HC Deb 22 June 1860 vol 159 cc880-908

Order for Committee read.

Motion made, and Question proposed,—"That Mr. Speaker do now leave the Chair."


said, he wished to ask whether it was competent to him to move, as an Amendment in Committee, that the Savings Banks Fund should be entrusted to five persons without first moving it as an "instruction" to the Committee. If so he should withdraw the Motion for the instruction of which he had given notice.


said, it was no doubt competent for the hon. Member to move the Amendment of which he had given notice in Committee, and if it should appear that it went beyond the present title of the Bill it was possible to amend the title in conformity with the alteration.


said, that he believed that this was about the fifteenth time that the Motion had been put down for going into Committee on the Bill, and he was afraid that even then many hon. Gentlemen interested in the matter were engaged elsewhere. He thought it right, however, to call the attention of the House to the principles of the measure; and he was the more induced to do so, because he was aware that a Select Committee was two years previously appointed by that House to inquire into the whole matter of the savings banks, and the names of the gentlemen who sat on that Committee showed that it was a very able one. They sat twenty-one days and examined witnesses, and collected a most important body of evidence, and made a very important Report; but from that day to the present not the slightest notice had been taken of any of their suggestions; and certainly the Bill before the House, which had been introduced by the Chancellor of the Exchequer, and which related to only one branch of the question, was in direct opposition to the suggestions of the Committee. That was one of the main reasons which induced him to trespass on the indulgence of the House, with a view of persuading them that it would be wise and proper to follow the suggestions of that Committee. He could name several im- portant Select Committees which had made most elaborate Reports, and yet their suggestions had been entirely passed over, and it was worthy the consideration of the House whether such recommendations should be so set aside. With regard to that Bill, the suggestions of the Committee were very clear, and were summed up in two important recommendations. One was that there should be a bonâ fide Commission of five Gentlemen, namely, the Chancellor of the Exchequer, the governor or deputy governor of the Bank of England, and three gentlemen to be appointed by the Crown, one of whom should be paid. The second recommendation was that the whole of the savings banks money should be treated as a trust, for the purposes of the savings banks and of the savings banks only, and that the money should not be used for state purposes; but above all that the Finance Minister should not have power to use any of the funds for the purpose of operating in the bill and stock markets of the kingdom, unless authorized to do so for a special purpose by an Act of Parliament. On the 20th November last, the amount of money invested in the savings banks was £41,180,000, and the account of the assets, taking the stock and bills at the market price, showed that there was only £37,700,000, so that there must be a deficiency of £3,500,000, if they were called on at once to pay every depositor his money.

He wished to call attention to the view which the trustees and managers of savings banks throughout the kingdom took of this Bill. A short time ago a similar Bill was brought in by the right hon. Gentleman, on the same principle as the present, but varied rather in its proportions. There were 250 petitions presented against it: nearly every leading bank in the kingdom petitioned against it. The same course had been followed on the present occasion. Nearly 100 petitions were now on the table of the House, and he believed all, without exception, pressed very much upon the attention of the House the absolute necessity of placing the funds in a bonâ fide Commission, and treating them as trust funds. They did not want to take a farthing from the State in any way; for if their funds were treated as trust funds they believed that not only the present rate of interest but all the expenses of the Commission could be paid; and they believed also that there might even be a better rate of interest. Down to 1828 a higher rate of in- terest than at present was paid; and in 1828 there was no deficiency, but a surplus. In 1828 the interest was lowered from £4 11s. to £3 15s., and the interest had now fallen to £3 5s., while the amount paid to the depositors did not average more than £2 18s. per cent. He could not concur in the dictum which he believed he had heard the Chancellor of the Exchequer express, that the trustees, managers and depositors had no interest in the way in which their money was treated when it passed from the banks. It was perfectly true that the trustees and managers and depositors had an undoubted statutable right to be repaid every shilling that had been paid into the savings banks and handed to the Government; but he could not concur that therefore they had no interest in the way in which their money was treated, because, at all events, they were very much interested in the rate of interest not being lowered, and there was very considerable fear, which he hoped the right hon. Gentleman would dispel, that there was some intention of reducing the rate of interest.

