§ The CHANCELLOR OF THE EXCHEQUER
Sir, it is not necessary for me to detain the House at any length in explaining the reasons why I think it desirable to postpone the consideration of the Savings Banks Bill until the opening of next Session. As, however, not a single word has yet been said upon the subject of this important Bill, and as it has been allowed, at my request and by the favour of the House, to pass through several of its stages, and to be reprinted without any explanation of its provisions, perhaps it is right that I should state, in a very few words, how the matter stands. The great evil with respect to the present condition of savings banks is not so much any gross, or flagrant, or glaring abuse connected with them, as the want of that "perfect" security which every one must feel that they ought to afford. If we look at the enormous amount of money deposited in the various savings banks, and then take the mere figures which represent the total losses that have been incurred by depositors, no doubt the amount of those losses in relation to the total deposited is very insignificant; but the evil that is done in particular cases is unfortunately not to be measured by the actual amount of money loss. There is an amount of evil such as figures can convey no idea of; and, besides, it is impossible that the public confidence in those institutions can be that which it ought to be while those losses are liable to occur at all. What Parliament should desire to secure is, not that those losses should be rare, but that they should be altogether unknown—that no such thing should be allowed to take place. That being so, the question arises, how can that absolute security which is so essential be given? There is no doubt that where a body of trustees such as most of the body 535 of trustees of savings banks are, could be induced to give their own unlimited personal security, that would afford safety to the depositors. But it is hardly reasonable to expect that they should be found willing to give that absolute security. If it were, Parliament might be glad that there should be no further intervention of Government, and I need not then trouble you with minute details, or endeavour to introduce any sensible degree of Government control. That, however, is not to be looked for as a general rule. Then, there is but one other way of giving an absolute security to the depositors, and that is by affording them that which is the best that can be given in this country—namely, the guarantee of the Government. But it will be admitted on all hands that if the guarantee of the Government should be given to those depositors, it could only be upon very distinct and definite grounds; and I am bound to express at once my dissent from the proposition which has been put forward by the managers of savings banks—not generally, but in certain quarters—that the Government guarantee should be given to depositors, the security taken by the Government in return being the appointment of auditors to the savings banks. I do not hesitate to say that I believe if I were to make a proposition to the House of Commons, the House of Commons would reject it; but at the same time I must frankly and openly say, that nothing would induce me to make such a proposition. It is absolutely necessary, if the guarantee of the State is to be given to the depositors in savings banks, that the State should have a sufficient control over the receipt and the payment of the money itself—not merely the power of calling for accounts at certain intervals, but control over the receipt and payment of the money itself. And that cannot be had without the full control of the Government over some person in the banks who shall be a party to every receipt and every payment. That is the fundamental principle of the Bill, though, as I have previously intimated, the Government would be too happy to leave a door Open to trustees becoming responsible if they thought fit. We have further introduced into the Bill a provision to enable trustees who may object to unlimited responsibility, but are willing to subject themselves to a limited responsibility, to make arrangements with the Government, to that effect, so that they may give their personal security to such an extent as, 536 though limited, might be sufficient to cover the risk. This will relate to existing banks only. We do not propose to have any new banks formed on that principle, but it is a provision which I have introduced in consideration of the fact that the system exists, and that we must endeavour to deal with it as we best can. Looking to the measure as a whole, no doubt the practical and operative part of the Bill is this—the granting of the Government guarantee to depositors on the one hand, and the establishing of an effectual control on the other, I do not say over the whole management of the bank, but over every act of the receipt and payment of money. This is one of the questions which I think, by judicious management, we may contrive to settle in a great degree out of this House. The taxes upon the time of Parliament are so heavy, the demands of the various wants of this great Empire come upon us in such number and weight, that though the labours of this house, I apprehend, far exceed those of any legislative assembly the world ever knew, yet still we feel from year to year that we are behind our work. Therefore, a great and real advantage will be secured if with regard to a question of this kind, of great importance, interesting directly millions of people, we can contrive to save the labours of the House by arranging the details in communication with the parties out of doors. With that view it was that I asked permission of the House to be allowed to carry this Bill through a preliminary Committee without discussion. The effect of that has been, I am happy to say, to enable me to make great and successful attempts for reducing the provisions of this Bill into form without troubling the House, and to acquire, I believe, a pretty accurate knowledge of the state of feeling on this subject throughout the country. Certainly, on comparing the tone of the communications which I now daily receive from the managers of savings banks with the tone of those which I used to receive when the Bill was