HC Deb 11 May 1857 vol 145 cc109-36

Order of the Day for the House to go into Committee on Savings Banks read.

House in Committee accordingly.

VISCOUNT PALMERSTON moved that Mr. FITZROY do take the Chair.

Motion agreed to, nemine contradicente.


Mr. FitzRoy, I rise for the purpose of moving the formal Resolution of which I have given notice, with a view to introducing in the present Session a Bill which differs in no very material respect from the Bill which I had the honour of submitting to the House in the last Session of Parliament. During the recess that Bill has been submitted to the consideration of the trustees and managers of all the savings banks of the country, and I have had the advantage, since the dissolution of the last Parliament, of numerous communications from their trustees and managers, containing their views upon its probable effect. I rejoice to say, that the great majority are of opinion that the principle of the Bill—namely, the giving a Government guarantee to depositors in savings banks—is beneficial, and ought to be adopted by this House. The principal objection which is made to the measure—and it is one very generally put forward by the trustees and managers—is to a provision which I inserted in the Bill of last Session for limiting the amount of deposits to £100, they think that the amount ought to be left at £200, which is the sum fixed by the existing law. That provision is not necessary in principle to the plan which I had formed, and inasmuch as I have seen that it is very generally objected to, I have had no hesitation in deciding to omit it from the Bill which I hope the House will permit me to introduce this Session. That will be the principal difference between this Bill and the Bill of the last Session. There is, however, a minor point of difference which I may mention. By the 7th clause of the Bill of last Session it was proposed that the price of the funds at which the investments of the Commissioners of Savings Banks are made should be determined by the average of the preceding quarter; whereas I now propose to make it the price of the day on which the investment is made. That is another alteration which has been suggested by the managers and trustees, and I have no difficulty in agreeing to it. With the permission of the Committee I will advert shortly to some other objections which are made to this plan in some quarters. It has been thought that the Bill of last Session imposed an unnecessary amount of restriction on the trustees and managers of these establishments, that it carried too far the principle of centralization, and gave the Government an unnecessary power of interference with the local management of these banks. Inasmuch as the success of the plan which I am about to propose will mainly depend upon the view which the House may take of that part of the question, I am desirous to explain, as briefly as I can, the principles which I have followed in framing the Bill in respect to that portion of the subject. At present the Government is responsible only for the money which is actually remitted by the trustees and lodged in its hands. By the Bill which I am about to introduce, the Government will become responsible for all sums deposited in the banks. That will render the Exchequer of the country liable for a very large sum of money. It will be necessary, therefore, that this House should take care that they do not render the country responsible for the money of the depositors without at the same time taking security against fraud, whereby the money may be intercepted; and thus saddling the Government with responsibility where they have no sufficient control. I will now state the extent of the alterations which I propose in the present system; and first, as regards the amount of the operations under the present system. At the close of the year 1856 there were no less than 1,339,000 depositors in savings banks, to whom there was due a sum of £34,899,000. In the course of the year there were 1,409,000 deposits and 793,000 withdrawals of money. The amount deposited during the year was £7,740,000, in sums averaging £5 2s. 3d. each; the amount withdrawn was £8,020,000, in sums averaging £9 19s. 4d. each; 221,000 new accounts were opened with a deposit in small sums of £2,155,000; 195,000 accounts were closed, and the sum withdrawn was £3,696,000. These figures will show the Committee the magnitude of the operations conducted by the existing savings' banks, and will convince the House of the necessity, if the Government is to assume the responsibility, not only of the money which may come to its hands in London, but also for all the deposits in the local banks, of taking security for the integrity and care of the local officers. That seems to me to be a cardinal principle in any legislation upon this subject. If upon an examination of the Bill which I shall lay before the House it shall be found that any unnecessary securities are taken, or any needless restrictions are imposed, I shall be quite ready to abandon such provisions; but if, as I believe will be the case, it shall appear that I have taken no superfluous securities, have sought to impose no unnecessary restrictions, I trust that the House will, while conferring this boon upon depositors, support me in guarding the interest of the public. If, on the other hand, it should be found that the local authorities, unwilling to part with their own control or to admit my interference on the part of the Government with their local concerns, seek to prevent the insertion in the Bill of the necessary securities, I fear that there will be only one course left to the Government—namely, to abandon the Bill, leave things in their present position and continue a system by which the depositors are left without any securities beyond the assurance of the local officers to the local authorities; while, at the same time, the Government will be left, as now, irresponsible, except for the amount of money which shall be ac- tually lodged in its hands. I trust, however, that it will be found that the plan I propose is a reasonable plan; that it does not, in fact, impose upon the local authorities any shackles of which they can reasonably complain, and that no securities are demanded on behalf of the public beyond what are absolutely necessary. I propose that the appointment and superintendence of the local officers should remain as at present with the local authorities; all that I ask on the part of the public in that respect is, that the Savings Banks Commissioners shall have power to make general regulations as to the duties of these officers, to fix the amount of security to be taken from them, and to possess a power of removing them from unfitness. Some objections have been made to the conditions, a compliance with which it is thought necessary to exact before a savings bank shall be admitted to the benefits of this Bill. That condition—which appears to me to be simple and at the same time indispensable—is that the bank should prove its solvency, and that can only be satisfactorily demonstrated by the production and examination of the books of the depositors. It is said by some that that condition is one which cannot be complied with, but those who make this objection seem to be ignorant of the state of the law in Ireland. In Ireland depositors are required to produce their books every year, and it is found that very many comply with that requirement, and that in some cases as many as ninety per cent of them annually produce their books. According to the plan which I shall propose for the adoption of the House, this operation will have to be gone through only on the first adoption of the bank by the Government; and I cannot see any sufficient reason for supposing that this condition cannot be complied with. I ought to mention that I propose to add to the Bill of last Session a clause providing that no private individual or company shall establish a bank under the simple title of a savings bank. At present it understood that every bank simply denominated a savings bank is a bank established under the Government authority and under the Savings Bank Acts. The trustees of such banks are irresponsible. But inasmuch as after the passing of this Act Government responsibility will be the rule, it is plain that all new savings banks must come within the meaning of the Act. If, therefore, private companies or private individuals are permitted to establish sav- ings banks without any distinctive title, showing that they are not under the public authority, there will be danger that the poorer classes who resort to these banks may be misled and may suffer losses. I shall, therefore, propose the introduction of a clause to prohibit the assumption of the title of "savings banks" by banks not established under the Savings Banks Acts. The right hon. Gentleman then moved 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.


