COMMITTEE.

HC Deb 27 May 1875 vol 224 cc943-90

Order for Committee read.

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

MR. FAWCETT

moved— That, in the opinion of this House, it is inexpedient to pass a Bill which might cause the Savings Banks and Friendly Societies Funds to he less securely invested than they now are, and which does not provide any adequate guarantee that the National Debt Commissioners, in whom these funds are vested, will not annually have to make up a considerable deficit by a Parliamentary grant. The hon. Member said, he very much wished the responsibility of challenging some of the principles contained in this important Bill had been undertaken by some hon. or right hon. Gentleman sitting on the front Opposition bench, who could have spoken with the experience of that authority which official life gave. In order to justify the course he was taking he should state what had happened with respect to it. It had been alluded to by the Chancellor of the Exchequer in his Budget speech and on subsequent occasions, and its importance had more than once been acknowledged by the Government, but when the second reading came on at 1 o'clock in the morning he was astonished to find that Government was determined to force it through at a time when no discussion could take place. Under these circumstances, he had determined on the adoption of a course by which discussion would be ensured. The object of the Bill, so far as he understood it, was to prevent the gradual growth and development of the deficit which had arisen in consequence of the funds of the old Savings Banks and of the Friendly Societies being invested in such a way as not to get an amount of interest adequate to meet the interest which had been allowed by the Government upon the funds entrusted to them. In consequence of this a debt or deficiency of £3,000,000 had grown up. No doubt this deficiency should not continue; but what they had to consider was whether the proposal of the Government would prevent it occurring again, and whether it would do it in a way that should be supported by the House. Before considering this, however, he would point out one great deficiency in the Bill, and that was that he could not see any steps that were taken to get the Commissioners out of debt—that was, to get rid of the debt of £3,000,000. The reduction of the National Debt was just now a fashionable cry; yet the Chancellor of the Exchequer had not the courage to face this debt of £3,000,000. He would now ask the House to consider what the scheme was to prevent a recurrence of this deficiency. It happened that the Commissioners to whom the funds were to be entrusted were to have three funds under their control—the Friendly Societies Fund, the Old Savings Bank Fund, and the Post Office Savings Bank Fund; and all these were to be amalgamated together in hotchpotch. As there had been a considerable gain upon the Post Office Savings Bank Fund, it was proposed that this should go to make up the deficit resulting from the investment of the Old Savings Banks and the Friendly Societies Funds. The second proposal in the Bill was not less questionable. Hitherto the Commissioners to whom the Old Savings Banks and the Friendly Societies Funds were entrusted were not allowed to invest their funds in any but Government securities. They were now to be allowed to invest a portion of their funds in local securities, in the Consolidated Stock of the Metropolitan Board of Works, and in certain local securities called into existence by local authorities. It seemed to him that this proposal was one of so much importance that it should be most carefully considered. It had very important direct and also indirect consequences. He was afraid that if these funds were allowed to be invested in local securities they would throw a kind of indirect Parliamentary guarantee over these securities, which might involve them in some very serious complications. There were also direct consequences of a very important kind. It was perfectly idle to suppose that they could get larger interest without additional risk. If these local securities involved no greater risk than Government stock, why had the Chancellor of the Exchequer stipulated in this Bill that only one-fourth of the funds entrusted to the Commissioners should be invested in these local securities? If, on the other hand, these local securities involved any additional risk, then he said that they were embarking in a most dangerous and perilous course in allowing funds which were in-trusted to them as trustees to be invested in anything which had one iota of additional risk as compared with Parliamentary security. One of two things must happen. If the Post Office Savings Bank funds were to be used to make up the deficit in the Friendly Societies and the old Savings Banks funds, then it was clear that the depositors in the Post Office Savings Banks did not receive their just amount of interest, and that they were taxed by a part of their funds being appropriated to the depositors in the old Savings Banks and in the Friendly Societies, in order that these depositors might have a greater amount of interest than was properly appropriated to them. Was it intended to prop up the old Savings Banks by artificial encouragement? This was not a just or right proposal, or one that should be adopted. There was one obvious thing, that these funds had been invested in securities that did not allow sufficient interest to pay what the old Savings Banks and the Friendly Societies investors received. Would it not, therefore, be better to adopt the common-sense, straightforward course of reducing the interest so as to prevent a loss, instead of making good the loss by taking something out of the pockets of the subscribers to the Post Office Savings Banks, and by allowing the proceeds of the funds to be invested in other securities which were not so safe as those which had a Parliamentary guarantee? Again, as the Bill stood they had no security that it would do what it was intended to do. If a deficit should arise, what was to take place? The House would be called upon each year to make good a deficiency out of the general taxation of the country because the subscribers to the old Savings Banks and to the Friendly Societies were to receive more interest than they were entitled to. He was anxious to see Friendly Societies flourish, and to encourage providence; but if the House gave encouragement to the idea that one particular kind of providence or one sort of prudence ought to be rewarded or encouraged by premiums levied upon the general taxation of the country, it would involve a principle that was very unjust. If they were once to sanction the principle that a deficit was to be annually made up by a Parliamentary grant, they would encourage a feeling among the people that providence was to be encouraged by Parliamentary assistance. He would say one word upon Clause 7 of the Bill, which seemed to him to contain some very curious and obscure proposals about converting Perpetual Stock into Terminable Annuities. So far as he understood, it would place great power in the hands of the Treasury by warrant to convert Permanent Stock into Terminable Annuities for short periods, such as 10 or 15 years, which might cause great financial confusion by suddenly and greatly increasing the annual charge. He could not see any advantage in creating a 2½ per cent stock, and he thought that the clause which would permit one was well worthy of the consideration of the financial authorities of the House. He had brought forward this Resolution believing that it would be unwise for them to adopt any arrangement which contemplated that Parliament would have to supply a deficit of an annual grant; because the investments of the old Savings Banks and Friendly Societies funds were treated in such a way that those who were interested in them received a larger rate of interest than could be legitimately made upon the investments by the National Commissioners; and therefore he asked the House whether it was expedient to sanction this new proposal, that funds which belonged to the people, and were in-trusted to the National Commissioners, should be invested in securities which had not a Parliamentary guarantee.

