I am going to talk about banks, building societies, credit, shares and all things to do with money so I have to start by reminding you of our pre-decimal coinage. We managed then with £sd – pounds, shillings and pence. One pound (£1) was 20 shillings (20s) and a shilling was 12 pence (12d). There were also halfpennies and (until the mid-50s) farthings (quarter pennies).
With this complex system we all coped every day with the mental arithmetic that was needed and we knew the notes and coins.
It is also worth noting that, with this complex currency system, cashiers operated cash registers which were not much more than places to store money. They were able to ring up and display the total but they did not add up the individual items. (Remember, there were no computers.) And they did not print a list. If you bought two or three things at the same counter at the grocer, the assistant would either do the arithmetic in their heads or use a scrap of paper. At a department store you might receive a handwritten list of the things you had bought.
Before I look at banking and bank accounts I need to look at local branches. Before the age of telephone banking and the Internet everyone with a bank account worked only through his local bank branch office. The branch kept the records of its customers and their accounts, including a copy of their signatures – all done without the aid of computers!
There were big national banks as now – Barclays, Lloyds, Midland (now part of HSBC), Westminster and National Provincial were the ‘Big Five.’ Westminster and National Provincial merged to become Now NatWest, now part of RBS. (In those days the Royal Bank of Scotland was just a Scottish bank, unknown south of the border.)
Banks were not open on Saturdays or Sundays and on days when they did open, they would close at 3:30 pm. (All they had were hand operated adding machines and at the end of each working day they had the laborious task of checking that cash totals were correct. If the total did not tally, they had to recheck until it did – however long this took.)
Current Accounts and Cheques
For most purposes a bank account meant a current account with cheques. Every bank offered a current cheque account (only one type) but there were all much the same. There was not much effective competition.
You could put money into a bank or take it out by physically visiting your local branch bank and filling in a form. With restricted bank opening hours this was not always easy or convenient. Only your local branch had the copy of your signature that enabled them to check that you were entitled to make a withdrawal.
Apart from deposits and withdrawals most transactions were done by cheques. There were no cheque guarantee cards (the cards that eventually became debit cards) so it was common to allow time for a cheque to clear its way through the system before delivering the goods for which the cheque made payment. Cheque clearing took at least three full days.
(You may notice that all cheques are crossed now. They have two lines and the words A/c Payee. This is a security measure and means that a cheque can only be paid into a bank account in the name of the payee. This used to be optional. By default cheques were open and anyone possessing a cheque could take it to a bank and cash it. If you wanted it crossed you had to draw two lines across it. Then it had to go into a bank account. The A/c Payee makes it even more secure.)
I can’t remember when Standing Orders started but they were probably not used at in the fifties by ordinary people. There was no need for them.
(You have to remember that most of the things for which we now have monthly standing order just did not exist. There was nothing like the modern Direct Debit, where the amount can change every time. Gas, Electricity and Telephone payments were quarterly and you could visit your Gas Board shop, Electricity Board Shop or Post Office to pay these in cash. You didn’t have regular payments for mobile phones, Internet, credit cards and a host of other things that just didn’t exist then.)
Bank Charges and Bank references
Two things will illustrate the fact that banking was essentially a manual process. It had to be manual before the days of computers. Bank charges were not based on any rules. The branch bank manager looked at each account and charged whatever he thought was appropriate each quarter for each customer – and he did not have to explain the charges to his customers. He just looked at the account and made an estimate – probably based mainly on what he had charged for the previous quarter!
There were also Bank References – precursors of the automatic credit checks that are done now. I you wanted to commit to a significant monthly payment (such as a mortgage) the recipient might want to check with your employer and your bank manager. He would write a letter to the branch manager effectively asking if you could manage to pay a certain sum and the manager would look at your account as he did when assessing charges. His reply would say something like “Mr Bloggs looks OK for a regular payment of this size.”
Just as every different bank offered a current account, they also offered a Savings Account – only one (and all the same for different banks.) Your interest would be directly linked to the Bank Rate. (Bank Rate used to be fixed by the Bank of England and was much more significant then.)
Actually there were two types of account, a Savings Account and a Deposit Account. The Deposit Account – yes, you guessed it, all the same – had a slightly higher interest rate but you had to give thirty days’ notice.
