HC Deb 20 July 1860 vol 159 cc2220-7

Order for Committee read.

House in Committee.

(In the Committee),

Clause 1 (Stock to be Cancelled).

MR. SOTHERON ESTCOURT

said, it was an inevitable consequence of the manner in which this Bill had been conducted —a long period having always elapsed between its appearances before the House — that the general principle of the measure was discussed over and over again, and that the House was doomed to hear, time after time, a repetition of the same arguments in regard to it. That was the more inevitable when the first clause had to be discussed, for, in point of fact, the first clause involved the whole principle of the Bill. The measure would cancel not less than £30,000,000 of stock, and the House was naturally anxious to know what security was to be offered as a substitute for that large amount of stock, and that question opened up the subject of the second clause, the creation of the State deposit, No. 1. They had yet to know the agency by which that creation was to be conducted, and the persons to be responsible. He objected to the transference of the securities from one form to another. The whole amount was at present held by the Government as a security to the local banks upon identically the same footing with the same amount of stock held by the Government in the name of any single person. That was the greatest security which it was in the power of Parliament to offer. He was, therefore, jealous of any alteration in that kind of security. It was proposed by the Bill to cancel an amount of stock equal in round figures to£29,000,000, in addition to the further sum of£2,000,000, the difference between the amount of securities held by the Government and the liabilities to the savings banks. All that sum was to be transferred to a book which was to be kept in the National Debt Office, and was no longer to be liable to the fluctuations in the Funds; and the Chancellor of the Exchequer was to insert in that book every year a sum which was to represent the deficiency between the interest receivable and the interest payable to the savings banks. Now the savings banks were entitled at any time to receive their money, and that might entail a great loss on the State, because the public might be called upon to pay at a time when the stock would be considerably below par. He thought it would be a much better plan, as recommended by the Commission which had sat upon the subject, to lay a statement of the deficiency annually before Parliament, and let provision be made for it as for the other requirements of the year. He did not think sufficient cause had been made out to justify the new mode of management. It was not merely a savings banks question, it was a question of public policy. That which was now proposed with respect to savings banks a future Chancellor of the Exchequer might propose with regard to some other fund. Therefore, opposing as lie did the whole Bill, he should move that the first clause be omitted, in order to give effect to the objection which he had to the Bill.

MR. BRISCOE

said, the question at issue between the right hon. Gentleman the Chancellor of the Exchequer and those who opposed the Bill was this:— The Chancellor of the Exchequer and the Government considered that they should be bankers for the large sums of money deposited in the savings banks, whereas those who opposed the Bill thought that the moneys of the savings banks should be dealt with by a body of trustees, separate and distinct from the Government, and that no one should have power to use these moneys except to pay the depositors. That was the view he took of the question. He thought the Chancellor of the Exchequer should have no power to make use of this money. If he required money at any time it should be obtained in a constitutional manner, and not taken from a fund consigned for safety and security to the Government of the country. He thought the Chancellor of the Exchequer would act wisely in withdrawing the Bill.

MR. HUBBARD

said, he thought it would be impracticable to keep such a separate account of the savings-banks' funds as had been recommended. The real security of the savings-banks' depositors was the credit of the country, and if the Bill was intended to add anything to that security he thought it wholly unnecessary; but the Bill went beyond that, and aimed at simplifying the management of these funds in the hands of the Government. Objections had been taken to the mode in which the Chancellor of the Exchequer made use of the savings-banks' funds to carry out financial schemes of the Government. He heartily joined in deprecating any such use of these funds. The savings-banks' money was in the hands of the Government for security, but not as a means of financial intrigue. The Chancellor of the Exchequer had been able, by means of the large sum in his power, to carry out unseen operations on the Stock Exchange, which enabled him to prepare the way for some great scheme of the Government; but that was a course of proceeding most unfair and unjustifiable, and the sooner it was exploded the better. In this respect, however, he regarded the Bill as an immense improvement, because it provided the means of dealing with this large sum as a book debt that the Chancellor of the Exchequer could not touch. The money was by the Bill taken out of the possibility of jobbery. Particular clauses of the Bill might be open to objection, but he wished to express his general approval of the measure. There had been a good many petitions, apparently from the same mint, presented against the Bill; but, with the exception of some fears that had been expressed as to a reduction of interest— for which he admitted there were some grounds — there was nothing in the Bill which justified the petitions that bad been levelled against it.