The existing law pointed out distinctly what was to be done with the money belonging to savings banks. That money was to be sent up to the Banks of England and Ireland, where it was to be placed in the names of the Commissioners for the Reduction of the National Debt, who were directed to make regulations as to the investment and employment of the monies for the benefit of the Savings Banks' depositors. But there was not a single word in the Act about the use of the money for any other purpose. The parties who were really interested in the settlement of the question were the taxpayers of England; for although the depositors might suffer, in the first instance, by any hocus-pocus in fiscal transactions, the taxpayers would ultimately be required to make good any deficit that might arise in regard to this money. The importance of the present measure could not be overestimated; for this was the first time the House had been invited to legislate with regard to the investment of the money of savings banks. Under it a power greater than he already possessed was placed in the hands of the Finance Minister, who, as an ex-officio Commissioner, was entrusted with the power of selling and purchasing stock to the extent of several millions. It was competent to the House to confer this power on the Chancellor of the Exchequer, but it ought to be done directly, eo nomine. At present the Financial Commission consisted of men of great ability and commanding position; but their important duties elsewhere prevented them from giving attention, or even in some cases attendance, as would be evident from the fact that the most distinguished Members of the Commission were the Speaker of the House of Commons, the Chief Baron of the Exchequer, the Accountant General of Chancery, and the Master of the Rolls. Nothing could be more unwise than to repose powers of such great extent in an ex-officio Commission, as it necessarily followed that it must be exercised by somebody else. Sydney Smith used to say pleasantly that "Boards were often made use of only to make screens;" and, in the present instance, the Select Committee which inquired into the subject, had distinctly expressed their opinion as to the impolicy of imposing such responsible duties on an ex-officio Commission. It was ascertained that for many years the funds of the savings banks had been mainly, if not entirely, vested in the purchase of stock on the order of the Accountant General, an honourable and high-minded public man, Sir Alexander Spearman. The power of selling the stock was exercised on a written order by the Chancellor of the Exchequer; and it was no disrespect, either to the Accountant General, or to the Finance Minister, to say that this was a power which was not recognized by the Act of Parliament, and ought only to be admitted with the utmost caution. It rested on the evidence of Lord Monteagle and Sir A. Spearman, that the money had been used on many occasions for what was called "State purposes"—namely, in the purchase of Exchequer bills, to keep these at a fair price in the market. Were they prepared to give to the Finance Minister the power of dealing in stock, without the knowledge of the House, to the extent of £2,000,000 or £3,000,000? Would anybody contend that the Chancellor of the Exchequer, who knew precisely what was the state of the Treasury, and who was acquainted beforehand with the measures to be brought forward, ought to be allowed to operate secretly and silently in the market, thereby affecting the property of every individual who had made investments? Above all things, he thought that they ought not to place such a power in the hands of an ex-officio Commission. They ought rather to adopt the recommendation of the Select Committee, and place the control of the funds in a bonâ fide Commission, to be named by the Crown, and to be composed of the Chancellor of the Exchequer, the Governor of the Bank of England, and three other gentlemen. It was a curious fact that, for many years the silent operations of the money of the savings banks on marketable stocks, were not known. The country owed the knowledge of the fact to the late Mr. Goulburn, who, acknowleding the danger of the system, placed upon the table of the House a voluminous document containing the whole history of those transactions, from which his information was derived—transactions extending from the period of 1828 to 1844, and amounting, he thought, to about 6,000 in number. The Legislature had authorized the Government in some instances, particularly in the days of Lord Auckland, to use the savings banks' monies. Looking at the whole of those accounts, however, from 1828 to 1844, there were only three years in which the balance was against the savings banks, and then only for small amounts; but, on a close analysis of the accounts, after making allowance for all demands on draughts, and treating the subject, as he hoped the House would now be disposed to do, as that of a trust-fund, it would be found that nearly £2,000,000 ought to be added to the account. It was a bad system that the Chancellor of the Exchequer, by the use of vast sums of money not in the stock market, should be able to carry on operations which would be otherwise impossible. For some years it was denied that the funds of the savings banks were made use of for the purpose of increasing the funded debt, and the observations which he from time to time had addressed to that House had not received all the credit to which they were entitled. But it had now been established conclusively, according to the evidence of Lord Monteagle, that there had been periods in which the bonâ fide debt of the country was increased through the medium of the Consolidated Fund; that no less than £3,000,000 of the unfunded debt were converted to funded debt between 1828 and 1860. Did the House mean, then, to make the savings banks' money a means of increasing the public debt? If not, it ought to place the powers necessary for the control of the funds of the savings banks in the hands of responsible people, and guard their exercise with vigilance.

With respect to the Bill introduced by the Chancellor of the Exchequer, he hoped that the House would be told the precise object of it in the course of the discussion. It was a grave operation proposed by the right hon. Gentleman. At the present moment the savings banks possessed about £36,000,000 or £37,000,000 stock, Three per Cents Reduced, and £25,000,000 Exchequer Bills. He gave great credit to the Chancellor of the Exchequer for grappling with the difficulty arising from a deficiency in the funds to satisfy the claims of the savings banks. It was proposed to place the sum of £31,000,000 to the credit of an account to be called the "State Deposit Account, No. 1," with interest at the rate of 3 per cent. This, he presumed, created a sort of book-debt to that extent, and he should like to know whether it was to be divisable and saleable, or in what manner it was to be treated. The 3 per cent interest, which the sum was to bear, was not the rate of interest at present prevailing, and he did not see why property should thus be arbitrarily dealt with. He should therefore certainly object to that portion of the Bill. It was a great question, too, whether the Legislature should lay hold of this property of the savings banks, cancel the existing securities, and by a sort of conjuring process create fresh securities. No doubt, the faith of the country would be pledged to repay the money of the savings banks, but he considered that the trustees and managers of savings banks and the depositors in them had already a right to their money by statute, provided they acted according to law. Therefore he did not see that their situation was improved in that respect. He trusted that the right hon. Gentleman would explain what would be the operation of Clause 4, for it appeared to give for the first time by statute a power to deal with stocks and securities to an extraordinary extent. In addition to the £10,000,000 remaining of the savings banks' money there would be the current balances, which would raise the amount to about £12,000,000. Now, he wished to know the various securities in which that sum of money would be placed. Those securities would be absolutely under the control of the Finance Minister of the day. It was specially provided by the Bill that such Minister might buy and sell stock or other securities, so that it would give him now, for the first time, by statute, that absolute power, as the avowed and sole organ of this Select Commission. The right hon. Gentleman, as well as the legal adviser of the Commission, appeared to have lost sight of the 25th Clause of the 3 and 4 William IV., c. 14. He would ask the right hon. Gentleman to produce the statute by which the Commissioners for the Reduction of the National Debt could buy and sell stock and bills, and purchase other stock and bills. The 9th George IV., for the purpose of savings banks, gave distinct powers for the handling of stock for the use of savings banks. But there was not the shadow of right to use what he might call the jobbing power. He hoped that the Chancellor of the Exchequer would explain to the House how the matter really stood. The fourteen Gentlemen who sat upon the Committee in 1858 had not a shadow of doubt that those funds should be treated as trust funds, and should be only invested in the best mode so as to secure the money for the savings banks' funds. There was no reason why those institutions should cost one shilling to the United Kingdom. He should impress upon the House the anxious desire of the trustees and managers of savings banks that the laws relating to these institutions should be consolidated in one Act. Through mismanagement, between the years 1820 and 1844 the savings banks' fund had been diminished to the extent of £1,820,000. In conclusion, he might state that what he wished for was a bonâ fide Commission; and he felt certain that if that were granted the trustees and managers and the depositors would be perfectly satisfied with the interest which their funds obtained; and that at the same time the public would have the advantage of these glorious institutions without being put to one farthing of loss. He thanked the House for the attention with which it had listened to the statement he had felt called upon to make.


