School banking refers to school students opening bank accounts in primary school and depositing small amounts of money each week in order to learn the habit of regular saving to prepare for their future lives.

Many Australian children participated in school banking schemes from the late 1800s through to recent years. From the 1870s, the establishment of free and secular government schools, administered by state-based education departments, helped to encourage widespread participation by students in ‘school banking days’. The schemes were aimed at teaching children basic financial literacy, with skills in thrift, saving and planning for the future. From around the 1920s, the Commonwealth Bank of Australia conducted school banking schemes, in close collaboration with schools; these were in place in several Australian states and territories, and in some overseas locations. In January 1960, the Bank separated into two entities, a central bank and a commercial bank, and school banking schemes were transferred to the new organisation named the Commonwealth Banking Corporation.

A history and timeline of school banking

The first modern school banking scheme was established in France, at a Communal School in Le Mans in 1834, and began to spread through Europe. The movement was further popularised when it was promoted at the International Exposition in Vienna in 1873. It is not known exactly when school banking was first conducted in Australia. Prior to 1887, ‘penny banking’ operated independently in various schools across the country. Classroom teachers used a bank account opened in their school’s name and deposited money from students in bulk. Deposits could be posted to the relevant bank branch or made in person by a teacher. Records of individual transactions were kept only by the teacher.

Compulsory schooling, which was free and secular, was introduced at different times in different Australian states during the 1870s and 1880s. Consequently, the number of schools and enrolments increased across this period. From this period on, the majority of schools were government run and standardised through state-based education departments rather than being independent or religious schools. This increased the use of school banking. For example, on 1 July 1879, every state school in Victoria with an enrolment of 250 or more students established a penny bank, and in 1887 the New South Wales Department of Education established school banking as part of the school routine, using a system that lasted for 37 years.

By 1906, Australian savings banks had become interested in being more involved in school banking. Representatives from the banks attended a conference to hear a presentation by Alexander Cooch, Chief Inspector of the State Savings Bank of Victoria, on the school savings systems that existed in several countries across the world. After discussions, the bankers decided the Spokane USA system was the best to emulate, although tailored with a few variations.

Following this decision, in 1907 the Government Savings Bank of Western Australia and the Western Australian Department of Education created a general school savings system for Western Australia. In 1908 the Savings Bank of South Australia assumed responsibility for South Australia. In 1912 the State Savings Bank of Victoria became responsible for school banking in Victoria, and in 1925 the Government Savings Bank of New South Wales took over responsibility for school banking from the NSW Department of Education.

In 1927 school banking in Tasmania was organised collaboratively between the Hobart and Launceston Savings Banks, and renewed efforts by the Commonwealth Bank led to a school banking scheme being established in Queensland. The Commonwealth Bank took over responsibility for this scheme from the Queensland Department of Education in the following year. The Northern Territory and Australian Capital Territory joined school banking in 1928.

School banking schemes in each state and territory became part of the school routine, with the teacher of each class expected to assume school banking responsibilities as part of their regular duties. Generally, school banking was done before school hours once a week. Victoria is the only state recorded to have paid teachers from time to time for their work in running the scheme in their schools.

On 31 October 1931, the State Savings Bank of Western Australia merged with the Commonwealth Bank, and as a result the Commonwealth Bank became responsible for 57,000 school savings bank accounts in Western Australia. This amalgamation also occurred in New South Wales, with the Commonwealth Bank assuming responsibility for school banking in that state. Interestingly, school banking seems to have continued throughout the 1930s despite the effects of the Great Depression.

During the late 1930s and the 1940s, the Commonwealth Bank’s Advertising Department created story booklets that were sent to schools for children to take home. The booklets proved very popular, with requests made for reprints from the public over the coming decades. The first booklet was titled The Book of Knowledge for Boys and Girls and in 1937 the Rainy Day booklet, written and illustrated by Dorothy Wall, was created. These booklets presented lessons about thrift in an attractive and child-friendly format.

