Chapter 2 Summary

Chapter 2 Summary

The first modern savings bank was known as the "Savings and Friendly Society" established by Rev. Henry Duncan in 1810 in Ruthwell, Scotland. It was set up to teach citizens how to practice thrift with the money they did not waste on clothing and alcohol. The first U.S. mutual savings bank was the Provident Institute for Savings in Boston. Within a few years of its building, mutual savings banks popped up in major cities throughout the U.S. These banks served solely to protect deposits, make limited secure investments, and provide depositors with interest. What made these mutual was the benefit that depositors received from the banks. A goal of the banks was to show the poor how living a disciplined life would generate rewards such as these. by 1910, there were a total of 637 of these mutual savings banks (MSBs). The banks advertised through literature and campaigns to get their concept of thrift out there instead of regular advertising. Many felt that the use of campaigns and directly getting to the people would truly deliver to them the concept of thrift. George E Allan stated, "The gospel of thrift should be preached in the highways and byways until the last improvident soul is saved." Savings banks' struggle for advertising competition however led them to slowly direct their attention from the poor to the middle class. The stock market crash of 1929 set the MSBs on a whole new level. They were forced to compete now with commercial institution for business. Ultimately, these changes led to the downfall of the MSBs as Americans knew them in the early 1900's. Modern banks swallowed them up and the only thing left of mutual savings banks was a good memory.