§ Order for Committee on Savings Banks read.
THE CHANCELLOR OF THE EXCHEQUER
said, that in the then thinly attended state of the benches it would not be necessary for him to enter into a lengthened statement of the measure which he proposed to bring in to alter the law in respect to savings banks. The present state of the law of savings bank was admitted to be inconvenient and unsatisfactory. The whole management was now vested in local trustees and managers; who required the actuary, who was the resident officer, to give a bond, which bond was the whole security that the depositors frequently possessed against fraud, for the trustees and managers were not personally responsible. He might mention the recent case of the Bromley Savings bank, where the defalcations amounted to £1,000 while the bond given by the actuary was only for £50, the consequence being that the depositors were exposed to severe loss. At present the Government were only responsible for that amount which was transferred to the Bank of England. What he proposed was without imposing any additional charge beyond that which would be necessary for payments that might be made to a limited extent for inspection, to give to depositors the ad- 1293 vantage of Government security to the whole extent of their deposits in all cases where savings banks complied with certain conditions to be specified in this Bill. In that way security would be afforded to the Government against loss in such a manner as would secure the depositors also against loss. It would be the duty of that House to see that the Government did not undertake any responsibility for the depositors' money without obtaining proper control over those deposits, and without taking the proper security against fraud and embezzlement of officers. On the other hand, it would be found that the provisions of the Bill did not impose conditions upon the trustees and managers which were not reasonable and satisfactory. The savings banks would also retain their character of local management and dependence upon the exertions and recommendation of local trustees. He would now move to resolve, That it is expedient to amend the laws relating to savings banks, and to provide for the establishment of savings banks with the security of the Government; and he would afterwards introduce a Bill framed to effect that object.
§ SIR HENRY WILLOUGHBY
wished to remind the House, that the savings banks money in the hands of the Commissioners for reducing the National Debt, amounted to £36,000,000, and that if the stock were now sold, there would result a loss of £5,000,000 sterling. Now in whose custody were those funds? Practically the whole was in the hands of the Chancellor of the Exchequer. That was wrong. The whole of the stock was in the hands of the Chancellor of the Exchequer, who did as he pleased with it—sold it as he thought proper, influencing the market, and possessing the power of being the greatest stock-jobber in the country. There were other savings banks' Commissioners, as the Speaker, the Lord Chief Baron, and other exalted Personages; but they never met, the law was not enforced, the Commission was merely nominal, and the sole power was practically in the Chancellor of the Exchequer. It was a trust, and the result was a deficiency of £5,000,000. There had been £36,000,000 of hard cash paid to the Commissioners, and the stock they held only amounted to £31,000,000. That was not the proper way of dealing with a trust. The power held by the Chancellor of the Exchequer was most monstrous and un- 1294 constitutional, and he hoped that the House, now that question was before it, would take care that this vast power was placed in proper hands, and regulated by proper enactment. He Sir H. Willoughby) having had communication with the savings banks throughout the country, knew that they felt the opinion he had expressed.
§ MR. GROGAN
was glad the Government had at last taken up the question, the condition of which was a sad blot on our social system. Until recent unfortunate failures it had been supposed that the Government was responsible for the whole of the deposits. He wished to know if any change was to be made in the rate of interest?
§ MR. WILKINSON
inquired whether the Chancellor of the Exchequer intended to make any alteration in the mode of investment in the savings banks, or whether he would let this mode of defalcation go on increasing?
