HC Deb 10 July 1861 vol 164 cc654-63

Order for Committee read.

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


, in moving that the House should resolve itself into Committee on this Bill, said its sole object was to determine the law with regard to establishments calling themselves "savings banks." There were two classes of savings banks, those that had complied with the Government regulations and those which had not. The beneficial operation of savings banks under proper management did not admit of dispute, but great hardships had been entailed on poor an unsuspecting persons, who, having entrusted their money to so-called "savings banks," under the impression that they were under Government regulations, discovered too late that they had been deceived by the assumed name, and had placed confidence in improper quarters. It had been proved before the Committee which investigated the subject that the monetary crisis in Glasgow was aggravated by the suspension of sixteen of these self-styled "savings banks," the law at present allowing any persons who though to do so to associate with a common object under that title. In Southampton there were three establishments of that class, one of which was next door to the real savings bank, and instances were adduced in which it had been mistaken for the bank under Government control. The Committee had also received evidence with regard to similar cases in Brighton, Birmingham, and Manchester, and a circular had been produced which the persons interested in promoting one of these fictitious savings banks had put forward, detailing the advantages of forming a connection with their particular banking agency. The object of the Bill was not to punish such persons for the past, but to prevent them for the future from adopting the name of savings bank. It did not prevent them from proceeding with their business as they pleased; but what it said was that if they adopted the name of savings bank they should come under the savings-banks law, and should not deceive depositors by assuming a title to which they had no claim. He had the sanction of the Government for the measure, which had been most favourably received in the other House of Parliament, and he did not anticipate any opposition to its provisions. He, therefore, begged to move that its consideration in Committee be entered upon.


said, the House was naturally disposed to receive with favour any measure emanating from the right hon. Baronet, but he thought he had not fully considered the necessary consequences of his present Bill. It proposed to create a new offence, punishable as a misdemeanour, to meet exceptional cases. But the Bill would, likewise, affect a number of institutions which were not merely harmless but positively beneficial; he referred to the "Penny Savings Banks," which had been established under somewhat varying regulations, with the greatest advantage to the working classes, and whose managers, if the Bill were to become law, would be guilty of misdemeanour. They were very numerous in the north of England. They were not started for personal profit, but purely from philanthropic motives. If there, were any public reason for compelling them to drop the term savings banks he should not object. But there was not, so far as he knew, any such reason. It must not be supposed that a change of name was a little matter with them. It was a serious thing; and what was more, to require them to remove that name was to cast a slur upon them. He should not have objected to the Bill if it had proposed to carry out all the recommendations of the Committee to which reference had been made. It was true the Committee in their Report referred to the inconvenience arising from institutions not under Government control assuming a similar appellation; but their attention was more especially directed to the advisability of giving guarantees to the present savings banks. When one of these failed, from any cause whatever, and it was found that the prevailing impression that the establishent enjoyed a Government guarantee was unfounded, public faith was shaken, and it was hard to induce them to place confidence in any savings banks whatever. His great objection to the Bill was that, by imposing this severe punishment on the conductors of establishments which were not under the Government regulations, the impression that these latter enjoyed a Government guarantee would be increased. But so far from having any such guarantee, the trusteees by recent Acts of Parliament had been relieved from all liability, even in cases of wilful neglect and default, and he regretted to say that flagrant cases of what he must call fraud had taken place in these very Government savings banks. At Rochdale, for instance, it was discovered upon the death of the actuary that he had abstracted some £50,000 or £60,000 from the savings of his neighbours. The principal savings bank in Kendal was conducted in the names of several gentlemen, and the directors for the time being were responsible. As the directorate would probably be good for £500,000 in the aggre- gate, he would appeal to the House whether that bank was not safer than a Government savings bank, in which the only guarantee on the part of the Government was that they would be responsible for money after it got into their hands, they taking no steps whatever to insure that it ever would get into their possession? In a Welsh district there had been a Government savings bank in which a temporary defalcation took place. After that occurrence the people would not patronize the Government bank, and the proprietors of large iron works in the district established a savings bank in connection with their own concern, for the benefit of their work-people. Was the House of Commons prepared to make that philanthropic act a penal offence? He thought they ought to postpone legislation on the subject till they were prepared to meet the whole question, and carry out the recommendation of the Committee. Parliament had begun that year to give a Government guarantee by passing the Post Office Savings Bank Bill. Would it not be better to see how that Bill worked before introducing any measure of this kind? He was of opinion that the Bill would interfere with a number of banks which were doing a great deal of good; that it was uncalled for at that time, and that it would strengthen a false impression throughout the country, and thereby prevent that careful inspection and management of savings banks which would take place if it were not generally believed that there was a special guarantee for the money deposited in those establishments. He, therefore, moved as an Amendment 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 proposed, "That the words proposed to be left out stand part of the Question."