Amendment proposed, To leave out from the word "That" to the end of the Question, in order to add the words "in the opinion of this House, it is inexpedient to pass a Bill which might cause the Savings Banks and Friendly Societies Funds to he less securely invested than they now are, and which does not provide any adequate guarantee that the National Debt Commissioners, in whom these funds are vested, will not annually have to make up a considerable deficit by a Parliamentary grant,"—(Mr. Fawcett,)

—instead thereof.

THE CHANCELLOR OF THE EXCHEQUER

This question of the Savings Banks deficiency is certainly a rather complicated one, and I am not surprised that many persons who have only given a casual attention to it are puzzled by it; but I am rather surprised that the hon. Member (Mr. Fawcett), who pays more attention than the average of Members to these questions, should have taken the line that he has done with regard to this Bill. He has not sufficiently considered what the real position of the question is. He speaks of this Bill as being one to place the funds that belong to depositors in Savings Banks and Friendly Societies, and which are in the hands of the Government, as trustees, upon securities that are less safe than those which they are now invested in. That is really an entire misrepresentation of what is proposed. These funds are not funds that belong to the depositors, nor are they in the hands of the Government, as trustees; and they are not invested by the Government in Parliamentary or any other securities in the sense in which funds which belong to a cestui que trust in private life are invested by the trustees. It is quite clear that if I were trustee of a marriage settlement, and there were funds intrusted to me, and I invested those funds in some security which failed, I should be doing an improper thing, and should be responsible for the funds which would be lost. That is not the case here. The security given to the depositors in the Friendly Societies and the trustees of, or depositors in, the Savings Banks is the security of the Consolidated Fund. The monies are placed by the trustees or the depositors in the hands of the Government, and we are responsible for these funds; and though what the Government afterwards do with them may, indeed, be a matter of financial importance, and a matter that the House has the right to determine, yet, so far as the depositors are concerned, they have absolutely no interest whatever in the matter. They have the security of the Consolidated Fund, and whether the Government have invested the money well or ill, the title of the depositors to that money is perfectly safe, and they are secure. I put this forward that there may be no mistake in the country, for it is important that this should be so. I see misleading paragraphs in newspapers occasionally, and I have heard some speeches, which, if read out-of-doors, would be calculated to create alarm, and to make depositors think that tricks are being played with their money. I wish it to be distinctly understood that this, at all events, is out of the question, and impossible. The hon. Gentleman says that there is a deficiency, and that it is right to put an end to it; but he says—"You are not taking steps to put an end to it." Now, I think that we are taking such steps, and that they are perfectly legitimate steps. The right hon. Member for Greenwich (Mr. Gladstone) the other night, and the hon. Member for Hackney to-night, said—"You are doing an unjust thing to the depositors in the Post Office Savings Banks by using their surplus to counteract the deficiency upon the old Savings Banks funds." But this is not the essence of the proposal. It is a curious thing, by the way, that the surplus on the Post Office Savings Bank fund does almost exactly meet, or a little more than meet, the deficiency in the other funds. The excess in the interest of the Post Office Savings Bank account to the credit of the National Debt Commissioners is £118,000, and the deficiency on the old Savings Banks and the Friendly Societies funds is £111,000, so that if we set one fund against the other, there would, instead of a deficiency, be a small surplus. I think, as a matter of book-keeping, that we should keep the accounts altogether, and as matters happen to stand, there would in that case be no deficit. If there should be—and one may at any time arise—it will be for Parliament to correct it by a vote, and this is the main principle of our plan; but as the matter stands now there is no occasion for a vote. But where is the injustice? What was the arrangement with regard to the old Savings Banks? The arrangement was this. In the first instance, the Government undertook to take charge of all monies that were deposited in Savings Banks and to allow an interest of about 5 per cent. The amount which they were able to earn as interest upon monies lying in their hands was less than 5 per cent, and therefore they incurred a loss. After a time they reduced the interest more than once, until at last it was reduced to £3 5s. per cent; that is the amount now paid by the Government to the Savings Banks trustees. The Government invested the money, and, in consequence of the greater latitude given to them as to investment some time ago, they make about £3 7s. per cent interest. Therefore, so far as the depositors in the Savings Banks and the Government are concerned, the Government are making enough to enable them to pay the interest which they allow, with a small margin to set against the expenses of management. There is, therefore, nothing unfair in the arrangement made that the Government should allow £3 5s. per cent interest upon the money received from the old Savings Banks. But, notwithstanding, there is a deficiency, which goes on increasing; the effect of that deficiency being that the Government are obliged to carry compound interest upon it, and though they make £3 7s. per cent, they cannot, of course, correct the deficit or restrain the deficiency from accruing. It is a question how that is to be dealt with—how it is just to deal with it. The State must deal with it. The hon. Member for Hackney says that the most simple plan would be to reduce the interest paid to the depositors. I fail to see the justice of that. If you were to reduce the interest you would make the present depositors in the Savings Banks pay for a deficiency which they had nothing to do with incurring. It is quite as unjust to take the money derived from investments of Savings Banks money deposited at the new rates to pay the deficiency which has arisen on the money deposited at the old rates, as to take that derived from the new Savings Banks to pay the deficiency on the old Savings Banks; but the injustice is increased if you consider how this deficiency arises. It arises, in fact, as has been said, from giving a larger interest than is earned. But that is not the whole explanation; a considerable portion of it arises from the use which former Chancellors of the Exchequer have made of the funds in their hands for public purposes. The Committee which sat in 1857, of which Mr. Sotheron Estcourt was Chairman, found that a very considerable amount of loss had been produced by the dealings of Chancellors of the Exchequer with the funds in their