said, that when this question was before the last House of Commons upwards of 200 petitions were presented, praying the House would not content itself with merely amending the law, but that they would consolidate it; and as one of the claims put forward by Her Majesty's Government to the confidence of the nation was that it was anxious to improve the state of the law, he trusted that they would in relation to this subject comply with that request. There were already seven statutes upon this subject, out of which they had to pick the law, and if the effect of this Resolution was only to add an eighth to the number it was impossible that any one should understand what were the exact provisions of the law. What the trustees and managers of these institutions desired was, that they should be placed under some clear and intelligible law, in order that they might know what they had to do; any alterations being at the same time made which the House might think desirable for the security of the money in the banks. To the first part of the Resolution he had not the slightest objection—he hoped that the question would be fairly grappled with, and the law amended and settled. But with respect to the second part, which related to the establishment of Government Savings Banks, he thought there would arise considerable discussion. What the savings banks of the United Kingdom would most sturdily resist was any interference on the part of the subordinate functionaries of the National Debt Office. They knew perfectly well that the Commission for the reduction of the National Debt was a mock Commission; that though it contained the names of men high in office, it never met. Those Commissioners never sat, and, in point of fact, the whole of the powers conferred by the statute upon that ex officio Commission were wielded by the Chancellor of the Exchequer or by the Comptroller General and subordinate officers of the National Debt Office. The savings banks objected to such powers being so wielded, and he trusted that the Committee would share that objection. What ought to be done was to consolidate the law relating to savings banks, and not, by allowing the powers conferred by the Act to be exercised by a subordinate department, to tease and perplex the trustees and managers of those banks. He was glad to hear from the right hon. Gentleman his announcement with regard to the reduction in the amount of deposits. He knew himself that in one Bank, the National Provident, of 16, 142 accounts the average of each account was only 4s. 2d. It was the payment upon the higher class of deposits which enabled the banks to meet the expenditure, upon the lower class; and if the right hon. Gentleman bad persisted in the scheme as regarded the amount of deposit which he first proposed it would have caused great dissatisfaction, and would have compelled many of the smaller banks to close. He would not on the present occasion enter into details, but there was one branch of the subject which he felt bound to bring before the Committee, because he considered that it was of paramount importance as affecting the interests of the State. On the 20th of November, 1855, the amount of money for which the State was liable on account of savings banks was £36, 451, 041; to meet which liability there were securities to the amount of £31, 249, 582; so that at that date there was an actual deficiency of £5,201, 459. Now, he wished to impress upon the Committee the necessity of considering how that deficiency had arisen. The question had been brought forward in another place by a noble Lord (Lord Monteagle) well versed in financial matters; and as the House was now asked to give the Government new powers as regarded savings banks, which he (Sir H. Willoughby) believed would be injurious to the public credit, it would be well for them to consider the real facts. The noble Lord, to whom he alluded, said, that the powers now exercised by the Treasury over the stock of the savings banks could not be used without danger to the public credit; that it was a practice of no occasional occurrence, but was resorted to day by day; that the millions of stock which they sell was disposed of without any pretence of the demands of the savings banks, but solely to facilitate and promote the financial operations of Downing Street; that if the Chancellor of the Exchequer finds his bills or bonds low and unsaleable, he sells out savings banks stock, invests the proceeds in the depreciated bills or bonds, thus making the whole transaction subservient to his own views as Minister: he buys, and thus gives his securities an unnatural and artificial value—he ceases to buy, and the same securities suffer an artificial depression; that in 1855 the stock sold nominally for savings banks amounted to £3,260,000, and the balance between purchase and sales of Exchequer Bills was £3,063,000 [3 Hansard, cxliij. 1190]. A Chancellor of the Exchequer was the last person to whom facilities should be afforded for such gigantic jobbery, and he (Sir H. Willoughby) thought that a system could not be other than a mischievous and inconvenient one under which the Chancellor of the Exchequer might use the money of the savings banks for purposes of State in carrying on operations of finance. In amending the law upon the subject it ought to be considered how such a power had arisen. The original statute affecting savings banks declared that the savings bank money should be treated as a sacred trust, and accumulated upon the principle of compound interest. Subsequent Acts, it was true, gave further powers for the management of that money, but those powers were conferred for the benefit of the depositors alone. He would challenge the Chancellor of the Exchequer to point out any phrase in any Act which gave the Chancellor of the Exchequer the slightest right to use that money in the way in which it had been employed. The powers conferred by those statutes were conferred not upon the Chancellor of the Exchequer, but upon an ex officio Commission which never met at all. Now, how had the deficiency to which he had referred increased from half a million to five millions and a quarter? Why, stock had been sold at comparatively low prices to buy Exchequer Bills when approaching or actually at a discount. In 1855 the savings banks paid in £500,000 more than they drew out. £3,000,000 of stock were sold to buy bills and bonds. Towards the close of the war prices were low, and a considerable amount of stock was sold in 1855 and 1856, at prices of 86, 87, 88, and 89, at some future period to be re-invested at a higher price; so a constant deterioration of the capital of savings bank stock was going on, and the natural result was a deficiency which somebody would have to pay. There was, however, another palpable absurdity, which was that under the statute 4th George IV., chap. 92, section 50, there was a power given to the delusive Commission to which he had referred, to fund Exchequer bills, and create new 3 per cent, stock. That power had been largely used by Governments preceding the present Government (for he believed the present Government had not so used the power), and an addition of £10,000,000 to £12,000,000 had been made to the National Debt, and the savings of the people had been turned into an engine for the creation of fresh debt, which, when invested, might again be sold to job in bills and bonds without the knowledge of Parliament; and if, in addition to the existing powers the Chancellor of the Exchequer obtained the powers he now sought, the abuse might go on ad infinitum, the National Debt might be doubled, and Parliament and the country exercise no voice in the matter. The law on the subject required amendment and consolidation, and what he desired to see was the savings of the industrious classes carried over to a fund sacred and inviolate. Assuming, then, that the Chancellor of the Exchequer was not in a position to propose a Bill embracing the whole subject connected with savings banks, he should wish to learn from the right hon. Gentleman whether he had any objection to do that which so many of the managers and trustees of those banks had sought at the hands of the Government—namely, to refer the entire question to the consideration of a Select Committee, Such a course appeared to him (Sir H. Willoughby) to be entirely in unison with common sense, and to be calculated to allay the anxiety of the public, who, from the memorials and petitions which had been presented by the Glasgow, the Exeter, and other ably conducted banks, were apt to imagine that there existed some defect in the system by which such enormous deficiencies had been occasioned. The interest paid to the depositors in savings banks was only £2 18s. 8d. per cent., and that certainly could not be regarded as so exorbitant a rate of payment as to lead to a deficiency of £5,201,000. The amount now deposited in those banks was £36,500,000, while in the year 1828 it had been only £14,750,000. So vast an increase in the sum lodged in those institutions naturally lent to them a proportionately augmented importance; and he was, upon that account, desirous that the Chancellor of the Exchequer should accede to his suggestion of referring the subject to a Select Committee, with a view to dealing with it, subsequent to the inquiry, by means of a clear and well-defined legislative enactment.


