Money makes the world go round, and if you visit Ruthwell, a small village in Scotland, you’ll find out why.
This sleepy village seems an 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.
This unassuming cottage was the home of the original Ruthwell Parish Bank. Today, it houses Scotland’s Savings Banks Museum, one of only three banking museums in Britain.
I’ve driven past the museum many times on my way to Caerlaverock, but never ventured inside until now. We found ourselves looking for something to do on a rainy day and somehow the museum popped into my head.
My partner Tony had often joked that this would be a dull experience so drove past without stopping. But I was curious – it was my challenge to drag him inside to prove he was wrong.
With only one room to explore, I had a few doubts myself, but these lifted as soon as we stepped inside the museum which is a treasure trove of goodies.
Not long after walking through the door, I was in piggy bank heaven. There’s everything from china pigs to oddly shaped money boxes and even a piggy bank in the shape of a royal crown disguised to hide its true function.
But it was one very special money-box that caught my eye – a bright orange, plastic grasshopper.
This was exactly the same as the piggy bank I had when I opened my very first bank account as a child with Martin’s Bank. I still have mine all these years later.
Why the grasshopper? Apparently, it was the symbol of Sir Thomas Gresham, a goldsmith and financial adviser to Elizabeth I. I remember filling mine with old sixpences and half crowns before decimalisation. Those were the days!
It was here in this very room that Henry Duncan opened the world’s first savings bank for those with modest investments in 1810.
Long before high street savings banks, this was the first of its kind, with clients from all walks of society. It wasn’t a bank designed for the rich or the middle classes.
This was a bank for people who wouldn’t be considered for accounts by the big banks. Henry Duncan’s savings bank would serve ordinary people – labourers, farm workers, weavers, joiners and servants.
Henry Duncan was a philanthropist, but he ran his savings bank on business principles, having once worked in banking himself.
He’d left the big finance world behind after working at Heywoods Bank in Liverpool. Henry returned to his home town of Ruthwell in Scotland where he was ordained as Minister of Ruthwell Church in 1799.
He believed in the dignity of the ordinary man and wanted to give something of real benefit and lasting value to the local community. Many of his parishioners were under-privileged and worked in low-paid jobs. They lived a hand to mouth existence which Henry wanted to change.
He wanted to give people greater financial independence by creating “an economical bank for the savings of the industrious”. Similar ideas had been mooted as far back as 1697 when writer Daniel Defoe had written of this concept.
But this was the first time it was given a solid foundation and business principles had been used to underpin the savings bank.
Local people could start a savings account with as little as sixpence compared with bigger banks who required a deposit of around £10, a huge amount of money at the time.
Revolution in banking
You can see how the small savings revolution began in a bank statement from a woman called Janet which is on display in the museum.
She deposited only small amounts of money which built up over time. Janet would have accrued interest as long as she didn’t withdraw large amounts or failed to pay into her account for a long period.
From small beginnings, Janet was able to build up almost enough money to buy a house or at least have a ‘nest egg’ for her retirement.
But how did this work? Henry Duncan was able to make the savings bank work because he placed everyone’s deposits with the Linen Bank in Dumfries and received 5% interest.
The surplus provided a charity fund, interest for long-term savers and money for administering the bank. This symbiotic relationship between big bank and small bank enabled ordinary people to reap the financial benefits.
It also helped that Henry carried out the administrative duties without taking any salary or remuneration. Instead, he used the money to build another school in the parish. What a great example of benevolent capitalism.
People trusted Henry because he was the local minister, a man of honour and decency. He even went as far as quizzing people about what they would do with their money if they were going to cash in their savings. No unwise spending of the savings on demon drink or dubious pursuits was allowed.
This was only the start of Henry Duncan’s revolution in banking. His next move to get behind an Act of Parliament which would enable the savings bank idea to be extended further afield.
Within five years of the Ruthwell bank’s opening, there were savings banks throughout the UK and they soon spread to Europe and the United States.
By 2002 the number of savings banks had mushroomed to 109 in 92 countries… and the map of British banking had been rewritten forever.
As I looked a the impressive growth of the savings banks, I couldn’t help speculate as to what Henry Duncan would have made of the 21st Century banking crisis.
Henry understood that banking was a business and knew that there needed to be a variety of different banks. But would he have approved of the way which modern banks treat their customers today?
I can’t help thinking that he would have been unhappy that small savers in the banks and buildings societies which crashed in 2008 were the ones to take the biggest personal hit.
But I feel sure that he would have approved of the modern idea of thrift banks which have started to take hold in places such as Africa, based on a similar system of small savings. And the idea of credit unions for those on low incomes isn’t far from Henry Duncan’s vision either.
A Great Scot’s Legacy
Having walked around the Savings Bank Museum, I started to conclude that it is as much about Henry Duncan the man as his banking innovations.
Here was a man who believed in helping people at every stage of their lives. Henry also wanted to improve conditions for the poor through education and he became a founder of Dumfries Mechanics Institute. He wrote pamphlets on subjects including how to bring up children and self-improvement.
Duncan also tried his hand at newspaper publishing as another way of improving the education of the working classes.
Henry Duncan’s achievements didn’t stop there – he was also an accomplished artist, writer and geologist. Reading about his exploits makes you think that we could do with a modern-day Henry Duncan to fix the credit crisis and our broken communities.
As we were about to leave, the museum guide popped back in to see us and told us a wealth of fascinating stories about Henry Duncan and his savings banks. She gave us a great insight into the man and the local community with her excellent storytelling.
In a strange twist of the tale, it turns out that today’s modern TSB bank is responsible for keeping the museum running. They’ve even named the dog in their adverts ‘Henry’ in honour of the great man. I’m sure that he would have been flattered that his legacy lives on.
Did I win the bet then?
Tony had to admit finally that the Savings Banks Museum had been anything but dull. To be honest, it’s the most fun you can have in a one-roomed museum anywhere in Scotland!
Tammy’s Travel Guide – Ruthwell
The Savings Banks Museum is located in Rothwell just off the main A75 road between Dumfries and Annan in Dumfriesshire, Scotland.
The museum is open Tuesday-Saturday between 10:00-16:00 between April-October – and Thursday-Saturday between October-March from 10:00-16:00. Admission is free.
In the museum you can see the room where Duncan conducted the bank’s business, ledgers, money-boxes and a small but interesting archive.
Other places to visit nearby
- Ruthwell Cross – Henry Duncan restored the medieval cross which dates from the late 7th Century Cross which can be seen in Ruthwell Church.
- Caerlaverock Wildlife and Wetlands Trust – a must for nature lovers and bird watchers, especially in winter. Read Tammy’s blog post on Caerlaverock
- The Devil’s Porridge Museum – Eastriggs was once home to the greatest munitions factory in the world during World War One. This new museum commemorates the town’s contributions to the First and Second World Wars.
- Dumfries – historic town and museums. Read my blog post on Dumfries
- The Robert Burns Heritage Trail – literary lovers will enjoy visiting the places associated with the great Scot and his writing.
- Caerlaverock Castle – a moated triangular castle dating from the 13th Century.