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Until the year 1825, no kind of savings-bank existed in Russia. The farmers and peasants, residing for the most part in remote and scattered habitations, were accustomed to keep their little store of money in common earthen-pots buried in the ground, whence it was not unfrequently stolen. It also often happened that, owing to the sudden illness or death of the owner, the place of concealment was unknown to any one; thus the savings were lost, and much family trouble and difficulty arose. In March 1825, a truly patriotic young merchant, Frederick Hagedom, junior, of Libau, in Courland, perceived the advantage of savings-banks in other countries of Europe, and the disadvantages of the system pursued by his poor countrymen. He resolved, therefore, to institute a savings-bank in Libau. The patronage of the governor-general was obtained, and one of the magistrates of the town appointed superintendent: Frederick Hagedom and two other gentlemen were chosen directors. The public of the town soon testified their approbation of the good work, by bringing in their silver rubles and copper kopecks at the appointed hours—namely, from five to seven every Saturday evening, and at two periods of the year daily—from the 1st to the 12th of June and December. The peasants, however, did not display the same alacrity and confidence as indeed was to be expected. Their kind benefactor perceiving this, wrote and circulated a short pamphlet in the Lettish language of the country, explaining the intention, object, and advantages of the new savings-bank. This convinced the ignorant country-people that their old way of keeping their money, even if safe, was not profitable. The pastors of the village churches also took occasion to speak to their people on the subject, being persuaded, like the benevolent founders of the savings-bank, that it was a plan which could not fail to improve the moral and religious character of the peasantry. These exertions did not fail to produce the desired effect.

To accommodate the country-people who came from a distance, it was soon found advisable to open the savings-bank for their attendance daily from twelve to one—the Saturday evenings being reserved for the inhabitants of the town. All classes now became desirous of taking advantage of the savings-bank, and brought in silver rubles and kopecks, instead of keeping them hoarded and useless.

A sum under five rubles receives no interest—is merely saved and kept—which is, however, no slight benefit to the poor peasant. Above that sum, 4 percent, interest is paid. The owner is at liberty to withdraw the principal at will. The tables published in 1845, after twenty years' existence, afford a most satisfactory and interesting result. The increase of members who partake of the benefits has steadily advanced. One-third of the number are inhabitants of Libau, the remainder are from the country. A very important gain was also perceived to arise from the system: a large portion of the silver rubles and Albert-dollars paid in, had evidently been for many years kept entirely out of circulation, buried in pots in the earth, and consequently in such a condition, that it was often necessary to have the coin carefully cleaned, before it was fit to be sent out into circulation again. Besides the pecuniary advantage, the improvement in the character of the people has been remarkable. The savings-bank has strengthened in a singular degree the love of order, industry, and temperance. How many cheerful hopes and anticipations are connected with savings! It has been ascertained, both in England and France, that since the establishment of savings-banks in those countries, no criminal has ever been found to have been a member of one. How true a benefactor to his country has the young merchant Hagedom proved himself to be! May he live long to direct the savings-bank of his native town of Libau! And, to conclude with the words of the last report of the institution: 'May a gracious Providence continue to prosper this first and oldest institution of the kind in the empire of Russia, and preserve this institution, so highly beneficial to the economical and moral state of the people, in its full prosperity, to future generations!'[7]