As the ‘city of a thousand trades’, perhaps it is fitting that Birmingham pioneered the Municipal Bank.
The country’s one and only opened in the city in 1916, after much effort from the then Lord Mayor of Birmingham, Neville Chamberlain.
And Chamberlain remained very supportive of the bank. Writing a forward to the 1927 history Britain’s First Municipal Savings Bank, Chamberlain wrote with pride of the institution he helped found.
“In a great provincial city, with its strong sense of civic pride, its traditions of public service, and its highly-trained and efficient officers, a savings Bank which is part of the local administrative machine, inspires general confidence, and even a sort of affection,” he wrote.
“It is constantly in the public eye; it commands the services of the most respected citizens; the councillors, the clergy, the magistrates, the teachers, the local leaders of every class and creed vie with one another in proclaiming its virtues.”
And many modern banks would be wise to take note of Chamberlain’s reasons for praising the institution.
“It is elastic and adaptable in meeting the needs of the people; for any defect in administration which hampered its use by depositors would not be long in coming to the notice of the Committee.”
The founding of the bank was not immediately welcomed by the financial authorities, however.
Chamberlain, who was born in Edgbaston, came up with the idea of starting a bank in 1915, to raise money for the war effort. He received frequent appeals from London to help boost the military coffers, and came upon the idea of the bank as a way for ordinary workers to get involved.
The outline was that workers could deposit a portion of their savings in the Municipal Bank to act as a buffer if the economy slid into depression after the war. Chamberlain consulted with trade unions, who were enthusiastic about the chance for workers to acquire the habit of saving, depositing directly from their wages each month.
As Chamberlain pointed out, “the Birmingham institution is essentially a Savings Bank. Its main object is the encouragement of thrift.”
However, the banks were not so keen to lose their monopoly. A special bill was introduced in Parliament to authorise local authorities with a population of 50,000 or more to establish Municipal Savings Bank, but this was not passed.
But Chamberlain was not to be defeated, and continued to plough away with his project, making concessions to the banks and negotiating with the Treasury.
Eventually in September 1916 the bank opened its doors for business.
Following the war, the bank – which was seen as being a temporary institution – looked set to close, but permission was granted from the House of Commons for the Municipal Bank to become a more permanent organisation.
On September 1, 1919, the bank opened officially as a Municipal Bank, with a head office and 17 branches – five of which were open full time; the rest of which opened on a part-time basis.
Initially, one shilling coupons were used as a savings method. The employee stated how much he wanted to save and the employer bought the coupons from his bank. The employee then received the coupon with his cash in his wage packet. Twenty gummed coupons were stuck on a card, which was then taken to the Municipal Bank and exchanged for a £1 entry in a passbook.
Chamberlain, who was Prime Minister from 1937-40, said that the founding of the savings bank was one of his proudest achievements.
And certainly the residents of Birmingham look back fondly on the bank. Although it went on to become a Trustee Savings Bank, which itself finally closed its doors in 1979, many rue its end.
Historian Carl Chinn said: “Until a few years ago, I could even remember my bank account number, because it was like your Co-op number: something that went with you from childhood.
“And, like a local library, we all had our local municipal branch – in my case the one in Sparkhill across from St John’s Church. Many of us felt that it was a sad day when the Municipal lost its independence and regret that since its passing there are now fewer bank branches in working-class areas.”
David Parkes, who himself was employed by the bank, said: “Many Brummies will remember the Saving Stamps they used to collect at school, how they saved coins with a Home Safe, their first passbook account, their first cheque book account, and perhaps purchasing their house with the aid of a Municipal Bank mortgage.”
Municipal banks remain in Scotland and Europe, but never took off in the rest of the UK. But it is undeniable that the Municipal Bank is ingrained in Birmingham’s past. It remains to be seen if Mike Whitby can make it a tool for the city’s future.