hands, which they used for the purpose of keeping up the price of the funds, funding Exchequer Bills, and other purposes, very legitimate at the time, and, perhaps, profitable to the Government, but with which the depositors in the Savings Banks had nothing whatever to do. Therefore, it would be most unfair that the interest should now be reduced in order to meet a deficiency so created. Then comes another question. The hon. Member for Hackney says we are going to apply a surplus that belongs, in some way or other, to the depositors in the Post Office Savings Banks. How does it belong to them? The Post Office Savings Banks were constituted in I860 originally, and they have since been extended on the distinct understanding that the depositors were to be entitled to a certain rate of interest and no more. It was distinctly stated at the time by the right hon. Gentleman the Member for Greenwich that if there was any profit, that profit would belong to the State. The State said—"We are ready to take your money; we will be responsible for it, and will pay you so much interest for it;" and so long as the State pays the interest and takes care of the money it fulfils its contract with the depositors, and to whatever use it applies any profit which it may make, it is perfectly within its right to do so. Is there, then, any more appropriate use of any profit made than in applying it to the same class of persons you intend to benefit. By the competition that was set up by the establishment of the Post Office Savings Banks you are diminishing the profits of the old Savings Banks by drawing away a certain number of profitable depositors—that is to say, depositors receiving a rate of interest calculated to leave a profit to the State. There is now a somewhat larger number of depositors in the Post Office Savings Banks than in the old Savings Banks. That being so, there is nothing unreasonable in the Government considering that we have a moral, as undoubtedly we have a legal, right to use this money, which is the surplus of the arrangement with the Post Office Savings Banks, in order to stop the deficiencies that otherwise would accrue from the old Savings Banks. When the Post Office Savings Banks were established great jealousy was expressed by the directors of the old Savings Banks. They said the new Post Office Savings Banks would come in upon them and carry off all their business, but the Chancellor of the Exchequer of the day was very tender of their interests. He said he would take care the new Post Office Savings Banks should not compete unequally with them, and he fixed the rate of interest lower than for the old Savings Banks; but, with the more perfect security and the other conveniences offered, they were content with that lower rate of interest. Those were the terms on which the bargain with the Post Office Savings Banks was entered upon, and to he told that we are not to make use of the profit of the Post Office Savings Banks in the manner proposed is scarcely consistent with the arrangement made when they were established. There is another part of the arrangement. The hon. Member for Hackney takes notice of the fact that it is proposed to allow some greater latitude in investments to the Government in dealing with these funds—that a certain proportion—one fourth—should be invested in local securities of a certain character; and the hon. Member says it is a very improper thing to do, because the very fact that we are to get a higher interest on these investments proves that the security is not so good. Of course, speaking broadly, it is generally true the higher the interest the worse the security; but it by no means follows that a security which bears a little higher interest than another is a less safe security. A security may be less convenient or less convertible, and therefore it bears a lower rate of interest. There may be explanations of that sort. But as regards the depositors, as I pointed out just now, it does not signify one half-penny whether the securities are good or bad. It is for the Chancellor of the Exchequer and the House—the watch-dog of the Chancellor of the Exchequer—to see that he does not make an improper use of the balances in his hands. We must consider whether it will not be a proper thing for the Chancellor of the Exchequer to make use of these balances by investing a portion of them in the securities of local authorities. This proposal, in fact, connects itself with the general schemes of the policy of the Government which has two objects in view—the immediate and limited object of endeavouring to get a little better interest for the money to cover the calls that the Friendly Societies and Savings Banks have, and the other of being enabled somewhat to assist local bodies by lending to a certain extent upon the system and scheme that is incorporated in another Bill before the House—the Local Authorities Loans Bill. There is nothing new in this, because we are continually lending money to the Public Works Loans Commissioners. When the right hon. Gentle- man the Member for Greenwich brought in his Post Office Savings Bank scheme he threw out a suggestion that a portion of the money might be lent to the Public Works Loan Commissioners. If the House will consider the matter, they will see there is a very great amount of delusion—and mischievous delusion—about this matter, which only requires a little clear statement to put an end to. I hold this—for the monies placed in our hands by the depositors in the Post Office Savings Banks on certain terms, by the trustees of the old Savings Banks on certain terms, and by the Friendly Societies on certain other terms—to these three classes of persons the State has—for the two former absolutely, and for the third morally—become responsible. There can be no doubt whatever that any deficiency that might arise in these funds must be made up in some shape or other by Parliament. Her Majesty's Government think it, therefore, undesirable that there should be any accumulating deficiency going on, making a false impression, and that any deficiency ought to be brought to the notice of Parliament from time to time, and voted out of public money. If it should appear that large Votes are to be asked for annually, and we shall have to pay more than we can virtually make out of these monies by way of subsidizing providence, as it has been called, nothing can be fairer than to challenge the propriety of the House making a Vote, of whatever amount, year by year to meet the payment to the Friendly Societies or Savings Banks. But that will not, probably, have to be done, and until it comes to that the ease need not be considered. If you adopt this plan we shall have stanched the growth of deficits, and provided, in all probability, for the gradual extinction of the accumulating deficit, and you will have provided a system for bringing the matter fairly before the public and the House, and to get rid of the mischievous and dangerous delusion which extends itself over the public mind, the idea that there is some insecurity in these funds. With respect to another point raised by the hon. Gentleman under the 7th clause—the use of the Savings Banks monies in creating Terminable Annuities—it will be more convenient to deal with that in Committee.