rose to state the reasons which induced him to believe that the Bill before them did not provide the proper mode of dealing with the subject of savings banks. The Bill unsettled a great deal and settled nothing. It did not contain any provision for the satisfactory settlement of the question, and it introduced many very novel principles that deserved the serious consideration of the House before they consented to sanction them. It set out on the principle that there was some sort of apprehension on the part of depositors, and that it was necessary to provide a fund to secure at all times the repayment of deposits. That was a laudable object, but the depositors in savings banks were safe beyond dispute. They had no apprehension that they would not get their money when they chose to call for it, and on the part of the depositors generally there was no necessity for the Bill. To effect his purpose, it was proposed that the Chancellor of the Exchequer should cancel a certain amount of stock, and create in its place a book debt. That was a novel mode of proceeding in their history, so far as any deposit of the kind was concerned. The proper way of treating the money was to place it out on proper security, taking care that too large an amount of interest was not paid, and that the money was always forthcoming. It was not necessary to invent the machinery proposed by the Bill to effect that object. The real thing the Chancellor of the Exchequer had to do, was to provide for the interest, and how did he do that? He provided for the payment of 3 per cent to the Government, while he gave the depositors 3¼ per cent. That was not an intelligible way of satisfying their minds that they would at all times be secure; but he repeated there was no apprehension that they would not be paid. The only advantage that could be gained was in saving the expense of management, but the Chancellor of the Exchequer would have little difficulty in arranging that point in half an hour with the Governor of the Bank of England. Another objection was that the Chancellor of the Exchequer did not create a sufficient amount of book debt to pay the whole amount. A deficiency was left unprovided for, and if the Chancellor of the Exchequer wanted to create a fund out of which the savings banks' money was to be paid, he should create a fund for payment of the whole. The right hon. Gentleman merely created a book debt, equivalent to a certain amount, the remainder being left entirely at his disposal. He (Mr. Hankey) objected to the power given to the Chancellor of the Exchequer with regard to the remainder of the money. He understood the Chancellor of Exchequer expected to effect a large amount of saving by the Bill—as much as £40,000 or £50,000 a year. The percentage now paid to the Bank would be, of course, so much money saved; but what saving was to be effected upon the remainder of the capital? He was afraid that only a small portion of it could be more profitably invested than at present. As the Bill originally stood it reserved a power to the Chancellor of the Exchequer to fund a certain amount of Exchequer bills. That clause had, happily, been withdrawn, for it did nothing more or less than empower the Chancellor of the Exchequer to create an additional amount of national debt without the knowledge or sanction of Parliament. The Chancellor of the Exchequer had a certain portion of stock at his command, and could buy and sell Exchequer bills; but he did not think it desirable the right hon. Gentleman should be in the position of one who "rigged" the market, for when the Chancellor of the Exchequer—the price of Exchequer bills being depressed—went into the market and bought, a rise was created, but not on the sound principle of supply and demand. He might add that in the Bill before the House pains seemed to have been taken to ignore the Resolutions, twenty in number, of the Committee of 1858, and he (Mr. Hankey) did not think that that was a fair way to treat the results of their labours. He (Mr. Hankey) did not agree with all the recommendations of the Committee, but there were many valuable recommendations offered by them, and their resolutions were sound and deserving of the consideration of the Chancellor of the Exchequer. They treated the funds of the depositors as a trust fund, but the Chancellor of the Exchequer thought it was a fund with which he could do what he pleased. If the change were to prove advantageous to the nation, so much the better, but who was to be the judge of that? The Chancellor of the Exchequer was entirely to decide upon it. It was a question about which the House know nothing, and which was not brought under their notice. However, he would give the right hon. Gentleman credit for having attempted to grapple with the subject more effectively than any Chancellor of the Exchequer had done for many years past. Many savings banks Bills had been prepared, but he was not aware that any one of them had been seriously discussed while he had the honour of a seat in the House. He objected to the Bill because it ignored entirely the objects which the Committee had in view; it treated the matter in quite a different way to that in which trust property should be treated; it did not grapple with any of the difficulties which surrounded the question as far as details were concerned, and it instituted a perfectly novel principle for giving greater security to depositors, for it did not create a sufficient stock nor a sufficient charge upon the Consolidated Fund, to pay 3¼ per cent per annum, which was the rate the Government had undertaken to pay the depositors.