THE CHANCELLOR OF THE EXCHEQUER
said, that, with respect to the rate of interest, it was not his intention to propose any alteration; but he should propose an alteration in the amount of deposit, which at present was limited to £200. Believing that the great object of the Savings Banks was, not to afford a place of investment to persons of moderately large means, but a safe investment for persons of small means, he should propose to limit the maximum amount of deposit to £100; at the same time affording facilities to the depositors for becoming stockholders through the savings banks. With respect to the deficit, which certainly accrued under the present system, he had no intention of making any proposition. The observations of the hon. Member for Evesham (Sir H. Willoughby) raised questions not necessarily involved in the Bill he proposed to lay on the table, which was limited exclusively to the local management of the savings banks, and did not affect the supreme administration in respect to what might be called the controlling power. It was true that the Commissioners in whom the administration of the funds of the savings banks was vested never looked into it, the real authority being centred in the Comptroller General, Sir Alexander Spearman, under the general superintendence of the Chancellor of the Exchequer. It might be desirable—he did not deny it—to make some alteration in that administration; but 1295 he begged leave to remark that he considered the Government fairly entitled, being subject to the losses that arose from the variation in the funds, to make the best use they could of the savings banks money by the transfer of securities when it was more beneficial to invest in Exchequer bills rather than in Consols, and vice versâ. The securities at present held by the Commissioners of savings banks were to the amount of £25,958,000 in Three per Cent, stock, £5,480,000 in Exchequer bills, and £1,765,000 in Exchequer bonds. He would now take the opportunity of answering a question put to him by the hon. Baronet some nights ago with respect to the Exchequer bonds held by the Commissioners for the Reduction of the National Debt. The Commissioners for the Reduction of the National Debt held £1,765,000 Exchequer bonds on account of savings banks. These purchases were all made through the Bank, to whom the securities were issued, in order to pass them on to the Commissioners. They were authorized to purchase these securities by the Acts under which the bonds were issued. The purchase originally extended to £1,850,000; but they sold £85,000 to the Patriotic Fund, which reduced the amount to £1,765,000, the amount now in their possession. The remainder of the £2,000,000—namely, £235,000—was held by the Patriotic Fund. The purchases were made between August, 1854, and the 11th of January, 1855. The money for the purchase was provided partly by the sums received from Exchequer bills held by the Commissioners, and which were paid off and cancelled, partly from cash balance arising from dividends, and partly from sales of stock. For many years the savings banks had been recognized as forming a desirable subject for legislation, and though he did not flatter himself that he had produced a measure free from all objection, in endeavouring to reconcile the claims of the local management with the necessity of taking adequate security for the Government, he nevertheless hoped with some confidence that the conditions he proposed would be found safe and moderate. He hoped the House would examine the Bill with indulgence, being conscious of the real difficulties which beset the subject and of the losses entailed on poor depositors, when the lamentable event occurred of a failure through the fraud of a local officer, and it 1296 turned out, contrary to their expectations, that they possessed no security, and were thereby exposed to most distressing and painful consequences.
§ SIR HENRY WILLOUGHBY
was glad to hear that the Chancellor of the Exchequer thought that the administration of the savings banks funds ought to be considered, but there was one power to which the right hon. Gentleman had not alluded. The Chancellor of the Exchequer virtually had the power under the Act of creating new stock without the knowledge of the House. He thought that the Government, in varying their securities, exercised an exorbitant and monstrous power.
THE CHANCELLOR OF THE EXCHEQUER
said, he could not admit that the power of varying Government securities was exorbitant and monstrous. The hon. Baronet assumed that the conversion of Exchequer bills into Consols implied some excessive power on the part of the Government; but Exchequer bills are just as complete and valid Government annuities as Three per Cent. Consols. It is not as if the Government had the power of creating debt. They merely vary the security of which the debt consists. Instead of it being a debt in the form of Exchequer bills, it becomes, by the variation, a debt in the form of Consols or Exchequer bonds. He admitted that the power to make that variation was a fit subject for discussion in that House, but he could not admit that it was unconstitutional and exorbitant.
thanked the Chancellor of the Exchequer for his proposition, which, if it should become law, would be of great service to Ireland. The depositors in the two banks in Ireland which failed, had placed faith in them because they thought that savings banks were under Government inspection.
§ MR. WILKINSON
said, he could understand that Government refused to allow the claims of the banks that had failed, because it would be a bad precedent; but seeing that Government would hereafter be responsible, he asked if Government would now liquidate the claims of those unfortunate depositors?
§ MR. BARROW
was glad to hear that the right hon. Gentleman did not intend to make any alteration in the rate of interest; and hoped that that local management of savings banks, which had given so much satisfaction to depositors, would not be interfered with.
THE CHANCELLOR OF THE EXCHEQUER,
in answer to the hon. Member for Lambeth (Mr. Wilkinson), said that the Bill which he intended to bring in would secure depositors prospectively, upon certain conditions being complied with; but it would not have a retrospective operation.Resolved, That it is expedient to amend the laws relating to Savings Banks, and to provide for the establishment of Savings Banks with the security of the Government.
§ Resolution to be reported To morrow.
§ The House resumed.
§ The House adjourned at half after Ten o'clock.