said, he should not trespass upon the time of the Committee by entering upon the financial considerations connected with the subject under their notice. Taking as he did the greatest interest in the question, he had listened with much pleasure to the speech in which his right hon. Friend the Chancellor of the Exchequer had introduced that subject, and the only portion of it to which he felt at all disposed to object was that in which the right hon. Gentleman had expressed some doubt and hesitation as to the opposition which was likely to be raised against that portion of his proposal by which the proceedings of trustees and managers of savings banks were sought to be controlled: and, indeed, judging from what had fallen from the hon. Gentleman opposite (Sir H. Willoughby) he was afraid that considerable opposition would be raised to that part of the measure. Now, he (Mr. Herbert) should mention some circumstances which, in his opinion, were calculated to induce the Committee to look with favour upon a proposition of that character, and to view with a considerable degree of suspicion any representations which might emanate from the trustees and managers of those institutions. He must at the same time be understood as not wishing to make any attack upon the various gentlemen who occupied that position, and to whom in very many instances the public were greatly indebted for the valuable time they had devoted to their duties, and for the admirable manner in which those duties had been performed. The very fact that so large a proportion of the enormous sum invested in these banks was perfectly safe, showed that they did their duty, and deserved well of their fellows. He felt it, however, to be his duty to remind the Committee that large sums of money had in more than one case been lost—large, he meant, to the depositor, though no doubt, small in proportion to the whole amount invested in savings banks. And why, he would ask, had that come to pass? It had been in consequence of the enactment of a measure which had, in the year 1844, been introduced into that House in favour of trustees and managers. Up to that period persons occupying that position had been held personally responsible for every farthing which might have been deposited in the institutions over which they presided. At length one of them—the St. Alban's bank, he thought—failed—and what was the remedy adopted by the House? Why, a remedy which when he spoke of it before, he had characterized as it deserved—namely, as legislation for the rich man at the expense of the poor man—they absolved the trustees and managers of savings banks from all responsibility. The sums deposited in savings banks had so greatly increased, that the Legislature might justly think, that the trustees and managers could no longer be fairly called upon to be personally responsible:—but, instead of adopting a measure like that now proposed by his right hon. Friend, they introduced a Bill which merely absolved trustees and managers from all responsibility, leaving the Government responsible only for the money actually paid over to it. Well, what had been the results by which that course of legislation had been followed? The Act to which he referred was passed at the end of the Session of 1844 without much discussion, and the first intelligence of its existence which reached the depositors was when, upon the failure of some particular bank, they were informed that the trustees and managers were no longer legally responsible for the money which had been confided to their hands, and then they discovered that all the respectable names which had been paraded before them as security for the amount of their deposits operated in reality as little better than decoys to induce them to lodge their earnings in institutions in which there was no substantial guarantee that they would be safe. When, therefore, the hon. Gentleman opposite threatened a strong opposition to that part of the measure which proposed certain restrictions, which he (Mr. Herbert) considered absolutely necessary in regard to the future management of savings banks, these circumstances, he thought, should induce the House to receive all objections in the interest of the trustees with caution—considering that the Government were about to take upon themselves absolute responsibility in respect of the vast sums now invested in the savings banks throughout the kingdom.