said, he might very well have left the question where it was after the able statements of the hon. Members who had preceded him, but as he had been Chairman of the Committee that sat to consider the subject in 1858 he felt bound to say that they brought to its consideration an amount of pains, trouble, and careful consideration which entitled their conclusions, at least to the consideration of the House, and as he had been prevented by illness from being present at the second reading of the Bill he hoped the House would allow him to say a few words with respect to the Report of that Committee. It was very true that the Bill dealt only with the subject of investments in savings banks, and for that reason he presumed that the Chancellor of the Exchequer and the Government thought they had not treated the Committee with discourtesy. He gave the right hon. Gentleman and the Government full credit for dealing with the subject in the present Session. When he saw that they were going to bring in a Bill upon the subject of savings banks he hoped they were approaching the settlement of a long-agitated question, on which the minds of people in the country had been more exercised than on almost any other question. Four or five different Bills with respect to it had been brought in by Chancellors of the Exchequer, but one after the other had been withdrawn; every one of those Bills threw some doubt on the security enjoyed by depositors, so that they acted, perhaps, rather to the prejudice than in support of the excellent institutions with which they dealt. He had hoped that the present measure would remedy that state of things, inasmuch as the way for legislation had been smoothed by the labours of the Committee which sat two years ago; but when he saw the Bill he had experienced considerable disappointment. In the first place, he found that it dealt with only portion of a great subject which ought not in his opinion to be dealt with piecemeal. It had reference only to investments, and he should under these circumstances be glad to know what chance other questions connected with savings banks more immediately and vitally affecting them had of being settled within any reasonable time? It might be said the Committee had taken no notice of these interesting points. But they dealt with them in the only way that was open to them—they had suggested the appointment of three Commissioners, in addition to the Chancellor of the Exchequer and the Governor of the Bank, to be looked upon as the guardians and trustees of the different savings hanks, and the 14th and 15th Resolutions of the Committee specially provided that the Commissioners should have the power to frame Resolutions as to the mode in which the accounts should be kept and audited. These questions were most interesting to local savings banks;—the question as to the best mode of establishing and enforcing an audit, of producing uniformity of accounts and determining how the usefulness of savings banks might be extended—how they could prevent defalcations such as those which had agitated the country from one end to another—how they should deal with the expenses of management—whether there should be a Government treasurer or leave the matter as at present—the question of the surplus of interest not paid—the question whether they should absolutely prohibit any bank being established other than a savings bank eo nomine under the provisions of the present law—the question of passbooks—the question as to the accounts and trusts of minors—the question of the liability of the Government, whether they should or should not transfer the deposit of any individual into the public funds when it had reached a certain point—and the most important question as to the liability of the trustees, Parliament having relieved them of all responsibility whatever—for this whole congeries of questions vitally affecting the management of local hanks, and vitally affecting the character of the law and Parliament, no provision whatever was made in this Bill. The Committee of 1858 did make provision for them, and if Parliament passed them over unnoticed now he did not know that another opportunity would offer for dealing with them. He should therefore prefer that the whole subject should stand over until it could be fully dealt with. So much for points omitted in the Bill; now for a few words on what he thought objectionable in the Bill itself. He might have left this to what had been so well said by the hon. Baronet the Member for Evesham, who had treated the subject with an ability that showed he might well aspire to the post of Financial Minister. The right hon. Gentleman the Chancellor of the Exchequer denied that the property should be regarded in the light of a trust. His (Mr. Sotheron Estcourt's) impression was that between the Chancellor of the Exchequer and any individual savings hank, the trans, action was a banking one; but as between the Government and the whole body of savings banks it was a trust. If the Government overlooked that distinction they would probably come to a defective conclusion. It was admitted on all hands that, as between the tax-payer and the Government the money was held as a trust. The main principle of the Bill went to the conversion of the security of savings banks now held in Consols into what was called a book debt, for which a fixed amount of interest was to be paid, and what was the consequence of such a conversion? At this moment there was an apparent deficiency between the sum the State was liable for, if every depositor were paid, and the amount of assets held by the Commissioners, as the result of the whole transactions since savings banks were established, of from £2,000,000 to £3,000,000. That was not an absolute sum, but depended on the price of the stocks. For the purpose of covering a deficit they were about to inscribe in their books a debt which must be paid in full to an extent much larger than he thought was absolutely required. Whenever a large demand was made upon them they would be obliged to sell at the price of the day, and according to that necessity they would either gain or lose Further, the Bill would create a fixed and permanent interest to be paid by the Government on the debt, while the interest accruing from the investment of the deposits would be continually varying. The only saving would be in the sum paid for the management of the debt. Did the right hon. Gentleman hope to gain a sixpence more than that from any other source under his Bill? The right hon. Gentleman might say he was going to inscribe this debt in a large book, and to give an indefeasible title to it by a clause in this measure. But, on the part of the savings banks, it could be answered that they would rather keep the security they had than accept the right hon. Gentleman's clause. Nobody disputed the liability of the Government for the money it received from the savings banks, and therefore the effect of the arrangements under the Bill would be to diminish the security while retaining the old management. The mode recommended by the Committee was to adhere to the present security and alter the mangement, and of the two suggestions that of the right hon. Gentleman was the one least deserving of adoption. In money transactions where there was no dispute as to the security afforded up to the present moment it was impossible to make any change without giving the country the impression that those who made it had some other object in view than the one that was apparent. He must again advert to the way in which the right hon. Gentleman had spoken of the labours of the Committee. One could quite understand that the right hon. Gentleman should disapprove all their proceedings, and as Finance Minister should think it his duty to assert the right of the Government to control this matter; but it would have been well to treat with some consideration the Gentlemen who devoted so much of their time, and worked extremely hard at this subject. They came to their Resolution nearly, if not quite, unanimously, and from no party spirit; and their Report contained an amount of valuable materials which would be of the utmost assistance to those who came to deal with this question. He was very sorry the right hon. Gentleman had brought the question forward in this shape, as he must vote against his Bill, because, even if it were a good scheme as far as concerned investments, they ought not to legislate on the subject piecemeal. They should satisfy the public upon points on which it was entitled to satisfaction, and should deal with the question as a whole. If they allowed the present opportunity to slip they might not very soon have another. The action of these excellent institutions was now very much impeded, and their sphere of operation greatly circumscribed. There were not above 600 savings banks in the whole country, whereas they ought to ramify every parish, and even every village in the kingdom. If the House passed this measure they would throw away a golden opportunity of placing these institutions on a better and more expensive footing, as well as of setting our whole law relating to them on a satisfactory basis.


said, he had hoped and expected that this question would have been solved by the Committee which sat to inquire into it some time ago; but in that hope he had been disappointed. Their recommendations had not been attended to, and for aught that appeared in the Bill the Committee might as well not have sat at all. Indeed, the labours of many Committees were thrown away in the same manner; those of the Committee on Harbours of Refuge for instance—and it seemed to him that the only way in which they could make the labours of Committees fructify, would be to require that the Chairman of every Committee should bring its Resolutions before the House in a substantive form, If that had been done with respect to the Committee which sat upon the subject of savings banks, the House would not have heard such expressions of dissent with respect to the Bill, and which he was afraid would be fatal to it. He hoped and trusted that something would be done in future to give a useful result to the labour of Committees. The great principle to be adopted in legislating with regard to savings banks was that the property of depositors in them should be considered to be a trust, and a trust alone, and should not be used by the Chancellor of the Exchequer to give a factitious value to Government securities. When Exchequer Bills lost their value the Chancellor of the Exchequer sold out a great quantity of savings bank money, possibly at a loss, and went into the market to purchase those securities in order to give them a factitious value, and deceive the mercantile world. This practice should be put a stop to.


said, he had for many years given his attention to the subject, and in June, 1857, he called to the notice of the House the injury which was inflicted upon public credit in consequence of the Chancellor of the Exchequer, what might be vulgarly but with strict accuracy called, rigging the market by means of the funds belonging to the savings banks. He entirely agreed with every word which had fallen from the hon. Baronet the Member for Evesham in the course of his luminous speech. These funds ought to be regarded as a trust, and the Chancellor of the Exchequer ought not to be allowed to use them for the purpose of buying Exchequer Bills at a discount, and thus giving them a fictitious appearance of value. The court in which he passed so much of his time continually held respectable men liable for trust money which they had employed in the purchase of shares in companies to which they belonged in order to raise their value in the market; and now that this Bill was before them it was the imperative duty of the House to provide that that should not be done by the Government which a Court of Justice would not permit on the part of an individual. It was also important that there should be a real body of trustees, men who would make it their duty to attend to their business, instead of such officers as the Master of the Rolls, the Chief Baron of the Exchequer, the Speaker of that House, and the Accountant General of the Court of Chancery, not one of whom had an hour to devote to the business.