MR. GLADSTONE

This is a question of which the Chancellor of the Exchequer has truly observed that it is of great importance and interest; and, at the same time, some of its financial points are complicated in themselves, and require a great deal of historical knowledge in order to properly discuss them; and I shall have to criticize his speech on the ground that his knowledge of it is not so extensive on all points as it ought to have been, because I can point out one fact of the utmost importance which he has entirely omitted to notice. I emphatically agree with my right hon. Friend in what I think it will be said is the fundamental principle of his speech with regard to these deposit—that they are held by the Government as bankers, and not as trustees. I may well hold that principle, because it cost me much labour and anxiety to establish it in the face of considerable opposition: I hold by it firmly, and I am prepared to carry it to all its consequences. While, therefore, I criticize the proposal of my right hon. Friend to invest these monies in the securities of local Boards, I shall do it entirely on the principle to which I have referred. I shall not pretend to say that it involves any question of the safety or of the danger of the deposits, but limit myself entirely to the question whether it is wise for the public bankers, in the use of their own money as such, to invest it in securities issued by local subordinate governing bodies, who may in many cases fall into difficulties, and when they do, as can be shown by history, they can bring pressure to bear upon the Government to abate the rights of the public, of whom they are the bankers. My right hon. Friend misunderstands, or has not represented accurately, the speech of my hon. Friend the Member for Hackney (Mr. Fawcett). I did not understand him to found his case on a denial of the fundamental principle that the Government are bankers and not trustees, but from the starting point of the Chancellor of the Exchequer, which, as I have said, is the starting-point which I myself take. I am unable, however, to travel with him a single step along the road on which he marches, though I agree with him in some of his details. The principle of bringing to account every year the deficiency and liability the public are about to incur is a good one, and he deserves credit for having provided a time when he might fairly propose to give effect to that principle; but I will endeavour to clear up the vital and fundamental confusion in the arguments of the Chancellor of the Exchequer. He says that the depositors in the Post Office Savings Banks have no claim whatever to one shilling of the balance accredited to their account and now in the hands of the public. It is quite true and perfectly undeniable. I cannot, however, agree with his history of the Post Office Savings Bank in some important points. I think I am entitled to be an authority on that history in some respects; and I must entirely demur to the statement that the interest on deposits in the Post Office Savings Bank was fixed at the low rate of £2 10s. in order to prevent competition with old Savings Banks. It was fixed on a very different principle. It was fixed on a sound banking principle—that is to say, it was the highest sum which, in our then state of information, we felt morally certain that we could afford to pay without incurring loss or risk to the public. What has probably misled my right hon. Friend is that in the course of the argument on the subject—for I must say the Government of the day were grievously persecuted by the managers of the old Savings Banks—in order to obviate some portion of their unreasonable jealousies and most unreasonable claims, it was urged that when they received from the public £3 5s., while only £210s. was to be paid to the depositors in the Post Office Savings Banks, there could be no idea of competition. I hold that the true way to a sound and fruitful discussion of this question, as respects the objection of the hon. Member for Hackney, lies in the distinction which it is our duty to draw between our moral obligations in regard to the funds as they now exist either as to a deficit on the one hand or a surplus on the other, and the prospective policy which we are to pursue in future. The two things are totally and absolutely distinct. It is perfectly true that the depositor in the Post Office Savings Bank have not the slightest right to complain if we give the whole balance now standing to his account to endow the Lord Lieutenant of Ireland, as we bestowed a small endowment last Session; but I think he would have great title to complain if you tell him, as the Chancellor of the Exchequer does now—"I am going to establish two systems of banking—one to pay, and one not to pay. I am going to do banking for you in order to get a profit to give to the other customers." Is it inconsistent to object to such policy because we say we are bankers, and not trustees? What would one of ourselves say to a banker of ours who should divide his customers into two classes, for one of whom he would do business at a profit and the other at a loss, and if we ourselves were to stand in the position of customers for whom he would do business only at a profit in order to apply that profit to the benefit of those for whom he did business at a loss? Surely it would be very bad policy