Popular Science Monthly/Volume 12/December 1877/Editor's Table
THE agitation for a reform in the Civil Service, as it is called, should it result in the establishment of that measure, may be expected to produce effects not now much anticipated or cared for. The essence of the reform is to consist in getting better men for office-holders than American politics has hitherto afforded—certainly a most laudable thing. But the mode of arriving at the better qualified men is to be by "examinations," that is, by the educational test. Before candidates can be examined, however, and decided upon, it will be necessary to arrange the standards by which they shall be judged, and one of the important effects of the system will be to bring to inexorable those preliminary standards on which the whole policy must rest. One of the reasons why the superstitions and absurdities of education are so tenaciously persistent, is the difficulty of bringing the results of so-called culture to direct practical test or verification; but the examiners who frame the catechism by which candidates for office are to be sifted and accepted or rejected, cannot fail to do something toward the removal of this difficulty. In deciding what qualifications are desired, they will give judgment upon the method that has produced them.
The English have tried Civil Service reform sufficiently long to begin to connect cause and effect, and take account of the validity and worth of its standards. They began the system of Civil Service examination in 1853 by drawing up scales of the valuation of different kinds of knowledge as expressed numerically by marks, so that proficiency in the various branches could be added up and indicate the "standing," as is done in many schools. This scheme, of course, represented current ideas, and the Indian Civil Service Board decided that "in the two great ancient languages there ought to be an examination not less severe than those examinations by which the highest classical distinctions are awarded at Oxford and Cambridge." This was for those who aspired to civil positions in India; and how the knowledges were rated comparatively may be inferred from the following examples:
This marked predominance of dead over living languages, and the still more striking predominance of language over science, could not fail ultimately to bring the whole question under critical scrutiny, and has led to a reëstimate of the educational value of lingual studies. We publish part of a paper read by Prof. Bain before the British Social Science Association, which deals with this important subject, and our readers will find it valuable as a contribution to education, regardless of the Civil Service interest, while it illustrates what must be the effect of that reform in bringing educational questions into a new aspect. The overshadowing predominance of language forces an inquiry which proves that it is of the very lowest possible use as a means of mental culture.
The recent scandalous revelations concerning the management of savings-banks and similar institutions of trust have, of course, provoked much discussion, and, equally of course, much loose talk.
The obvious fact that many of the men who have been chosen, or have assumed, to take care of the savings of the frugal have proved to be wholly unworthy shows, it is often argued, an alarming decadence in the moral tone of the community, which is variously ascribed according to political or religious bias. There are not wanting those who assert that the whole social organism is unprecedentedly corrupt, and that the facts which have transpired are but a faint precursor of what is to come. But it is by no means clear that any such doleful view of the situation is warranted. The morals of trade may be loose enough, but it is not readily to be admitted that they are deteriorating.
It is true that the early history of savings-banks in this country shows no such dark picture. Previous to 1862, failures were rare; the banks were, as a rule, safely managed by fit men. A high order of financial or executive ability is not required for the management of a savings-bank, but integrity and common-sense are; the right paths are straight and well beaten—what is needed is a steadiness of purpose to resist the temptations that lead away from them. During the last fifteen years the number of these institutions has largely increased, and the process of natural selection does not seem to have developed safe officials as fast as they were wanted.
Nor is it alone that it has been necessary to put many new and untried men in places of trust. A higher degree of rectitude has been needed to bear the strain imposed by the speculation and recklessness of a period of inflation than was sufficient in the less trying days which preceded this era—this has not always been found. The prudence of any given man or class is not a fixed quantity, it is subject to fluctuations; it is weakened by the spirit of confidence and rashness that always marks a period of rising prices, and strengthened by the heroic treatment of adversity which is sure to come in with the reaction.
Of the details of the mismanagement which has led to disaster, and of the rules for properly conducting such institutions, it is not our present purpose to speak; but there is one idea which seems to be fundamental in all the remedies proposed that deserves attention.
State control in some form is the sole corrective which, in the opinion of those whose views find expression, is available; and there is something sublime in the faith apparently felt in government management, even by those who are loudest in their denunciations of office-holders—the only agents through whom a state can do its work.
The recommendations all assume one of two forms:
1. That a system of post-office savings-banks, similar to those now operating in England, be established; or—
2. That more thorough state inspection be instituted with a view to maintaining and purifying the present system.
Opinion is still divided in England as to the ultimate success of the scheme for post-office banks, but it has, so far, worked too well to permit unqualified condemnation. This success, however, has been wrought under conditions that do not obtain in the United States.