I sincerely wish, Sir, that it was in my power, consistently with the respect which is due to the House and to the hon. Members who have taken part in the debate, to release you from the position you have occupied for so many hours during the last twenty-four. Unfortunately, it would not be respectful or just with respect to the subject that I should not, at any rate, make some remarks, in which I will endeavour to bring to a head the principal points in regard to this Bill which have been referred to by the different speakers. First, I must thank all who have taken part in the debate for the spirit in which they have approached the subject. I cannot say that it has in every case been regarded from the true point of view; but nothing could be more kind and considerate than the remarks which have been made. I will begin with what fell from my right hon. Friend the Member for Wiltshire (Mr. S. Estcourt), because the complaint which formed the burden of his speech can, I think, be easily got rid of. The main objection of the right hon. Gentleman was that the measure did not contain a set of provisions to regulate the ordinary management of savings banks, and he enumerated a multitude of points with respect to that which he thinks ought to be settled by law. Now, I admit that it is most desirable that we should have a Bill for the management of savings banks; but it is a subject of great difficulty, and has no relation to the mode in which the moneys are to be invested and used. Does the right hon. Gentleman really mean to say it is a valid objection to a Bill for dealing with the investment of savings banks' moneys that it does not deal with the totally different subject of the management of these banks and the liability of trustees—a subject upon which half a dozen Finance Ministers have in vain endeavoured to legislate, and all this at so advanced a period of the Session as the 22nd of June, when so much business of importance yet remains to be disposed of? I feel confident that the House will not refuse to proceed with the Bill on such a ground as that.

I now come to a point on which much has been said. The hon. Member for Peterborough (Mr. Hankey) complained that I had ignored the labours of the Select Committee of 1858, which, he said, at least deserved consideration at my hands. But how does he know that I have not considered the Report of that Committee? Consideration does not necessarily involve adoption. A man may consider and adopt, or consider and decline. It was my unfortunate condition, after most carefully considering the recommendations of the Committee, that I was, in a great number of instances, compelled to decline them. My hon. Friend, however, is in error when he says that no trace of the recommendations of the Committee is to be found in the Bill now before us. There are two most important recommendations of the Committee embodied in the Bill. One is the limitation, or as I may rather call it, the abolition of the power of the Commissioners for the Reduction of the National Debt to add to the funded debt of the country without the authority of Parliament. The other is the power which is conferred by the Bill of varying securities, within certain limits, in order to increase the income that would be derivable from the proceeds of these moneys when invested. I must say a word, however, as to the proceedings of this Select Committee. The instruction which it received when appointed was to inquire into the Acts relating to savings banks and the operation thereof, and I, for one, at once concluded that the management of savings banks was to be the chief subject of inquiry. I cannot, therefore, express the astonishment with which I found, when the Report of the Committee was issued, that not a tenth part of the whole inquiry related to the question of management, and that the investigation mainly turned on the financial questions connected with the investment of moneys received from savings banks. Those questions were, perhaps, within the terms of the reference; but I had not the smallest conception that they would form the subject of their labours. How did that Committee proceed? There were then in the House five Gentlemen who, during the course of twenty years, had, as Chancellors of the Exchequer, been invested with the sole responsibility of the management of these moneys. With the exception of these five Gentlemen and the hon. Member for Evesham (Sir Henry Willoughby), there was scarcely a Member in the House at the time who had paid any attention to the proceedings of the Chancellor of the Exchequer in this matter. Not one of these Gentlemen either sat as a Member of the Committee, or was examined as a witness. Under these circumstances, no one can be surprised that the investigation of the Committee proved imperfect and unsatisfactory.


Lord Monteagle was examined before the Committee.


Lord Monteagle retired from the office of Chancellor of the Exchequer twenty-four years ago, and could not, therefore, be expected to give a sufficient account of all the operations of the right hon. Gentleman the Member for Buckinghamshire (Mr. Disraeli); my right hon. Friend the Member for Portsmouth (Sir Francis Baring); the right hon. Gentleman the Member for Halifax (Sir Charles Wood); the right hon. Gentleman the Member for Radnor (Sir George Lewis); or myself, during the twenty years between 1839 and 1858. [A MEMBER: Sir Alexander Spearman was another witness.] Sir Alexander Spearman—yes. But who is he? A very able and excellent public servant, but not the responsible officer from whom the House should seek to know the grounds upon which the Finance Minister of this country has proceeded.

The main questions that have been raised for the consideration of the House are two: the first is the doctrine that the funds ought to be managed by what is termed an independent Commission, entirely different in composition from the present one; the other is the doctrine that the moneys ought to be dealt with in the same manner as private trust moneys. Before going into these two questions, I may state for the satisfaction of the hon. Member for Evesham, that no provision has been inserted in the Bill with the view of reducing the rate of interest allowed to depositors, and that no such intention is entertained. Indeed, I apprehend it is indubitable that the fund from which the interest is payable will be larger under the operation of this Bill than under the present law. But to return to the two questions. It is said that the Commissioners for the reduction of the national debt are not the proper persons to manage these funds, and that there ought to be an independent Commission. Now what is meant by an independent Commission? It is, of course, very agreeable to a gentleman in my position to contemplate the creation of additional patronage, and I have to thank my hon. Friend for proposing the creation of a new paid office. Of the new and independent Commission which is proposed, the Chancellor of the Exchequer is to be one member with the Governor of the Bank of England and three others, one of whom is to be paid. The real meaning of that arrangement is that the Chancellor of the Exchequer is to have one vote among five. Now, I do not at all dispute that if we were about to constitute a trust like that recommended by the hon. and. learned Member for Wallingford (Mr. Malins) it might be desirable to render it wholly independent of Parliament. On the other hand, however, if you hold that these moneys ought not to be regarded as trust moneys at all, but that the public is strictly a banker and nothing else, then it is obvious that it would be absurd to constitute an independent Commission to manage moneys which are, in fact, the moneys of the public, and which ought, therefore, to be kept under the close and immediate control of the House of Commons. If, as contended by the hon. Member for Evesham, this money is the money of the depositors, and ought to be managed by the public as trustees, you ought to look at the character of your trust, and separate it from the immediate control of Parliament. But the doctrine has always been that this money is not the money of the depositors, and on this principle it has always been held and managed. And the vital question now at issue is, are we to hold this money as trustees or as bankers? The obligation of a trustee is to act in the interest of those for whom he holds the trust, and when he has so acted to the best of his judgment, with integrity, and reasonable discretion, his liability terminates, and the persons for whom he is trustee are liable for any loss they may suffer.