to establish or carry on any banking account whatever except on one principle—that it should be a paying account. Is it a paying account? Will it be a paying account? What proof is there that it will be? The right hon. Gentleman has said that the deficiencies on the old Savings Banks is due in some degree to the proceedings of former Chancellors of the Exchequer, which, might be called tampering, so far as the old Savings Banks are concerned, and about which there is a great deal to be said. The right hon. Gentleman refers to the periods of Lord Althorp in Earl Grey's Government, and Mr. Goulburn in that of Sir Robert Peel's Administration. Mr. Goulburn, in the prosperous state of things then existing, applied £20,000 of the Savings Banks money daily for a considerable period to the purchase of stock at very high rates, which materially contributed towards enabling him to bring in a Bill, which he carried, in 1844, and which produced an immediate saving of £600,000 to the public, and an ultimate saving of£ 1,200,000 a-year. My right hon. Friend referred to the authority of a Select Committee. But was Mr. Sotheron Estcourt or Sir Henry Willoughby so conversant with the financial condition of the country as to be altogether competent to guide this House? I am not aware that Mr. Goulburn in applying £20,000 to the daily purchase of stock did, in the slightest degree, any damage to the Savings Banks fund. But I do not take my stand upon that, because the particulars are not fresh in my memory. What I want to know is the amount which my right hon. Friend estimates is due to these proceedings on the part of Chancellors of the Exchequer? [The CHANCELLOR of the EXCHEQUER: I cannot name any sum.] Has he no idea? Does he think it is £1,000,000 or anything like £1,000,000? If I say it is not £1,000,000, is he prepared to contradict me? I want to know what would be the answer if I gave such an opinion, and I will venture the opinion that it would be extremely hard to show that anything like that sum was due to the undertakings of Chancellors of the Exchequer. However, I am willing to make a liberal allowance, and even if £1,000,000 were a reasonable estimate—and I think it an excessive one—no great damage has been done to the funds of the Savings Banks in that way, for I myself, as Chancellor of the Exchequer, threw £2,000,000 into the gulf in order to meet this deficit by the Act which converted £20,000,000 of Three per Cents into £20,000,000 of cash deposits. I saddled the public with the charge of about £2,000,000 towards the extinction of the Savings Banks deficit, and therefore the whole of the Savings Banks deficits, and much more as it now stands, is due solely and simply to the fact that we have been banking on principles that no banker would have adopted. It gratifies the benevolent crotchets of certain classes of politicians; but it is a principle and practice which is thoroughly unsound, as I believe the Chancellor of the Exchequer will admit. My right hon. Friend complained of me the other night, that I made everybody's head ache by explaining that the Chancellor of the Exchequer had two different capacities—one the character of a financial administrator, and the other that of a banker. But to-night he has had to dwell upon his character as a banker as distinct from that of an administrator of the national finances. The right hon. Gentleman is now proposing a bank for wholesale banking principles, or he is not. We have got a deficiency of £3,300,000, exclusive of the Friendly Societies, and to that a sum of between £4,000,000 and £5,000,000 must be added, and for that amount the public must be sconced in consequence of our bad banking. What are the indirect results of this bad banking? One indirect result is this—that you place your funds in continual danger. You pay to the depositor more than the market rate of interest, and thereby make your Savings Bank an object of investment for people who go into it for investment, and to remain with you as long as they get a better rate of interest than the public securities will give at the time, but whose intention it is to withdraw their money just at the time when it is most inconvenient for you to pay it. That is the history of the greater part of this deficiency. My right hon. Friend knows very well that the statement he has given us, that he can now make on an average £3 7s., is no conclusive and definitive settlement of the case. He has no reserve whatever to meet periods of difficulty. What would my right hon. Friend say of a banker who looked at the interest he was able to give at a certain moment on the balances in his hand, but who never took into account the losses to which he would be subject on sudden calls for the withdrawal of money, when he must necessarily sell securities at unfavourable terms? My right hon. Friend has submitted this case without making the slightest allowance for the fact that when times of great pressure come, when times of great distress arise, and when the public has to borrow largely, a great portion of the old Savings Banks depositors rush in and make withdrawals far exceeding your receipts, and you are obliged to encounter heavy losses on these withdrawals. It is palpable and undeniable that my right hon. Friend with a balance between £3 5s. and £3 7s., with this 2s. per centum, has not allowed 1s. for these periodical