1902 Encyclopedia > England > Savings and Wealth of the Population.

(Part 14)


Part 14. Savings and Wealth of the Population.

Giving Alms no Charity was the title given by Defoe to a pamphlet, published in 1704, in which he recommended the establishment of savings banks as a remedy for pauperism, the cancer of which, he declared was only increased by charitable institutions. The imaginative author of Robinson Crusoe thought it quite possible that parliament might order the nation to be thrifty, passing Acts "which shall make drunkards take care of wife and children, spendthrifts lay up for a wet day; make lazy fellows diligent, and thoughtless, sottish men careful and provident." A long time elapsed before Defoe’s wish for savings banks was acted upon. In 1771 Francis Masères, a thoughtful philanthropist, carried a bill through the House of Commons enabling rate-payers of parishes to establish savings banks; but the bill was thrown out by the Lords, as revolutionary in its nature. Subsequently there were several private efforts to effect the same end, which met, however, with only trifling success. A savings bank for the poor, under the ill-chosen name of "Benevolent Institution," was established by the Rev. Joseph Smith at Wend-over, Buckinghamshire, in 1799, on the model of a Swiss "caisse de domestiques," and a similar one by Mrs Priscilla Wakefield at Tottenham, near London, in 1804, the title of the latter being that of "Charitable Trust." But these institutions met with no support from the people; and it was not before the year 1817, when parliament took the subject in hand, and legislated upon it, that savings banks took root in the country. The statute which effected it was Act 57 George III. c. 105 and 130, which placed all the savings banks of England and Wales under the control of the Government. In 1828 the Act was extended to Ireland, and in 1835 to Scotland; but in neither of these divisions of the United Kingdom had it to any degree the same effect as in England. For various reasons, chief among them ordinary banking facilities, savings banks never flourished greatly in Scotland, while the poverty of the country prevented them flourishing in Ireland.

The extension of savings banks in England, rather slow at first, became very marked during the decennial period from 1830 to 1840, and at the end of the latter year 552 of them had been established in the n country, the total deposits amounting to £21,036,190. Thenceforth the deposits rose steadily one million every year until 1846, when there came a period of decrease till 1849, followed by a further increase which lasted uninterruptedly till 1861. At the end of the latter year, the total deposits in the savings banks of England and Wales had risen to £36,855,508. The deposits in Scotland at the same date amounted to £2,537,963, and in Ireland to £2,153,004.

The following table shows the amount of deposits received and paid back by trustees of the old savings banks, in England and in Wales, during every years from 1864 to 1876, together with the sum of the total capital at the end of each year, the whole exclusive of the deposits in post-office savings banks:—


The facilities of the people to place their savings securely and profitability were greatly increased by the establishment of post-office savings banks, by which the number of offices taking deposits was spread, as it had never before been, all over country. By Act 24 Vict. c.14, passed in 1861, the postmaster-general was empowered to direct all postmasters to received deposits of money, of nor less than one shilling, for remittance to the central office at St Martin’s-le-Grand, London, to be repaid on demand, with 2 _ per cent. interest per annum. The first of the new post-office savings banks were opened throughout Great Britain on the 16th September 1861, and their progress since that time is shown in the subjoined table, which gives the number of offices open, the number of deposits, and the amount of deposits, in years and periods of years, from 1861 till 1876:—


The total number of both old and post-office savings banks open at the end of the year 1876 was 5912, and the total number of depositors 3,195,761. At the 20th November 1876 there were 1,493,401 accounts open with the old savings banks in the United Kingdom, and the amount owing to depositors was £43,283,700 being an average of nearly £29 for each depositor. The amount deposited in post-office savings banks at the end of 1876, in the name of 1,702,374 depositors, was £26,996,550, an average of £15, 17s. (see page 240).

It appears from the detailed annual returns of the old savings banks, which, notwithstanding the wide-spread competition of the post-office, still hold over 34 millions of savings of the lower classes, that these savings are made in very unequal proportions throughout England and Wales. They are largest, as may be expected, in Middlesex, where the deposits amounted at the end of 1876 to £5,347,217; but Lancashire came very near it, with deposits of £5,302,982. The county of York stood next, the deposits at the date amounting to £3,960,754; while three more counties showed deposits of over a million, namely, Devonshire, £1,950,303; Cheshire, £1,235,084; and Northumberland, £1,166,086. As a rule, the manufacturing counties of England show a far larger amount of savings, per head of population, than the purely agricultural counties, which may be sufficiently explained by the lowness of wages in the latter. In two counties of England, Huntingdonshire and Rutland, there were no savings banks of the old establishment in 1876; and the same was the case in two counties of Wales, Anglesey and Merionethshire. In Wales in general the savings are far below those in England. There were in the old savings banks of Carnarvonshire only 702 depositors at the end of 1876, being one in 152 of the population. The population at the same date for the whole of England and Wales was one depositor in every 21 of the population, and for Wales alone one in every 37.