If he acts within the limits of the trust.


I assume as much when I suppose that he acts with integrity and to the best of his discretion.


But he might invest in other funds than the trust allowed.


That would certainly not be acting to the best of his discretion.


I beg your pardon—it might be so in some cases.


I have never heard it propounded before that a trustee who travels out of the limits of his trust may be held as acting with integrity and discretion. I repeat, a trustee must act with integrity, and use a reasonable discretion, and having done so, the persons interested in the trust are liable for any loss. But will the House legislate on that principle for the depositors of savings banks? If so, you must reconstitute the fund entirely, and begin de novo. The principle upon which all past legislation has been founded is that this money is not the property either of the depositors or of the trustees, but the property of the Commissioners for the Reduction of the National debt. Instead of that you wished to make it the property—of whom? Either of the trustees of savings banks or of the depositors. I do not think you will declare it to be the property of the trustees as they themselves are irresponsible. But if you declare it to be the property of the depositors you must hand over to them the sum you have received. You must therefore find a sum of about £3,000,000, and place it in the hands of those gentlemen. You have certain liabilities towards the trustees of savings banks on behalf of the depositors. There are certain assets to meet those liabilities, and the assets are of less value by £2,000,000 or £3,000,000 than the amount of those liabilities. It will be a breach of faith which I feel confident this House will not entertain, if, when you have the fact established beyond doubt that the assets of the Commissioners are not equal to their liability, you hand the money over to a Commission as trustees without enabling them to discharge every shilling of liability. Such a course cannot be contemplated for a moment. But I contend that the proposition is unreasonable and undesirable in the interests of the depositors themselves. The property in question is subject to fluctuations of value. It would be a bad view to hold this out to the depositors in savings banks, "instead of a regular and fixed amount of interest you are to take the chance of the funds going up and down, and four or five gentlemen are to be appointed as Commisioners, who are to do the best they can for you." These gentlemen must soil when the funds are low, and buy when they are high. The difference between the rate of interest paid and received and the necessity of selling out at a time when the funds are low have been the main cause of the loss on this money. Now would it be for the benefit of the depositors to place them under all the fluctuations that result from the system proposed by the hon. Member for Evesham? The fact is, this doctrine of a trust is a vast legal change in the tenure of a vast amount of property. At present property is vested in the Commissioners for the Reduction of the National Debt, and their absolute proprietary right is balanced by the obligation to pay back the trustees the whole sum invested, with interest at 3 per cent. The basis of the present law is, that the Commissioners are in the position of bankers. The savings banks' money is their property, but they hold it subject to the repayment of the principal and a fixed rate of interest. The proposal of the Committee would be the breaking up of that system, and I declined to enter upon a task that I knew would be hopeless, of attempting to persuade this House to undo all the policy and retrace all the steps it had taken for the last forty or fifty years, even if that change had not been accompanied with the necessity of handing over to the Commissioners a sum of £3,000,000 of the public mouey.

Something has been said of the constitution of the present Commission, which is, I apprehend, analogous to many other Boards and Commissions which Parliament has thought fit to establish. I was for many years prior to 1858 a Member of the Indian Board of Control; and so also was my noble Friend at the head of the Government, and I do not know whether down to the period of its abolition my noble Friend has ever—for myself at all events I can say that I have never—attended a single meeting or took any share in its proceedings. I have also been a member of the Board of Trade, over which my right hon. Friend so efficiently presides, but I have never troubled him in the discharge of his business. The practical working of such a system is that his responsibility is full, absolute, and undivided. It may be a question whether we should keep up the umbra of a Board, but the responsibility which thus falls upon the adviser of the Crown and the head of the Department is unquestionable. In like manner, the responsibility of the Minister is absolute in these savings bank transactions, for there can be no doubt the Chancellor of the Exchequer, and he alone, is the person whom the House of Commons would call to account. I do not say that the machinery is perfect for securing the control of the House of Commons, but this I do say, that no effectual control can be obtained by tying the hands of the Chancellor of the Exchequer. How will the House ensure his acting well? By ensuring an effectual review by the House of Commons of his transactions, I contemplated the formation, under the highest authority, of a Select Committee of this House who should sit from year to year and carry out an entire audit of the public money. This would, of course, include a regular revision of all the proceedings of the Chancellor of the Exchequer in the management of this money.

From the speeches delivered to-night it might be supposed that some dreadful Bill had been introduced enabling the Chancellor of the Exchequer to take into his hands a number of exorbitant powers which hon. Members were endeavouring to prevent. But there is not a power given to him by the Bill which he does not already possess, except one or two minor provisions that do not enter into the substance and purpose of the Bill. On the other hand, the surrender of powers that he does possess is very large. He has at present the power of funding deficiency Bills, Ways and Means, and other Bills, which is done away with by this measure. A large portion of the Stocks under the control of the Chancellor of the Exchequer are placed beyond his control by this Bill. Above all, while I propose to limit his powers, I also propose to provide by the appointment of this Committee that the whole of the Chancellor of the Exchequer's proceedings shall be under the review of this House. We are all agreed in this, that the main question we have to settle is in what capacity these moneys are to be managed—are they to be managed by us as trustees for private persons or as bankers? It is clearly impossible we can manage them as trustees. The time for that is past. If a trust was to be constituted, it should have been constituted when the savings banks were first taken in hand; but Parliament adopted a totally different system, and I think it did so wisely. But the financial purposes to which these moneys are applied are purposes of such a magnitude that I think the mode of dealing with them is of a character far beyond being settled by the Report of any Committee, and must be reserved for the discretion of this House. Those funds have been used for purposes of great importance. At times, when it has been thought right to lighten the burdens on property by reducing the interest on the public debt, these funds have afforded the means of doing so by enabling us to make the proper provision for that purpose. I doubt whether, if it had not been for the possession of these funds, Mr. Goulburn would have been able in 1844 to effect that great operation which saved this country £1,200,000 a year. And during the Crimean war could my right hon. Friend the Member for Radnorshire (Sir George Lewis) be blamed because he largely used these funds to enable him to borrow with advantage and with a saving to the country, in order to bear the expense of the war? If he had then been compelled to borrow in stock—the demands for the war being uncertain—he would have had to borrow a larger sum than was wanted, and would not only have withdrawn from the demands of commerce money that was necessary, but have entailed upon the country considerable expense.