Cartoons were also created around this time such as Willie Wombat: Waste Not Want Not (c.1939). In this cartoon, the main character, Willie the Wombat, plays while everyone else is working and saving for the future. When a harsh winter arrives, Willie goes without, ‘haunted by his wasteful past’, while everyone else is able to withdraw what they have saved from the Bank and has everything they need. In spring, Willie works hard to save and encourages children by saying that ‘you too can save for the rainy day by putting all your savings in the school bank’.

In 1949, the Commonwealth Bank produced a documentary film School Bank which explored its school savings bank facilities. Scenes were filmed at Enmore Practise School in inner Sydney, Arcadia Public School in the north-west of Sydney, and a rural agency. Children were also brought to the Bank’s Head Office to film scenes of how the Bank operated, with the banking chamber being filled with ‘a blaze of high-powered lamps which made the office look like a Hollywood set’ according to one staff member.

In the early 1950s, school savings schemes were also established in the Territories of Papua and New Guinea, where the Commonwealth Bank had operated since 1916.

By 1954, the Commonwealth Savings Bank ran school banking schemes in the majority of schools in the Australian Capital Territory, New South Wales, Queensland, Western Australia, Northern Territory, in the Territories of Papua and New Guinea, and the British Solomon Islands Protectorate. More than three million deposits were processed annually through these schemes. State or trustee savings banks ran the school banking schemes in Victoria, South Australia and Tasmania, rather than the Commonwealth Bank.

When the Reserve Bank Act 1959 was introduced, the central banking and commercial banking functions of the Commonwealth Bank were separated into two distinct institutions – the Reserve Bank of Australia and the Commonwealth Banking Corporation. The school banking function was transferred to the Corporation.

School banking machines

The burden on teachers of manually recording school banking records grew over the years as the number of accounts and deposits increased. Recognising this, the Bank engaged an engineer to help design a machine that could stamp the deposit amount on a special card. When this card was full, a record would be made in the passbook and ledger. It was proposed that this machine would cut down handwritten entries by 70 per cent. The first handmade machine was installed at Warrawee Public School in Sydney in 1939. The Second World War, and resultant material shortages, prevented further machines from being manufactured, with Warrawee being the only school to use one for 13 years.

By 1953 a new improved school banking machine was built with the intention to be sent out to large schools in New South Wales, then Queensland and Western Australia later in the year. Initially, stamp-selling machines, like those used in post offices at the time, had been trialled for use, but were not rolled out to schools because they removed the interaction between teacher and student. During the school banking process, teachers were expected to discuss and encourage savings goals with students.

The new machine stamped impressions onto a card, as had the 1939 model, in 2 shilling and 6 pence denominations. Ainslie School in the Australian Capital Territory was the first school outside of Sydney to use this new machine due to the success of school banking at the school. The machine reduced approximately 77 per cent of the manual work involved in recording transactions. By 1954, 543 machines had been installed in 251 schools in New South Wales and over 400 machines were being delivered to larger schools in Queensland and Western Australia.

By 1956 a new model of school banking machine was introduced, which could print denominations of 5 shillings, 1 shilling and 6 pence together with the date of the deposit. As with the first two models, it was tested by Warrawee Public School before being rolled out to others.

Motivations for school banking

The essential need to teach children thrift from a young age so that they could learn the value of money and prepare for their future is one of the most frequently cited motivations for establishing school banking schemes. A heavy emphasis was placed on preparing for one’s future after school which could include going to university, establishing a business, buying a home and being financially secure in old age. It was suggested that savings begun with school savings banks could be used for these expenses once the child became an adult. According to Bank Notes (1931) saving to purchase an item that was not a necessity was to be discouraged lest it lead to the ‘danger of stimulating a luxurious taste’.

