§ Bill considered in Committee.
§ (In the Committee.)
MR. CHILDRES,in rising to move, as an Amendment, in page 3, line 42, to leave out all after "direct" to "account," in line 43, and insert—
Be placed to the following accounts respectively (that is to say) to the Old Savings Fund Account, the Post Office Savings Fund Account, and the Friendly Societies Savings Fund Account,said, the object of his Amendment was a very simple one. The proposal of the Government was, that all the monies which stood to the credit of the different accounts connected with the old Savings Banks, the Post Office Savings Banks, and the Friendly Societies should be thrown into one account, and that Returns were to be in future made to Parliament and the public, in which the liabilities of the Government, through the National Debt Commissioners, to the trustees of the old Savings Banks, to the depositors in the Post Office Savings Banks, and to the trustees of Friendly Societies, would be shown on one side, and the assets in respect of those three separate accounts would be lumped together and shown on the other side. In his humble opinion, the proposal of the Government should not be carried out—first of all, because it was fatal to the principle upon which public accounts were kept. Ever since the financial reforms of 1829, in all branches of the public accounts, the rule had been maintained with great strictness to let each account take care of itself, and not mix up different accounts, so that it would be out of the power of the Government to state in what position each separate account stood. That was a canon of finance as to which he had never heard a doubt expressed, until the Chancellor of the Exchequer came down this year and deliberately proposed to muddle the Savings Banks Accounts; and what he (Mr. Childers) proposed was to insert words under which they might have, if they liked, one general account rendered to Parliament, containing three distinct parts, so that the House should be able to know whether 1470 the operations of the old Savings Banks Fund were during the year on the credit or debit side, and also with regard to the Post Office Savings Banks Fund and the Friendly Societies Fund. In the Return he saw that there was a considerable deficiency, and it was on that Return that the proposal had been made. In 1874 the excess of interest paid by the trustees of the Savings Banks, over and above the interest received from the National Debt Commissioners in respect of the old Savings Banks, was £61,000, and that relating to the interest on the Friendly Societies account amounted to £50,000, making a total of £111,000, It was stated to the House, as one of the justifications of this proposal that the Government had a surplus of £7,00C over and above £118,000. In reference to the deficiencies generally, it appeared that in November, 1873, there was a deficiency on account of the old Savings Banks of £3,234,000, and at the same date a deficiency in the case of the Friendly Societies of £1,146,000, making a total of about £4,380,000; whilst in November, 1874, the deficiency on account of the old Savings Banks was £3,364,000, and in the case of the Friendly Societies £1,168,000, making a total of £4,532,000, being a difference of about £170,000 between the aggregates at the end of each financial year. That, however, was not the whole of it, for in the interval the price of Consols and other Government securities had so increased that, as regarded the amount invested, there was a difference of £45,000 to be added to the £170,000; so that the total loss on the year was £215,000, not £111,000, as had been stated. A combination of all those accounts would render it impossible to account for discrepancies, and it was as a means of preventing such a state of things that he proposed his Amendment.
§
Amendment proposed,
In page 3, line 42, to leave out all the words after the word "direct," to the word "account," in line 43, and insert the words "be placed to the following accounts respectively (that is to say): to the Old Savings Fund Account, the Post Office Savings Fund Account, and the Friendly Societies Savings Fund Account."—(Mr. Childers.)
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he was not quite sure that he understood what his right hon. Friend the Member for Pontefract (Mr. Childers) 1471 intended to be the effect of his proposal that these accounts should be kept separate. His right hon. Friend said it would be very unsatisfactory to him if the Government muddled up the accounts of the Post Office Savings Banks, the old Savings Banks, and the Friendly Societies, and that to do so would be perfectly contrary to all the principles that had been laid down for a great number of years on the keeping of Government accounts. Well, in the first place, if they were to keep everything separate, he (the Chancellor of the Exchequer) wanted to know why they should not keep the account of each savings bank separate, because the position in which each separate savings bank stood was very different, and if it was unfair to lump the Savings Banks established under the old system with the Post Savings Banks, he should be inclined to demur to the savings bank at Exeter being mixed up with some other savings bank which perhaps did not stand in so satisfactory a condition. The right hon. Gentleman said the Government must not muddle things together. But what had been done in the case of the Friendly Societies for a considerable number of years? The depositors in the Friendly Societies were allowed interest at the rate of 3d. a-day, then 2½d a-day, and latterly 2d. a-day. It so happened that 3d. was a losing rate, that 2½d. was a losing rate, but 2d. was a profitable rate. Yet for many years, ever since the 2d. rate was established, it had been the practice to muddle up those different accounts and keep them all together. And all he (the Chancellor of the Exchequer) proposed to do was that the Government should keep the accounts of the different funds over which the Government was the banker in one account. The right hon. Gentleman said it was contrary to public policy to mix up accounts together. Well, he (the Chancellor of the Exchequer) thought it was a principle which had been recognized for many years, that you should keep accounts together as much as you could. He had heard the right hon. Gentleman the Member for Greenwich say frequently, that it was undesirable to keep a number of small balances at your bankers; that it was far better to concentrate them and keep them together. That was the reason why the accounts of the paymasters were kept together, 1472 and the same principle he (the Chancellor of the Exchequer) thought would apply to these accounts. On some of these accounts, the Government was a gainer, and on others it was a loser, and it would be to the interest of the Government to keep them together. The whole hypothesis was, that they had made a bargain with certain depositors, and had said to them—"We will take care of your money for you, and allow you a certain rate of interest upon it. As long as we keep our bargain with you, that is all you have to do with, and we will make the best use we can of the money which is placed in our hands." The question was, whether they were to use the money in a profitable or in an unprofitable manner? That was a matter which he was quite prepared to discuss. But to say that they were to perpetuate a system which was in itself unprofitable to the Government, merely because the results would be less self-evident appeared to be a monstrous proposition, and unless better reasons could be given why they were to sacrifice financial convenience and a proper method of keeping accounts, he must persist in his scheme. With regard to the question of the deficiency, he did not know that he was prepared to go minutely into the question which the right hon. Gentleman had raised. All he could say was that the account to which the right hon. Gentleman had called attention, and which was presented on the 21st of May, was an accurate and true account, as he (the Chancellor of the Exchequer) was informed, of the aggregate interest which had accrued to the National Debt Commissioners up to the 31st of December, and of the amount of interest which had been paid. He admitted there was a slight inaccuracy in it, because what was called "interest paid" should have been written "interest accrued." But that did not affect the argument.
§ MR. GOSCHENsaid, it was very evident that the general object of the Bill was on this, as in several instances of other measures, very different now from what it was represented to be in the earlier stages. ["No, no!"] It had been stated that it was simply a measure for the simplification of accounts; but it now appeared to be a matter of much greater consequence, because he maintained that the Chancellor of the Exche- 1473 quer was about to take out of the hands of the House of Commons every means of ascertaining how these accounts stood. Was this a simplification of accounts, or was it not rather a paying off of Debt? He contended that, as a matter of fact, there was no contract on the part of the Government to pay depositors in the old Savings Banks £3 5s. per cent, and he believed that the matter might be managed more satisfactorily than in the way proposed in the Bill. The time might come when we might be able to pay depositors in the Post Savings Banks more than £2 10s. interest. But if this measure was passed, it would be impossible to do so, because they would never be able to say on what accounts they were gaining and on what losing money. They must not be diverted from the general purport of the Bill by a representation that it was a mere matter of account, for serious principles were involved, and he therefore thought the Amendment would not only enable them to detect what defects had occurred in the past, but also to prevent defects in the future.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, the best way would be to grapple with the whole question at once, and in order to do so he would first take the case of the old Savings Banks, with respect to which the Government were virtually under a contract with their trustees, by which the trustees were bound to invest their money with the National Debt Commissioners, the Government undertaking to allow them £3 5s. per cent. It was true that if the Government could not make £3 5s. per cent they would be at liberty to say they must reduce the rate; but there was no reason for reducing the rate, when a larger amount could be obtained. The amount made by the Government at present was £3 7s. per cent. which left a margin of 2s. to cover the cost of working. But it was argued, and it was true that a deficiency existed, due to certain mistakes made by the Government in dealing with the funds in their hands, and it was said that the Government were also liable to serious losses because a run by the Savings Bank depositors might necessitate the sale of Stock when the Funds were low, while the investments had been made when the Funds were high. There was, however, no reasonable danger that such a state of things could 1474 arise. The year 1847, which had been referred to, was one of peculiar trial—there was the Irish Famine, commercial distress, and agitation both at home and abroad. [Mr. GLADSTONE: That was in 1848, not 1847.] Well, the remark was applicable to both the years 1847 and 1848. He had asked the Department for information on this point—"How much has ever had to be sold out to meet a drain at the worst of times?" And, as it seemed to be necessary to be very particular upon this question, he would give the exact date to which the answer referred—namely, between October 1847 and October 1848. That was the Savings Bank year; and the most considerable drain on the Savings Bank fund occurred during that was period, when £3,189,000 of Stock sold for £2,683,000 in money, being at an average of 82¾, and the capital loss was reckoned at about £250,000. It was said that that sort of thing might occur again. He denied that it could occur again. If there was double that drain it might be met, because you now had a totally different system of banking. Instead of having nothing but Consols to invest in, you had now by the wise policy devised by his right hon. Friend (Mr. Gladstone) and carried out by the present Prime Minister, invested the Savings' Bank funds in Terminable Annuities as well as in Consols. Besides this, under another system introduced by his right hon. Friend, large sums had been lent out to the Irish Church Commissioners, which sums were coming back every year. From £5,000,000 to £7,000,000 a-year were now coming in in this way without selling Stock at all. The action of the Terminable Annuities had entirely prevented the necessity of any sale of Stock for the purpose of payments to the Savings Banks, and the same protection would exist up to 1885 at all events. In 1874 the cash income of the Commissioners upon securities held on account of these funds, excluding the amount paid in by depositors was over £3,000,000. The income on investments upon the amalgamated fund would be over £5,000,000; and now that the payments from the Irish Church Commissioners were coming in, it was probable that the repayments would reach no less than £7,000,000. If that was the case, the danger upon which so much stress had been laid was 1475 entirely extinguished. The annuities would be coming in periodically, and would be more than sufficient to meet the demands of depositors, and a surplus would always be available for the purchase of Stock. With regard to the accumulated deficiency, it was suggested that the proper mode of wiping it out was by reducing the interest paid to the Savings Bank trustees. He did not see why the interest should be reduced. The deficiency was not due to the action of the Savings Banks. It was due, to a certain extent, to the action of the Government, to the use by former Chancellors of the Exchequer of the funds at their disposal, because until the time of his right hon. Friend they kept up a system of banking which led to the vicious result that you had to sell out Stock at a loss when there was a drain by the depositors. The right hon. Gentleman opposite (Mr. Goschen) had expressed alarm that it might happen that these investments might lead to an increased price. But that did not apply to that particular case, because it was founded on the assumption that, at that time. Consols would be low. He could not understand how, at the same time, Consols could be high and low.