Then as to the objects of the Bill. There is at this moment no positive title in law to the deposits in savings banks. I have been told that it is alarming to the depositors to say so; but I think that opinion has been set afloat by certain officers of savings banks—the persons, in fact, who have got up the petitions. But if it is true that alarm will be created, I ask would it be wise or right to conceal from the depositors what is the fact? The legal position of depositors is this—they have a perfect and absolute title to all assets held by the Commissioners, but none beyond that. This Bill gives them a title to all the money held by the Commissioners, a title secured on the State Deposit Account, and it insures the trustees of savings banks in the funds of the State itself. The next object of the Bill is to give a true account of the National Debt; no one has ever seen a true account of the National Debt. No such thing has ever been laid before this House; but the Bill aims at arriving at as true an account of the National Debt as we can, and of rectifying that account once every year. An hon. Gentleman has said I ought to go bowing to the Bank of England to ask more favourable terms from them in respect of these funds. The Bank of England is entitled to £300 a year for the management of every million of stock created by these funds, and I am asked, as Finance Minister, to go to them and petition to have the charge lessened; but I do not think that that is a position in which the Finance Minister of this country ought to appear. In conclusion, I have to repeat that this Bill completely establishes the legal title of depositors; limits the power of the Chancellor of the Exchequer—cutting off the means by which he exercised his power, and which, I am free to admit, has in past times been abused; increases the income derived from these funds, and makes provision for bringing all the proceedings connected with them under the cognizance and control of the House. I believe, therefore, that the Bill will receive the sanction of the House.


said, that as a Member of the Committee he could not overlook the statement of the right hon. Gentleman—that the Committee was composed of individuals not one of whom knew any thing of the question.


I never said anything of the kind. I said that none of them had been conversant in the slightest degree, as responsible persons, with the question to be considered.


said, he did not apprehend that the Committee professed to know more than other Members; but when the right hon. Gentleman said the Committee contained no Chancellor of the Exchequer, he would ask under whose administration was that Committee appointed? It was formed under the sanction of the Chancellor of the Exchequer of the day, now the Secretary for the Home Department. Why did that right hon. Gentleman exclude the Chancellor of the Exchequer? He (Mr. Baring) did not know his sentiments on the subject; but it was only reasonable to suppose that, as a fair and honest Minister, he thought the inquiry ought to be conducted by a Committee wholly distinct from the existing or any previous Government. The right hon. Gentleman had the opportunity of objecting to that Committee as not being a fair Committee, but he did nothing of the kind. It was also in the power of the Chancellors of the Exchequer to whom reference had been made to ask to be examined, but no one did so; and when reference was made to Sir Alexander Spearman, a man more conversant with savings hanks than perhaps any other man in the country, the right hon. Gentleman told the House that he was not an efficient, because he was not a responsible witness in such a question as this. If he were to be again a Member of that Committee he would say, "Examine Sir Alexander Spearman, who is the man most conversant with the affairs and the conduct of savings banks." But the Chancellor of the Exchequer also said the Committee took the benefit of the letter of their Commission and overstepped the spirit of the inquiry. The spirit of the inquiry was—first, to see whether the management of the funds was conducted with security to the depositors, and next, whether the loss which was apparent arose from the savings banks' system itself, or from the system of control and management being vested in the hands of the financial Minister of the day. The result was that, as the funds were at the disposal of the financial Minister of the day they were made use of, no doubt, from most conscientious intentions and with perfectly clear views, but the operations were conducted not for the interest of the savings banks, but for the purposes of the Government and the country. The right hon. Gentleman said that himself, for he asked if the Chancellor of the Exchequer for the time being had not had the control of the savings banks' funds, how could Mr. Goulburn have effected a reduction in the rate of interest, and how could we have managed in the Crimean war? But when complaints were made of the cost of the savings banks, the House ought to know whether that was traceable to the operations of the savings banks themselves, or the employment of the funds for national purposes. He was glad to hear the right hon. Gentleman say that no depositor in any savings bank was not sure of his money.


I said as far as the Government were concerned.


said, he did not want to draw any distinction, but he was glad to hear the Minister charged with that department tell the country that the depositors were perfectly safe. But the real question was whether the Government in employing the money belonging to depositors they considered the interests of the depositors or the advantage of the country. The right hon. Gentleman said that the control over those moneys must be vested in the individual at the head of the finance department, and instanced the Board of Control. But those systems were not analogous. The Board of Control in former times had the Government of a great empire, distinct from this country, and were responsible for it; but the Chancellor of the Exchequer was responsible to the country for the finances, and he had placed under his control the deposits of individuals which had not in their origin any connection with the finances of this country, except that they implied an obligation on the part of the country to repay them. But then came the question whether that control was always wisely, judiciously, and safely exercised. Undoubtedly it was so under the right hon. Gentleman. Nothing could be more safe, judicious, and wise than his management. But there would always exist a doubt whether there might not be some financial operation which the minister of the day might wish and be able to carry out with these funds which might terminate in a loss to the depositors, although beneficial to the country. The establishment of savings banks had been one of the best institutions ever conceived. It had encouraged saving habits and stimulated the industry of the poorer classes. But the late Mr. Hume used to say they were a great loss to the country; but then came the question of how that loss arose. The evidence before the Committee showed that if there was any loss it did not arise from the employment of the funds in due course, but resulted from their being used for the temporary purposes of the Minister of the day. The right hon. Gentleman said that this Bill was to make everything more secure, but he (Mr. Baring) could find nothing in it to benefit depositors. It was, in fact, a great financial measure, and should have been introduced as such. He wished to enter his protest against the measure, as he did not believe there was any necessity for it, and he would be glad to hear the right hon. Gentleman consent to withdrew it.