returning losses, and which I affirm are the main constituents of this heavy deficiency we are now called upon to meet. I think I have established that. My right hon. Friend means to have two systems of public banking—one system which is to pay and which shall draw profits—namely, the Post Office Savings Banks; the other a system which shall not pay, which in favourable years may enable him to make ends meet and no more, but which in unfavourable years—as experience showed, if my right hon. Friend will not shut his eyes to it—cannot possibly pay, and which he can only sustain by making over to it the profits he derives from the other operation. I say that no private bank would so deal with its customers as to divide them into two classes. That is a simple statement of the case, and until my right hon. Friend is able to produce facts and figures totally different from those produced to-night or on any former occasion, I must abide by it. I also wish to point out the effect of this principle of paying interest over and above the market rate. It is associated with something that I always hold to be a great evil—namely, the creation of a sham vested interest in the country. We have not given any security to the Savings Banks depositors. Do not let me be told that I am giving cause for unnecessary alarm when I proclaim that it ought to be known to the whole world that no public security is given whatever to the depositors in the old Savings Banks. There is an absolute public security given to the trustees, but as respects the trustee, and between the trustee and the depositor, the trustee is under no liability whatever to the old Savings Banks depositors, unless it can be shown that he is guilty of fraud or such connivance at fraud as amounts to guilt. This practice of not transacting matters of business upon principles of business, but of making it a matter of sham banking and pseudo-benevolence, has created this vested interest, and has set up this power in the country which presumes to interfere with the proceedings of Parliament, which exercises a most illegitimate pressure in all directions—as I know well from experience—and which makes it difficult for the House of Commons to give the public that accommodation which is so desirable, both for them and the State. Another consequence of this system has been to oblige you to introduce into your system most vexatious, paltry, and petty restrictions. No depositor is allowed to deposit in an old Savings Bank more than £200. Why not? Because you know that the inducement to deposit is illegitimate, and as it is illegitimate you keep it within the limits of that amount, so as to make it, as you choose to Think, for the benefit of the poorer classes of the community. In the same way no depositor is allowed to pay into the Savings Bank more than £30 a-year. Will it be believed that these restrictions were imported into the old Savings Bank system because it was an extravagant system and paid to the depositor more than it could afford to pay. I myself was compelled—I am almost ashamed to say so—as the price of ob- taining the measure, to introduce these absurd and vexatious restrictions into the Post Office Savings Banks, and to inflict upon the Savings Banks depositors, along with the low rate of interest which I was able to afford upon sound principles, those vexatious and silly restrictions which belonged to the other and illegitimate system of Savings Banks, and which had created such a jealousy, such a spirit of monopoly, and such a spirit of aggression in a portion of the managers of those Savings Banks that they would not allow justice to be done to those who would give us their money upon terms convenient to us and profitable to them. All these restrictions my right hon. Friend proposes to maintain, and at this moment the man who wants to go to the Post Office Savings Banks, and who is content with a rate of interest from the public which comes to £2 7s. a-year, is positively not allowed to deposit more than £30 in any one year, for fear he should give offence to any of the old Savings Banks. It was impossible to carry absurdity much further. This is called a reforming measure, but it does not contain one line for removing this gross inequality. It coolly adopts the unsound principle to which I have referred, and asks Parliament to sanction two systems of Savings Banks, one of which can walk upon its own legs, and one which cannot, and having, therefore, to be carried on the back of the first. I feel a sort of vested interest in the Post Office Savings Banks, and I have always watched them with intense interest, and I have always felt convinced that they would become sources of benefits and advantages more than I could easily enumerate. They established relations between the State and the thrifty portion of the people—I wish to Heaven they were a larger portion of the people—that were wholly unknown before. It is quite a mistake to suppose that the old Savings Banks before met the wants of the people. They did not meet the wants of the people. The number of independent workmen, the number of heads of families holding an independent position in the working classes of society that are depositors in the old Savings Banks is trifling. It is a very small proportion of the whole. It is the Post Office Savings Banks which really go home to the people, and in