MR. HENLEY

said, he must protest against a Bill affecting such large interests being brought forward at a period of the Session when it was impossible for it to receive the discussion which its importance demanded, and in a House so thin as invariably was the case at morning sittings. He wanted to know who called for the Bill, and he would ask where were the petitions of those who were its supporters? The tendency of the Bill was greatly to shake the confidence of the depositors in savings banks. It had been said that the petitions presented against the Bill were nearly similar in terms, but the reason of that was obvious, because the managers of savings banks knew very well the imminent danger in which they would be placed by the passing of the Bill of the interest to the depositors being reduced. He believed the savings banks had wisely taken alarm; he believed that it was seriously intended to reduce their interest, and that this Bill was laying the foundation of that measure, for people were apt to judge more from deeds than from words. The Chancellor of the Exchequer spoke as if the savings-banks' money would be taken out of his hands; but by the Bill he would keep in his hands ample funds for all that any Chancellor of the Exchequer might want to do in the way of jobbery. He repeated that the real object of the Bill was to reduce the interest to savings-banks' depositors, and he could scarcely Bee any other.

THE CHANCELLOR OF THE EXCHEQUER

said, he thought he had reason to complain of the language of the right hon. Gentleman (Mr. Henley), language which had gone to the extreme verge of Parliamentary licence. He was not warranted in saying that the manifest object of the Bill was to enable the Chancellor of the Exchequer to do that which he knew the Chancellor of the Exchequer had absolutely disclaimed. He (the Chancellor of the Exchequer) had distinctly stated that there was no intention to reduce the interest on savings banks' deposits, and the right hon. Gentleman abused the liberty of speech which was enjoyed in that House when he made allegations applicable not to matters of policy or opinion, but to personal intentions. Perhaps the right hon. Gentleman might not pay much attention to his assertions on this point, but he surely must see the force of the argument, that the best answer to the allegation about reducing the rate of interest was that the effect of the Bill as it stood was to enlarge the income of the fund, and to make provision for its further enlargement here after; and he need hardly add that a Bill that enlarged the income of the fund could not be made an excuse for diminishing the interest. One material item of that enlargement of income proposed by the Bill was to invest a sum—say four or five millions—in securities bearing a larger rate of interest than the present investments, and which in the course of a year or two might increase the income by £40,000 or £50,000. He had a word or two to say with regard to the objections taken out of doors to the Bill. There were, no doubt, certain officers of savings banks who had an interest in maintaining the power they now had of cutting and carving on the sum that formed the difference between the £3 5s. per cent paid by the public, and the sum paid to depositors. These officers en-deavoured to maintain their own interests by sending in petitions against the Bill, which, as they thought, tended to diminish the funds available for defraying the expenses of savings banks, and raising all those beautiful buildings that were to be seen in so many of the towns of this country—buildings used for two or three hours a week for savings-bank purposes, and which formed very agreeable residences for those officers. They very naturally opposed the Bill, but he did not believe there was the slightest indication of the depositors being alarmed at any of its provisions. The state of the case as regarded the security of the depositors was this:—The moral obligation of the country was full and absolute to return to the trustees of savings banks both principal and interest, and that moral obligation was recorded in an Act of Parliament; but there was no legal machinery by which effect could be given to the legal obligation. It was merely a moral obligation legally recorded. Now, if it could be supposed, as an extreme case, that all the banks in the country were at once to demand from the Government the repayment of the whole sum that was due to them, it would not be in the power of the Government to make that repayment. He would positively state that the Commissioners of the National Debt had at present no power to do anything except to realize their assets, and hand over those insufficient assets in part satisfaction of the claim. But let the Bill before the Committee be passed, and so long as there was a shilling left available in the Consolidated Fund, the whole of the funds of the country would be answerable to satisfy the whole of these obligations. Indeed, he confessed that it had been an error not to have created this full and perfect legal title at an earlier period. There had no doubt been practical safety between the savings banks and the Government, but the full legal machinery to enforce that obligation had not existed, and it was very desirable to supply that want, so that the trustees of savings banks, on behalf of their depositors, might be in as good a position as any man who drew a dividend from his money in the funds four times in the year. It was quite true that a book debt, as this had been called, was not a convertible security, but he provided means of substituting marketable securities for that book debt in the extreme and remote case of the demand for the means of realizing the amount exceeding the amount of stock which was retained. In any case there would ultimately be a resort to the Consolidated Fund. Now it was admitted that there was a large existing deficiency between the assets and liabilities of the National Debt Commissioners on the savings bank account. He proposed to deal with that deficiency, amounting to£3,500,000, first by rectifying the capital account, and then by providing machinery which would gradually restore the income of the fund to an equality with the annual charges upon it. He did not think he should have been justified in throwing upon the country, at that time, the burthen of at once making good that deficiency, so he proposed to add it to the amount of the obligations already acknowledged; and at the same time, whilst extinguishing an amount of nominal stock held on that account, and thus making a saving of £9,000 or £10,000 a year, he would adopt a natural and simple system instead of the present artificial one, and would make it openly appear on the account that the Government held so much money repayable at call. It would be quite impracticable to adopt the plan which had been suggested, of taking each particular deposit as a separate investment, and it would be no favour to the depositors to offer to take their money and invest it in the Funds, since they could do that for themselves. The Bill did involve a considerable diminution of the powers of the Chancellor of the Exchequer, though it was not, as had been truly observed, by the mere creation of £31,000,000 of deposit account that his powers were materially diminished. Two-thirds, however, of the amount, which might be invested in other securities than those now permitted by law, would practically be so much removed from the control of the Chancellor of the Exchequer. It would not be in his power to make use of those stocks for financial purposes, in the manner in which probably, upon many great occasions, the existing securities had been employed. The way in which the Chancellor of the Exchequer had been accustomed to manage his great operations was this. He sold stock, and with the proceeds he purchased Exchequer bills, and then again he had funded his Exchequer bills, all which he had been enabled to do without bringing his operations under the review of Parliament. Now, by the Bill the Chancellor of the Exchequer would be deprived to some extent of the opportunity of practising that operation of selling stock and converting it into Exchequer bills at his convenience. It must thenceforth be an operation necessarily limited and temporary in its nature; and it must, if this Bill became the law, always be brought under the notice of Parliament before it took effect. But if the House did not choose to pass this Bill, although the public would be somewhat poorer, and the legal title of the savings-bank trustees to their funds held by Government would remain imperfect, the Chancellor of the Exchequer would continue to enjoy what was supposed to be the luxury of being able to deal with a large sum of money—a power which he (Mr. Gladstone) was now endeavouring to reduce. He therefore hoped the Committee would at once agree to this first clause of the Bill.

