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A Brief History of Mutual Savings Banks

By Dorothy Savarese

Last year, we celebrated the bicentennial of a great American institution: the mutual savings bank. The first savings banks were founded in 1816 in Philadelphia and Boston, and they swiftly sprouted up throughout the cities and towns of the United States.

From the very beginning, mutual savings banks were mission-driven organizations, built around a model of serving the poor and working classes of our growing East Coast cities and towns. While we can take for granted that nearly 90 percent of the U.S. population is served by banks today, in our country’s early years of the republic, the principal function of banks was to create money in the form of commercial loans and banknotes—and their services were generally only available to the well-to-do.

Savings banks were the first step to building the trust that Americans of all socioeconomic backgrounds today place in their financial institutions.  Two centuries ago, very few people had safe places to keep money, especially in swelling cities where theft was rampant. In cities, even prudent savers faced temptations to spend, whether at taverns or gambling houses, and if they resisted temptation, they would find themselves harassed by relatives and friends for “loans” that every party knew would never be repaid.

The savings banks were resolutely focused on inclusion for the poor and working class—serving tradesmen and manual laborers, servants, widows and orphans. To maintain its focus, the savings bank in Baltimore capped total deposits at $500. In that city, the bank was found so useful that by 1840, the first savings bank there counted 10 percent of the population as its customers. In New York, savings bank managers expected $50,000 of deposits in its first year. In just six months, it attracted three times that.

Mutual savings banks and their sister institutions, the mutual building and loan associations, also fostered inclusion along other lines. In fact, the nation’s very first savings bank depositor in 1816 was an African-American Philadelphia servant named Curtis Roberts. From the very beginning, women were welcome as savings bank depositors, and in 1841, a Philadelphia-area building and loan became the first thrift to admit women as members and thus as loan customers.

As an advocate for greater diversity in banking, I am inspired by the history of the mutual savings bank movement. Today, savings banks offer many of the same products and services as other banks. But I cherish our heritage as an institution that helped hardworking people save for their futures.

The name of the bank I lead—the Cape Cod Five Cents Savings Bank—reflects this legacy. It was so named to encourage thrift. Our bank’s founders more than 160 years ago urged the fishermen and the cranberry farmers here on the Cape to put five cents a week into their savings. It’s a constant reminder to us of the importance of our mission—and of fostering inclusion for all.


Dorothy Savarese

Dorothy Savarese is the 2016-2017 chairman of the American Bankers Association and the chairman, President and CEO of Cape Code Five Cents Savings Bank, Orleans, Mass.



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