first printed, I think I may venture to say that I have made great progress with the measure. And I think that that which I have just described as the principle of the Bill—namely, the concession on the one hand of the guarantee of the State, and the taking, on the other, by the State of an effectual control through the medium of an officer of the bank over the receipt and payment of money, is generally recognised and approved throughout the country. I do not by any means say universally, but 537 generally. At the same time, Sir, there are many other provisions in the Bill which are important, and two of them particularly so. One relates to the rate of interest to be allowed to depositors, and the other to the responsibility which is proposed to be imposed by the 78th clause upon trustees in regard to the accounts which they are to hand over to the Government. It must be obvious to the House, when the Government are going to undertake a responsibility to the depositors in respect of deposits already lodged, that we must have the amount of those deposits ascertained for us by some one who shall be responsible to us, and that we can undertake no responsibility to the depositors except in regard to the liabilities of the bank which are certified to us in that manner. The 78th clause, it should be clearly understood, does not raise any question between the Government and the trustees, but simply between the trustees and the depositors. It is admitted on all hands that the State cannot undertake any responsibility, except in the case of deposits, of the amount of which we are apprised beforehand; and the whole question is, whether the trustees or managers of savings banks shall or shall not be responsible to the depositors in respect of deposits which they do not include in the list which they hand to the Government—deposits which are omitted by any cause, either by the carelessness, the negligence, or the fraud of the officers, it not signifying which. That is a point at present in discussion, and I think it is exactly one of such a nature that the interval of the recess may enable us to hit upon some mode of proceeding which shall be satisfactory to all parties. I must always beg the House to bear in mind, however, with respect to this difficult clause, that there is no question between the Government and the trustees involved in it. The only question is, shall we say to the trustees, "You must be responsible to those depositors whose names you omit;" or shall we say to the depositors, "You must each of you take care to see that the proper amount of your deposit is included in the list handed over to the Government liability to you." With respect to the question of the rate of interest, I will not enter into it now, because, after all, it is more a question of policy for the House to consider, than one which is to be arranged between the Government and the trustees. In addition to that great question, there are a variety of minor points in the Bill, which, dealing as 538 it does with a complicated system, necessarily enters into a good deal of detail. I think some inconvenience might arise at this period of the Session, which has already lasted from the beginning of November, if we attempted to settle those points in the House; and I fear if we attempted to do so, either that the Bill might fail to pass, or that the Session would be inconveniently prolonged, or, what would be worse than all, that it might give rise to the suggestion that we had passed the Bill without devoting to it that care and attention which its importance merited. Upon all these grounds, although I am very anxious for immediate legislation if it could have been had, I have come to the conclusion that our end will be most speedily attained if I now propose that the House resolve itself into Committee upon this Bill on this day three months.
§ MR. H. HERBERT
said, he ventured to express an earnest hope that this subject would be again brought forward at the very earliest period next Session. It was now four years ago since the question of savings banks was inquired into by a Committee of that House; that Committee reported that the law required amendment, land it was, therefore, to be regretted that Government had not taken the question up much earlier. Next Session the House, it was well known, would be involved in discussions on Parliamentary reform, and he, therefore, hoped that the very first measure introduced next year, would be the Savings Banks Bill, so that the House might make progress with it before they reached more exciting, but certainly not more important, questions. The right hon. Gentleman the Chancellor of the Exchequer had said that he did not believe that there had been any gross or fatal mismanagement in these institutions; but he, for one, was hardly inclined to concur in that statement. There could, however, be no doubt of this—that the existing state of things was most unsatisfactory. Previous to the year 1844 the trustees were responsible for all the deposits; but in 1844 they were relieved from that responsibility—a measure which he heartily concurred in, because when these institutions were first established it was anticipated that the deposits would never reach more than 11,000,000l., whereas in 1844 they amounted to something like 28,000,000l., while now they amounted to 30,000,000. Everybody must allow that this was by far too serious a liability to rest upon individual trustees; but, at the 539 same time, when Parliament came to the conclusion to relieve the trustees from the liability, it was the duty of that House to have devised some other means for securing the depositors against loss. As it was, it now appeared that the depositors had been left almost without security, and while this insecurity lasted, how could they expect the public to have confidence in savings banks? As well might they ask them to entrust their deposits to a private banker, who held himself irresponsible for the repayment of the money. No question, then, could come before Parliament of more importance than this. True, it was not an exciting topic like Parliamentary reform, but it involved the social interests of the people; and he hoped another Session would not be allowed to pass without its being satisfactorily settled.
