COMMITTEE. (Hansard, 24 August 1860)

THE MARQUESS OF NORMANBY
said a few words in justification of his vote on a previous occasion against the proposition for suspending the Standing Order, in order to allow the Bill to be proceeded with. Considering that two months were allowed to elapse since the Bill went into Committee in the House of Commons, he did not think that the measure had been treated as if it were one of urgency.

§ LORD REDESDALE
said, that the measure enacted that Savings Banks money might be invested in any Parliamentary funds, and this had led to an impression in some quarters that this might include railway and other similar securities. He apprehended that this was not what was intended.

§ EARL GRANVILLE
said, there was not the slightest ground for supposing that the Bill authorized investment in any such securities. The intent of the Bill plainly being that the investment should be only in securities which were guaranteed by Parliament.

§ LORD ST. LEONARDS
thought that this Bill required great consideration, however urgent it might be, for nothing could be |more dangerous than for Government to make any alterations which might alarm people in reference to the safety of the investment of the money which they had deposited in savings banks. The object which the Bill had in view was the making of a profit by investing the savings-banks money.

§ EARL GRANVILLE
dissented; the intention was to prevent a loss, not to make a profit.

§ LORD ST. LEONARDS
It was to be allowed that the money should he invested in any of the class of securities named which would secure a profit.

§ EARL GRANVILLE
referred to two returns of the particular funds in which the investment could be made, all of which funds were guaranteed by Parliament.

§ LORD ST. LEONARDS
repeated that great caution was required, for in some of the securities named, though the interest was guaranteed by Parliament, the principal was not. There were many of the funds mentioned in the second return in which a prudent man would not invest his own money; and, therefore, the Government should not invest in them moneys which they held in trust. His objection was that they ought not to allow the Chancellor of the Exchequer to invest these funds at his pleasure. It was true that he might get a higher interest, but the depositors would only be paid at the usual rate. Everybody knew that high interest meant bad security; so that whilst the depositors got worse security their interest remained the same.

§ LORD MONTEAGLE
thanked the noble and learned Lord for his statement. He retained the opinion which he had originally expressed with regard to this measure; and he did so with the more confidence, because he was supported in it by the high authority of the noble and learned Lord. That noble Lord had repeated and confirmed his (Lord Monteagle's) assertion that higher interest represented a worse security, and therefore could not with any justice be described as favourable to the party investing. He had been reminded on a previous occasion by the noble and learned Lord on the woolsack, that funds in the Court of Chancery were now allowed to be invested in the securities in which it was the object of this Bill to permit the investment of savings-bank moneys. It was true such a clause had been introduced without explanation into a Bill which had passed their Lordships' House. It was done elsewhere. But it formed no precedent for the Bill now on the table. He very much regretted that the investments under the authority of this Bill were not to be as cautiously guarded as were those which were made by the direction of the Court of Chancery. The Bill of last year required a previous approval of the Judges 1775 in the Courts of Equity. The power of the present were vested absolutely in one political officer, the Chancellor of the Exchequer. There was most important amendments which he would now venture to explain and to propose. He had already informed their Lordships that there were now in existence many banks which falsely assumed the title of savings-banks without having any right thereto, the rules of which had not been certified, and the funds of which banks never came into the hands of the Commissioners of the National Debt. The depositors in these fictitious banks were liable to he misled and defrauded by this deception, and he had, therefore, to meet the evil, prepared a clause which he entreated their Lordships to accept. It was introduced three years ago into a Government measure, and had received the sanction of Sir Alexander Spearman, the Comptroller of the National Debt, and of the law advisers of the Savings Banks Commissioners. It had also the high authority of his hon. Friend Mr. Hubbard of the Bank of England. It bad been suggested that such a provision did not quite come within the terms of this Bill; but that difficulty might easily be avoided by the insertion of a few words in the title. The importance of this clause was so great that he trusted their Lordships would not allow a merely formal objection to prevent its being added to the Bill. The effect of the clause would only be to prohibit a fraud and to guard innocent depositors from certain loss.

§ EARL GRANVILLE
said, he thought the observations that were made were, in his opinion, calculated to suggest suspicion in the depositors of savings banks, without any just cause whatever. There was no foundation for the opinion that the smaller stocks were less secure than the greater ones. The interest upon the whole of them was equally guaranteed by Parliament until the principal was paid. The only difference between the two classes of securities was, that the one might be more convenient than the other for purposes of investment. The noble Lord (Lord Monteagle) the other evening had talked of dealing with £40,000,000 of money belonging to the savings banks; but it should be remembered that these minor securities did not amount to more than £6,000,000 or £7,000,000. With regard to the clause suggested by the noble Lord, he regretted that be could not agree to its insertion. He had not a word to say against the clause 1776 in itself, for he thought it a very good one; but it was not consistent with the scope and character of the Bill. The noble Lord, having prevailed on their Lordships once to vote that this was not a measure of urgency, could hardly now plead urgency in favour of his own clause.

§ LORD REDESDALE
said, his objection to this Bill was, that it would open a door to further transactions, such as those from which a heavy loss had already been incurred through the investment of the savings-banks' moneys. That loss had been stated at £2,500,000; but he believed it amounted at that moment in reality to nearly £4,500,000. Through the operation of this measure the debt of the country might be increased without the sanction of Parliament. He objected to the Chancellor of the Exchequer going into the stock-market, not in a purely official character, but as a speculator, which he more or less became in dealing with the moneys of the savings banks.

§ LORD MONTEAGLE
having agreed to move his clause on the Report.

§ LORD MONTEAGLE
then moved to add the following clause— And for the Protection of any Party or Parties desirous of making Deposits for Investment in a Savings Bank lawfully established and certified under the several Acts of Parliament relative thereto, be it enacted, That if any Person or Persons shall, after the First Day of January next, establish, continue, or carry on, any Bank, Institution, or Society of whatsoever kind, for Receipt of Deposits at Interest or otherwise, assuming or using for such Bank, Institution, or Society, the Name, or Title, or Description of a Savings Bank, of whatsoever kind, except in respect of Savings Banks established under the Acts now in force for the Establishment thereof, or in respect of any Penny Savings Banks of which the Monies are deposited in any Savings Banks established under any Act or Acts relating thereto now in force, such Person or Persons shall be held guilty of a misdemeanour.