Articles published during the Great Depression period emphasised the need for thrift early in life. One study showed that 54 per cent of men over the age of 65 were dependent on family or charity as they had no means to support themselves. This situation was seen as preventable if people were taught to save early in life. A vivid quote from TM Wilton (1935) shows the effects of the Depression era on the Australian psyche:

… fear of unemployment, that grim spectre which lurks like a dark shadow within our consciousness, is the greatest destroyer of human happiness. The most potent antidote to this vague dread is a good bank balance, and the knowledge that by one’s own providence the future has at least been partially provided for.

At the time, a scheme was also available, in conjunction with willing employers, whereby pay envelopes provided by the Commonwealth Bank were printed with thrift mottoes, information on how to buy a home and tables showing how money grows when deposited every pay day. Deposit envelopes and collecting boxes had been available at workplaces since 1928.

While several banks had produced very popular money boxes for children for many years these were generally only deposited at a bank branch when full. In contrast, school banking schemes enabled children to form a savings habit from an early age and see the benefits of compound interest. They also removed the temptation of cutting open the money box to spend the money before it ever saw a bank account.

How school banking schemes worked

School banking schemes were administered by teachers at each school. Although procedures varied over time and between states and schools, the general procedures were similar. Students would open an account with an initial deposit handed to their teacher during school banking time on a specific day each week which was chosen by the school. A receipt was issued to the student and their signature taken for identification purposes. For this reason, most schools required that a student needed to be able to write their own name before they could open an account, but others allowed parents to sign on their child’s behalf. The teacher then created records and sent them to the Bank, and within 10 days a passbook was issued with the name of the child and the school. This passbook was used to record all transactions moving forward. Most schools only accepted deposits, not withdrawals. In general, if a withdrawal was needed the child’s parent attended a bank branch or agency with the passbook to facilitate this. The minimum withdrawal allowed was one shilling (12 pennies). At times, concerns were expressed that children’s accounts could be emptied by their parents for their own use.

Motivational quotes were often printed on passbooks such as in the Government Savings Bank passbook: ‘Regular deposits, even of small amounts, will not only grow to quite a handy sum but will develop strength of character in you’ and ‘Cultivate the habit of saving while you are young. It will greatly add to your prospects of success in life’. Passbooks also included a table showing the results of compound interest on savings over several years to motivate children to get into the habit of depositing into their account regularly.

No fees were charged for school banking accounts and the rate of interest paid was the same as that received for regular savings accounts.

Community responses to school banking

In 1894 the NSW Department of Education sent a circular to NSW state schools asking for a list of students with school bank accounts and a list of students that had received exemptions from school fees. This caused concern that schools would use the student’s savings to pay their school fees if parents had not paid them. Newspapers reported that children from lower socio-economic backgrounds were discouraged from using school banking for this reason.

In 1935, with the effects of the Great Depression being felt, a Brisbane parent called for school banking to be abolished because they felt it discriminated against children from poorer families unable to participate in the schemes and that it also undermined social legislation. It was pointed out that parents had not been consulted before school banking was introduced to their children’s schools.

Other critics of school banking suggested that the Bank conducted the schemes to create higher profits. However, real profits were not made due to a number of factors, including frequent but small deposits, no fees being charged, the amount of administration being done by the Bank, the costs of printing passbooks and costs associated with employing school liaison officers. Instead, while not a guaranteed outcome, it was hoped that having developed a relationship with the Bank at a young age, children would choose the Bank for savings and loans as adults.

Overall, communities supported school banking and many contributed to the school savings of their students. For example, in 1931 at Peacock Siding State School in North Queensland, a local resident organised a dance which raised £12 15s 9d. This amount was divided between the 31 students at the school, receiving 8s 3d each, enabling those who did not already have school savings accounts to open one.  

In 1933 a teacher at Stonevale School, near Ingham in Queensland, collaborated with a local storekeeper to organise social evenings where the profits from events were divided equally among the 27 children at the school for their school banking accounts.