MR. HENLEY

said, the right hon. Gentleman seemed to be annoyed at something he had said as to his intention. He hoped the right hon. Gentleman would make allowance for him, considering the great length of time that had elapsed since the discussion took place on the Bill. In what he said he had no intention to go further than this, that people judged only by what they saw in the Bill.

THE CHANCELLOR OF THE EXCHEQUER

said, he was perfectly satisfied.

MR. HANKEY

said, he thought there must be a re-adjustment of the savings-bank account in some way or other, but he objected to the mode in which the Chancellor of the Exchequer proposed to do it. Though he did not believe that any individual Chancellor of the Exchequer he had known would abuse the power of dealing with the funds, he was distinctly in favour of their being placed under the management of responsible and permanent trustees.

SIR FRANCIS BARING

said, he should support the clause, which he thought materially improved the security given to the depositors. Some Gentlemen were in favour of a separate body of trustees to manage the fund, but the adoption of that proposal would by no means be favourable to the security of the depositors.

SIR HENRY WILLOUGHBY

said, that before they went to a division he wished to remind the Committee that it was proposed by this clause to cancel securities to the extent of £28,962,742. That was exercising more than a banking power, and it was quite clear that it was a financial arrangement of a very gigantic and novel character. He objected to the proposal to entrust the management of the funds to an ex-officio Commission that would not act, thereby really leaving the management in the hands of the Chancellor of the Exchequer of the day. Then came the question whether they ought to confide the power of changing the securities to any Chancellor of the Exchequer. He trusted the Committee would not consent to the clause, not alone because the proposition was objectionable, but also because they could not at that period of the year give the measure the consideration to which it was entitled.

COLONEL SYKES

opposed the clause, and expressed his conviction that the provisions of the Bill generally-would not be satisfactory to the country.

Question put, "That the Clause stand part of the Bill."

The Committee divided:—Ayes 78;Noes 116: Majority 38.

THE CHANCELLOR OF THE EXCHEQUER

I have only to move, Sir, that you leave the chair, as the loss of the first clause destroys the Bill.

Motion agreed to.

House resumed. [No Report].