§ SIR BENJAMIN HALL
thought that his right hon. Friend had laid sufficient grounds for deferring this Bill till next Session, though he much regretted the necessity for such delay, considering, as he did, that the Bill was a measure of great importance. Several petitions had been presented against the Bill; some of which, emanating from trustees and managers, were entitled to consideration. But there were others which should be viewed with some degree of suspicion. He meant those which were got up by the paid officials of different banks, who, in some instances, looked naturally to their own interests—who particularly disliked the limit which might be placed upon their salaries. His right hon. Friend had referred in the course of his speech to two very important provisions in the Bill—the necessity for the fullest security that would be afforded to the depositors, and the rate of interest to be allowed. But there was another provision in the Bill, to which his right hon. Friend had not alluded, but which he ventured to think was very important; and that was, the amount which ought to be set apart to defray the expenses of management, which must necessarily be paid by the Government, and must, therefore, affect the amount of interest to be given to the depositors. The sums now deducted for management from the 3l. 5s. per cent, allowed as interest by the Government, varied considerably; in some banks the amount returned was most moderate, in others most excessive. In illustration of the necessity for some provision, he begged to instance the case of a savings bank in this town, the name of 540 which he should be perfectly ready to give to any hon. Member who might wish to have it. The receipts of that bank in the shape of deposits amounted to between 90,000l. and 100,000l. a year, and it paid out about 80,000l.; so that between 10,000l. and 12,000l—an always increasing sum—annually went to the general fund, which at present amounted to about 365,000l. The cost of the establishment of that bank was, in salaries, 1,458l.; in rent and taxes, 211l.; and allowance to manager for coals and candles, 109l. a year. In addition to this, the trustees had actually taken a house with a lease of only forty years to run, and they had expended no less a sum than 6,000l. upon the repairs of that house. This, he contended, was for the benefit of the manager, so that, taking the interest upon the capital sum, and allowing for the loss of that capital, which he (Sir B. Hall) could not estimate at less than 500l. a year more, he estimated the cost of the establishment, independently of printing, law, and incidental expenses, at 2,280l. a year. For that 6,000l. which the managers had laid out upon a house with a forty years' lease, they might have obtained one of the best mansions in the district in which the bank was situated. What had been the consequence of that gross extravagance and outlay, as he must term it? There were 18,612 depositors, whose deposits did not average above 30l. each, and the present amount of their deposits was about 83,000l. Would the house believe that out of the 3l. 5s. per cent which the Government allowed by way of interest, no less than 1l. 5s. was deducted from the interest paid to the small depositors, while that which made it more gross was, that from the larger depositors of 100l. and upwards, there was only a deduction of 7s. 7¼d. per cent? When his right hon. Friend stated that the two important provisions of the Bill were to provide a responsible guarantee for the deposits, and to determine the rate of interest to be paid, he was glad that he had taken into consideration by his Bill the important question of the cost of management. His right hon. Friend had raised the scale from 6s. 8d. to 7s. 6d. This latter he thought to be an ample sum, and he trusted that his right hon. Friend would not be induced, either by petitions from managers, or by other considerations, to raise it; but that if the Government should find it consistent with their duty to 541 allow a larger sum than 2l. 17s. 6d. per cent for interest and cost of management, the surplus might be given to those who, by care and good management of their little incomes, had become depositors in the banks.