§ MR. GOSCHENexplained that his idea was that there would be a double process.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, that the annuities were coming in periodically, and they would be much more than sufficient to meet the demands made without there being any necessity for selling stock. There was, however, an accumulated deficiency. So far as regarded the action of previous Chancellors of the Exchequer, many of them had used these funds for the purpose of completing financial operations for the benefit of the country. Mr. Goulburn had sold Savings Bank Stock at a low price, and bought it again when the price was higher. That process was resorted to in order to promote an operation which was for the advantage of the nation, but still it added to this Savings Banks deficiency. The question now was how were they to deal with that deficiency. The right hon. Gentleman the Member for Greenwich had admitted that they ought not to let it alone, for he had endeavoured years ago to extinguish it, and had created 24 millions of book debt instead of 24 millions of 1476 Consols. But the misfortune was that he had not, in fact, extinguished the deficiency, or they would not be in their present difficulty. He (the Chancellor of the Exchequer) believed that the right hon. Gentleman thought he had extinguished it; but if that had been so, instead of a deficiency, there would have been a surplus for the present year of £40,000, and, if so, it was clear there had been a miscalculation. Were they, then, to call on the trustees of the old Savings Banks to make up for the miscalculation of the right hon. Member for Greenwich in 1863? But it was said the putting of those funds together would be injurious to the Post Office Savings Banks, about which right hon. Gentlemen opposite appeared to be so sensitive. He believed the Post Office Savings Banks to be most excellent institutions, and he as well as his noble Friend (Lord John Manners) was desirous in every possible way to further their development. That was a matter with which they would be prepared to deal at the proper time; but the question of that financial deficiency ought not to be mixed up with the subject of Savings Banks reform. He denied that what they were doing would impede such a reform. Even as regarded the old Savings Banks he was not sure that the law did not require to be made clearer as to their right to separate investment; and he was satisfied that the Post Office Savings Bank system would admit of considerable development. But that ought not to be done by being unjust to the trustees and depositors of the old Savings Banks. The old Savings Banks had been the pioneers and the apostles of providence among the people, and they had done and still did a distinct and an excellent work, which probably could not be done by the Post Office classes. They touched Banks which might not be willing to invest in the Post Office Savings Banks. If it could be shown that they were receiving more than the state could pay them on their own account, apart from a deficiency arising from no fault of theirs, it might be reasonable to say that they could not afford to give them that rate of interest. But he maintained that they could afford to give it, and that, there being other modes of meeting the deficiency, they ought to give it. It might be argued that 1477 they ought to make a grant out of the Consolidated Fund; but the Government having in their hands a sum which they could use towards meeting that deficiency, without injuring or breaking faith with anyone, it would be unwise and unnecessary to make grants out of the Consolidated Fund for that purpose. He thought that the system submitted by the Government was fair to all parties. It did no injustice to the old Banks or to the new Banks, and he thought it would be a very convenient and decided improvement on the old system.
§ SIR JOSEPH M'KENNAsaid, he would remind the Committee that the surplus from the Post Office Savings Banks was only an apparent profit made by the State, and expressed the opinion that if an investigation were made into the cost to the State of the duties performed in connection with those banks by the Post Office officials, together with the proportionate charge for rent and other expenses, it would be found that they had made an equally fair and prudent bargain in allowing £3 5s. per cent to the trustees of the old Savings Banks, who discharged all those functions for themselves, as they did in allowing £2 10s. per cent to the Post Office Savings Banks. He further said that this discussion was carried on overlooking the fact that the official labour of the Savings Bank Department was nearly gratuitously performed by the Post Office. No step had ever been taken to apportion the actual cost of service between the banking and postal departments. Some charge was, no doubt, made to the Savings Bank Department by the Post Office, but it was so insignificant that it could only be justified on the ground that it was a good policy to nurse these institutions at the cost of the State, which principle, if it were a sound one, would equally apply to other Saving Banks. The profit apparent at foot of the Post Office Savings Bank account was simply a return of a portion of the cost of working them. It afforded no ground for raising the rate of interest allowed to the depositors in these Banks, as some hon. Members seemed to think.
MR. GLADSTONEI do not think that on the present occasion we can discuss the question as to the relation between the two different rates of interest, 1478 and I must content myself with entering my protest against the arguments used by the Chancellor of the Exchequer on the subject. I will put aside some suppositions of my right hon. Friend, which appear to me to be entirely visionary, and in which, by a strong effort of the imagination, he fancied himself contending against doctrines that he assumed were those of his opponents, but that I have never heard them uphold, and that—so far as I can gather from communication with them—they are entirely innocent of entertaining. For example, he appealed to the humanity and the equity of the House when he said—"For heaven's sake do not call on the depositors in the old Banks to liquidate these enormous deficiencies." No doubt, they are not responsible for the deficiencies, and on that point he has made a strong case. Any person who laid down such a doctrine would prove himself to be a man totally incompetent to deal with public affairs, and one in regard to whom his friends had better inquire as to his capacity for dealing with his own private affairs. But I submit that there is no more effective way of darkening matters, than by raising up questions as to the terms of contract between these old Banks and their depositors. What is the nature of my contract with my banker, or yours, Sir, with your banker? That of the depositors in question is precisely the same, and what we are bound to do is to pay them at the rate agreed upon up to the present time, and not to make any change without giving them reasonable notice. But to set up the terms of contract as applicable to the future for any considerable length of time is really—without using strong language—most preposterous; and the Committee ought not to suppose that our hands are tied—any more than our understandings should be darkened—by any consideration of the kind. All these matters, however, had better stand over. Only I would like to correct one thing in regard to myself. My right hon. Friend—with that liveliness of imagination which is always to be distrusted in a Minister whose business it is to deal with figures—said I had calculated on supplying the deficiencies on account of the Savings Banks. I never did anything of the kind. There is not a syllable of evidence in my words in support of that doctrine, and I object to 1479 its being supplied even by one whom I respect so much as my right hon. Friend. Now, the speeches of my right hon. Friends (Mr. Childers and Mr. Goschen) dealt with a question which, while more limited than the one which might he raised on this question, is not unimportant. It is in strictness a question of account, but under this technical name there are often concealed considerations of a great public importance, touching the good management of our finance at large, and what is higher and more weighty—namely, the constitutional control of the House over national receipt and expenditure. In that view I venture to present this subject to the House, and I affirm that the three following objections are applicable to the proposal before us for the amalgamation, or, as I should call it, the confusion of those three classes of accounts. In the first place, it is a proceeding which is retrogressive; in the second place, it is irremediable; and, in the third place, it is adverse to Parliamentary control. On a former occasion, when I referred to it as being retrogressive, some hon. Gentlemen opposite felt themselves touched in their Conservative principles, and thought that the fact of its being retrogressive conclusively indicated that there must be something good in it. They came to the conclusion that it must be intended as a remedy for some of the mischiefs caused by the galloping career of Liberal Governments. I can assure such Gentlemen that there are no grounds for that view of the case. There is nothing of a political character in this matter. There has not hitherto, so far as I am aware, been any disagreement between Parties as to the principles on which public accounts should be regulated. The process of putting them on a proper footing has been a long and a very painful and difficult one. Even now it is not complete, and my right hon. Friend the Chancellor of the Exchequer seems to exult in the fact. You talk about muddling—and when my right hon. Friend accused my right hon. Friend beside me of using it hastily, he forgot the high authority on which the word was originally introduced. The Chancellor of the Exchequer says we have already muddled up the accounts of good and bad Friendly Societies, and he seemed delighted that he could show a grand precedent of muddling up. But 1480 the reason for those accounts being muddled up is, that in reforms we can only proceed from point to point. There has, however, been hardly a year in which some branch or other of the public accounts have not been put on a right instead of a wrong footing. The process has so far been carried on by successful gradations, and I confess it has annoyed me a good deal to find that we have now made a question of contention of that which until the present time all Parties, all authorities, all politicians, have been agreed on—namely, that accounts ought to bear their own responsibilities—that they should, in short, bear their own surpluses, and be saddled with their own deficiencies. Now, I distinctly challenge contradiction, when I say that this is a process which has been going on these many years. It began mainly with the service of that most distinguished and admirable public servant Sir William Anderson, and with Sir James Graham when that right hon. Gentleman was at the Board of Admiralty; and it has been going on ever since, slowly perhaps, but steadily, until we are now invited to make a little experiment in the way of reversal. I will not repeat the saying of my right hon. Friend (Mr. Childers). It has not been answered; it cannot be answered. The Chancellor of the Exchequer has himself conclusively shown that when those accounts are thrown in hotch-pot, and investments and sales made in common, it will be impossible to arrive at any decision as to the real state of the accounts of each of these different branches; and therefore we are justified in saying the system is irremediable. No doubt, the right hon. Gentleman would object to the word irremediable; he would call it an irreversable improvement. Certainly, however, it will not be practicable to charge on each of these branches, their respective responsibilities; their whole concerns will be thrown into one, and each will be responsible for all. My third objection is that it will prevent Parliamentary control. Now, why have we been clearing up these accounts? Not from any love of arithmetical precision; but because these servants of the public to whom I have referred were aware, and the House of Commons agreed in the belief, that this was the true method of securing proper Parliamentary control. It is impossible to get 1481 Parliament to enter into elaborate details. It is difficult even to get a handful of Members with leisure and public spirit enough to give themselves the trouble of dealing with these accounts in Committee. Therefore, simplicity of procedure, so far as possible, is the essential condition of true Parliamentary control. Go over