By Sandra Roff

There have been recent articles in the press concerning the fact that children do not save their money.

A recent New York Times article stated that the average weekly allowance is a whopping $30 a week but only 3% of parents reported that their children saved any of the money.[i] Let’s turn back the clock one hundred and thirty-two years, to 1887 Brooklyn, New York, when Charles Pratt, a businessman turned philanthropist founded Pratt Institute to educate both men and women. On Founder’s Day at Pratt in 1889, Mr. Pratt announced, “that an association, to be called the Pratt Institute Thrift Association, which for convenience will be known as the Thrift, will be organized at once.”[ii] This new association was formed to help people in general, but particularly young people in saving and wisely investing their earnings.

The Thrift movement has European roots, and a school savings bank system began in France in 1834. However, it was not until 1885 that the idea made its way to America and the first school savings bank opened in School No.4 in Long Island City, New York.[iii] In The Report of the Commissioner of Education for the year 1888-89 there is a description of the Thrift Association. It outlined its organization which it likened to building and loan associations, with the exception that it offers more security for depositors. “The investing shares of the association, to which no liability attaches, are $150, payable at the rate of $1 per month for ten years...In other words a monthly payment of $1 will amount, with interest and premium, to $160 at the end of ten years,…The shares can be withdrawn at any time. Shares may be held by minors and any person, whether connected with Pratt Institute or not, is entitled to the benefit of the association.”[iv]

In addition to the investment branch of the Thrift there was also a loan branch which loaned out money for the purchase of private residences, shops or other Brooklyn real estate. In order to cover all the costs of operating the loan branch a commission of 1% per year on the sum loaned was charged. There was always an option for the borrower to pay back the loan in full at any time.[v]

The ideals of Charles Pratt can best be stated in his own words:

“The instruction given in the Institute is intended, in part to enable people to become self-dependent. Pupils are taught some useful work by which they can earn money. It seems a natural thing, in carrying out this part of the plan, that the next step should be to endeavor to teach them how to save this money; or, in other words, how to make a wise use of it. It is not enough that one be trained so that he can join the ranks of the world’s workers and become a producer; he needs quite as much to learn habits of economy and thrift in order to make his life a success.”[vi]

The progress of the Thrift was chronicled in the Pratt Record and the Pratt Institute Monthly. It continued in operation until 1940 when the directors decided that its services that were once unique were duplicated by other agencies. In the fifty years that it was in existence it loaned over $75,000,000![vii]

Advertisement from the Brooklyn Daily Eagle November 28, 1909

Sandra Roff is Professor and Head of Archives and Special Collections at Baruch College.

[i] Ann Carnes, “Average Weekly Allowance? It’s $30, a new survey finds,” New York Times, October 4, 2019 (online)

[ii] “Founders Day,” The Brooklyn Daily Eagle, October 2, 1889: 6. (online)

[iii] S.W. Straus, History of the Thrift Movement in America. Philadelphia: J.B. Lippincott, 1920: 35. (Internet Archive)

[iv] Report of the Commissioner of Education for the year 1888-89.Vol.1 Washington: Government Printing Office, 1891: 665. (Google Books)

[v] Pratt Institute Thrift Association, Pratt Institute, Brooklyn, N.Y., November, 1889: 8. (Hathitrust)

[vi] Pratt Institute Monthly, Vol. X, (November, 1901-June 1902): 19. (Google books)

[vii] “Pratt Institute Due to Close Private Bank,” The Brooklyn Daily Eagle, October 2, 1940: 1 (online)

A Penny Earned is a Penny Saved: Pratt Institute’s “Thrift”