said, as a Member of the Committee, he rose to protest against the assertion of the right hon. Gentleman that the Committee had confined its inquiries to financial policy, and had not devoted much consideration to the conduct of savings banks. The Committee had examined Sir A. Spearman, and did not call for Chancellors of the Exchequer, therefore it was clear that the Committee had devoted their inquiries to the proper subject. They only entered into the operations of the Chancellor of the Exchequer, so far as to ascertain that those operations, however advantageous they might be to the national finances, had actually diminished the funds in the hands of Government on account of savings banks. The objections to the Bill were twofold—that it did not contain many of the recommenda- tions of the Committee; and, next, that what it did contain was unsatisfactory. To accomplish two simple objects the right hon. Gentleman had taken a most complicated course. To cancel a portion of the National Debt and turn it into a book debt with the Treasury, was a most dangerous operation, and, he should have thought, inconsistent with national faith. But what was the use of it? Why begin a new system of National Debt? The only reason he could discover was to save the money paid to the Bank of England. There was no necessity for the Chancellor of the Exchequer going cap in hand, as he had described, to the Bank; but if he had made proper representations to the Directors of the Bank, they would no doubt have surrendered the payment for the national benefit without the necessity of this complex legislation. The right hon. Gentleman said that if he did not do this he must create some new fund, but that was what he was doing by this complicated proceeding. Every hon. Member with whom he had conversed on the subject asked, "What can be the meaning of the Chancellor of the Exchequer's Bill?" If the right hon. Gentleman, instead of trifling with the character of the National Debt, had created some £3,000,000 of new debt in the shape of Consols, people would have thanked him for a satisfactory adjustment of the deficiency which had been created by forty years of mismanagement, and which successive Chancellors of the Exchequer had shrunk from disclosing. He doubted, too, whether the right hon. Gentleman's proposal with regard to the interest was a safe one, or whether it would sustain close investigation in Committee. It would have the effect of diminishing the fund which existed as a guarantee against mismanagement or malversation in certain banks. If, instead of creating a new book debt, as he called it, he had made the original deficiency good in Consols, the interest would have been secured in the same way. But the right hon. Gentleman had destroyed his Consols; and if any claim were made by the savings banks he would be confined to the Exchequer Bill market, instead of having the advantage of the Consol market, where the field was larger and money more easily got. Any one acquainted with financial transactions must admit that a more inexpedient proceeding could not have been suggested.


observed, that no one had spoken in favour of the Bill except the right hon. Gentleman the Chancellor of the Exchequer, and that it was opposed by the great majority of savings banks. He objected to Members being brought down night after night by the Bill appearing on the paper when there was no chance of their making any progress with it, and he thought he was justified in moving that the Bill be committed that day three months.

Amendment proposed, To leave out from the word 'That' to the end of the Question, in order to add the words 'this House will upon this day three months, resolve itself into the said Committee' —instead thereof.

Question put, "That the words proposed to be left out stand part of the Question."

The House divided:—Ayes 92; Noes 65: Majority 24.


expressed a hope that the Chancellor of the Exchequer might yet be induced to withdraw this Bill. Except the right hon. Gentleman, not a single Member had said one word in favour of the Bill. The right hon. Gentleman seemed to think that the Committee who had inquired into this subject had not discharged their duties quite satisfactorily. No Committee, however, could be more determined to investigate the question in every way, and, though they had not examined Chancellors of the Exchequer, they did examine an officer whom they thought more competent to give an unbiassed opinion than even Financial Ministers. The Manchester and Salford Savings Bank, the deposits in which exceeded £1,000,000 had petitioned against the Bill, calling attention to the Report of the Committee, and the Report was, in his opinion, approved by the leading banks throughout the country.


said, he hoped the right hon. Gentleman would not withdraw the Bill, for it contained a provision of the greatest importance—namely, a clause preventing the conversion of Exchequer Bills into stock without the authority of Parliament.

Main Question put, and agreed to.

House in Committee.

Clause 1 (Stock to be cancelled).


said, he wished to take the opinion of the Committee with respect to the formation of the Commission, and he would therefore move that the clause be postponed.


observed, that such a course would be inconvenient. He could not see any connection between the object of the hon. Baronet and the course which he proposed to take. If he wished to raise the question of the constitution of the Committee, he ought to propose a new clause.


said, he regretted that his Motion did not meet with favour in the eyes of the Chancellor of the Exchequer, who rarely gave his assent to anything; but he must contend that the object which had led him to give notice of a Motion to postpone the first three clauses was perfectly intelligible.


said, that the Bill, so far from extending, appeared to him to limit the power of the Treasury to operate with the funds of savings banks.


remarked that the sum of £31,000,000, at present subject to the control of the Finance Minister, would be removed from his power by this Bill.


said the sum of £10,000,000 and the current balances would still remain.


said, the principle of the Amendment was to overset the Bill; and that being so, therefore the propositions in the measure should be taken in the order in which they arose. The first proposition was to cancel a certain amount of stock. We did not owe the total amount which had been named, but only interest upon it, though we did owe the difference between the amount of securities and the debt.


said, he had made his Motion bonâ fide, and he thought that he had pursued a course which was a proper one. The governors were trustees, and Chancellor of the Exchequer had no right suddenly to get up and say, "I will change the whole nature of the transaction, and alter the kind of securities." He should persist in his Motion, because he believed that a Commission should be appointed to manage this fund, and it was necessary to an Amendment of that kind that the three first clauses should be postponed. He hoped the clause would be postponed.


said, he did not impute to the hon. Baronet any unfair attempt at postponement, but the Amendment moved would prevent their proceeding with the Bill. The only question upon the first clause was as to the stock in which the money should be invested; and the usual course would be to discuss that question only upon the clause. The mere fact of changing the security was no breach of faith at all, as seemed to be supposed, for the parties investing had the security of the nation still.


said, if it was the desire of the House to do a certain thing, the first thing they should determine was, who was to do it, and on these grounds he supported the postponement of the clause.


said, the real thing for the Committee to decide was, whether they would vest power in the Chancellor of the Exchequer, or whether they would adopt the recommendation of the Committee. He therefore thought his hon. Friend was quite right in taking the sense of the Committee as to whether the clause should be postponed, in order that they might determine whether they would adopt the recommendation of the Committee.


insisted upon being informed who the Commissioners were to be that were to manage these funds before they proceeded further.

Motion made, and Question put, "That Clause 1 be postponed."

The Committee divided: Ayes 49; Noes 73: Majority 24.

House resumed.

Committee report Progress; to sit again on Friday next, at Twelve of the clock.

House adjourned at a Quarter before One o'clock, till Monday next.