the countries of Europe, and I do not think you will find any one of them has an effective Parliamentary control. I speak, at all events, of the large countries, and the reason is, that they have not had the experience we have had, and they have not had the time or the opportunity of going over the long, painful, and almost interminable process of arranging details by which alone a proper system of accounts could be arrived at. It is absolutely necessary, if the House of Commons is really to pass a judgment on these subjects, one by one, that they should have pecuniary results presented in an intelligible form. They are so presented so long as you make reasonable separation of accounts; but if you are determined to mix up systems totally distinct—if not even contradictory in the principles on which they rest, you are not only neglecting a system of great merit, but you are doing your best to darken the view of Parliament on the monetary affairs of the country, and much to weaken that great medium of Parliamentary control. What are the reasons given by the Chancellor of the Exchequer? He advanced two. In answer to my right hon. Friend the Member for Pontefract he said—"If you go so far, you ought to go a great deal farther. You ought to provide not only that the accounts of the old Savings Banks should be kept apart from the accounts of the Post Office Savings Banks, but that the accounts of each old Savings Bank should be kept apart from each other old Savings Bank." He says that we are bound to distinguish between a well-managed Savings Bank in Exeter and another—say in No Man's Land—where it was very notorious that the concern had been very ill-managed. Does he really think that that argument will hold? "We are to draw a distinction between the old Savings Banks and the Post Office Savings Banks, because in their relations with the public they are founded on totally different principles. But is that a reason why we should separate from the Savings 1482 Bank at Exeter the Savings Bank at No Man's Land, when in the face of the public those Savings Banks are founded on the same principles? However well the bank at Exeter is managed, and however badly the bank at No Man's Land is managed, we shall never pay them a farthing more than £3 5s. [The CHANCELLOR of the EXCHEQUER: There is a separate surplus fund.] Yes, but the separate surplus fund is only a drop in the ocean in comparison with the great magnitude of the transactions carried on, and the interest of the public in it is infinitesimal. "Why am I to trouble the House by representing to it the respective merits and proceedings of all the Savings Banks of the country, when the public has no direct concern in the management of the Savings Banks. The principle of severance is a good and a sound principle, and my right hon. Friend is not likely to act upon it in an extravagant manner. The only great distinction the public is interested in is the distinction between the working of two principles so different in their working and effects. If my right hon. Friend thinks there ought to be still more division and classification than we desire, let him consider it freely, and whatever he determines upon will receive from this side of the House, I have no doubt, a very favourable consideration. As to the argument of my right hon. Friend, I own that I heard it with surprise. He says that if we keep each account separately, it will be a great expense to the public; and he claims for the measure he proposes the merit of economy. I venture to say that there is not the weight of a single feather in that claim. If the accounts are to kept separate, sums of money necessarily considerable must be kept separate in each account. That is his argument, and he says—"Throw these three balances into one. Then I shall be able to work with a smaller balance, and consequently to achieve economy." It may be desirable to bring these balances together; but how do we proceed with regard to the great public expenditure of the State? Do we confuse together the surpluses and the deficits of the Army expenditure, the Navy expenditure, and the Miscellaneous expenditure, in order to realize the advantages of one balance? That is the only plea he has to advance for the proposition before the House. He 1483 is well aware that the whole of the advantage is obtained and none of the inconvenience is encountered by the simple provision introduced into the Paymaster General's Office, by having one drawing account. I hope I have made myself intelligible upon the subject. It is one on which I do not intend to say I entertain any doubt, or that any man can entertain a doubt who is conversant with public receipts and payments. A practical improvement might be introduced into the National Debt office, and one that would not require in the slightest degree this strange confusion of accounts which my right hon. Friend is now inviting the House to adopt. My right hon. Friend the Member for Pontefract has taken measures for placing the responsibility upon the right shoulders: it is at present the proposal of the Government, but it must be settled by the House, and it is right that the House should bear the responsibility of this singularly retrogressive step. It will, however, be infinitely more satisfactory if my right hon. Friend the Chancellor of the Exchequer shows that he is disposed to reconsider the matter. I, at all events, shall deem it to be my duty to record my vote in accordance with, the views which I have just expressed.
§ MR. GOLDNEYmaintained that the proposal of the Chancellor of the Exchequer was to accomplish the very object which the right hon. Gentleman (Mr. Gladstone) said ought to be effected—namely, the keeping of the accounts of different institutions separate. When the right hon. Gentleman said that each different class of society dealt with should bear its own responsibility, he (Mr. Goldney) would reply that the responsibility was with the Chancellor of the Exchequer, who invested the funds. The Government had taken upon themselves the duty of bankers in this case, they had entered into certain contracts with depositors, and they undertook to pay them a certain rate of interest just as the large joint-stock banks did. He (Mr. Goldney), however, had long been of opinion that all matters of this kind should be self-supporting, and he believed that would be the result under the Bill.
§ MR. FAWCETTsaid, the Chancellor of the Exchequer had adopted a some-what unusual course with regard to the 1484 proposal of the right hon. Gentleman the Member for Pontefract, for in a very off-hand way he had scarcely taken the trouble to reply to it, but all he said was, that it was a monstrous proposition. A few minutes afterwards, however, the views of the right hon. Gentleman seemed to have undergone an entire and fundamental change upon the point. He then thought the proposition so important, that he went over points which raised the principle of the Bill and which ought to be discussed upon the second reading. The speech of the right hon. Gentleman was a curious comment upon the conduct of the Government, and he (Mr. Fawcett), as an independent Member, agreed with the right hon. Gentleman the Member for Greenwich that, as the principle of the Bill had again been raised, they should have another opportunity of discussing it upon the Report. He protested emphatically against certain opinions and doctrines which the Chancellor of the Exchequer had endeavoured to fasten on those who opposed the Bill. The Government seemed to wish to make the country believe that those who opposed the Bill were hostile to the old Savings Banks, and wanted to injure them in order to benefit the new Savings Banks. There was nothing to justify such an assumption. All that they contended for was, that the one set of depositors should not receive a halfpenny more, nor the other set a halfpenny less, interest than the country could afford to pay, because if they did receive more, the country generally would have to be taxed to give an advantage to a special class. The depositors in both the old Banks and the new should receive alike, for there ought to be no partiality whatever shown to either. The Chancellor of the Exchequer wished further to confuse the issue by saying that the opponents of the measure desired to injure the old Savings Banks by reducing the interest because of the existence of this deficit, which had arisen from no fault of the Government. Such was not the fact, but quite the contrary. All they wished to do with regard to the deficit was to take steps to get out of it, and the only way in which they thought the existence of the deficit should affect the interest paid to depositors was, that it should cause careful inquiry to be made as to how it had arisen, and as to what rate of inte- 1485 rest could be paid in future without loss to the public. He would point out the injustice which the Chancellor of the Exchequer wished to inflict upon the depositors in the Post Office Savings Banks. The right hon. Gentleman had a right, as the property of the State, to take the £800,000 and deal with it; but he (Mr. Fawcett) contended that the deficit for the future should not be made up from the profits of one particular class at the expense of the other. The Government defended this mixing up of the accounts on the ground of its being convenient and profitable to do so; but the public had to be considered as well as the Government, and the House should see that every facility was given to enable them to exercise a better control over these Departments in future. The proposal of the right hon. Gentleman the Member for Pontefract was that by keeping the accounts separate the House would be in a better position, in future, to judge of the true financial position of these Banks, and the rate of interest that ought to be paid.
§ MR. J. G. HUBBARDsaid, he also differed from his right hon. Friend the Chancellor of the Exchequer in this matter. He had on a former occasion supported the principle of a joint account, but since then having more carefully examined the Bill and the statements attached to it, and having listened to the speech of his right hon. Friend, he felt bound to say that although it was possible the moment might come when such a fusion as the right hon. Gentleman proposed might be desirable, that moment was not the present. He ventured to dissent from the assumption of his right hon. Friend that this question was in the main one to be considered with regard to the advantage of the Government. That was a perfectly natural view to take in Downing Street; but he thought the Committee would take a wider view, and consider the advantage not of the Government, but of the numerous classes represented by the depositors in these three classes of banks. Considering the magnitude of the transactions involved, it could not be said that the Chancellor of the Exchequer was very liberal to his bankers in reference to the amount of the balance he left in their hands. It was impossible to exaggerate the importance of nurturing and stimulating habits of providence 1486 among the labouring classes, and one of the best means of doing this was by making them understand and feel that the Legislature was at all times anxious to give them every possible advantage in reference to the profit they would receive in the shape of interest upon the savings which they chose to entrust to the Government. For this reason he was unable to agree that the present time was opportune for effecting the fusion of accounts which would be brought about by adopting the clause as it stood in the Bill. The Chancellor of the Exchequer had stated that it would be very agreeable to him to close the account and discharge the deficiency; but he made no proposal of that kind in the present Bill, and the deficit would still continue a lingering existence, and remain a blot upon the accounts and a disgrace to the country. He thought the proper course for the Government to take would be at once to wipe out the deficiency, and then it could be ascertained what was really the annual deficit. With much reluctance he strongly advised his right hon. Friend not to proceed with this measure. The three accounts started from and concluded at different periods; and it was impossible for the House thoroughly to understand these three matters and give an intelligent opinion upon the proposition now before them, unless they had the accounts of the three departments of deposit on March 31 or April 1, with the valuation taken at the price of the day. They said they knew what was the deficit and how to apply a remedy; but they could not do so, without considering the point he had mentioned. On these grounds he must oppose the proposal of the Government as far as the 1st clause of the Bill was concerned.