Assessment to Income Tax—While the statistics of the savings banks serve as valuable indications of the growth of habits of thrift among the lower classes, they furnish little or no information of the progress of national wealth. It is naturally impossible to measure this progress with any approach to accuracy, but fair estimates towards it may be drawn from the income tax returns. Originally instituted in 1799, to defray the expenses of the war against France, the income tax was levied from that date till 1816, when it ceased, the motion for its renewal having been defeated in the House of Commons by a large majority. The tax was re-imposed in 1842, by Act 5 and 6 Vict. c. 35, and renewed at intervals, but with constant changes in the amount taxed per pound of income. In the first financial year of its being levied, ended April 5, 1843, the total annual value of property and profits assessed in England and Wales was returned at £227,710,444; but the amount sank to £221,101,717 in 1844, and £220,464,968 in 1845. while it reached again £227,863,132 in 1846. there was a rapid increase, scarcely checked for a few years, at intervals from this date for the next twenty years. In the financial year ending 1848, the total annual value of property and profits assessed to the income tax in England and Wales had risen to £229,868,226, in 1851 to £230,419,304, in 1854 to £256,333,899, in 1857 to £261,069,680, and in 1860 to £282,312,309. The increase from this time up to the financial period ended April 5, 1875—the last year for which returns have been published in January 1878—is shown in the subjoined table, which gives the total annual value of property and profits assessed to income tax in England and Wales, as well as in the United Kingdom, during each of the fifteen years from 1861 to 1875:—


Under the Act of 1842 which instituted the income tax, all incomes were ordered to be taxed under five classes, or schedules, marked by the first five letters of the alphabet. Schedule A was to comprise all incomes from ownership of lands, tenements, and tithes; schedule B, all incomes from occupation of lands and tenements; schedule C, all incomes form public dividends and annuities; schedule D, all incomes from trades and professions; and finally, schedule E, all income from Government offices and pensions. The annual value of each of these classes increased in the fifteen years form 1861 to 1875, but in very unequal proportions. The least increase was in the incomes under schedule B, arising from the occupation of lands and tenements, not amounting to more than 25 per cent. during the period, while there was but a slightly larger increase in the incomes under schedule C and E, the former comprising dividends and annuities, and the latter public salaries and pensions. On the other hand, the incomes under schedule A from ownership of lands, more than doubled in England and Wales in the course of the fifteen years for 1861 to 1875; and the incomes under schedule D, from trades and professions, were not far from trebling during t6he same period.

The following table exhibits the gradual rise in annual value of these two classes of incomes in England and Wales during the fifteen years 1861 to 1875:—


The annual value of the incomes assessed under schedule A in the year 1875 was £16,716,474 in Scotland, and £12,994,735 in Ireland, the aggregate for the United Kingdom being £162,431,893, so that England represented more than three-fourths of the total. Under schedule D, the annual value of the incomes in 1875 was £27,412,223 in Scotland, and £10,133,323 in Ireland, making an aggregate of £266,942,347 for the United Kingdom, and leaving not far from six-sevenths to the share of England and Wales.

Growth of National Income—The income tax returns given in the preceding tables furnish import materials for ascertaining, if only approximately, the national income of England. They show, first of all, that it is not only growing, but growing at an enormous rate. This is conclusively proved by the returns of the aggregate annual value of the incomes assessed under schedule D, comprising the gains derived from trades and professions, including in the same the profits from such undertakings as mines, railways, canals, and gas and water works. It is said, with truth, that these incomes under schedule D are "the true gauge of the prosperity of the nation;" and if this be admitted, the people of England are growing vastly in prosperity. In the fifteen years from 1861 to 1875, the increase in the annual value of the incomes of England and Wales taxes under schedule D was no less than £147,856,566, being at the rate of £9,857,704 per annum. In Scotland, during the same period, the increase of incomes under schedule D was at the rate of £1,269,298 per annum, and in Ireland at the rate of £353,135; while in the whole of the United Kingdom it was at the rate of £11,480,138 per annum.

Accumulated Wealth.—There have been many attempts made to estimate the amount of capital, or of accumulated wealth, of the country in recent times, and the rate at which it is increasing. One of the most recent, as well as most valuable of these estimates, was contained in an elaborate paper by Mr Robert Giffen, head of the statistical department of the Board of Trade, read before the Statistical Society of London on the 15th of January 1878. Taking the income tax returns, down to the year ended March 31, 1875, the latest for which particulars were published, for the basis of his calculations, Mr Giffen arrived at the conclusion that "the total capital of the people of the United Kingdom may be reckoned at a minimum of 8500 millions sterling," their being "the capitalized value of the income derived from capital," or, in other words, the accumulated wealth of the nation.