said, the fact was that the measure to which the hon. Gentleman who had just sat down had alluded was passed when the late Mr. Goulburn was Chancellor of the Exchequer, and the cause of its enactment had been the difficulty which was experienced in the establishment of savings banks, in consequence of the pecuniary liability which attached to those who filled the offices of managers and trustees of those institutions. Had not some such clause been passed exempting trustees and managers from liability, except in so far as they bound themselves in writing, there would have been no trustees at all, and they must have given up savings banks altogether. The fact that this protection had been given to trustees formed an additional claim by the depositors on the Government, and the force of that claim was admitted by the Chancellor of the Exchequer, who, instead of proposing to protect the rich at the expense of the poor, boldly proposed to come forward and take upon the Government of the country that responsibility to which for many years it had been almost universally supposed they were liable. His hon. Friend near him (Sir H. Willoughby) had made a most plausible suggestion, that the Bill about to be introduced should not be added to the Acts of Parliament upon the subject of savings banks which were already in existence, and that no legislation should take place unless the whole of the Acts should be consolidated; and that, in order the more effectually to carry out these views, the whole question should be referred to a Select Committee. Now, he should have been disposed to concur in the proposal of his hon. Friend were it not for the particular nature of the Bill, the merits of which they were engaged in discussing. It was not a Bill by which it was sought to introduce any fresh provisions into the statutes in connection with savings banks already in existence. It was a Bill by which it was proposed to establish a new and distinct system of savings banks; and it was therefore necessary, if the measure were to pass into a law, that they should have one or two years' experience of the mode in which the system acted. Eventually he quite agreed with his hon. Friend that all the statutes relating to these insti- tuitions would have to be repealed and the law consolidated, so that any man might turn to one particular statute as containing the code, under the security of which his little savings had been invested. He knew no more of the particular provisions of the Bill that the Chancellor of the Exchequer proposed to introduce than his hon. Friend. But the right hon. Gentleman had told them that the provisions were similar to those laid on the table last Session with a few alterations. One of those alterations he was sorry to hear. Every hon. Gentleman in the House would, he feared, be against him in this respect, but he confessed that he was sorry to hear that the Chancellor of the Exchequer was about to remove from his new Bill that clause which restricted the maximum amount of deposit to £100. As it seemed to him, full provision was made in the former Bill to extend the amount of deposit by any individual, not only to £150, but indefinitely to as large a sum as he chose, by means of the clauses relating to investments. He did not, indeed, think that the withdrawal of that clause would affect the interest of the depositors, but it would leave a larger amount of liability on the part of the Government. His hon. Friend (Sir H. Willoughby) said that of the £36,000,000 of money of the savings banks in the hands of the Government only £31,000,000 could be repaid if the demands were all made at one time. This difference between the amount received by the Government and the amount of stock to the credit of the savings banks was to be accounted for, as he understood, by the fact that the Government undertook to return £100 for every £100 paid in, whatever might be the state of the funds at the time the demand was made upon it. If, therefore, it so happened that the funds sunk 10 per cent after a deposit of £100 had been received and invested in stock, instead of there being £100 to answer the demand that might be made upon the Government, only £90 would be realized on selling out. His hon. Friend (Sir H. Willoughby) thought this Bill would withdraw the power from the managers and trustees of savings banks and concentrate it in the functionaries of the National Debt Office. But when it was remembered that a new principle was to be established, the basis of which was that the Government undertook to be responsible for the repayment of every farthing actually deposited in any savings bank, it must be allowed that to justify it in incurring such a risk it ought to be armed with stringent powers enabling it at any moment to suspend and even to remove any officer against whom there was reasonable ground of suspicion. There were upwards of 500 separate banks, with different officers and under different bodies of trustees; and it was therefore just and necessary that the Government should be authorized to stop the whole proceedings of any bank established under this Bill, and to take possession of all the papers and other documents in the custody of the actuary, should circumstances seem to warrant such an extreme step. In whoso hands would his hon. Friend place such a power? He (Mr. Estcourt) had for years held communications, in what he might almost call a public capacity, with Sir Alexander Spearman and Mr. Tidd Pratt, the Comptroller and consulting barrister of the National Debt Office, and he felt convinced that those gentlemen would exercise any powers which might be intrusted to them, not only with integrity, but with discretion and moderation. Sir Alexander Spearman was an old public servant of unblemished reputation, who had greater experience of these matters than probably any other man in the kingdom; and it was impossible to suppose that he could desire gratuitously to act in hostility to the feeling of the local managers and trustees of savings banks. For himself, as a manager of a savings bank, he (Mr. Estcourt) thought his position would be infinitely improved by this Bill. He had never yet attended a meeting in that capacity without feeling how insufficient were the means he had of knowing whether the actuary had bonâ fide carried to the ledger every farthing that had been deposited in the bank. Everybody acquainted with savings banks knew that such a check was next to impossible. His poor neighbours went to the bank with their small savings because they saw his name down as one of the trustees; they knew nothing of the government; they regarded his name and the names of other trustees as guarantees for the security of their money. Yet the fact of his name appearing as a trustee did not make him responsible for a single farthing. If this Bill passed, however, he (Mr. Estcourt) would know that for every shilling deposited there was the security of the Government, and he would therefore attend the meetings with very different feelings than he had hitherto done. The Chancellor of the Exchequer had happily re-introduced his Bill of last Session, with certain alterations, most of which were improvements. There was one point on which he wished to offer a suggestion. The conditions upon which the existing banks were to come under the benefit of the provisions of this measure would necessarily be left to the discretion of the National Debt Office. He did not ask the right hon. Gentleman to lay those conditions on the table with a view to their receiving in any way such a sanction as an Act of Parliament would confer. But, as he believed, the only essential condition that need be required of any existing bank which might wish to come under the operation of the Bill should be that it is in a solvent state when it received the security of the Government, it would be satisfactory if the right hon. Gentleman, without pledging the Government to follow any precise conditions, would furnish the House with a general outline of the stipulations on which he meant to insist. In conclusion, he heartily hoped that this measure would be passed into law, because, as he understood its principle, it would give to the poor depositor the security of the Government upon the easiest terms, and would cause the smallest interference with existing management that was compatible with the liability undertaken by the State.