You will remember Post Office Savings Accounts. These were more commonly used by ordinary people, as savings accounts or almost as current accounts. I was twenty when I opened my first proper bank account! (I needed it as somewhere to put my University grant cheque.) Children did not have bank accounts.
Mortgages were much simpler although they were not easy to obtain. You could only get a mortgage from a Building Society, not from a bank and the building societies openly operated a cartel. They would meet every month and decide whether to change the interest rate. Then all building societies would change the rate on the same day. The rate was not linked to Bank Rate in the same way as for banks. It depended on the amount of people seeking mortgages and the extent to which people were saving.
Building Societies essentially borrow money from savers and then lend it to house buyers. So they also operated savings accounts, probably used more than Banks’ savings accounts. Their rates changed when mortgage rates changed, in the same way. It was generally understood that to establish a good credit standing with the Building Society, you were advised to save regularly with for a year or so and then that Building Society would look favourably on your mortgage application.
If you were granted a mortgage it would be for a maximum of 80% of the value of the house and there were very few option choices. You could only buy a variable rate mortgage for 20 or 25 years (with the rate fixed as I have described above.) Your only choice was whether to have a repayment mortgage (by far the most common option) or an interest only loan backed up by an endowment policy. In those days the Building Society, would insist on seeing the endowment policy first and would probably arrange it for you. They would also arrange the buildings insurance for you (with no choice of insurer).
Credit Cards and Store Cards
It is hard to imagine in today’s society but these cards simply did not exist. The technology was not available. Some stores did have some arrangements for credit, but normally the only credit available was hire purchase. Hire Purchase agreements were made when you bought something expensive like a washing machine or television. You paid a deposit and regular payments over about three to five years. At the end of the agreement (which had a high rate of interest – but we didn’t mention things like APR then) you owned the item. But if you missed or delayed a payment the item technically belonged to the HP firm who could reclaim it.
American Express and Diners Club started their charge cards in the early sixties but these US firms did not operate in the same way as early UK credit card firms. They were only for the rich.
The original UK credit cards were Barclaycard (from Barclays Bank) in the mid-sixties and Access (a joint scheme by four other banks) in the early seventies. Barclaycard became part of Visa, and Access became part of Mastercard.
Early methods were relatively primitive, using carbon paper without telephone Internet connection. Now we take instant credit for granted and most of us carry dozens of plastic cards. In the fifties we didn’t even have plastic.
Of course back in the fifties people in general did not need foreign currency. Foreign travel of any kind was rare. Those who did travel abroad found it much more complex than today, when you simply go to the local foreign ATM and withdraw cash in the local currency with your debit or credit cards. Now you probably even get instructions appearing in English.
There was no European Union and no Euro currency so every country in Europe had their own currency. You could change your pounds, shillings and pence to French Francs for example either at a British bank (perhaps giving a few days’ notice) or somewhere in France. (They were pounds sterling with the symbol £. The use of GBP for GB Pounds is quite modern – perhaps brought about by the disappearance of the easy use of the £ symbol.)
There were also Traveller’s Cheques, pre-printed in fixed amounts of foreign currency. They had two advantages but were quite awkward to use. (Ordinary shops did not take them.) They were registered to you and could be reissued if lost or stolen. And they were relatively easy to cash back home if unused.
[I may come to foreign travel later. Most aeroplanes were much slower than modern jets. There was no Channel Tunnel. Package holidays did not exist. My only experience of foreign travel was a day trip to Boulogne with the Scouts round about 1960. We were on French soil for about five hours!
Shares are now common to most people, largely as a result of the denationalizations that led to many ordinary people owning shares. Back in the fifties only businessmen and the rich owned shares. Buying shares could only be done by an esoteric process known only to stockbrokers – a profession that controlled the process and charged high commission rates for doing so. The process was, of course, paper based. The central Stock Market was a room with individual brokers clamouring together in chaotic attempts to make trades.
Now it’s all computer based. Ordinary people like me do it on the Internet without the help of a stockbroker.
“Look after the pennies and the pounds will look after themselves.” We used to say it about pre-decimal money.