"It is a bewildering figure," says Mr Giffen, "about eleven times the amount of our national debt, which may thus be reckoned with all soberness as a fleabite. Nearly 7500 millions out of this amount besides must be reckoned as income-yielding, only the remaining 1000 million being set down as the value of movable property or the direct property of imperial or local authorities, which does not yield any individual revenue. The suggestion may perhaps be made that to some extent these are only figures in an account—that the capital outlay on the soil, plant, machinery, factories, and houses of England, or on the circulating capital of English industry, would not come to so much. But in reply I would say that, while there is no evidence one way or the other as to what the outlay has been, while we shall never know what it has cost from generation to generation, to give us all this inheritance, there is some justification for thinking that the values are stable and not transitory. They represent an estate on which thirty-four millions of people have facilities for production and distribution, which must be equal all in all to the facilities existing anywhere else, because they are constantly tried in the furnace of free trade, and are not sustained by any adventitious means. If certain properties have acquired what is called a monopoly value, it is because actual workers are able to pay the corresponding rent out of their first earnings, and have ample wages and profit besides. In such matters the property of a great country, like a factory or business, must be valued as that of a going concern, and the monopoly value which certain things acquire only enters into the question of the distribution of the estate and its income."

As regards the growth of capital in the course of the first three quarters of the present century, Mr Giffen’s calculations showed that it has been going on at an ever-increasing rate, the greatest increase taking place in the decennial period from 1865 to 1875. The following table was published by him as an approximate account of the capital and property existing in the United Kingdom, distinguished as assessed and not assessed to income tax, in each of the years 1865 and 1875, given in millions of pounds, with the amount and percentage of increase in the ten years:—


In the concluding part of his paper, Mr Giffen entered upon the difficult task of estimating the distribution of the increase of wealth both in the three divisions of the United Kingdom and among classes, premising that "it would be difficult to find sufficient details, owing to the large amounts of income which are earned in one part of the country and pay income tax in another.

"The great increase," he goes on to say, "both in amount and per head of population is undoubtedly in England, although the income tax returns show clearly enough that both Ireland and Scotland now progress very rapidly. In another aspect, viz., as to whether capital is being more diffused, or is accumulating in fewer hands, I am afraid the data are not sufficiently good for any sure conclusions. There are certain means for comparing the number of assessments under Schedule D, at different amounts of income, which would appear to show that the number of large incomes is increasing more quickly than the increase of population or the increase of wealth. But the fact of the rich class becoming a little more numerous, would not prove that, as a whole, the number of people possessed of moderate capital, and the average amount they possessed, are increasing of diminishing, while the increasing number of company assessments under Schedule D makes the number of assessments altogether useless for comparison, as we have no information whatever respecting the number of individual shareholders in the different companies, the average amount of each individual interest, and the interests of the holders in Schedules A, B, and C."

As regards the important question whether the accumulation of capital in recent years, subsequently to 1875, marked by great depression of almost all branches of trade and industry, Mr Giffen’s conclusions were that the process of growth continued uninterruptedly. He expressed his conviction "that in no year is the accumulation absolutely at an end, and that in many directions it is even more active in dull years than it is at other times. We know, for instance, that the capital outlay on railways is incessant; that during the last two or three years of depression, and even now, the nation is saving in railway very nearly as much as the annual income of the capital invested in them. In agriculture again, there is a constant annual reclamation of land in progress, besides an incessant outlay on the older cultivated area...The truth is that, owing to the division of labour, there must be a vast disorganization of industry, not a mere temporary falling off from a former inflation, before accumulation can be wholly checked. A certain portion of the community is told off as it were, to create the accumulations, and id the accumulations were not made, we should see in the building trades, in railway construction, in shipbuilding, and numerous other directions, a wide spread stoppage of works, and masses of unemployed labourers, far exceeding anything witnesses even in those terrible times of depression which were frequent before the free trade period, when industry was partially disorganized, and pauperism assumed most threatening dimensions. In the absence of the effects which would follow, we must assume that the cause is not present, that there is no stoppage of accumulation; but that accumulation, on the country, goes on at present in most directions at an average annual rate, or at a rate greater than the average.

Another eminent political economist and statistician, the late Mr Dudley Baxter, who read a paper on the "National Wealth of the United Kingdom" before the Statistical Society of London on the 21st of January 1868, just ten years before Mr Giffen, tool a far less hopeful view than the latter about the constancy of increase of the national wealth. He expressed his belief that, while "the income of England is the largest of any nation, and shows wonderful good fortune and prosperity, we must not forget that it rests on an unstable foundation. The turn of trade, or obstinacy and short-sightedness in our working-classes, or a great naval war, may drive us from the markets of the world, and bring down our auxiliary as wellas our productive industries." Mr Dudley Baxter wound up his conclusions with an eloquent warning. "England’s position," he exclaimed, " is nor that of a ngreat landed proprietor, with an assured revenue, and only subject to occasional loss of crops, or hostile depreciations. It is that of a great merchant who, by immerse skill and capital, has gained the front rank, and developed an enormous commerce, but has to support an ever increasing host of dependents. He has to encounter the risks of trade, and to face jealous rivals, and can only be depend on continued good judgment and fortune, with the help of God, to maintain himself and his successors in the foremost place among the nations of the world."

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