§ MR. DISRAELII think the hon. Member for Hackney (Mr. Fawcett) was somewhat deficient in candour in the remarks which he made upon the two speeches of the Chancellor of the Exchequer. He at first said that the right hon. Gentleman in his first speech made a brief and indifferent reply to the right hon. Gentleman the Member for Pontefract, but that after the observations of the right hon. Gentleman the Member for London (Mr. Goschen) he thought the matter was becoming serious, and that then he considered it necessary to reply at much greater length. I think 1487 that the causes of the difference in the character of the two speeches of my right hon. Friend must be apparent to the Committee, if they only look at the Paper of the day. The right hon. Member for Pontefract brought forward a Motion which really touched the very principle of the Bill which my right hon. Friend has presented to the House; but, in his remarks, the right hon. Gentleman touched but very slightly on his own Resolution; and therefore my right hon. Friend in following him, although he had suspected that some attack was about to be made of a more extensive and formidable character, measured his remarks in accordance with the weight and breadth of those of the right hon. Gentleman. But when the right hon. Member for London rose, he revealed to the Committee the disguised purpose of the Amendment. He attacked the principle of the Bill, which is indeed attacked by the Amendment, but which was not attacked in the speech of the right hon. Gentleman the Member for Pontefract, and therefore it became necessary for my right hon. Friend to vindicate his policy, and he did so in a full House, to the satisfaction, I hope, of a considerable majority. It was very natural, of course, after that speech of my right hon. Friend, that the right hon. Member for Greenwich, with his great Parliamentary experience, should feel that it was absolutely necessary to bring back the House to the charmed region of abstract accounts, and to assure the Committee that we were not again recurring to the necessity of a reform of the system of Savings Banks, but that it was a mere affair of account, and that upon the right appreciation of the principles of account, with a view to facilitate Parliamentary inquiry, that not only our Parliamentary authority, but almost the very existence of the Empire, might depend. That was the reason why my right hon. Friend took the line which he did. The hon. Member for Hackney, although he made an attack again tonight upon the principle of the measure, admitted again, as I believe he did before, that the Government was perfectly justified in dealing with the profits which have already accrued from the Post Office Savings Banks, but argued that for the future we must not avail ourselves of it—that we are entitled to the profits of the past, but not to those of 1488 the future. But not even the logical capacity of the hon. Member for Hackney has made it intelligible why we should be entitled to the profits of the past and not to those of the future. But there is a question which, after all, is the question before us, and which has not been answered by any right hon. Gentleman opposite. Here is a deficit, and here is a measure which appears to the House a mode by which the course of that deficit may immediately be arrested, and by which its existence may eventually be terminated. It is a financial measure, brought forward with those objects, which is now before the Committee for consideration. What is the proposition of the right hon. Gentleman opposite? The deficit must be dealt with, and it seems a general opinion on the part of the Committee that it is not the unhappy depositors in the old Savings Banks upon whose backs it should be placed at this stage. Very well, how will you arrest the course of that deficiency? How will you arrest the course of compound interest which has already produced such terrible effects? The right hon. Member for Greenwich threw not the slightest light upon that point. We must deal with the circumstances, and this is our proposal for doing so. My right hon. Friend who has just addressed us (Mr. Hubbard) tells us that he has several objections against the scheme of the Government; but his main objection is, I believe, that we were going to use three accounts which start from different periods of the year. But my right hon. Friend must remember, or he can easily refer to the Bill before him and see, that we have provided for that inconvenient circumstance, and that in this very Bill we have provided that these three accounts should in the future start from the same period. What are we to do? I want to know what is the policy of the right hon. Gentleman. We must remember, if we are to judge from the past, that the right hon. Gentleman the Member for the University of London, when he was responsible for the finances of the country, did bring forward, of course with the entire sanction, perhaps at the instigation, of the right hon. Member for Greenwich, a plan to arrest this compound interest, and ultimately to terminate and discharge the deficit. What was the plan of the right hon. 1489 Gentleman opposite? It was to reduce the interest received by the depositors in the Savings Banks. These, then, are the two different policies that ought to be considered—the one we have proposed, and the one proposed by the right hon. Member for the London University. It is a delightful, intellectual treat to hear the right hon. Gentleman the Member for Greenwich dilate on those abstract truths about the system of accounts on which he believes that the existence of the authority of Parliament and the greatness of the United Kingdom depend. But the long and the short of it is this—Here is a deficiency which, in the management of a branch of our finance, this country has incurred; that deficiency is increasing at a compound rate; it is necessary to take some steps to arrest that rate of increase and to satisfy that deficiency, and for that purpose we have brought forward this plan. It has been described as a measure to reform the Savings Banks, or one which may prevent all reform of those Banks. It is neither the one nor the other. It is purely a financial measure, and the alternative plan proposed by our stern critics is, to diminish the interest on the deposits in the old Savings Banks. I trust, therefore, that the Committee will, in a manner which cannot be mistaken, sanction our policy, and satisfy those who are our fellow-subjects, and are deeply interested in this question, that their just interests will be guarded and preserved by the present Government.
§ MR. DODSON,as a Member of the Committee on Public Accounts, asked leave to say a word. The right hon. Gentleman the Member for Buckinghamshire had put this matter before the House as if it was entirely a question how the deficiency was to be stopped. That, he apprehended, was not the question, and he directly challenged the statement. If the Amendment of the right hon. Member for Pontefract were adopted the deficiency on the old Savings Banks, or that on the Friendly Societies might be met in any way they thought fit, either by making use of the surplus of the Post Office Savings Banks for that purpose, or by any other means. Neither of those points was touched by the Amendment. All that the latter raised was the question of whether they were to combine or separate three different ac- 1490 counts; whether they were to keep their accounts clear or were to obscure them? What the Government proposal really amounted to was to mix up these accounts, so that in the future the House and the public would be left in the dark, and it would not be known whether the old or the new Savings Bank system had failed.
§ Question put, "That the words proposed to be left out stand part of the Clause."
§ The Committee divided:—Ayes, 199; Noes 161: Majority 38.
§ MR. W. SHAW,who had on the Paper Notice of an Amendment for keeping the monies of Friendly Societies out of the Savings Fund Account, said, he would not occupy the time of the House after the decision just taken, but he would recommend the Government either to re-consider their position and withdraw the Bill for the present Session, or else refer it to a Select Committee.
§ MR. GOSCHENapproved of the Amendment of the hon. Member for Bandon, and as he wished to give the right hon. Gentleman the Chancellor of the Exchequer an opportunity of offering some further explanations to the Committee respecting it, he would put himself in Order by moving it. The whole of the question turned upon questions of the old Savings Banks and the Post Office Savings Banks, and very little had been said about the Friendly Societies. The question was a very large one; and it would be better if the right hon. Gentleman would exclude the Friendly Societies altogether from the operation of the measure. In the Returns, it was shown that the interest carried to the National Debt Commissioners, in the account of the Friendly Societies—taking the whole receipts of those Societies—was one-third of the amount paid. Well, as he understood the matter, the State had to make up the other two-thirds. He therefore put it to the Chancellor of the Exchequer, whether it would not be better to exclude altogther the Friendly Societies, the loss being £50,000 a-year He wished to know whether they were self-supporting societies; and seeing that an enormous deficiency was to be made up from the surplus in the Post Office Savings Banks, he should therefore sub- 1491 mit that the Friendly Societies be left out of the Bill.
MR. M'LAEENwas of opinion with regard to the alleged surplus at the disposal of the Chancellor of the Exchequer, that there was no surplus at the disposal of the Committee. The expense of working the Scotch banking system, comprising 800 branches, amounted to 20s. or 21s. per cent on the business transacted, being greatly above the assumed cost of the Post Office Savings Banks.
THE CHAIRMANcalled the hon. Member to Order, and reminded him that there was an Amendment before the Committee to leave the Friendly Societies out of the Bill.
§ THE CHANCELLOE OF THE EXCHEQUERsaid, it was obvious that the right hon. Gentleman and his Friends had not yet been able to perceive the principle on which they were proceeding. He could therefore only pity them. If he could have thought that they had grasped the principle of the measure, he should have been surprised at the division which had just taken place; but it was quite obvious that they failed to do so. The principle on which they were proceeding was this—the State was a banker; the State had certain customers whose accounts it kept, and to whom it guaranteed a certain rate of interest, and he held that they were justified in taking the various accounts and dealing with them as a whole, and in such manner as would enable them to fulfil the engagements into which they had entered with the depositors. They had entered into an engagement with one class to one extent, with another class to another extent, and with the Friendly Societies to a third extent, and all that they proposed was that these accounts, which if treated separately would show confusion, should be dealt with as one account. He justified what was done by the old Savings Banks, by saying if they stood on their own footing they would be self-supporting; and if they had nothing to do with the vast deficiency which had arisen from old transactions, they would be able to realize the interest given and leave a small profit over. That was evident from the Return, and it was still more clear from the 1st Schedule to this Bill. There was obviously a great distinction between the principle on which they dealt with the Friendly Societies, on whose invest- 1492 ments they paid interest at the rate of 2d. per cent per day or £3 0s. 10d. per annum and the Savings Banks, because the Friendly Societies were not bound to invest with the State, whereas the trustees of the Savings Banks were bound to do so. They should, therefore, be more liberal in the interest they paid to the one than to the other class of depositors. But, in answer to the right hon. Gentleman, he might say that the Friendly Societies account, apart from the deficiency, was self-supporting.