which the people have confidence. I do not say a word against the old Savings Banks if they are only content to be treated upon reasonable principles, and if they will not interfere with the House of Commons when the House wishes to apply the same principles to other people. These banks are very useful and valuable, but their utility is almost entirely of an exceptional character, and limited to persons who are more or less in a state of dependency upon the upper classes of society, those who are objects of care and benevolence, or the class of domestic servants. But it is the Post Office Savings Bank that is the institution of the people. I do not claim for the Post Office Savings Banks one jot or tittle more than justice; but I say that justice is due to them, because they form this great, popular, and truly national institution. And they have thoroughly and entirely acquired the confidence of the masses of the community. I do not say that it pays you too largely; but I think, on the whole, it would be well to reserve large sums even for a longer period than that for which the Post Office system has now endured. About £2,000,000 were, some 10 or 12 years ago, given by the House of Commons to get rid of the Debt, which has immensely increased since that period. That the other system does not pay at all is clear from the deficits staring us in the face. There are many other things in the Bill which I dare say will be the subject of consideration when we get into Committee, and on which it is not necessary to dwell now. My right hon. Friend takes credit for what he calls the union, but what I should call the confusion of accounts. I will take the case of an insane banker, and I look on that as a fair parallel in the position in which we are now asked to place ourselves, with his two banking systems, the paying and the non-paying, and his two classes of customers, one of whom is asked to bear all the expense at which business is done for the other. If my right hon. Friend can prove to me that he can pay his £3 5s., and that, while paying his £3 5s., he can lay by every good year such a sum as every prudent banker would think fit to have to his credit, in order to meet those periods of danger which have always occurred periodically in former times, and will recur hereafter, then I will admit he has made good his case. But he has made no attempt to do that; and all he says is that, in favourable times, he pays £3 5s., and, subject to deductions, he gets £3 7s. He has not attempted to show that he has made any provision for a rainy day. [The CHANCELLOR of the EXCHEQUER: I propose to improve the investments.] My right hon. Friend proposes to improve the investments, and I admit that from his point of view that is a proposal which tends to better his position; but I am bound to say that I am not prepared to accept that improvement. I see such danger and I see such inconvenience in it. In a Parliamentary Government like this—and a Parliamentary Government which like ours is more and more proving its efficiency most of all in the facility by which local and individual pressure and claims of sectional and smaller interests are brought to bear as against the public—I am jealous and apprehensive for the sake of a trumpery sum of money of establishing a system such as that which my right hon. Friend proposes. He has been good enough to affiliate on me some of the responsibility, because I said that the money in the Savings Banks might with advantage be employed for the purposes of the Public Works Loan Commissioners; but that is a totally different thing. It establishes no new relations of any kind. The Public Works Loan Commissioners are a tried and independent body, to whom we have every reason to be grateful. These Savings Bank balances are public money, and to employ them through those Commissioners would be exactly the same as employing them in the Exchequer. It is a totally different thing if you determine that the Imperial Government of this country can wisely become the creditors of the multitude of small governing authorities dispersed over the whole surface of the country. Therefore, I am sorry I cannot admit the pecuniary plea which I fully grant the Chancellor of the Exchequer is entitled to urge. I will not detain the House by entering more fully into matters that may be treated in Committee, especially as I am anxious to keep the view of the House strictly concentrated on this one question—whether a system under which we are to receive the smallest sums of money all over the country, under which we are to pay £3 5s. under all circumstances for that money as money at all times, and to be liable to return it in times of difficulty—whether that, by prudent men, is to be called a paying system. If it is a paying system, on sound commercial principles; if it is a position which enlightened men in the City of London managing a concern for themselves would be content to maintain, then I grant my view is erroneous, and the view of the Government is justified. I contend it is otherwise, and if it is so, then the union of accounts so sanguinely projected by my right hon. Friend, so far from being a union, is confusion, and a mere device, not so intended, but in its effect, for hiding from Parliament and the country the clumsy, un work man like, and highly impolitic nature of the scheme we are invited to adopt.

