HC Deb 18 March 1861 vol 161 cc2189-96

Order for Second Reading read.


moved the second reading of this Bill.


said, he thought the Bill too important to discuss its Second Reading at half-past twelve o'clock, particularly as the right hon. Gentleman the Chancellor of the Exchequer had not favoured them with any information as to the kind of machinery by which he proposed to carry it out. He much doubted whether the existing machinery of the Post Office would be found equal to the measure, and whether the persons engaged at the various post offices could fairly be entrusted with the additional and important duties that would be assigned to them. There was, moreover, a great principle involved in the Bill. There were already 600 savings banks in the country, and the Bill would establish 2,500 additional banks on a perfectly different principle. Instead of being private establishments, the new banks would be banks of deposit opened by the Government through the medium of the Post Office in different localities, in any one of which any person might deposit, and from any one of which he might draw out his money. It was important that the House should duly consider whether they would sanction such an arrangement. It might be said that the military savings banks were identical in principle; but in that case the depositors were men receiving their pay from the Government, and if any fraud was attempted the Government could at once put its hand upon the cheat. At that moment the Government was subject to an annual loss or risk on account of the savings banks, owing to the rate of interest paid upon deposits being higher than that which was paid upon the Government securities in which they were invested; and since they undertook to pay £100 for every £i00 deposited, they were also liable to the much more serious but more remote risk than if all the depositors drew out their money when the funds were—as they might possibly be—at £50, instead of having to pay £40,000,000, the amount of the deposits, they would have to pay double that amount. Such a thing had always been considered impossible; but when they were about to increase the number of savings banks, and to make them more popular, they ought to look such a risk in the face. The great question, however, was whether it was possible to carry out this scheme without such risk of fraud and imposition as would possibly defeat it altogether? It was true that in one clause in the Bill the interest to be paid was limited to £2 10s. per cent, and if that was adhered to there would be no loss by interest; but the same clause empowered the Treasury to raise the rate to £3 0s. 10d., the amount now payable, and there could be no doubt that after a year or two that would be the rate paid. No doubt the plan would become popular, and that for several reasons, the most important of which were that these banks, instead of being open on only one, would be open on all the days of the week, and that they would give to the labouring classes that perfect secrecy for which, in regard to their money matters, they were so anxious. All who had anything to do with savings banks knew that the members of those classes preferred to put their money into a savings bank at a short distance from, rather than into one nearer, their homes. For those reasons they must anticipate that in a short time the new banks would absorb not only all future deposits, but also a great part, if not all, of those which had been made in the existing savings banks. It was for the House to determine whether such a result would be good or bad; but at all events they ought to prepare both themselves and the managers of existing banks for that result. There were three methods, any one of which they might adopt. They might so limit the sum to be received at the post office savings banks as to prevent them from entering nto competition with existing establishments. They might dovetail the new system into the old by making the post office savings banks auxiliary and subsidiary to the existing savings banks by making them correspond directly with them instead of with the London establishment. Then, the question arose, whether, since various attempts had been made to amend the savings banks, without any satisfactory result, it would not be better to put an end to them at once, and substitute the Post Office banks in their place? That course could not be contemplated without some apprehension; but, still, if the new hanks were to compete with and exhaust the existing savings hanks, it would be much fairer and much more statesmanlike to look the danger in the face, and determine at once which of the two systems was to he retained. He owned that he was very favourable to the existing banks, and he greatly lamented that no Government had hitherto but upon a plan for remedying their defects. There were evils in the system no doubt—a greater degree of security was desirable. He believed, however, that the recommendation of the Committee which sat two years ago might be turned to account. He thought there ought to be some kind of central body possessing the confidence of the Government on the one hand, and of the local managers on the other, from whom the local banks might be willing to receive advice and instructions without that jealousy which appeared inevitable as long as they were in direct communication with the Government. He feared, he repeated, that if the proposed measure were carried out the old savings banks would be exhausted, and he did not believe that the new system could be worked with such machinery as the Post Office possessed, and without running very serious and improper risks. To make money receivable and payable at the price of stocks would be the only way of avoiding the great risk to which they would otherwise be exposed. He apprehended also that the post office savings banks would not take root in the villages where they were most wanted, and would be almost exclusively confined to the towns, where they would overthrow the existing savings banks by drawing away their deposits. This would not be fair to the managers, unless the result were distinctly foreknown and fully prepared for. He would not, however, oppose the second reading; but he hoped the right hon. Gentleman the Chancellor of the Exchequer would consider the points he had suggested.


believed that the measure would be a great boon to the people, as it would provide good savings banks where none now existed, and safe banks where they did exist—a very desirable matter. He could not, however, very well see how the existing system of savings banks could be made to dovetail with the new one, because if the Government was to take upon itself the responsibility it was necessary that it should also possess the control. It should also he remembered that when once they had embarked in this new scheme there would be no drawing out of it afterwards; and they ought to consider whether the existing organization of the Post Office was satisfactory for the purpose—for instance, whether it would not require, especially in country districts, a new class of postmasters and mistresses?


said, that he could not understand the objections of the right hon. Gentleman opposite (Mr. Sotheron Estcourt) to the proposed scheme. For himself he had arrived at an entirely different conclusion. He hoped that the proposed scheme, if found practicable—having the direct responsibility of the Government as a security to the depositors, and with the direct control of the Government over its own officers—would entirely supersede the existing savings banks, and the sooner the better.