School banking in special schools

School banking was established at Mosman Spastic Centre in 1947. Services were introduced to other special needs students in 1954, with programs being established in three Sydney schools – in Parramatta, Rockdale and Campsie.

The experiences of school children

School banking did not always run smoothly. The opening of one school bank account was postponed to the next week, after the student accidentally swallowed the coin he wanted to deposit. Another child, named Leopold, disliked his name so much that he decided to open an account under another name. His mother quickly had it changed to his real name.

At another school, the cash takings on school banking day were a penny short, and a Bank officer who was assisting on the day made up the difference. The suspicious teacher, however, informed the class that if the penny was not forthcoming immediately the police would be called. The coin was quickly handed in by a child.

In 1935, more than one little girl stated that her savings goal was to buy her mother a new baby.

Success stories were celebrated with examples of both girls and boys going on to pay all or part of their university fees from their original school savings accounts, supplemented by finding work in the holidays. Other students left school to take up a trade or profession, buying into businesses with their school savings.

In 1956, a schoolboy saved £100 from three years of selling newspapers on weekends. The Bank attributed his success to school banking and held a ceremony for him when he invested the funds in a bond.

School banking in secondary schools

With some exceptions, school banking accounts closed when children finished primary school, after which the student was encouraged to open a regular savings account at a Bank branch and continue to save on their own. The Bank was interested in expanding school banking into secondary schools but had come up against barriers as education departments instructed teachers that schools were not to be used for advertising or commercial purposes.

After a request in 1955 by Mr AG Robinson, principal at Crows Nest Boys Secondary School, school liaison officer Alf Stephens created a program to train schoolboys to operate a school banking system at the school instead of teachers. The school ran a 12-month experimental pilot in 1956, which attracted the attention of other schools. By January 1957, over 30 secondary schools nationally were using the system. Special equipment consisting of arm bands, storage cases, plastic signs and change trays were supplied by the Bank free to each school using the system, to add realism to the banking operations.

The roles and associated duties of the students running the school bank were as follows:

• Teller – accepts cash from depositor, enters amount into passbook, initials entry
• Examiner – counts cash, checks and initials passbook
• Clerk – enters information onto deposit statement
• Auditor – checks entry on statement, returns passbook to depositor
• Student superintendent – collects the cash takings from all the branches in the school and hands it to the savings bank representative.

Students involved in the running of the school bank received a certificate acknowledging that they had participated in this work.

The NSW Department of Education’s Director of Secondary Education strongly commended the system’s educational value and encouraged other NSW secondary schools to introduce one. In this way, school banking was seen as educative of financial literacy, and an extension of skills for future life and employment, rather than as an external commercial service.

This taste of a career in banking for students was mutually beneficial. Staff recruitment was a high priority for the Bank due to factors such as the resignation or retirement of large numbers of staff after the Second World War, a decline in the birth rate during the Depression years, an increase in the Bank’s activities, an expansion of branches across the country, and the resumption of National Service. The Bank targeted high school students for future employment through advertising, letters to schools, and meetings with school principals and careers advisors. In this way, school banking could also lead to a banking career.

This information is drawn from records held by the Reserve Bank of Australia and the following sources:

Bank Notes (1931), ‘School Banking in Queensland [Brisbane District]’, January, p 17.

Bendigo Advertiser (1879), ‘State School Penny Savings Bank’, Bendigo Advertiser, 5 July, p 3.

Griffiths N (1930), A History of the Government Savings Bank of NSW (Australia’s Largest Savings Bank), Government Savings Bank of NSW, Sydney.

Lonergan E (1935), ‘School Banking’, The Courier-Mail, 14 September, p 17.

Wilton TM (1935), ‘The School Bank’, Bank Notes, January, p 20.

The two staff magazines published by the Bank, Bank Notes (1918–1960) and Currency (1951–2021), contain reports and anecdotes about school banking from approximately 1923 to 1960.