concurred with the hon. Member for Evesham (Sir H. Willoughby) in requesting the Chancellor of the Exchequer to give his best consideration to the proposal for referring this Bill to a Select Committee. It was not alone with a view to the consolidation of the law relating to savings banks that such a reference was desirable, but with a view to ascertain what were the provisions best adapted to carry out the intentions of the Chancellor of the Exchequer. A new principle was to be introduced which met with his cordial approval, but the subject was a difficult and delicate one. The Government wished to encourage the labouring classes to place their savings in these banks; now, these classes were extremely susceptible, and it was necessary that the greatest respect should be paid to their feelings and even to their prejudices. They had also to deal with the directors and trustees of these banks, a body of gentlemen to whom, notwithstanding what had fallen from the hon. Member for Kerry (Mr. H. Herbert), the country was under great obligation for their voluntary and disinterested services, and whose views were entitled to consideration. The managers and trustees of savings banks in Yorkshire, and, he believed, also, in Lancashire, were most anxious for an inquiry into this subject. The right hon. Gentleman would not be pledged to adopt the views of those gentlemen; all that was requisite was that they should have an opportunity of expressing their opinions and of bringing to his aid the results of their experience. There were several other points beyond those which had been adverted to which in their opinion required consideration, and, as the House was about to legislate on the subject, surely it would be desirable to remedy any defects in the existing law which those persons could point out. They were of opinion, for example, that power should be given to invest the funds of savings banks in other securities than those in which at present they could alone be invested—securities which, being equally safe with those where the money was now placed, would afford the inducement of a higher rate of interest, a matter which was of the utmost importance to the working classes at a time when there were so many other institutions, having no security at all, which offered the attractions of a higher interest. He thought that the views of the trustees and managers were entitled to consideration; and although the Session would be a short one he saw no reason why the Bill should not be referred to a Select Committee, and yet become law in the course of the present year.


said, he was inclined to support the Select Committee. So far as he had ascertained the feelings of the managers of savings banks, he did not believe that they objected to any salutary check or control which could be imposed; they had no objection to anything that was reasonable, but they wished the checks to be defined. What they objected to was that there should be a power lodged in any officer of the Government to impose checks at any particular time, with any particular object, and to any particular extent, at his discretion. If the checks were reasonable and defined, there would be, he believed, no opposition; but there would be an objection if power were lodged with the Comptroller of the National Debt to impose checks according to his good pleasure. He (Mr. Baring) had the honour to be acquainted with Sir Alexander Spearman, and he had no doubt that any checks which that gentleman imposed would be perfectly reasonable; but the objection was to the principle of placing that power in the hands of any particular individual. With respect to extending the amount of deposits, he presumed that the object of the House and of the Government was to make these public institutions as useful as possible; but he feared, if the amount were limited to the smaller sum originally proposed, that there would not be sufficient income to defray the cost of management, and he believed that it would be impracticable to carry on the system of savings banks in this country if the amount of the deposits were limited to a very small sum. It was of the utmost importance in institutions of this sort that the depositors should feel that the country was responsible to them for every penny deposited, and they should be enabled to withdraw their money at any time. His hon. Friend the Member for Evesham had alluded to a question which was not altogether connected with this Bill, but which, nevertheless, was a very serious one—namely, whether there should continue to be lodged in the Chancellor of the Exchequer the power of playing with the funds of the depositors in savings banks in a manner which might not be beneficial to those funds considered per se, but which might be considered beneficial or necessary to his own financial projects. He thought that that was a very important question, which ought to be considered.


said, he was satisfied that affording a Government security to the depositors in savings banks would prove a great boon to the working classes; and, having been chairman of the Committee which sat last Session upon the investments of the working classes, he knew how earnest their desire was for some such security as the present Bill afforded. Instead of regretting that the right hon. Gentleman had increased the sum which depositors might place in savings banks, he wished that he had extended it even to £500, because he was sure that not only the humbler, but the middle classes also, would gladly avail themselves of these institutions if they could do so. He thought it possible to devise some mode by which, when the deposit amounted to £200, it might be invested in Government securities, and the exact amount deposited paid back when required. He sincerely trusted that the Bill would pass in the present Session; but, if it would not jeopardize its doing so, he should feel inclined to support the proposition for referring it to a Select Committee.