§ MR. LOWEquite agreed with the right hon. Gentleman that they had not hitherto understood the principle on which the Government were proceeding; indeed, after the explanation of the right hon. Gentleman, he was obliged to say he did not understand it now. He said the State was like a banker and had many customers. Some of them paid, others did not; some overdrew their accounts, others kept a good balance. The right hon. Gentleman, however, was not going to trouble himself by considering whether they were good or bad customers; he was going wifully to shut his eyes to that question. He would look at all the accounts together. That was the way, he said, in which bankers transacted their business. The prospects certainly were not very encouraging, but he did not know they were so bad as that. By voluntary and self-imposed ignorance the right hon. Gentleman concealed from himself the actual state of things—whether one class of depositors paid and another class did not. He kept no separate account at all, as he said it would create confusion. He only looked at the profits of the whole. Could they imagine a banker carrying on his business in that way? Such a course would ruin any banker in a month. His only wonder was that the right hon. Gentleman condescended to have any account and would tell them anything about Friendly Societies at all. What he said was—the State received deposits from these three sources; but one account should be kept, and if they got a surplus from the whole they would be able to reduce the deficit. Henceforth, these things were to be a State secret, and such being the case it was really scarcely worth while to ask the right hon. Gentleman to explain to them any details of the arrangement which they could not quite understand, for as a banker the right hon. Gentle- 1493 man would manage affairs in a statesmanlike way, and think it below his dignity to scrutinize profits, or inquire into such minutiæ.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, the right hon. Gentleman was presuming on the ignorance and want of common sense of the Committee on the subject, for he had never before heard such assertions as had just been made. The question had been put, whether they were giving more interest than they were earning. There would be no more difficulty in ascertaining that fact for the future than there had been heretofore. How the deficiency was to be dealt with was another question. Let them, if they pleased, separate the question of there being a present and a future deficiency. Let them say with regard to the future they would not give to any class of depositors more than they earned. If they earned on the Consolidated Fund only £3 4s. per cent. then he would say they had no right to give to any class of their depositors £3 5s.; but if they gained £3 7s., the payment of £3 5s. would not be over the mark, provided they made the fund self-supporting. They would see whether the fund was remunerative and whether the deficiency was gradually wiped out. What he stated was, that a banker treated the whole amount of his deposits as one fund, without inquiring whether they came from depositors at one rate of interest or another. They might alter their rate from time to time. The whole question now was how to deal with the deficit.
§ MR. LOWEasked if the right hon. Gentleman proposed not to keep separate accounts, how separate accounts could be given to Parliament?
§ THE CHANCELLOR OF THE EXCHEQUERreplied, they could have separate accounts whenever they asked for them.
§ MR. CHILDERSsaid, he was at a loss to understand if only one account were kept of all securities, by what process Parliament could know whether one branch of business paid or not. In what shape could the Chancellor of the Exchequer prepare the account, when the measure of profit and loss was not only the interest upon a proportionate amount of security, but when one very important factor in it was the price at which the securities were purchased? He hoped the right hon. Gentleman would 1494 answer this question, which was certainly not put in a controversial spirit.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, it would be perfectly easy to discover what had been the course of business during the year. In the first place, it was not intended to have earmarking. He thought it would be the duty of the National Debt Commissioners to sell from that fund, however it was provided, from which it was most profitable to sell at the moment, and this the ear-marking would prevent being done. We should always be able to ask what our transactions had been in the course of the year with the Friendly Societies; how much we had received from them, and how much we had supplied to them. Any excess would be met by the sale of stock or by withholding money which came in. The same thing would be done with regard to the Post Office Savings Banks and the other Savings Banks. It was intended to get rid of the ear-marking and the necessity of being obliged to sell out of this little cistern or that little cistern, but rather to take the money out of a large cistern
§ MR. LYON PLAYFAIRwished to know whether it was an absolute fact that for four or five years there had been an absolute profit on the Friendly Societies' accounts?
§ THE CHANCELLOR OF THE EXCHEQUERNo, I did not say that.
§ MR. CHILDERStrusted the right hon. Gentleman would consider more carefully between the present time and the bringing up of the Report, whether it would be possible to prepare such instructions to the Commissioners of the National Debt as, without destroying the unity of the account, would give in the National Debt Office those particulars which would be given if the accounts were kept separate.
§ MR. FAWCETTsaid, it had been remarked that hon. Gentlemen on that side of the House did not understand the principle of the Bill. If so, what was the use of going on with it? He had the Bill off by heart, and if he failed to understand it, the misunderstanding must be owing either to the obscure language of the Bill, or to the fault of those who had undertaken to expound its principle. If, however, he understood the Chancellor of the Exchequer, all the accounts were to be thrown 1495 into hotch-potch, and that then from the aggregate result they were to determine what was the rate of interest they would pay to the depositors. He considered the relations of the Post Office Savings Banks should be decided on their own merits, and those of the old Savings Banks on theirs.
THE CHAIRMANreminded the hon. Gentleman that the question before the Committee was that of the Friendly Societies.
MR. FAWOETTwould then substitute "Friendly Societies" for "Savings Banks;" but hon. Grentlemen would understand that when he used the expression Friendly Societies he meant Savings Banks. ["Oh, oh!"] At all events, the arguments which applied to the one applied to the other. If it was legitimate to give investors in Friendly Societies an interest of £3 0s.10s. per cent. was it legitimate to continue to depositors in the Post Office Savings Banks only £2 10s. per cent. What he maintained was, that these funds should be kept distinct, and that the interest paid to depositors in the Post Office Savings Banks, the old Savings Banks, and the Friendly Societies should be at the rates which they respectively earned. It was not only a question of accounts, as the right hon. Gentleman had stated, it was a question of principle.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he would admit that the hon. Gentleman had stated his case with perfect fairness, but as to some of the questions he had propounded it might be difficult to find an answer. He (the Chancellor of the Exchequer) contended that the profit derived by the State from this business was required for the purpose of stopping the growth and ultimately putting an end to the existing deficiency, which was an affair of the State. The State had a right to use the profit it gained from the depositors for the purpose of getting itself out of the difficulty. But then it was said—"If £3 0s. 10d. per cent is sufficient to yield a profit to the Government, why should you only allow £2 10s. to other depositors?" His reply was, that that was the bargain with these depositors, who obtained certain advantages which were not given to the others. At the proper time he was perfectly ready to go into the whole question and see whether im- 1496 provements could not be made in the system of Post Office Banks. He thought some improvements could and ought to be made; but, meanwhile, he wished to keep the question distinct from the proposals in the Bill.
§ MR. BRISTOWEthought that as long as those three funds were carried to one general consolidated account there was no process by which the public would be able to ascertain any deficiency upon one or profit upon the other. It was quite clear there was a loss upon two out of the three classes of Friendly Societies, and it was very advisable that they should not be brought into this general account.
MR. BECKETT-DENISONsaid, the Government were going to take upon themselves the position of bankers, and treat the whole of these three accounts as one undivided fund, whether each of them paid or otherwise. Now he was sure that if any private banker did not take care that each individual fund yielded a profit, he would very soon become insolvent. He was therefore desirous that these three accounts should be kept separate, for it should be always open to Parliament to call for Returns showing the precise position of each of these funds, and to take such measures as were suggested by the financial results of each. He had heard with considerable satisfaction from the right hon. Gentleman the Chancellor of the Exchequer that it was not the intention of the Government to obliterate all identity between these accounts, but that they were to be kept separate. That being so, some of the objections made against this clause were deprived of their force.
§ SIR JOHN LUBBOCKsaid, it should be remembered that in the case of the old Savings Banks there was much voluntary and unpaid labour, while the Government had to pay the entire labour of the Post Office Savings Banks, so that they could afford to pay a rate of interest in the one case which they would be unable to afford in the other. Then, too, the rate of interest paid by the Government was not to the depositors of the old Savings Banks, but to the Savings Banks as a whole, while the interest was actually paid to depositors in the Post Office Bank. Comparing the rate of interest actually received by the depositors in each case, the differ- 1497 ence would not be found as considerable as was generally supposed. He very much doubted whether the Post Office Savings Banks were not really a loss to the country. As regarded the amalgamation of the accounts when there would be large withdrawals from the old Savings Banks there would probably be large withdrawals from the Post Office Savings Banks, and when depositors were paying money into the one they would be paying into the other; but he doubted very much whether that would be the case with the Friendly Societies. It was, therefore, specially desirable that the accounts of the latter should be kept separate from those of the old Savings Banks and the Post Office Savings Banks.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, with reference to the statement made by the right hon. Member for Pontefract, he had heard from the gentlemen who had prepared them that they considered there was no discrepancy whatever between the two accounts. He was not in a position at present to explain the matter further, but he would lay a Paper on the Table upon the subject.
§ MR. CHADWICKsaid, there would be no difficulty whatever in ear-marking the accounts, and he would venture to say that in 10 minutes a scheme could be prepared which would enable the Chancellor of the Exchequer to effect his object, while it would remove the objections entertained by the right hon. Member for Greenwich.
§ MR. GOSCHENsaid, he would withdraw his Amendment, and in doing so he would ask the right hon. Gentleman, whether he had any objection to give a Return for the last five years, showing whether the Friendly Societies, irrespective of the old Savings Banks, were self-supporting; and, if there had been a loss upon them, to what extent?
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he would be happy to furnish accounts which would show the loss accruing on the Friendly Societies, irrespective of the old balance.
§ Amendment, by leave, withdrawn.