In the first place is the wide difference in the Civil Service of the two countries. Without going into comparisons it is safe to say that, until our much-talked-of reform shall have made some progress, it may be as well to go slow in committing savings-deposits to the custody of an irresponsible, ever-shifting set of officials, chosen without any reference to their natural fitness or training for the discharge of such a trust. "We already hear much of their delinquencies, and it is certain that the proposed system would add to their temptations and the risk of defalcation.
Secondly, the difficulties in working the system are greatly enhanced in this country by the wide territory over which it must extend, to at all meet the requirements of the people.
Thirdly, the banking branch of the Post-Office Department could not be made self-sustaining, and at the same time pay a rate of interest that would draw deposits. It is not likely that 32 per cent, would be satisfactory when there are perfectly sound banks that can pay five per cent.; and yet 32 is probably more than the Department could afford to pay. Following the rule of the English system, and the only safe one, it must invest its deposits in Government securities, on which it cannot now realize more than four per cent. Out of the half per cent, margin must come all expenses and the loss of interest on unused balances. The Department could not even take the very necessary precaution of keeping a cash reserve against deposits, and though it may be said that the degree of confidence would be so great as to preclude a run, and so no reserve would be needed, it will be found that if the Government, through any of its departments, goes into banking, it will be amenable to the rules that govern banking operations. It could be readily shown, if space permitted, that the Department would be a constant dealer in bonds, buying on a high market, and selling on a low one—a process not conducive to profit—and it is highly probable that from these various causes the chronic deficit of the mail-service would be increased by the losses incurred in the banking department, a result which could not be defended on any tenable ground.
Next, as concerning State inspection. It is certainly remarkable that a system which has been tried so fully and failed so utterly, should still be so implicitly relied on; that men, who pride themselves on being practical, and who never fail to have their little fling at theorists, should cling to a theory that has broken down whenever tested.
Official examination has had a very thorough trial in this country; it has been a feature of the national banking system since its organization in 1864; the history of these banks has, as a whole, been creditable, but scores of them have failed, many disgracefully, and the worst of them in localities where it might be expected that the examinations would be most thorough; while the life-insurance companies and savings-banks of New York have long been objects of legislative solicitude and official care, with results that do not need to be told here.
The theory of State intervention in such matters is fallacious; private enterprise, if left to itself, would compass the desired end much better than any governmental machinery. The indorsement which the State gives to a new institution, by granting a charter and nominally assuming a supervisory control, endows it with an air of respectability and solidity which it could not otherwise command, and which is for the most part illusive. If depositors understood that their sole reliance was the character of the men they were dealing with, and that the only supervision would be such as they chose to exercise, they would soon come to select the guardians of their savings with greater care, and scan their acts more closely.
The State has a legitimate function which it has very imperfectly fulfilled in this connection; it is competent to enforce the performance of contracts; to visit punishment upon negligent or dishonest officials; to secure prompt and inexpensive justice to the sufferers in event of failures. This has not been done, but instead, contracts have been shamelessly broken with impunity; felony has been openly compounded; and the proceedings of winding-up defunct banks have been dilatory and extravagant—conducted with a disregard of the interests of the depositors that differs from common swindling only in having the sanction of the courts. If the State had performed the duties which manifestly belong to it, there would be less clamor now for it to step out of its proper sphere to manage financial corporations.
It is true that the public has been marvelously credulous. Any adventurer who could raise money enough to put up a sign and make large promises would find some trusting fools to leave their money with him, and it almost seems that they should be protected against themselves; but efforts which aim to protect people from the consequences of their own folly, however amiable they may be, are rarely successful; it is best in the end to let people reap the reward of their stupidity.
Unfortunately, the average depositor in savings-banks labors under disadvantages in being without facilities for getting information or training which would help him to form an intelligent judgment on it when obtained; but this is one of the unpleasant concomitants of ignorance from which there is no way of escape except through the acquirement of knowledge. The public does not seem very apt in gaining this sort of knowledge; but only as it is mastered will a better condition of things be reached. The teachings of the last few years have been very thorough, and it is to be hoped that confidence will be more intelligently placed in the future than it has been in the recent past; that new candidates for it will find that more strenuous and legitimate measures are needed.
A good deal is said about the philanthropy of this class of institutions; but analysis would doubtless show that the altruistic element in them is the merest trace. They are formed by men who are selfish enough to desire to make them as large and prosperous as may be; it will not need a great prolongation of the present state of feeling to teach them that the way to success is to offer the highest guarantees of good management and security, and see to it that these guarantees be real.
As to the best methods of convincing the public of their trustworthiness, that may safely be left to the managers themselves; the utmost publicity and fullness in the statements of condition, and the greatest freedom for the inspection of accounts and securities by depositors, or those in their interest, would contribute much to that end.