The father of savings banks

My first financial goal

Although I’d never been to Cheshunt and I didn’t know what a Building Society actually did my teenage self dutifully visited the counters of the Cheshunt Building Society

1 each Saturday to handover a small portion of my weekly newspaper round earnings.

In return for handing over a couple of pound notes to the person behind the counter updated my passbook by hand and, incredibly, gave me an extra 10% of my balance every six months.

At such a tender age it was the 10% return bit I couldn’t fathom – how on earth did they manage to give me extra money for free? 

However, despite my ignorance, I wasn’t complaining, after all, this “free” money helped me to reach my first financial goal more quickly.

If you are interested my first financial goal was the purchase of a 12 inch, Black and White Binatone portable TV.

Like many of us I chose a financial provider solely on where my parents saved their money – hence my savings account with the Cheshunt Building Society complete with its bright red hard backed passbook.

I could easily have chosen the Griffin Savings Account, complete with some excellent branded SWAG, from the Midland Bank a few doors along the High Street:

Or I could have chosen the bank next door to open a Barclays Super Savers account with its special “super savers” SWAG. 

Today’s app based banking offer both Gen Z and Genration Alpha a multitude of ways to save money with traditional savings account recently supplemented with ‘spaces’, ‘round ups’ and even regular ‘top ups’. 

Now we find Standing Orders, Direct Debits are on the cusp with being replaced with Variable Recurring Payments (VRP’s) offering rules / scenario based transfers to savings accounts being triggered. 

How about setting up a rule that ‘every time I spend money at McDonalds transfer £5 to my ‘gym budgeting space’ or ‘on the last day of a month transfer the balance of my account in excess of £50 to my rainy day savings account’.

The choices and ways of saving our money have certainly changed over the past couple of decades but, in essence, the importance of saving money has not changed:

Saving money is one of the essential aspects of building wealth and having a secure financial future. Saving money gives you a way out of the uncertainties of life and provides you with an opportunity to enjoy a quality life. Putting aside a sum of money in a systematic manner can help you steer out of many hurdles and obstacles in life. It can support you in your hour of need and ensure that your family has something to fall back on in case of an unfortunate event.

ICICI Prudential Life Assurance.

But where did it all start?

A few weeks ago I was travelling up the A75 towards Stranraer in the South West of Scotland when I saw a brown road sign pointing to a Savings Bank Museum.

As you would expect a quick detour was required and nestling in the small hamlet of Ruthwell I found the, unfortunately permanently closed, Savings Bank Museum.

At first glance this sleepy village seems a very unlikely place for a major revolution in banking, but that is its claim to fame – blink and you’d miss a white cottage on the high street, the birthplace of the savings bank movement in the early 1800s.

The small, single story white washed stone museum is the site of the Ruthwell Parish Savings Bank, the first of its kind, was formed in Ruthwell (near Dumfries, Scotland) in 1810, by the Rev. Henry Duncan. 

Although a pioneer in savings bank history, the Ruthwell achieved limited commercial success and was taken over by the Annan Savings Bank in 1875.

The father of savings banks

The Rev. Henry Duncan was regarded as the “father of savings banks”. Duncan was born in 1774 near Dumfries and after two years at the University of St Andrews he took a job in 1790 at Arthur Heywood & Co., a Liverpool banking house. Tiring of banking, he decided to follow his father into the church and attended both Edinburgh and Glasgow universities and in 1799 he was appointed minister of the small parish of Ruthwell.

Duncan was deeply concerned about the poor, and extensive writing about their conditions led him to the importance of saving. He revived the local friendly society that had become moribund and founded another specifically for women.

Duncan published a series of articles in the Dumfries and Galloway Courier, extolling the virtues of savings banks and proposing that one should be opened in every parish.

However, despite the success of the friendly societies, Duncan was not convinced that their rules and regulations, were appropriate. Earlier institutions had been charitable in status. “Dr Duncan had the insight…to see that if the institution was to be of a permanent character it must pay its way.”

The Ruthwell was the first savings bank established on commercial principles. In May 1810 Henry Duncan duly opened the Ruthwell Savings Bank in the Friendly Society’s rooms.

Chronologically first but superseded by a simpler model

The claim that the Ruthwell Bank was the first savings bank was heavily challenged at the time, particularly by the Edinburgh Savings Bank which engaged in “One of the wordiest warfares in the history of savings banks”.

Although the Ruthwell claim was chronologically correct, the Edinburgh contention was that its model, dating from 1814, was simpler, and that most subsequent savings banks followed the Edinburgh and not the Ruthwell structure.

The Ruthwell constitution was, indeed, not one which would have stood the test of time. It was so democratic that its AGM could overrule any management decision; failure to attend the AGM incurred a sixpence fine.

Every depositor was required to lodge four shillings a year subject to a penalty of one shilling; there were also restrictions on withdrawals.

There is no evidence that the Ruthwell Savings Bank achieved much commercial success. The 1835 Scotland Act followed the English “Rose’s Act” enabling the Scottish savings banks to deposit funds with the British Government which led to a reorganisation of many of the leading banks.

However, the Ruthwell Savings Bank that did not register under that Act and also in 1835 the Bank’s deposits peaked at a very modest £3,326.

The Rev. Henry Duncan died in 1846 and subsequently the establishment of savings banks in Dumfries and Annan reduced the need for a bank at Ruthwell and the number of customers dwindled.

In 1875 the remaining 29 accounts, with deposits of just over £590, were transferred to Annan Savings Bank and the Ruthwell Savings Bank was wound up.

History preserved

The small, single story white washed stone museum used by the Rev. Duncan for the Ruthwell Parish Savings Bank was preserved as a savings bank museum in memory of the work of the Rev. Duncan and the museum is located in the very room in which he conducted the Bank’s business every week and the displays include original ledgers, a collection of money boxes and banking artefacts from around the world.

In 2021 the TSB revealed plans to permanently close the museum at the site of the world’s first savings bank and transfer its contents to Edinburgh. The TSB said its plan was to take the contents to its head quarters (Henry Duncan House!) which would allow more people to see them.

The museum in Ruthwell was closed last year because of lockdown and TSB is creating a new exhibition in our Edinburgh head office, Henry Duncan House. The Henry Duncan story is a proud part of TSB’s history, and by having these items on display in our head office in central Edinburgh we believe more people and colleagues will be able hear and learn about his significant contribution to Scotland. 

TSB spokesperson.

By the end of 2021 it was reported that the TSB had agreed in principle to transfer the building and its contents to Comlongon Estate Limited, which is owned by David Thomson, a Dumfries-born professor, and his wife Teresa Church, a scientist and businesswoman. The couple had recently purchased Comlongon Castle at neighbouring Clarencefield, Dumfries.

The new owners pledged “significant investment to improve, consolidate and expand the visitor experience at the museum”. The agreement in principle was praised by community campaigners who advocated for the museum, calling it “a significant step forward in safeguarding the museum’s long-term future in Ruthwell”.

Although there has been little news on the future of the Savings Bank Museum since the end of 2021  discussion seemed to have progressed and today (18 August 2023) the BBC reported that the museum is set to reopen in 2024 following major restoration work.

David Thomson and Teresa Church said that the museum is one of the most important historical sites in Dumfries and Galloway and have promised to restore the museum ‘sympathetically and appropriately’ and to ensure that they ‘capture the spirit of the fantastic achievements of Henry Duncan, with his many hats, not just as a minister but as a real man of the people, who worked hard to help  them in any way he could”.

I’m looking forward to my trip inside the Savings Bank Museum in 2024!

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