§ On the Motion of Mr. CHANCELLOR of the EXCHEQUER, Amendment made in page 4, line 7, after "annual," by inserting "and principal,"
1498§ MR. W. SHAW,in rising to move, as an Amendment, to add at the end of Clause, the following words:—
From the first day of January, one thousand eight hundred and seventy six, the interest credited by the National Debt Commissioners to the trustees of any savings banks shall be at the rate of two pounds seventeen shillings and sixpence per centum per annum, and that in any case in which the trustees of any savings bank shall decide on discontinuing such savings bank, and hand over the deposits to the local Post Office Savings Bank, the Postmaster General is hereby authorized to accept such transfer, and also to arrange, with the sanction of the Treasury, to compensate the permanent salaried officers of such savings bank,said, he believed the old Post Office Savings Banks were giving too little interest for the money invested, whilst the others were giving too much. Any profit was absorbed in carrying on the business as they were at present doing, because there were certain expenses being incurred. There was no margin with which to carry on the business. The right hon. Gentleman the Member for the University of London brought in a Bill to reduce the interest in the old Banks, but that was met by an outcry. Who from? It was not got up by the trustees, but by the officers. There was not one of these institutions that did not employ several officers, and all these people cried out that it would be unfair to shut up these institutions without passing some measure for remunerating the officers. From conversations he had had with officers of these Banks—some of which were very large institutions—the feeling was that the Banks could not continue to compete with the Post Office Savings Banks and with other modes of investment which were now available for the poor throughout the country. They would be delighted if there were some means suggested for gradually absorbing them. The old Savings Banks were established in a very different state of society from the present; now in every town and district of the country there were plenty of safe and remunerative modes of investment for the working classes. The effect of his Amendment, if carried, would be that the Post Office Savings Bank would absorb all the weak and doubtful of the old Savings Banks, whilst where there was a first-class well-managed. Savings Bank, there would be margin enough between the rate of interest allowed and received to enable the trustees to carry it on. As 1499 regarded the Irish. Savings Banks, he knew, and supposed it was the same in other places, that the depositors in half of them were not the people for whom they were intended, but consisted of the professional classes and others, some of whom had half-a-dozen pass-books for members of their family, and the country was taxed to keep up those institutions in a fictitious manner. His object in placing his Amendments on the Paper was that the Bill should be made a complete Bill reforming the whole system. If necessary, the Government ought to postpone the Bill for a Session and make a complete overhaul of those institutions by means of a Royal Commission. If that were done, he thought it would be recommended to absorb them at once, even at some expense, rather than keep them on in a half dead state, the depositors imagining they had Government security when such was not the fact. In conclusion, the hon. Member moved his Amendment.
§ MR. M'LARENsaid, he could not support the Amendment, as he was of opinion that the alleged profit in connection with the Post Office Savings Banks was an entire delusion. A few days ago he wrote to the Secretary of the Treasury, asking a few questions about the Banks, and the hon. Gentleman answered them with his usual promptitude. One of these questions was, whether they were charged postage on their communications; and another was whether, if a tenth of the business of local Post Office officials was taken up with Savings Bank business, a tenth of the expenses was charged against the Savings Banks? The answer to the first question was to the effect that no postage was charged, because the other Departments of the Government were not charged postage. The analogy seemed most illogical. The War Office was not carried on for profit, neither was the Home Office, nor the Colonial Office. But the Post Office Banks were alleged to make profit, and the objects of the Bill now before the Committee were to decide how they were to dispose of an alleged surplus of £118,000 a-year, which he did not think had any existence. Why, being carried on for profit, were they not charged with postage? Was the conveyance of their correspondence not a source of expense? Did we not make payments to the rail- 1500 way companies, and did we not pay above five millions to the Post Office, of which we got back only a million and a half? In his opinion, the hon. Baronet had good grounds for his remark, who said that every time he posted a letter he felt he was paying towards the support of these Banks. He believed that if there were an inquiry, it would be found not only that there was no profit, but that there was a loss. Indeed, if there was a profit at all, it was only by failing to estimate the expenditure in as strict a manner as ought to be, that it was effected. The answer to the other question he put to the Secretary of the Treasury—namely, as to whether a tenth of the expenses was charged against the Banks—was that £5 was charged to the Banks on every 1,000 transactions to cover all these expenses. Now, was it possible to pay for 1,000 transactions by £5? He submitted that the Banks should pay their legitimate share of the expenses, and not be let off with a nominal charge. If they followed the principle adopted with these Banks they could make any concern appear to pay, whatever its actual condition; but any man who conducted his private business in such a way would be thought fit for a lunatic asylum. It was not the business of the State to carry on banking at all; but least of all was it its business to carry on banking at a loss. As to the second part of the Amendment—that which proposed to transfer the business of the old Banks to the Post Office Banks, and give the Post Office authority to compensate the displaced servants of the old Banks—he reminded the Committee of the expense the country had been led into by the taking over of the telegraphs, and asked them to consider it as a warning. The right way to deal with the present Bill was, in his opinion, to send it to a Committee, in order that they might ascertain whether the alleged surplus in connection with the Post Office Savings Banks was real.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, that while agreeing with much that the hon. Member for Edinburgh (Mr. M'Laren) had said, he did not think it at all necessary to send the Bill to a Committee. It would certainly be inexpedient to take forcible measures to put an end to the old Savings Banks with the view of transferring the whole of their business to the Post Office Sav- 1501 ings Banks, and beyond that, he was not now dealing with the question of Savings Banks reform, which was a very large question, and one which must be deliberately taken up. He was anxious by the Bill to put a stop to the growing and objectionable deficiency in the old Savings Banks account without disturbing the arrangements which had been made with the new Savings Banks. It had been said that the old Savings Banks were dying out; but that statement was only true to a certain extent. Although some years ago, when the Post Office Savings Banks were first established, there had been a falling-off in the number of depositors in the old Savings Banks, the latter had since recovered their business to a large extent, and they now continued to hold their own very fairly against the former. In the last three years the number of depositors in the old and the Post Office Savings Banks were, respectively, in 1872, 1,425,000, against 1,442,000; in 1873, 1,445,000, against 1,556,000, and in 1874, 1,466,000, against 1,668,000. These figures showed that the business of the old Banks was not decreasing, but was merely not increasing equally fast with that of the new Banks. Again, the sums transferred from the old Banks to the new amounted in 1872 to£339,400; in 1873 to £45,000; and in 1874 to £58,600; whereas on the opposite side the sums transferred from the Post Office Savings Banks to the old Banks amounted in 1872 to £7,300; in 1873 to £8,700; and in 1874 to £11,110. On the whole, therefore, the old Banks were still doing good work, and he should consider the subject in many lights before taking so strong a step as that proposed by the hon. Member. The question of allowing the trustees to invest in other than Government securities would require great consideration. He could not agree to the Amendment, the tendency of which would be to shut up the old Savings Banks altogether, in conformity with the spirit which had been manifested by those who sat on the front benches opposite.
§ MR. CHILDERSsaid, that no proposal had emanated from the bench on which he sat that could be regarded as suggesting the adoption of the course indicated by the right hon. Gentleman as the tendency of the Amendment. All that had been said by himself, and those 1502 who sat near him, was to the effect that they were by degrees approaching the time when one rate of interest would have to be paid to all depositors in all Savings Banks. The Amendment had elicited a very satisfactory statement from the Chancellor of the Exchequer, and therefore he should appeal to the hon. Member to withdraw it.
§ MR. SWANSTONsupported the Amendment. He observed that there was so small a number of depositors in many Banks that they did not derive much advantage from the Government paying a higher rate of interest, because the expenses were heavy in proportion to the amount of deposits. He should be glad to see some inquiry instituted into the condition of the old Banks, and he doubted the prudence of putting the accounts of these three classes of societies together.
§ MR. W. SHAWsaid, the object he had in view was fully answered by the discussion, and obtained leave to withdraw the Amendment.
§ Amendment, by leave, withdrawn.
§ Clause, as amended, agreed to.
§ Clause 2 (Liability of Consolidated Fund to Savings Banks, Post Office Savings Banks, and Friendly Societies).
§ On the Motion of Mr. CHANCELLOR of the EXCHEQUER, Amendments made, in page 4, lines 42 and 43, by leaving out "with interest at three and a half per cent. per annum" in page 5, line 1, after "direct," by inserting "with interest at such rate as the Treasury may fix so as to prevent loss to the Exchequer."
§ Clause, as amended, agreed to.
§ Clause 3 (Annual deficiency of interest received by Commissioners to meet interest credited).
§ MR. GOSCHENsaid, that a loss would accrue if the annuities were calculated at the lower rate, but would not arise if the Commissioners were able to buy when Consuls were low as well as when they were high. They might then strike an average, and the loss at one time might be put against the gain at another. The Chancellor of the Exchequer, on the other hand, by the course proposed to be taken, deprived himself of the advantage in bad times of making a good average by buying when Consols were low.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he would admit that there was a good deal of force in the remark of the right hon. Gentleman. He wished, however, to point out that by amalgamating the funds, the risk of loss would be diminished.
§ MR. GOSCHENsaid, it would be wise to leave a sufficient margin to meet any contingency, and it was desirable that the House should have more precise information as to the annuities.
§ THE CHANCELLOR OF THE EXCHEQUERthought he could give it; but he had been surprised to find how small was the loss upon them; it had amounted to only £378,000 since 1817; and that was chiefly due to small deficiencies accumulating at compound interest, which would be prevented in future by Parliamentary Vote.
§ Clause verbally amended, and agreed to.
§ Clause 4 (Accounts and annual balance sheet and returns of Commissioners).
§ MR. MUNTZ,in moving, as an Amendment, in page 5, line 34, after "keep," insert—
An account showing the surplus or deficiency arising in their operations with the Savings Banks, Post Office Savings Banks, and the Friendly Societies respectively,said, it was absolutely necessary that there should be separate accounts to that extent, and he believed that the publicity which the adoption of the Amendment would secure would have the effect of doing away with a great deal of the opposition that was offered to the Bill. If this were done they would be able to see next year precisely how they stood, and what had been the gains or losses on each department. The accounts in the proposed form would, of course, be laid before Parliament annually.
§ LORD ESLINGTONhoped the Chancellor of the Exchequer would accede to the Amendment, and said the accounts must be kept if only for the purpose of the audit.
