 | 76 | 21 | 116 | 4 | . | 130 | 347 | Bucks. . | 219,551 | 50 | 16 | 68 | .. | 2 | 124 | 260 | Cambs . | 198,074 | 22 | 21 | 97 | I | 2 | 91 | 234 | Ches. | 954,779 | 248 | 82 | 364 | 8 | 38 | 179 | 919 | Corn.. . | 328,098 | 31 | 16 | 243 | 3 | 10 | III | 414 | Cumb. . | 265,746 | 33 | 27 | 194 | 7 | 23 | 91 | 375 | Derby. . | 683,423 | 182 | 37 | 345 | 6 | 23 | 106 | 699 | Devon | 699,703 | 127 | 26 | 250 | 8 | 40 | 253 | 704 | Dorset | 223,266 | 21 | 23 | 85 | .. | 14 | 109 | 252 | Dur. . | 1,369,860 | 324 | 74 | 236 | 2 | 75 | 174 | 885 | Ess.. . | 1,350,881 | 178 | 52 | 265 | .. | 37 | 255 | 787 | Glos. . | 736,097 | 243 | 70 | 126 | 6 | 26 | 219 | 690 | Hants. | 950,579 | 274 | 72 | 404 | 19 | 225 | 1,046 | Hereford . | 114,269 | 3 | 11 | 89 | 5 | 7 | 57 | 172 | Herts. | 311,284 | 56 | 52 | 3 | 116 | 270 | Hunts. . | 55,577 | 12 | 15 | 37 | .. | 6 | 46 | 116 | Kent . | 1,045,591 | 223 | 77 | 293 | I | 57 | 303 | 964 | Lancs. | 4,767,832 | 1,147 | 330 | 1,167 | 30 | 176 | 343 | 3,193 | Leics.. . | 476,553 | 335 | 29 | 218 | I | 17 | Ioo | 700 | Lincs.. . | 563,960 | 152 | 37 | 250 | 9 | 36 | 217 | 701 | Lond.. . | 4,521,685 | 1,607 | 163 | 254 | 79 | 85 | 5z6 | 2,714 | Middlesex . | 1,126,465 | 190 | 60 | 240 | 9 | 40 | 100 | 639 | Norf.. . | 499,116 | 58 | 18 | 79 | 3 | 8 | 225 | 391 | Northants . | 348,515 | 166 | 18 | 163 | 10 | 18 | 106 | 481 | Northumb. | 696,893 | 198 | 41 | Io 1 | 15 | 36 | 164 | 555 | Notts . | 604,098 | 184 | 30 | 334 | 3 | 28 | 108 | 687 | Oxon. . | 199,269 | 24 | 15 | 39 | 1 | 7 | 103 | 189 | Rutl.. . | 20,346 | .. | .. | 16 | .. | 2 | 23 | 41 | Salop. . | 246,307 | 46 | 20 | 116 | 5 | 7 | 122 | 316 | Som.. . | 458,025 | 109 | 39 | 168 | 2 | 14 | 260 | 592 | Staffs. . | 1,348,259 | 508 | 63 | 478 | 9 | 27 | 154 | 1,239 | Suff.. . | 394,060 | 85 | 18 | 209 | 3 | 19 | 236 | 570 | Sur.. . | 845,578 | 156 | 55 | 233 | II | 47 | 200 | 702 | Sus.. . | 663,378 | 68 | 63 | 134 | 18 | 34 | 226 | 543 | Warwick . | 1,040,409 | 311 | 55 | 264 | 8 | 40 | 166 | 844 | West m.. 63,575 | 12 | 8 | 43 | 3 | 5 | 58 | 129 | Wilts.. 286,822 | 82 | 19 | 64 | I | 13 | 153 | 332 | Worcs.. 526,087 | 138 | 23 | 265 | 5 | 19 | 97 | 547 | Yorks, E. R.. 432,759 | 112 | 30 | 85 | 10 | 22 | 87 | 346 | Yorks, N. R.. 419,546 | 42 | 13 | 103 | .. | 7 | 130 | 295 | Yorks, W. R.. 3,045,377 | 1,160 | 294 | 1,235 | 52 | 166 | 313 | 3,220 | Wales:- | Anglesey. . 50,928 | 6 | 10 | 22 | .. | 4 | 19 | 61 | Brecknock. 59,287 | 4 | I I | 32 | .. | .. | II | 58 | Cardigan. 59,879 | 3 | 14 | 101 | I | .. | 17 | 136 | Carmarthen 160,406 | 21 | 28 | 158 | 2 | 2 | 24 | 235 | Carnarvon. 125,043 | 12 | 7 | 19 | .. | 7 | 45 | 90 | Denbigh. 144,783 | 14 | 35 | 55 | 1 | 2 | 53 | 160 | Flint. 92,705 | 4 | 9 | 18 | 2 | 2 | 16 Copyright Statement These files are public domain. Bibliography Information
Chisholm, Hugh, General Editor. Entry for 'Savings Movement'. 1911 Encyclopedia Britanica. https://www.studylight.org/encyclopedias/eng/bri/s/savings-movement.html. 1910.  Ads FreeProfile |
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