said, he was sure that there could be no difference of opinion upon this, that it would be a great boon to depositors to have Government security for every shilling they paid over the counter into the bank; but the difficulty that seemed to arise was, that the Government proposed to set up a great number of new banks. In fact, they would be all new banks under this Bill. And what steps were the Government to take to bring into uniform action with the new ones those 500 old banks in which there was £36,000,000 already deposited? That was the great practical question. The Government were setting up new banks, for they made what conditions they pleased, and appointed what officers they pleased. When he read the Bill last Session, it appeared to him that it was the intention of the Government absolutely to put an end to and do away with all the old banks. What did the Bill say? It said this, that these old banks might come into union with the new banks—or rather be placed on the same status as the new banks;—but on what conditions? On such conditions as might be imposed. Therefore these banks were to come into union without knowing what conditions were to be made. They had had one of the conditions stated that night; and what was it? They could come into union on their solvency being ascertained—a very proper condition; but the right hon. Gentleman went on to say that the solvency could not be ascertained unless they had every deposit book produced—and in this he (Mr. Henley) agreed with him—for unless they knew the position of the books of the depositors they could not tell what the real claims were, for the ledgers might be falsified. The right hon. Gentleman said that these old banks should not come into the new order of things unless every depositor's book was produced; but he believed that almost every savings bank had a rule that depositors' books should be produced yearly under penalty of the interest ceasing; yet everybody who knew anything of the working of savings banks knew that you could not get the books in; and if the books did not come in, the old banks would be shut out from the advantages of this Act. What would be the effect when the new banks were established? Paragraphs would appear in the papers saying that the Govern- ment security was with one bank and not with another, and there would be an immediate run upon the old banks, because every depositor would, of course, desire to have the Government security. There were £7,000,000 or £8,000,000 paid into the savings banks in a year, and surely it was not a subject unworthy of the attention of the House of Commons, to inquire what would be the particular conditions under which existing banks should come into the new system. He believed that there was no difference of opinion at all that adequate security should be taken by the Government from every bank that desired to come under the operation of the Bill; but it was most reasonable to ask the Government what was the nature of the security to be given, and what were the conditions to be observed? The hon. Member for Wiltshire (Mr. Estcourt) would be content with having the conditions upon the table of the House; but he (Mr. Henley) would rather see them in the Bill, that they might have the opportunity of discussing them. The country had had some experience of a Government official's interference in the affairs of savings banks. The hon. Member for Kerry (who had something to do with savings bank defalcations on the other side of the water) had given the House a lecture about a defalcation at St. Alban's; but he (Mr. H. Herbert) surely could not have forgotten that a Government official was sent to Ireland to inspect the affairs of an Irish savings bank, and that that official's advice (although the bank was insolvent) was "Go on; things will mend." That official was sent over by a tolerably cautious Government—namely, that of the late Sir Robert Peel. But what was the consequence? Things went on from bad to worse. There was a continued ebb, and there was a great resemblance between the conduct of the managers of that savings bank and of those of the Royal British Bank. Finally, he believed that the Chancellor of the Exchequer of the day paid the depositors 10s. or 15s. in the pound. He thought that they had better have the regulations on the table before them. As to the deposit books, he repeated that they never could be got in, for the depositors put their money in the bank, and then went to all parts of the world. That part of the plan he felt persuaded that the Chancellor of the Exchequer must at all events reconsider. He thought that he would facilitate the pass- ing of this Bill if he sent it to a Select Committee on the question of the conditions on which the old banks were to come in. Of course it would be absolute madness on the part of the Government to make themselves responsible for deposits in cases in which they had not previously exacted proper security; but he believed that the question as to what should be the nature of that security could be best discussed by the Members of that House, whose varied information would be more valuable than that of any single or half-dozen right hon. Gentlemen out of the House. A very important question had been touched on during this discussion. The Chancellor of the Exchequer had stated the great difference that existed between the present funds in the hands of the Government and the amount of their liabilities to the savings banks; but he did not therefore think it was desirable to limit the amount to be deposited. How far it might be wise or not it was not now the time to discuss, but the hon. Member for Wiltshire (Mr. S. Estcourt) had expressed his opinion that all this discrepancy arose from money being paid into the savings banks when the funds are high, and taken out when the funds are low; but, however, they had positive evidence that the market had on more than one occasion been "rigged" by Chancellors of the Exchequer, by dealing with the securities of the savings banks, and when this had been done to a not very limited extent, he thought that it was a question which seriously demanded the attention of the House. They all knew that the Chancellors of the Exchequer had been utterly incapable of using any such powers for any purposes other than what they considered the public interest; but it was not sufficient that they did right; they should be placed in circumstances that people who had not good means of judging would come to a certain conclusion that the Chancellors of the Exchequer did not do wrong. The extensive operations that had taken place in managing those securities did give ground for the supposition, that it had been done to suit some financial scheme of the Government. He thought that it would be a great advantage if this was looked into. He thought that this was a measure that the country had long looked for. Savings bank depositors believed that they had the security of the Government, but the fact was that they had it only in respect of funds deposited with the Government. The Chancellor of the Exchequer now proposed to give that security fully, and it was a matter that ought to be well discussed and considered. The hon. Member for Kerry (Mr. H. Herbert) had overstated the alteration in the law consequent upon the failure in 1844, for he believed that the best legal opinion was, that trustrees before then could not be fixed with responsibility unless they could be proved to be personally in fault.


said, he rose to explain. The right hon. Gentleman had said that his statement as to the effect of the Act of 1844 was incorrect. In one bank that had failed with which he (Mr. Herbert) was acquainted, Mr. Tidd Pratt had been called upon to adjudicate between the trustees and depositors. Mr. Pratt, instead of dividing the available assets equally between all the depositors, had awarded 20s. in the pound to those who had deposited previous to August, 1844, leaving only a small balance for those who had deposited money since that period. This he did on the grounds that the Act of 1844 had absolved the trustees from all responsibility. As Mr. Pratt had stated in public that he had consulted the law officers of the Crown before he made these awards, he (Mr. Herbert) thought he was justified in his complaint as to the unfairness of the present law.


said, he hoped the Chancellor of the Exchequer would accede to the suggestion which had been made to him, and would refer the whole subject to the consideration of a Select Committee. For several years past there had existed a state of unprecedented prosperity, and yet he believed there had not been a single additional savings bank established; and even, taking the last seven years, more money had been withdrawn from the existing banks than had been deposited with them. These facts showed that some alteration was required in the law which regulated these institutions, and which he did not think the Bill introduced by the Chancellor of the Exchequer in the last Parliament was calculated to effect. There never was among the working classes a greater desire to save money than at present; but the fact was, that throughout the country they found a hundred places of temptation to spend their money, for one where they were invited to save it. He knew of large districts of 10,000 or 15,000 inhabitants, where there was not a single savings bank; they were all placed in the large towns; and even in those cases, they were very frequently open only on one day in the week, and then at hours when it was most inconvenient for the working classes to attend. He was glad to find that the right hon. Gentleman had resolved to give to the money deposited in these banks the important advantage of a Government guarantee; for he thought that the working classes had a right to expect that their hard-earned savings, when deposited in institutions of this kind, should be perfectly safe. One great complaint he had to make against the management of these institutions was, that the money lodged was not invested to the best account. The Commissioners of the National Debt of course had no interest in laying it out to the best advantage. At any rate, the money should not be used in jobbing in various descriptions of stock, as had been described by the hon. Member for Evesham (Sir H. Willoughby). What he should suggest was, that the managers of the savings banks money should invest one-half—say £18,000,000—on good mortgage security, which, at 4 per cent, would produce an interest over the rate of the funds amounting to £135,000 per annum, which would serve the double purpose of forming an ample reserve fund to provide against any loss that might by possibility arise out of that mode of investment, and would also afford a better rate of interest to be paid to the depositors.


said, he thought that the objections of the right hon. Member for Oxfordshire (Mr. Henley) were not well grounded; for the law at present was, that the depositors should produce their books once a year; and, surely, if the country were to be made liable for the solvency of savings banks it was but natural to entrust the Government with some control over them. He thought the proposal of the Chancellor of the Exchequer a very wise one, for he believed that the knowledge that the depositors had the security of Government would go far to increase the desire of saving, and thus stimulate habits of frugality. He believed he spoke the sentiments of those whom he had the honour to represent, who were much interested in this measure, when he said that the Bill of the right hon. Gentleman had his entire approbation. His only regret was, that the limit of deposits was not extended to £500.