§ SIR HENRY WILLOUGHBY
said, he must deprecate the introduction of isolated cases at this stage of the discussion. He regretted that the hon. Baronet (Sir B. Hall) had instanced a particular case. It was one which was well known to himself, and he believed he could give an ample answer to to the charge. There were a vast number of unusually small depositors in that bank, and it was known that the keeping of a number of small accounts was more expensive than the keeping of a few large ones. If any injustice were done to any party, it was, in his opinion, rather to the larger than the smaller depositors. There was a perfect answer to the charge of expending 6,000l. upon the house, but he did not think it desirable to enter into it at present. With regard to the Bill itself, be was glad to find that Government did not intend to persevere with it, because if they had done so, there would have been no alternative left to the majority of the trustees but to resign. Many of them, in fact, had announced their intention of doing so if the Bill passed; and he did think that it was high time that a stop was put to these experimental Bills, which being brought forward just to see which way the wind blew, were productive of infinite mischief to all classes, and more particularly to the interests of savings banks. He was not going then to enter into any discussion of the details of this Bill; but he must be permitted to tell the Chancellor of the Exchequer that when he talked of what the Government intended to do in this matter, he should make up his mind as to the meaning of the word "Government." Now what was the Government in this case? Why, it was supposed to be the Commissioners for the Reduction of the National Debt, who held their offices ex officio; but the Commission being composed of persons like Mr. Speaker, the Master of the Rolls, and the Chief Baron of the Exchequer, they were never called upon to perform any active duty. All they had to do was to meet about four days in the year, for the purpose of adjusting the surplus income applicable to the reduction of the National Debt. Now, how was it possible for these gentlemen to attend to the interests of 600 savings banks? 542 They could not possibly do it; but it too often happened that transactions were carried on in their names which were not strictly legal. For instance, the other day they were told that in the name of these Commissioners large sums received through the savings banks had been invested in the purchase of of Exchequer Bills. This was done on the sole authority of the Chancellor of the Exchequer; but inasmuch as by law the Commissioners had only power to invest such money in stock, he contended that it was impolitic, if not illegal, that the Chancellor of the Exchequer should be it liberty to deal with the disposal of the funds just as he thought fit. Parliament ought to look closely into this branch of the subject, for it would not only be mischievous and dangerous, but unconstitutional, to leave the 30,000,000l. of savings banks deposits to be invested in the manner which best suited the convenience of the Chancellor of the Exchequer.
§ MR. NAPIER
was as anxious as any one to see an efficient Savings Banks Bill passed, and begged to express his readiness to discuss the question at length were it to be proceeded with this Session; but he deprecated further discussion with regard to it under the present circumstances, when the Bill was actually withdrawn.
§ SIR JOHN YOUNG
said, he concurred in this view, and would urge the House to proceed with the important Irish measures which stood upon the business paper. Unless those Bills were got on with, he really did not know when he should be able to give another day to them.
§ MR. MAGUIRE
said, he also concurred in this view, and begged to thank the Chancellor of the Exchequer for the steps which he had taken to amend the Bill, and to obtain the sentiments of the public with regard to it. If the Bill had not been withdrawn; or, had it been passed in its present shape, the trustees of the Cork Savings Bank would have been compelled to resign.
§ SIR JOHN SHELLEY
said, that in the case of the bank referred to by the hon. Baronet the Member for Marylebone, the number of depositors whose deposits were under 30l. were 81 per cent of the whole; the costs of management being 1l. 5s. per cent. Now, in the bank of an adjoining district, the number of depositors under 30l. were only 75 per cent of the whole, and yet the deduction for the cost of management was only 6s. 3d. per cent. He had no wish to oppose the principle of 543 this Bill, although he objected to some of its details; and he would suggest, with the view to the removal of his own and all similar objections, that the Bill should be referred again to a Select Committee next Session.
§ MR. BARROW
said, that, as the surviving trustee of a savings bank, he was not sorry to hear that the Bill was not to be persevered with this Session, as it was quite impossible to do the subject justice at this late period of the year.
§ Committee put off for three months.