§ MR. M'LARENsupported the Amendment, remarking that it did not affect the application of the aggregate profit, and that the result of producing this account would be that the House would get tired of making up a deficit by an annual Vote. It was, in fact, only in accordance with the principle of the Civil Service Estimates.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he supposed the object was to show in a separate account what would have been the result if there had not been a joint account. That would be a little difficult, because of the necessity of dealing with accumulations of deficit. He thought the view of the Committee would be best met by his introducing words on the Report, accompanied by a blank form of account, as a Schedule to the Bill.
§ MR. MUNTZ,on that understanding, expressed his willingness to withdraw the Amendment.
§ MR. GOSCHENdesired to be certain that the Chancellor of the Exchequer accepted the principle of the Amendment, which was that they were to be able to follow the transactions precisely as if no change had been made. He trusted that the right hon. Gentleman was willing to take the position laid down by the hen. Member for Macclesfield (Mr. Chadwick), and would consent to produce separate statements of profit and loss, deficiency and surplus.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he could not undertake to satisfy the right hon. Gentleman. It would be quite impossible to go into all the details he wished. He would give all the information he could, and put it in the definite form of a table.
§ SIR JOSEPH M'KENNAthought all they could expect was what the right hon. Gentleman had promised to give.
§ Amendment, by leave, withdrawn.
§ Clause agreed to.
§ Investments.
§ Clause 5 (Investments by National Debt Commissioners on Savings Fund account).
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he had an Amendment to propose which was rather important. The greater latitude given by the Bill to investment was part of a scheme which the Government had of dealing with the whole question of local loans. There were four Bills before Parliament connected with the subject. There was this clause in the present Bill, the Local Loans Bill, and the two Bills connected with the Public Works Commissioners. The questions which had arisen on the scheme of local loans were rather complicated, and required some considera- 1505 tion. The proposal was a new one. It had been circulated in the country, and several suggestions had come to him from different bodies with regard to some provisions of that Bill. He thought it would be more convenient and proper that the provisions of the section, so far as they related to debentures of local authorities, should be withdrawn from the present Bill and inserted in the Local Loans Bill. He should therefore propose an alteration in this clause, restricting it to investments in Parliamentary securities and consolidated stock of the Metropolitan Board of Works. In order to do that, he would move the omission after "Works," in line 35, of the remainder of the clause.
§ MR. DODSONsaid, he did not object to the proposal, but must point out that its effect would be to take away securities paying higher interest.
§ MR. FAWCETTcomplained of the Chancellor of the Exchequer coming down and without Notice making that alteration in the most important part of the Bill, the effect of which proceeding was to throw the whole question into inextricable confusion. The right hon. Gentleman had had adopted a great number of his Amendments; but he proposed to adopt the most unusual course of transferring a vital part of this measure to another Bill which might never pass. As the provisions which the right hon. Gentleman now proposed to omit were intended to be his chief means of getting rid of an existing deficit, he put to him whether it was worth while going on with that Bill. He thought, under the circumstances, it would be better to report Progress.
§ MR. GREGORYwished, as the hon. Member for Hackney said the Amendment was substantially the same as he had himself proposed, to ask him whether his object now was, because he could not defeat the Bill on the second reading, to throw the whole scheme into "inextricable confusion?"
§ MR. FAWCETTexplained that whereas the Chancellor of the Exchequer proposed to revive, in another Bill which they had never seen, the provisions which he now wished to omit, he, on the other hand, if he carried his Amendment, would do nothing of that kind. That, he thought, was a wide difference between their respective proposals.
MR. GERGORYsaid, the Chancellor of the Exchequer, as he understood him, wished to defer to a fair and proper opportunity his proposals with regard to investments in securities. Local loans required to be placed on a sounder footing, so as to afford some guarantee or reserve fund beyond the rates for the repayment of the principal within a reasonable time, before the Commissioners for the National Debt could securely invest in them. The right hen. Gentleman, therefore, did well in postponing that question until the Local Authorities Loans Bill was before the House. He would suggest, however, that investments in the stock of the Bank of England should be included in that clause.
§ MR. COLLINSthought there was now little to find fault with in the proposal of the Chancellor of the Exchequer. The Government had withdrawn the most debateable part of the Bill, and had thereby removed what would otherwise have occasioned great difficulty to that side of the House.
§ MR. LOWEsaid, the two principles of the Bill were joint accounts and investment in more paying securities, with a view to extinguish the deficit. These were the principles on the faith of which the Bill was read a second time. The Chancellor of the Exchequer, however, like a magician, had waved his enchanted wand, and all had disappeared. It seemed that there was now to be a separate account for each of the three institutions, and the possibility of getting a higher rate of interest was at an end, though the right hon. Gentleman had stepped out of the charmed circle of Government securities and retained the stock of the Metropolitan Board of Works for investment. Now, he had not a word to say against the credit of the Metropolitan Board; but while the right hon. Gentleman deprived them of the benefit of obtaining higher interest from their investments, he thus committed Parliament to the principle that other than Government securities might be resorted to. Equally good securities to the stock of the Metropolitan Board might be mentioned, and why not invest in them? Then would come the investments which were a little worse, and so, while robbed of the substantial good arising from higher interest, an objectionable principle was retained which might be fraught with future mischief. After 1507 such extraordinary changes and vacillations, made with out notice of any kind, he thought the Committee should have time for consideration, and the best plan would be to report Progress.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, the right hon. Gentleman had told hon. Gentlemen who had been absent from the House for a short time getting refreshment, that they would be greatly astonished when they heard what had been done in their absence. Doubtless, they would be very much astonished. But he (the Chancellor of the Exchequer) thought he could point to a faithful few who would be still more astonished, and that was those who had remained in the House during the whole of the discussion. What other construction could hon. Members who had remained put upon the words of the right hon. Gentleman than that he had either been asleep, or had fallen into a cogitation over some other subject? There was not the slightest shadow or semblance of foundation for the accusations he had made. But everybody knew what were the powers of the right hon. Gentleman. He was as acute and as severe in criticism as he was blundering in legislation. The right hen. Gentleman was the author of the Bill of 1873, for extinguishing this deficiency by reducing the rate of interest to the old Savings Banks, a measure which was paraded before the House, but withdrawn without going to a second reading; and if this were to be the model of wisdom the Government were to follow, he would rather pursue a humbler course of his own. He had proposed to consolidate the different accounts and carry all the funds to the same account, making the profit on one go towards the deficiency accruing upon others. That proposal had been sanctioned by the Committee and remained part of the Bill. It was true he had promised the hon. Member for Birmingham (Mr. Muntz) that he would endeavour to introduce a form of account which would show as far as possible the nature of the proceedings in each class. He had no wish to conceal anything, and the suggestion that he wished for concealment was a gratuitous suggestion for the purpose of throwing contempt and odium on his proposals. The principle for which he had contended, and which the Committee had adopted, was the adoption of 1508 such a mode of accounts as would absolutely arrest the progress of the deficiency, and if a deficiency still occurred in any year, it would be brought under the notice of Parliament, and a Vote would be taken on account of it. With regard to investments, the right hon. Gentleman said he had tried to knock away the great recommendation which the Bill contained, by destroying the hope he at first held out of obtaining better interest. First, he replied that that was not the case; and, secondly, that if he had done so, though it would to a certain extent retard the reduction of the deficiency, it was not contrary to the principle of the measure, as there would still be enough to carry on the business and make some impression on the deficiency. Though they proposed to insert in the Bill a better form of investment, they proposed to withdraw what related to a particular class of investments that had to be settled by Parliament. The right hon. Gentleman himself admitted that the security of the Metropolitan Board of Works was retained, and this security would yield an interest above any now received—namely, 3½ per cent. The Bill contained a very important principle, which was that better interest might be obtained for the money received by the National Debt Commissioners than at present, provided that good and certain security was obtained. It had originally been intended to specify the securities in which the investments should be made in the Local Authorities Loans Bill, which it was supposed would have proceeded pari passû with this measure. In consequence, however, of suggested alterations which had been made by deputations from various parts of the country who waited upon him in connection with this subject, some urging that nominal debentures were not objectionable, others complaining of the proposed system of audit, and other matters which were very proper subjects for careful consideration, it was found desirable that the latter measure should not be forced on without giving full time for discussing it. Therefore, he begged to state that he abandoned no principle whatever in proposing these Amendments. [Mr. LOWE: Only the execution of it.] No; nor the execution of it. He had simply given his adhesion to an Amendment which would meet the 1509 wishes of a good many without encroaching upon the principle of the Bill.
§ MR. GOSCHENsaid, that the Chancellor of the Exchequer had one unfailing weapon by which he could attack those who sat on the benches opposite to him, and that was the use of very vigorous language. Thus he had charged his right hon. Friend with being acute in criticism as he was blundering in legislation. That was a pretty strong phrase; but it was not true. The right hon. Gentleman had selected the opportunity of referring to the blundering legislation of those sitting opposite to him on the occasion of his withdrawing a well-considered clause in his own Bill without having given any Notice whatever of his intention to do so. The right hon. Gentleman had also spoken of the proposition of the right hon. Member for Pontefract as a monstrous one, although it was one that had met with the approval of the right hon. Member for Cambridge University and of the right hon. Gentleman the Member for Oxfordshire. It was not proper for the right hon. Gentleman to use such language. It was quite true that great modifications had been made in the Bill, but in any case the right hon. Gentleman should refrain from making such attacks. He hoped that the right hon. Gentleman would proceed with his other Bill in order that hon. Members might know what they were doing.
§ MR. J. G. HUBBARDdeprecated the introduction of party controversy and recrimination into the discussion, and said he was glad his right hon. Friend consented to withdraw the clause, for, had he persevered with it, he, for one, should certainly have joined the hon. Member for Hackney in his opposition. The Committee must recollect that in these transactions the Chancellor of the Exchequer must be a borrower of money as well as a lender, and he should act in both operations in a manner which would be for the public advantage. He ventured to say that in withdrawing the clause he acted very wisely and discreetly.