said, he must oppose the Motion for going into Committee on the Bill, as the right hon. Baronet objected to an Amendment of which he had given notice, for the insertion of words which would limit the operation of the measure to banks other than Government established, "for the purpose of profit to the managers or shareholders." The right hon. Baronet said, that if that Amendment were agreed to he would give up the Bill. Under these circumstances, he felt bound to second the Amendment of the hon. Member for Bradford. In its present shape the Bill would strike at hundreds and thousands of institutions which were arising throughout the country, and which he conceived to be attended with great usefulness—he meant the penny savings banks. They were on a small scale, and connected with almost every Sunday school, mechanics' institution, and evening class. They were managed by those who managed those benevolent institutions, by the committees of Sunday schools, and others whose object was purely and absolutely philanthropic. In many cases the object was to collect the pence of the children, and on the approach of winter or spring, to provide them with new clothing, the money was withdrawn. They got a much better interest than they could get if they invested in a Government savings bank. He held in his hand a letter from a friend in his own borough, who, with his wife and family, had established an evening class to teach mill girls to sow. He had established a penny bank in connection with that class, and he had written to him to say that he should give it up if the present Bill passed, as he did not choose to subject himself to be charged with an offence or to be visited by the penalties of the Bill. It might be said that they would only be required to take away the word "savings" from their title; but that word was the charm of the institution, and if they took away that they would be doing a great deal of mischief. The effect of the institutions to which he had referred was to induce children to acquire a habit of saving, which could not but be of the greatest possible value to them in after life. The evil which the right hon. Baronet wished to reach by his Bill was one which he (Mr. Baines) believed could be reached by the ordinary course of law against fraud; and as that Bill would demolish thousands of useful institutions, andas the right hon. Gentleman would not permit him to amend it, he had no course but to oppose the measure by seconding the Motion.


said, he was very sorry to hear that the right hon. Baronet the Member for Portsmouth would not consent to the modification of his Bill, because he agreed with the hon. Member for Leeds that the measure as now framed would injuriously affect an infinite number of penny savings banks in connection with schools. Those banks had no rules, but the elergyman of a parish, a schoolmistress, or some other person said to the children, "Put in a penny a week and I will add so much, and at Christmas or Michaelmas the money will be distributed in a particular manner." Now, were they to declare the person who did that to be guilty of a misdemeanour. That was the real question. The right hon. Baronet said, "Why do you not change the name?' He had cast a good deal about for words, but he could not find a word that would express what "savings" did as well as that term itself. Every child understood it. He was very reluctant to vote against the Bill, but if the right hon. Baronet did not modify it he should feel bound to do so.


said, he agreed very much with what had fallen from the last three speakers, but his object in rising was to explain the effect which the passing of the Bill would have in Scotland. In many towns in Scotland the only savings banks were those the deposits of which were guaranteed by the great chartered banks in that country. They were purely benevolent institutions, not conducted for profit, but for the benefit of the poor. Every day the money received was placed in the chartered banks with which they were associated, and was guaranteed by those banks the moment it was entered upon the depositors' pass-books. He would put it to the House whether that was not a better guarantee than that which the right hon. Baronet placed so highly? While they all knew that there had been several defalcations in connection with the Government savings banks, there had not been a single instance of defalcation in the banks which he had described. The effect then of passing the Bill in its present shape would be to deprive many of the towns of Scotland of the advantages which they enjoyed from the name of savings banks.


said, the truth was the object of the Bill was to protect those who from their position in society were unable to protect themselves; and what they had heard of the charm in the name savings banks only strengthened the case of those who wished to pass the Bill, because it showed that the very fact of the assumption of the name of savings bank secured confidence and attracted depositors. Some of the most extensive institutions, which had assumed the name were carrying on a most thriving trade so far as regarded the acquisition of deposits, but an exceedingly losing trade so far as regarded their own profits and the security of the depositors. One of these institutions, established a few years back, promised high interest and undoubted security to depositors: while it promised large profits and limited liability to its shareholders. How those conditions were to be harmonized it was not easy to perceive. In the year ending June, 1859, that society by its own account alone made a deficiency for one year of £2,135. Up to September 1859 the liabilities amounted in the whole to £37,000 from the commencement, while the assets amounted to only £24,000, making a deficiency of £13,000. That was an illustration of the mischief which was going on. In one year thirty new branches had been opened, and £37,000 received, While those institutions were managed upon such principles, and since in a few years they must be eaten up by the expenditure, it was not for the Legislature to stand by and say, "Let the public take care of themselves." He submitted, then, that there was a case for the intervention of Parliament to prevent loss to persons who were unable to help themselves.