I have heard with much satisfaction that the Bill which I seek to introduce has met with the approbation of various Gentlemen well acquainted with the subject who have spoken on both sides of the House; and I may refer with peculiar pleasure to the opinion expressed by the hon. Gentleman the Member for North Wiltshire (Mr. Sotheron Estcourt), who is known to have devoted great attention not only to this subject, but to the kindred one of friendly societies, and who, therefore, speaks upon a question of this description with peculiar weight and authority. I am sorry that he does not altogether approve of reducing the limit to £100; but I accept with gratitude the general approbation he has expressed of the measure which I have described. The objections made to the proposal have been of two kinds—one of a strictly practical and pertinent nature, while another set of objections seems to me (though it bears unquestionably on the subject of savings banks) to have very little reference to the measure which I ask leave to introduce. The more important and practical objections are, as is often the case, those made by the right hon. Gentleman the Member for Oxfordshire (Mr. Henley). He seems to me to have laid hold of the practical considerations upon which the fate of this Bill must mainly turn. It is quite true that my object in proposing this measure has not been so much to introduce any new class of savings banks as to suggest means by which existing banks may be brought within the benefit of the Government guarantee; and their admission to that benefit must depend upon the conditions prescribed to their directors. In that view I entirely concur with the right hon. Gentleman, and he is quite entitled to ask what these conditions are to be. He makes a perfectly fair demand when he asks that the House should be informed of these conditions, or even, if possible, that they should be engrafted upon the Bill. On considering, however, the great variety of circumstances which distinguish the different savings banks, I found a difficulty in laying down any imperative rule in the Bill. My object rather has been to avoid those unnecessary restrictions which the inflexible words of an Act of Parliament might enforce, and to leave a reasonable discretion in the Executive authorities in applying the measure to existing banks. That was my object, and it was certainly not to exercise any arbitrary and unnecessary power in this matter. I may state, in general terms, that the only condition which I seek to enforce is, that the Government shall be satisfied of the solvency of the banks. Then the question arises, how is that solvency to be determined? No doubt, the most complete and most conclusive means of ascertaining the solvency is to obtain all the books of the depositors. The right hon. Member says that that is an impossible condition; and if it were so, as lex non cogit ad impossibilia, it would not be right that such a condition should be attempted to be enforced. But why is it impossible to obtain the production of the depositors' books? If it be possible to obtain a very large proportion of them—ninety-five per cent, for instance—I contend that that ought to be sufficient security. In Ireland the law has required for some few years back the production of the depositors' books. In the first year out of 21,000 books forty-six per cent were brought to be examined, or not one-half; and in the last year, out of 39,000 books there had been brought in seventy-two per cent, or nearly three-fourths. In 1855 one bank got in ninety-four per cent of the whole of the books, another eighty-three per cent, another seventy-eight per cent, and another ninety-nine per cent. These might be extraordary cases, but I have stated the result of actual experience, and under the circumstances it is for the House to say whether it is an unreasonable and impossible condition to require, at all events, the production of a considerable proportion of the books. I will attempt, before the second reading, to put in as distinct a form as I can the conditions which I think it necessary should be complied with in order that a bank might have the benefit of the proposed Act, and on the sufficiency of those conditions the further progress of this Bill in the present Session must mainly turn. I now come to the other main practical proposal which has been made—namely, that the Bill should be referred to a Select Committee. It seems to me that the effect of the adoption of that proposal would be really to shelve the Bill for the Session. If the Bill were referred to a Select Committee, and if power were given to the Committee to examine actuaries, members of savings banks, and take other evidence on the subject, I ask whether hon. Members think there would be the slightest prospect of passing the measure during the present Session? Therefore, if hon. Gentlemen really wish to reject this Bill, let them resort to the direct and fair course of moving on the second reading that it be read that day six months, but let them not attempt to get rid of it by the indirect means of moving that it be referred to a Select Committee. Besides the practical objections I have referred to, other objections which do not apply to this measure particularly, but affect generally the question of savings banks, have been raised by the hon. Member for Evesham (Sir H. Willoughby). The hon. Member first proposes not to amend the law until the existing Acts shall be completely consolidated. I for one fully agree with the hon. Member, that it is desirable to have a consolidation of the existing Acts; but that question is wholly independent of the measure I seek to introduce, which introduces new provisions, but does not alter the existing law; for the last clause provides that all the provisions of the Acts now in force relating to savings banks, as to matters for which no other provision is made by this Act, shall be deemed, as far as the same are not repugnant to or inconsistent with this Act, applicable to any savings bank established under this Act. It may be expedient, after further experience, to consolidate the whole law on this subject into one Statute; but that is a matter wholly independent of the measure now under the consideration of the House. The hon. Member also made some remarks on the Board by which the affairs of the savings banks are administered; but the objections he urged apply just as much to the existing law as to the law modified as proposed by the Bill about to be introduced. They are of a general nature, and have no special reference to the contemplated modifications of the law. The hon. Member says that the present system is a fiction and delusion; that there are Members of the Board who never attend, and that there is no security for the proper administration of the affairs of the savings banks. Now, let me call the attention of the House to the present state of the law. By Acts passed as far back as the time of Mr. Pitt, certain powers were given to Commissioners for the reduction of the National Debt, and, as often is the case with matters of that description, a Board was created with one active and responsible Member, and other nominal Members placed in connection with him to form the Board. The really responsible Mem- ber of the Board for the Reduction of the National Debt, to which Board by subsequent Acts the management of the savings banks was entrusted, is the Chancellor of the Exchequer for the time being. In the same Commission there are named certain other officers of State, such as the Master of the Rolls, the Speaker of this House, the Chief Baron of the Exchequer, and others, with whom are associated the Governor and Deputy Governor of the Bank of England. At no time has any one of those persons, with the exception of the Governor and Deputy Governor of the Bank, who attend the quarterly meetings of the Commissioners for the Reduction of the National Debt, been called on to take an active part in the duties imposed on the Commissioners. In like manner the actually responsible member of the Board of Control, which is formed in a similar manner, is the President,—other official members being associated with him, but not being in the habit of attending to the business. The same practice exists with respect to the Board of Trade, and with respect to some other Boards; and, therefore, there is nothing unusual in the course taken in the case referred to by the hon. Member. In respect both to the duties of the Commissioners for the Reduction of the National Debt and to the savings banks, the Chancellor of the Exchequer for the time being is the officer responsible to this House, and he has associated with him the Comptroller of the savings banks, who has the general superintendence of the officers. The Chancellor of the Exchequer, however, is the head of the Board directly responsible to Parliament. Therefore, having considered the remarks made by the hon. Member in a former Session, I have not, looking to the precedent of other Boards, and considering that no practical; inconvenience has arisen from the present: system, deemed it my duty to propose any alteration of the existing law in that respect. The hon. Member next called attention to a matter which he said was urgent and of serious importance—namely, the loss which has accrued to the Government for a series of years by the management of the funds of the savings banks. It is undoubtedly true as a matter of account that there is a certain sum in which the Government stands debtor to the depositors in the savings banks; and if we could suppose that on one given day all the numerous depositors were to draw out their money the Government would endure a loss; but, unless we suppose such an improbable event, the deficiency of the Government is a mere matter of account or a theoretical question, having no practical bearing on the affairs of the savings banks. My hon. Friend seemed to assume that some loss has been incurred by depositors in consequence of the present state of things. He must be aware that that is not the case. No depositor ever fails to obtain the full amount of his deposit with the interest due to him, and whatever loss could by possibility grow out of the present system could only be incurred in the event of the whole affairs of the savings banks being wound up and a deficiency being established against the Government. My hon. Friend also stated that there was an improper varying of securities, or, as another hon. Member described it, a power in the hands of the Chancellor of the Exchequer" of playing with the funds," and he thought some restriction ought to be imposed on the power now exercised of varying the securities. I can only say, as far as I am myself concerned, that I have not on any occasion exercised the power of funding Exchequer bills, though that power certainly exists by law, and I really cannot see any valid objection to its exercise under certain circumstances: Exchequer bills are just as much Government debt as Three per Cent Consols. The annual vote in supply for paying off Exchequer bills has now become nothing more than a fiction, for the Exchequer bills are renewed with perfect regularity, they have become part of the permanent debt of the country; and, as far as I can see, no valid objection can be raised to the conversion of that portion of the unfunded debt in the hands of the savings banks Commissioners in the form of Exchequer bills into Three per Cent Consols. If the House think fit to impose any restrictions which do not now exist, they must remember that they will deprive the Executive Government of the power of sustaining, on certain occasions, the value of the Government securities, and of preventing depreciations injurious to the public. I confess I can hardly believe it possible—and I do not think the right hon. Gentleman who alluded to the subject intended to make such an imputation—that any Chancellor of the Exchequer would use such a power for personal objects. The House must consider, however, whether upon the whole they think it desirable to deprive the Chancellor of the Exchequer of a power which can be used for the benefit of the public, because, in a possible case, he might use it for his own personal objects; but if Parliament think fit to impose closer restrictions than now exist with respect to the use of savings banks money, they must remember that the Government for the time-being cannot be blamed if they do not make the best bargain for the public with regard to the investment of that money. The two objects are inconsistent with each other. You cannot have the money used to the best advantage and at the same time tie up the hands of the Government by restrictive regulations. The right hon. Gentleman opposite (Mr. Henley) said, in alluding to the case of the Cuffe Street savings bank, that he could not draw a very favourable augury with respect to the superintendence of Government officers when he remembered that Mr. Tidd Pratt, having investigated the affairs of that bank, after discovering that it was in a tottering state, advised the conductors to go on, and that in a short time after the bank failed. The right hon. Gentleman's statement is quite correct, with the exception of one important fact which he has omitted to mention—namely, that Mr. Tidd Pratt advised the conductors to go on, provided they adopted a certain course which he indicated; but they acted only upon one part of his advice, and, unfortunately, did not comply with the other. They kept the bank open, but they did not adopt the course which Mr. Tidd Pratt recommended. I trust the Committee will now agree to the Resolution, in order that I may found upon it a Bill which I shall hereafter introduce.