§ MR. CHILDERSsuggested that the Bill should not go to a third reading, until the Local Loans Bill had been brought forward, so that hon. Members might know what local securities were to be invested in.
§ Amendment agreed to; words struck out.
§ MR. CHILDERS,in moving as an Amendment, in page 6, line 32, to substitute "and" for "or," said, he did so with the object of providing that the funds standing to the Savings Fund account should only be invested in Parliamentary securities, both the principal and interest of which were provided for and guaranteed by Parliament.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, the proposal as contained in the clause was in the precise words of the existing law; but he would look into the matter, and consider whether any alteration was either necessary or desirable.
§ MR. CHILDERS,on that understanding, said he would withdraw his Amendment.
§ Amendment, by leave, withdrawn.
§ MR. FAWCETTsaid, that in order to raise the question whether the funds should be permitted to be invested in local securities, he would propose to omit from the sub-section the consolidated stock of the Metropolitan Board of Works, in which, among other securities, the clause proposed that investments of the funds dealt with by the Bill might be made. Once the principle that funds of this description should not be invested in anything but Parliamentary or public securities was infringed, the Government would be pressed day by day to extend the area of their investment. It appeared from an explanation of the Chancellor of the Exchequer that evening that part of the Local Taxation policy of the Government was to give assistance to local authorities by making loans to them, and by that means to obtain larger interest than could be obtained otherwise. But if that was part of the Local Taxation policy of the Government, it ought to be carefully examined, for nothing could be more dangerous than attempting to get a higher rate of interest by such means. The Government had been assured by a high financial authority—namely, the right hon. Member for the City of London (Mr. Hubbard)—and by other supporters of the Government that to invest in local securities would be attended with the greatest possible danger. Under these circumstances, it was 1511 only a reasonable request on his (Mr. Fawcett's) part, to ask that instead of discussing the question in this partial way, the question should be postponed until the House knew what was the new shape of the Local Authorities Loans Bill, which the Government had promised should be dealt with pari passû with this Bill. He would postpone his Amendment and raise it on the Report, if the Chancellor of the Exchequer would give an undertaking that the Report should not be brought up until the Local Authorities Loan Bill was reprinted. If the Chancellor of the Exchequer could give the assurance he asked for, he would not press his Amendment to strike out the mention of the Metropolitan Board of Works.
§ MR. M'LARENsaid, he failed to see any good reason for giving a preference to the securities of the Metropolitan Board of Works. An equally good security was that of the city he represented—Edinburgh—but it could get abundance of money for its city improvements without any such legislation.
§ MR. GREGORYsaid, all that was now before the Committee was whether the National Debt Commissioners were to have powers to invest in the stock of the Metropolitan Board of Works. That stock had been expressly made a trust investment by Act of Parliament, was accepted by the Court of Chancery and was on such a footing that there could be no doubt of the security which it afforded.
§ LORD ESLINGTONthought that by retaining the words the National Debt Commissioners were not at liberty to invest in the security that appeared best and safest.
§ MR. SAMUDAsaid, that, as he understood the clause under consideration, it limited the investment of these funds to the stock and securities of the Metropolitan Board of Works. The hon. Member for Hackney objected to that proposal because it involved investment in other local securities. What he (Mr. Samuda) objected to was, that this clause did not go far enough. He wanted the area of investment to be enlarged, and he would ask the Chancellor of the Exchequer not to give up the proposal which he had indicated. It would get rid of many of the difficulties with which he had at present to contend, and enable 1512 the Government to invest in more varied securities and realize better interest than could be obtained by investment in more limited securities.
§ SIR JOSEPH BAILEYsaid, that almost every word spoken by the hon. Member for Hackney on those subjects fell upon his ear like the voice of a schoolmaster. He rose to express his cordial concurrence with the views expressed by the hon. Member for the Tower Hamlets. So far from confining investments in the way proposed, he would like to see the trustees of public companies and public bodies empowered to invest their funds in all kinds of securities based upon local rates.
§ MR. WHITWELLwas also in favour of extending the area of investment; but he thought that as the securities of the Metropolitan Board were of an exceptional character they should be included in the Bill, leaving the question of other securities to be considered when the Loans Bill was before the House.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he understood the hon. Member for Hackney to say that he would not press his Amendment if he (the Chancellor of the Exchequer) would undertake not to press the part of the clause to which he objected until the Report on the Bill was brought up, and the Loans Bill was also before the House. He hoped that would be the case, because he did not propose to take the Report on this Bill until after next week, when the Loans Bill would have been considered in Committee. He had struck out all local securities except those of the Metropolitan Board because terms affecting them must be defined in the other Bill, and the Committee would be at a disadvantage in discussing them now. He wished the Committee to affirm now the principle of investing in other than Parliamentary securities, and he selected the stock of the Metropolitan Board because it would not be dealt with by the other Bill, and because it was of a large and important character, was already under the supervision of Parliament, and could not be increased without its sanction.
§ MR. ANDERSONsaid, he hoped the Committee would express an opinion on the point now, as it had been raised, because he objected strongly to singling out the securities, of the Metropolitan Board, When hon. Members talked of 1513 taking other securities every bit as good as Government securities and yet getting larger interest, they were talking what, with all respect, he ventured to call nonsense. In all cases the rate of interest was the measure of the security, and if the Metropolitan Board of Works could give a higher interest, it simply meant that the security was not so good. He could point to many other securities that were as good as the Metropolitan; but he thought they ought not to go beyond Government securities.
§ MR. MOEGAN LLOYDwas opposed to any exception being made in favour of the Metropolis.
§ LORD FREDERICK CAVENDISHsaid, the question involved was a most important one—it was this, whether, for the first time in the history of this country. Parliament was to confer on the Chancellor of the Exchequer the power to bestow immense local benefits upon local authorities. Was it wise to enable the Chancellor of the Exchequer to confer vast benefits upon communities whose political support it might be important for him to secure?
§ MR. ALDERMAN COTTONsaid, he would raise the question of the Metropolitan Board debentures when the Bill was reported.
§ MR. FAWCETTsaid, as the Chancellor of the Exchequer had given him an assurance which he deemed satisfac factory, it would be impossible for him to divide. But he hoped neither the right hon. Gentleman nor the Committee would think that he and those who agreed with him were in any way pledged to the principle of his proposal. On the Report, he would raise the question in the most distinct way.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, he did not wish there should be any misunderstanding on the point. He did not enter into any positive engagement to comply with the wish of the hon. Gentleman, but would do all in his power to meet his views.
THE MARQUESS OF HARTINGTONthought it wise that the hon. Member for Hackney should withdraw his Amendment; but it was possible that he might not be allowed to do so, and might be compelled to divide. Whatever the result, however, those who agreed in the main with the hon. Member would not be pre-eluded from raising the question on the next stage of the Bill. The course taken 1514 by the Government was extremely inconvenient, and had placed the Committee in a false position. There were many hon. Members who would be extremely unwilling to give a vote which would seem to cast a shadow of suspicion upon the security of the Metropolitan Board of Works; but, at the same time, there was a general question involved, and he was not prepared to assent to the National Debt Commissioners being empowered to invest in any kind of local securities. He hoped the hon. Member for Hackney would withdraw his Amendment, as the division upon it could not be of a satisfactory character, and that hon. Members on that side of the House would not be accused of obstructing unnecessarily the progress of the Bill if they took the opportunity, on the Report, of raising a more general issue.
§ Amendment, by leave. withdrawn.
§ Clause, as amended, agreed to.
§ Clause 6 (Power of Commissioners to sell and change securities) agreed to.
§ Conversion of Perpetual Annuities.
§ Clause 7 (Power to Treasury to cancel capital stocks, and substitute equivalent terminable annuities, and two and a half per cent. terminable annuities).
§ MR. J. G. HUBBARDmoved that the clause be omitted. Although in a Bill relating to Savings Banks, it had no necessary connection with that subject. It empowered the Chancellor of the Exchequer, on his own authority, to direct the Bank of England to convert Permanent into Terminable Annuities. The result of a transaction of that kind was to increase greatly the annual charge on the National Debt, and in that way add to the taxation of the country. Such a power was unnecessary, dangerous, and unconstitutional. The Secretary of the Treasury said the other day that they must take the Savings Bank Bill in connection with the National Debt Bill; but whether they considered them together or separately this clause was out of place, the £28,000,000 a-year charged to the National Debt was meant to be definite or it was not. If it was definite, it was clear that this clause could have no possible operation; and if it was not definite, then the provision of which he complained might, as a possibility, be imposed upon the country.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, that, practically, it would be impossible for a Chancellor of the Exchequer to attempt to create Terminable Annuities beyond the limit of £28,000,000. He had at present the power sought by this clause as regarded the Post Office Savings Banks, and it was found to be very convenient. He had no doubt that whenever it was desirable to make these Terminable Annuities the Chancellor of the Exchequer of the day would, as a matter of course, bring the subject under the notice of Parliament, and he thought it would be a pity to alter an arrangement which had worked well for some years.
§ MR. CHADWICKurged that if the clause was of so important and extraordinary a character as the right hon. Member (Mr. Hubbard) had described it to be, it ought either to be omitted or postponed.
MR. DISEAELIsaid, the hon. Gentleman who had just spoken mistook altogether the functions of the Committee. The clause had been before them for days, and even weeks, and full opportunity had been allowed for its consideration. He believed that the Committee were decidedly in favour of the clause; but if the hon. Member had any objection to make to it, the Committee would be perfectly ready to consider his observations.
§ THE CHANCELLOR OF THE EXCHEQUERsaid, the provision in question was not a new one. It was the existing law in respect of the Post Office Savings Banks.
§ Amendment negatived.
§ Clause agreed to.
§ Remaining clauses agreed to.
§ Schedules agreed to.
§ Preamble agreed to.
§ House resumed.
§ Bill reported; as amended, to be considered upon Monday 21st June, and to be printed. [Bill 198.]