31st July 2004.

In 1861 Chancellor of the Exchequer, William Gladstone established the Post Office Savings Account to offer a secure home for savings.(1)

Supported by Sir Rowland Hill, the innovator of the Penny Post, the move was not entirely altruistic  as Gladstone realized it would be a cheap way to finance Public Debt.

Up till then, people who had any savings, had no choice but to keep their money ‘under the proverbial bed’ or on their person.

Several banks had failed in the 1850s and outrageous losses at the Manchester Savings Bank provided the catalyst. Then as now fraud and incompetence had undermined public confidence.

Now backed by the Government people got a Passbook, could invest their meagre money safely, earn 2½% interest, and invest a maximum of £30 per annum, up to a total of £150.

Within 5 years 600.000 were subscribing and by 1880 Post Offices were selling Government Bonds.

Up until 1916 the Post Office Savings Account was the only one on offer, but now War-Saving Certificates were sold to raise money to pay for the conflict.

By 1927 there 12 million accounts held, mainly held by children and the working classes.

The Author remembers putting 2/-6d into the Post Office Savings Certificates, which were sold in schools in the 1940s, and pasted in a savings book. It certainly started many a child on the road to thrift, but not just that, an ability to look to the future rather than demand instant gratification.

Times changed as ordinary people were acquiring bank accounts, and other outlets such as Building Societies were more competitive regarding interest rates.

Post Office rates became so low at 0.25% gross, that fewer than 3 million bothered to use their blue books, illustrated by the fact 250 a books a week were being received needing to be converted to decimal currency.(2)

Happier Times.

Happier Times.

From April 1977 the P.O.Ordinary Account was tax-free for the first £70. It was closed to new customers in January 2004 and all transactions ceased Today on July 31st.

It was replaced by the cumbersomely named National Savings & Investment, Easy Access Saving Account. The Blue Book became an Automatic Teller Machine (ATM) Card and now required a minimum investment of £100.

The once much cherished Blue Book of the young, was abandoned in 2014.


(1) Small Savings Banks were always at risk as that of the Needham Market, Suffolk, Penny Savings Bank which collapsed in December 1904.

However, the financier Sir Edgar Speyer, reading about the plight of the local, total loss of £5,700, gave money to repair its funds.

(2) Decimalization came in 1971.

Ref: wikipedia.org/public_savings_system.

Ref: bbc.co.uk/magazine 3.2.2004. Also Image.




About colindunkerley

My name is Colin Dunkerley who having spent two years in the Royal Army Pay Corps ploughed many a barren industrial furrow until drawn to the 'chalk-face' as a teacher, now retired. I have spent the last 15 years researching all aspects of life in Britain since Roman times.

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