said, he deprecated too much interference on the part of Parliament in affairs which people should manage for themselves; nor did he see why the Government should adopt the fascinating title of "savings banks" without incurring full responsibility for all money deposited in those institutions, and at the same time deny to others the right to call their banks by that name. In the borough which he represented (Scarborough), and which contained about 18,000 inhabitants, those banks were established since 1850. During that time there were something like 1,100 depositors, and of these about 1,000 were connected with the schools in the town, while the whole amount deposited was only about £500, although the banks were something like the money-boxes given to children, the object being to get them to put in their money and make it difficult for them to take it out again. He should like to see everything connected with the poor self-supporting, but that could not be the case if such security was given as was intended by the Bill. He, therefore, thought it would be safer to reject the Bill, and wait for a more comprehensive measure to carry out the recommendations of the Select Committee.


said, that it appeared to him that it would be going very far in the direction of penal legislation if, because the Government gave certain assistance to savings banks, but without giving an absolute guarantee, that House were to give them a sort of monopoly in the title "savings bank," and make it a misdemeanour, punishable by fine and imprisonment, for any one else to establish a savings bank and call it by that name. If it would be shown that there was a fraudulent intent; that the object of the party was to create a misunderstanding and to produce an impression that a bank was a Government savings bank, when it was not, the case would be different. Some qualification of that sort might remove the objection which now existed to the Bill. He could not call to mind any instance of a similar prohibition to that contained in the Bill. With regard to any argument that might be drawn from the law relative to the assumption of trade marks, where a trader assumed the trade mark of another firm there was prima facie evidence of fraud; but the case under consideration was a mere assumption of a name which might accurately describe the nature of the business.


said, he must have been labouring under a great delusion. Last year that or a similar Bill was brought into the House of Lords, and the Government expressed approbation of it in that House. That year it was brought into the House of Lords, and the noble Lords who represented the Government then expressed the Government then expressed their approbation of it. He had had the honour of communicating on the subject with the Chancellor of the Exchequer, and he understood that right hon. Gentleman to wish him to go on with the Bill. He had acted under the conviction that he was proceeding in concert with Her Majesty's Government. However, after the right hon. Gentleman the Home Secretary had declared against the Bill it was hopeless for him to go on with it; but he wished that the Government knew their own minds a little better, and that hon. Members should not be told by one Minister that what he was doing was sanctioned by them, and then, when he came down to the House, find himself thrown over by another. In pronouncing the funeral oration of the Bill, he wished to observe that he was as unwilling as any human being could be to interfere with the privileges of those benevolent institutions which had been referred to in the course of the debate; but he could find no words which would really draw a distinction between what he wanted to stop and what he would allow to go on. He admitted that that was an argument against the Bill itself. He had received communications with respect to what were called penny banks, but these would not have been affected at all by the Bill. The right hon. Gentleman concluded by withdrawing his Motion.


said, he thought the right hon. Member had exercised a sound discretion in determining not to press his Bill. What was really wanted was that every charitable and benevolent society should be obliged to submit its transactions to an efficient annual audit at the hands of a paid auditor. Frauds were as common in the case of friendly societies as in the case of savings banks. He hoped, therefore, that next year a Bill would be introduced insisting upon an efficient audit in the case of all societies in which the working classes invested their money.


said, he was not aware, before his right hon. Friend mentioned the Circumstance, that this was a Government measure. He never had heard the subject discussed by his Colleagues, and he had given his opinion as an individual Member of the House, without wishing to bring Government influence to bear upon it. He was not before aware of the circumstances to which his right hon. Friend had adverted.


said, the Committee that sat on the subject only wished to interfere with institutions that were carried on for profit, and not those that were instituted only for benevolent purposes. He was certainly surprised when the right hon. Gentleman the Home Secretary rose and threw over the Bill, as he thought it might have been so amended in Committee as to render it a valuable measure.


said, he considered that, in the case of the small institutions, anything like an efficient audit would be impracticable; and that, even if it were practicable, it would be most distasteful to the depositors.


expressed a hope that in a future Session a comprehensive measure would be introduced on the subject.

Amendment and Motion withdrawn

Bill withdrawn.