thought the proposed system would be exceedingly beneficial to the industrious classes of this country. The present system of savings hanks could not be extended over the whole country, and in fact there were only 600 altogether; but there were no fewer than 2,400 money-order offices in connection with the Post Office. The system had, therefore, been already tried, and found perfectly successful. It had been so well appreciated that the business had expanded with wonderful rapidity, and was conducted with the greatest regularity and satisfaction to the public. He thought it was not a necessary consequence of the new system, that the existing savings banks were to be destroyed by it; but if that were the result, it could only be from the proved superiority of the new system. He had been assured by Sir Rowland Hill, and by all the gentlemen whose departments would be charged with the carrying out of this plan, that it would work exceedingly well; and he could state that Mr. Sikes of Huddersfield, whose opinion should be most influential on this question, as he had originally suggested the measure, after the assurances of its practicability given by the Post Office authorities, was a hearty supporter of the plan.


declined to discuss the Bill at a quarter-past one o'clock in the morning. All he would say was that a Committee which sat in 1859 recommended that the savings banks should be dealt with in one way, which was quite a different way from that proposed in the present Bill.


did not so much complain of what was done as of what was not done. He questioned whether the Post Office would not be overloaded with work under the present Bill.


said, that nothing had been stated with regard to the limit of deposits under this Bill.


said, the limit of deposits under the proposed measure would be the same as in the existing savings banks. The Bill would extend to Ireland; and if the objection was that the salaries of postmasters in Ireland were small, it was really an argument for the Bill, because whatever work they did under it they would be paid for, and it would tend to improve their position. As to not legislating at the same time fur the old savings-banks and the new as had been suggested, there would have been little chance of success had he clubbed together two perfectly distinct matters, and attached to the new plan, which was perfectly practicable, the consideration of remodelling the present savings banks, which had hitherto been found to be perfectly impracticable. The statement that the Committee of 1859 had recommended legislation in a totally opposite direction was entirely erroneous. He was not aware of a single recommendation that was not compatible with the present Bill. Whether the Government was favourable to the adoption of every recommendation of their Report was a question on which it was not necessary to give an opinion. The Bill did not prejudice the Report of the Committee, but passed by that and all controverted matters in order to do good in a manner upon which they were all agreed. As to the vast dimensions which the undertaking might possibly assume, he could not say whether the system would be very extensive or not; nor could be anticipate whether the operation of the new banks would be to draw away custom from the present savings banks. No doubt many depositors would be attracted by the system of se-cresy, but a great deal of the favour with which present savings banks were regarded depended upon the personal confidence which the depositors felt in the managers of those banks. Experience only could show whether local associations and personal influences would continue to operate to their full extent in favour of the present banks; but if the old suffered from the competition of the new it could only be because the new were better, and if so they ought to have the preference. But, however that might be, he did not deem that the object of the Bill was competition with the old hanks. Its proper object was to supply facilities which did not exist at present; and, undoubtedly, the first duty of the Postmaster General would be to look to the establishment of the savings banks in those places where either no savings bank existed, or those which did exist afforded very narrow facilities. He could not undertake to define the number of banks which would be established under the Bill because he believed that, in addition to money order offices, there were many postmasters of character and qualifications quite adequate to the transaction of business such as would be carried on under it. At the same time it was not the view of the Government that all money-order offices, or anything approaching the whole, should at once be constituted post-office savings banks. That might be the way to break down the machinery of the Post Office. The duty of the Postmaster General would be to select a moderate number, and to extend them in proportion as he found occasion, the test and index of the occasion being the demand for such banks by the public. It was not his wish nor would it be just to draw away depositors from the present banks by offering a superior rate of interest. The present savings banks were at the outset established on the theory of giving a bonus, and while he did not censure that system it must be distinctly understood that the new banks must be strictly self-supporting. The desire was not to feed them at the expense of the Post Office Revenue, but to maintain and increase that revenue, and certainly as Chancellor of the Exchequer he had no intention to found a system which would surreptitiously be fed at the expense of the annual revenue of the State. With regard to the rate of interest he agreed that it ought to be carefully considered in Committee. It was a subject on which he had considerable doubt. He could rather fix it too low than too high; and it was entirely an open question with him whether it should be a fixed rate or a maximum somewhat lower than the maximum of the present savings banks. The right hon. Gentleman (Mr. S. Estcourt) took financially the view that it was insecure on the part of the Government to hold deposits at present as money at call; and that any increase in the amount of deposits would be extending the danger. But if such a course were dangerous to the State, they ought to stop the augmentation of the present savings bank deposits, which increased year by year, and the only complaint against which was, in his opinion, that they increased too slowly, because it proved that the people had not adequate facilities for laying by their savings with perfect security. The system of savings banks had been established for forty-five years, during which they had had every description of speculation, the severity of a com- mercial crisis, the pressure of a dreadful famine, and almost every trial that could befal a new system, and although holding a great amount of money at call, there had been but a small pecuniary loss—and, in comparison with that loss, the establishment of such a system was immeasurably of greater value. The right hon. Gentleman had alluded to the risks of the new system now propounded, but he must remember that all postmasters were compelled to give bonds for the due performance of their duties, and for himself he had no doubt that the Post Office machinery was admirably suited for the purpose. Indeed, had that system, as it now existed, been in operation forty-five years ago, he believed that no one would have dreamed of the present savings hanks system. If the addition to the labours of the Post Office were not too sudden, he had no doubt that department would be fully able to meet the demand made upon it. And it was a small addition, for while the intromission of monies paid in and out of the savings banks only amounted to between £2,000,000 and £3,000,000 annually, the money that passed through the Post Office was no less than £13,000,000. He agreed fully that the question was one that should be carefully considered in Committee, but he trusted that there would be no objection to the Second Reading of the Bill.

Bill read 2°, and committed for Friday.

House adjourned at a quarter before Two o'clock.