said, the Chancellor of the Exchequer had made one very startling declaration which he could not refrain from noticing—namely, that the whole of the savings bank money might be jobbed away by the Government to sustain the price of Exchequer bills, or for any other purpose, and yet, that the depositors in savings banks would not lose anything, and the public would not lose anything, unless the whole of the money were asked for at the same moment. That was equivalent to saying, that unless all the money were required at one time there was no loss. But, if such a contingency did occur, the public would have to provide the amount in some way or other.


said, he would remind the right hon. Gentleman that the Act constituting the Commission for the reduction of the National Debt, provided, that to constitute a Board there should be "a quorum of three;" and he should like to know how the Chancellor of the Exchequer could consider himself "a quorum of three." If there was any Gentleman to whom he would be willing to commit the uncontrolled command of £34,000,000 it was the present Chancellor of the Exchequer; but, for his own part, he would not trust any man in the United Kingdom with unlimited power over such a sum. Assuming that 600 Government savings banks should be established, he would ask the Committee whether they thought the Chancellor of the Exchequer was the proper person to be intrusted with the mangement of those banks? If any financial difficulty occurred the Chancellor of the Exchequer was the person who most wanted to lay hold of money, and therefore he (Sir H. Willoughby) thought he was the last person to whom a power of this kind ought to be given. The conduct of the functionaries of the National Debt Office with regard to the Cuffe Street bank induced him to object to the control of savings banks being intrusted to them. From 1833 to 1847 they recorded a deficiency in that bank commencing with £3,371 rising to £32,922 in 1847, and which was ascertained to be nearly £60,000 when the accounts were examined, while the assets were only £90; and yet they allowed the bank to be kept open, and to receive deposits, although the law enabled them to close the accounts of the bank. When the question was discussed in Committee, whether that was the fitting department to control savings banks he would mention some other instances of a similar nature.

Motion agreed to. 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 Government.

Resolution to be reported To-morrow.

House resumed.