Teaching the Technique of Thrift

Few Canadians who live east of the Ottawa or west of Lake of the Woods have heard of The Penny Bank of Ontario and yet that institution handles the accumulated coppers of over 90,000 juvenile capitalists. As a bank it is unique, for it pays no dividends and its directors serve for “honorariums of nothing.”

J. E. MIDDLETON August 15 1926

Teaching the Technique of Thrift

Few Canadians who live east of the Ottawa or west of Lake of the Woods have heard of The Penny Bank of Ontario and yet that institution handles the accumulated coppers of over 90,000 juvenile capitalists. As a bank it is unique, for it pays no dividends and its directors serve for “honorariums of nothing.”

J. E. MIDDLETON August 15 1926

Teaching the Technique of Thrift

Few Canadians who live east of the Ottawa or west of Lake of the Woods have heard of The Penny Bank of Ontario and yet that institution handles the accumulated coppers of over 90,000 juvenile capitalists. As a bank it is unique, for it pays no dividends and its directors serve for “honorariums of nothing.”

J. E. MIDDLETON

BUSINESS at the bank is at its peak. Side by side, the depositors are lined up in orderly array. One of their number steps out rom the ranks, bank book in hand. The capitalists who are awaiting their turn watch every step of the business of making a deposit, with absorbed attention.

The receiving teller is speaking:

“Twenty-seven cents, Horace? Splendid, Horace ! Splendid! Running errands for the grocer, were you? That’s the way to put money in the bank. You’ve got a balance of $2.29. There’s your book! Now Ruth!”

An odd bank, this, eh? It is—but a badly needed one. It is a bank which transacts much of its business in the schoolroom; its depositors range in age from six to fourteen years and they make deposits of a few coppers at a time. It is known as The Penny Bank of Ontario and it guards the savings of over 90,000 children, attending 272 public schools.

Penny Bank directors are financial magnates whose services are priceless and whose salaries are honorariums of nothing. The total dividends paid are represented by a zero sign. If you want to borrow money on the best collateral security in the world, don’t choose the Penny Bank—-it won’t lend you a cent.

Its aggregate of deposits exceeds $807,000 all bearing interest at three per cent. Its head office “overhead” must be met by the excess over three per cent, received from government securities and deposits in the postal bank. Since 1911 the Penny Bank has paid its way. For six years before that time small deficits were recorded annually. The unfavorable balances were covered by the personal contributions of the directors. So much were they prepared to do, in order to see their hobby horse continue trotting.

The Directors

WHO are these directors; never seeing a dividend or a fee, but yet willing and eager to serve? They do not look for public commendation and so might resent a detailed directory, but it is no secret that H. D. Lockhart Gordon is the president. He is a partner in the auditing firm of Clarkson, Gordon and Dilworth, Toronto. Angus MacMurchy, K.C., solicitor for the Canadian Pacific Railway, is also a penny bank enthusiast. Others directors come from the banks, the loan and trust companies, and the bond houses. The active sympathy and co-operation of all the chartered banks of Canada are given to The Penny Bank and the service of their branches is always available to it without cost.

What positive interest can a millionaire financier have in the school balance of Willie Jones, or Dorothy Smith — one

perhaps being $1.21, the other, $2.36? Why does a trust company send one of its most active executives to the board of The Penny Bank?

All these questions can be answered in a three-fold statement: The prosperity of any nation is wholly dependent upon the thrift of its people; the saving of money is a habit; a habit is most easily established in childhood.

The financial institutions of Canada hope to achieve immortality. They look for a larger activity in the future than in the past. Therefore any plan of action which can teach people to stop wasting money, which can induce them to maintain for their own advantage a steadily-growing reserve, bearing interest, is a procedure which a financial man must support with both hands.

Banking Day Lessons

THERE are hundreds of agencies in Canada which show people how to make more money. The Labor movement has advanced the prevailing rate of wages. Mass-production in the industries gives the piece worker as well as the manufacturer a larger reward. The government departments of agriculture develop new and prolific strains of cereals, encourage spraying of fruit trees, give instruction in stock-raising, in cheese and butter making, in bee keeping, in horticulture. The sciences are applied to the business of agriculture in the hope of making the farmer’s income larger and still larger. But it is a solid fact that the prosperity of a man depends more upon what he saves than upon what he earns. Few, indeed, are the public efforts to impel the ordinary person toward saving. The insurance companies do something, but they speak to adults whose habits are fixed and only the naturally thrifty are attracted. The happy-go-lucky and the shiftless continue on their reckless way. While they are “flush” they are fair game for the get-rich-quick solicitors and the swindlers. They are not concerned about the rainy day. They buy doubtful patent-rights, they acquire expensive motorcars which they cannot afford to maintain. They keep up with the Joneses. Then in old age many of them are dependents, either upon their child en or upon the community at large. Agitations have arisen from time to time in favor of a Blue Sky law, whereby the government would prevent the flotation of doubtful securities. The careless.people who have been nipped want protection—being unwilling to protect themselves by practising th ift and learning the true value of money.

It is plain to any trained observer that Canada’s greatest need is a largef body of thrifty people who have the habit of saving money for important and considered uses instead of wasting it on the frivolous wants of every day. The Penny Bank can teach that lesson to children. Therefore, say the economists, long may it live!

Tuesday is banking day in the Toronto schools. A series of arithmetic questions is put on the blackboard for the class to work out. Then one by one the depositors come to the teacher’s desk, each with money and passbook. The teacher makes the entry and forwards money and copies of the entries to the head office of the bank where all the ledger-keeping is done. Fifteen minutes is an outside estimate of the time required of the teacher for this duty, and not a moment has been lost to the class. One boy is saving to buy a pair of skates; another has a bicycle in view; a little girl is going to buy a brooch for her mother’s birthday. By actual practice the children learn the technique of banking.

Not long ago one of the directors of the bank called on a class of seven-year-olds in a primary grade. “What is interest?” he asked. The answer came promptly. “Money paid for the use of money.”

Through the public school grades the child has the weekly opportunity of making deposits. Then he is encouraged to transfer his balance to a chartered bank and continue the excellent practice thus begun.

The Penny Bank operates in over fifty municipalities of Ontario and might serve as many more. It gives complete safety to the depositors and nobody makes any profit out of the service. There are a few communities where school-savings banks had a trial years ago—the experience being unfavorable. In one instance a teacher undertook the task on his own responsibility and soon was in hopeless entanglement. The memory of experiments of that sort lives long; parents, trustees and teachers cannot yet believe that all disadvantages and dangers have been overcome through Penny Bank service.^ Some day they will discover the fact, to the clear benefit of the children and the country.

Meanwhile in the United States the American Bankers’ Association has set up a special department to encourage school savings banks. By co-operation with school superintendents and other educational leaders, some remarkable results have been achieved. In five years the number of schools having a savings system increased by 271.4 per cent.; the individual participants, by 520.2 per cent., the bank balances, by 516.8 per cent. The report of the association for 1924-1925 showed 2,869,497 children’s bank accounts, deposits of $16,961,560.72 and bank balances of $25,913,531.15. The children’s money has earned in interest nearly half a million dollars. “Mony a mickle maks a muckle.”

The A merican system at its best cannot compare for safety and economy with that of The Penny Bank of Ontario, which is buttressed by Federal authority, restricted in its investments and forbidden to lend its accumulated funds. Within twenty-one years its aggregate deposits have increased twenty-fold. There is not a town or city in Canada but might instal the Penny Bank in its schools, to the advantage of the children, the parents and the country.