Proper savings banks, which allowed depositors to put money in and take it out as they pleased, appeared in England in the 1790s. Another English writer, Jeremy Bentham, called in 1797 for the formation of "frugality banks" to cultivate thrift among the poor. He criticized the main alternative, friendly societies, on many grounds. They were liable to overestimate the contributions needed to cover the promised benefits; or underestimate, resulting in bankruptcy. They were prone to disagreement, dissolution, and embezzlement. They gathered at public houses, which often required them to spend and imbibe. "Choosing a tippling-house for a school of frugality, would be like choosing a brothel for a school of continence." The costs in ale and time were substantial. Within ten years, the equally influential Malthus concurred, in an edition of his Essay on the Principle of Population. He pointing to savings banks as a way to encourage thrift and self-sacrifice among the poor, which would induce them to better their material lot, delay marriage, and have fewer children. “It would probably be essential to the success of any plan of this kind, that the laborer should be able to draw out his money whenever he wanted it, and have the most perfect liberty of disposing of it in every respect as he pleased.” Sure that he could get his money it out, the depositor would be more ready to put it in. As intellectual giants inked ideas in books, others acted. In 1798, the noted children’s book author Priscilla Wakefield—the only prominent heroine in this history—started a Benefit Club for poor children in Tottenham, north of London, which accepted tiny increments of savings. “It is well known to those who are conversant with the affairs of the labouring classes, that it is much easier for them to spare a small sum at stated periods, than to lay down what is sufficient…at once.” She expanded the operation to adults in 1801, with several wealthy individuals guaranteeing the safety of deposits. The Benefit Bank accepted deposits as small as a shilling and paid 5 percent on complete pounds accumulated. The first depositor in this, arguably the first savings bank, was “an orphan girl of fourteen, who placed two pounds in it, which she had earned in very small sums, and saved in the Benefit Club.”I used the blog post on Wakefield to say and show more about her than I could in the book text. After sitting on the web almost nine months, the post earned its first comment three days ago, from Janine McVeagh. It was short, but intrigued me. So I wrote to Janine. Turns out she is writing a biography of Wakefield from far northern New Zealand, and occasionally Googles "Wakefield" to see what turns up. This time my blog showed up. Had I not blogged, we never would have connected. Janine obtained copies of Wakefield's diaries, transcribed them with some difficulty, and has kindly shared extracts from 1798--99, when Wakefield started her Benefit Club. Though the entries are short, they convey two lessons that are probably familiar to today's microfinance pioneers: building a new institution on a new idea takes a lot of energy, not least to persuade people to take the idea seriously; and if you get it right, people will come out of the woodwork to partake. Janine wrote to me that Wakefield "read both Bentham and Adam Smith and was influenced by them." It seems likely then that Wakefield was directly inspired by Bentham. Here are the relevant diary entries:
July 8, 1798: Morning meeting---fear I shall not be able to overcome the obstacles to the forming of a Female Club [place?] July 21: Mrs Fawcett employed with me the whole morning in forming a plan for a Club. July 25: Concluded the Club rules---my mind anxious on many important concerns that I dare not commit to paper---fixed principles of action are the only [sword?] for peace of mind and the only support through the vicissitudes of life. July 27: Taking charge of little Edward and recommending the Club. Alas for [?] so multifarious are the small concerns of life. July 28: Attended the child, wrote letters---fear I have many difficulties before the Club is established---explanation with Miss Creech [?] - hysterics in consequence. July 30: Round Scotland [Street?] [?] about the Club---tea at the Williams one of those flat evenings---disagreable but consistent with my expectations. October 3: Wrote slowly---dined solus. Called upon Mrs Hobson. Time will open the eyes of the public to the advantages of a benefit club for women -how slow the progress of human reason. October 7: Morning meeting---yielded to Dan's importunities in the afternoon. Walked to the hill- Mr Forde [?] intending to amend my club plan, substitutes a very different one in its place. October 18: A day I know not how to characterise. Mrs Fawcett and I settled the plan of the club as I hope for the last time. October 22: At last have gained my point with respect to the club---a general meeting began with more than 70 names. Every prospect of success, rejoice in the view of [?] good to my neighbours. October 23: Attempted to write---but continual interruptions chiefly relative to the club---dined at Uncle Springalls---tea at my fathers with Charlotte Hanbury who is returned very poorly. October 30: Began to get the club books in order, according to my new office as treasurer and secretary---wrote letters etc. October 31: Club books till time to dress for dining at my brother's with Mr and Mrs Thompson of Dublin. Rather a flat day---the accounts of the insurrection in Ireland horrible. What dreadful effects the wicked passions of men produce. November 1: School meeting. Club books etc finished the day. How I regret being separated from my children and grandchildren, my Kitty in particular to whom I think I could be serviceable. November 6: Innumerable applications for the Lying-in and the Club prevented all study. Dan arrived, all hope for him in the Old Jewry frustrated. 1799: Upon reviewing the transactions of last year I find that I have enjoyed 8 weeks and 4 days of my daughter's company, have devoted considerable time to my father whilst confined on account of his eyes. I have published my Reflections on the Present Condition of the Female Sex and the 2nd volume of the Juvenile Anecdotes. But the undertaking which affords most pleasure in the retrospection is the successful establishment of a Female Benefit Club, a work that has engrossed a considerable portion of my time, which I do not lament as I trust that many will reap the benefit of it when I am no longer remembered. As time elapses, it is pleasant to look back and see what has been produced---may it stimulate to fresh diligence---that not even an hour wasted but that every day should be spent in usefulness and innocent pleasures.
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