MR. J. G. HUBBARD

said, the Parliamentary Paper which had been distributed that morning showed distinctly how they stood as regarded the interest allowed to depositors in the Post Office Savings Banks. The Returns for the year showed that £524,000 had been allotted as interest to depositors, and that there was a surplus of £18,000, after allowing for £99,000 expenses. One-fifth of £524,000 was £105,000, which could be taken from the existing surplus, making 2½ per cent into 3 per cent interest, without diminishing the necessary balance on the surplus of the account. The deficiency on the old Savings Bank account was exactly a quarter per cent. The deficiency of £3,000,000 had been existing on the old Savings Banks for some years. The interest upon that was £100,000 a-year. The average deficiency of receipts upon the ordinary Savings Banks during the 12 years ending 1870 was only £116,000, exceeding, therefore, by a very small sum, the interest on the deficient amount of capital. That was an exceedingly gratifying circumstance in connection with the ordinary Savings Banks. While he acknowledged that the question of the rate of interest was a very important one, which might with advantage occupy the attention of the House hereafter, he did not think it had been intended to raise it by the Bill now before them. [The CHANCELLOR of the EXCHEQUER: Hear, hear!] The object of the Bill was to condense the accounts of the old Savings Banks, the Post Office Savings Banks, and the Friendly Societies into one account, and he saw no reason why that should not be carried out. He had, however, a very decided objection to the clause which gave the managers of these banks the power of investing in local guarantees and debentures. That clause authorized a system which, he thought, would be exceedingly dangerous, not as regarded the depositor, but as regarded the integrity of the fund; and he did not see that there was any need to seek for a higher-paying security. There was an important question connected with this measure, which he hoped would not escape the serious attention of the House. He wished to ask whether it was desirable by a Bill of this kind to place in the hands of the Chancellor of the Exchequer personally the power of adding millions to the taxation of the country. That would be the effect of the power given by the 7th clause of the Bill as it now stood, if the Chancellor of the Exchequer chose to exercise it. That clause would enable the Treasury by warrant to direct the Bank of England to cancel a certain amount of Perpetual Annuities standing in the name of the Savings Banks, and to substitute Terminable Annuities of an equivalent value. Suppose, therefore, that in 1877 such directions were given for the cancelling of £14,000,000 of Consols, and the creation of £2,000,000 of Terminable Annuities payable to the year 1885. In that way £14,000,000 of Consols would be cancelled by a stroke of the pen by the Bank of England, and Terminable Annuities of £2,000,000, to last for eight years, would be substituted in their place. That might be done in the Recess; and when the Chancellor of the Exchequer brought forward his next Budget, he would have to show, among other things, what was the charge for the National Debt. In the previous year it might have been £27,000,000 sterling; now he would say it was £28,580,000. The interest on the £14,000,000 of Consols that had been cancelled was £420,000, and the substituted annuity would be £2,000,000. The difference—namely, £1,580,000, through the exchange of security, was added to the charge for the National Debt. It became one of those obligations for which the Finance Minister was bound to provide, and he was bound therefore to see that the taxation he imposed on the country was sufficient to meet the additional liability. He was sure that the present Chancellor of the Exchequer would not think of doing so cruel an act as that, but it might be otherwise with his successors; and if the right hon. Member for the University of London (Mr. Lowe) were again Chancellor of the Exchequer, there was nothing probably that would give him greater delight than making use of that special means of obliterating the National Debt by the creation of Terminable Annuities. As regarded the taxpayer, those Terminable Annuities were engines for enabling the Chancellor of the Exchequer to aggravate almost indefinitely his demand upon the taxpayer. On the other hand, as regarded administration, nothing could be more inconvenient than heaping together those Terminable Annuities in the way they had been hitherto treated. He asked the House whether it was prepared, by Section 7 of that Bill, to place on the Statute Book a provision which would give to the Finance Minister the power by his own arbitrary will of adding millions to the charge for the National Debt, and thus creating, at all events, a formal necessity for increasing and intensifying the taxation of the country. Let the question of the reduction of the Debt be dealt with on its own merits, and with the full knowledge of the House; but do not let them sanction a provision so utterly unconstitutional, and so fraught with danger as that to which he had referred.

MR. LYON PLAYFAIR

objected to the Bill, because it would have the effect of withdrawing public attention from the important fact that they had two systems of Savings Banks—one of which was a great financial failure and the other a great financial success. In 1871 the surplus of the Post Office Savings Banks was £445,000, and now it was £860,000. The Chancellor of the Exchequer said the public had a right to use that £860,000 in any way it desired. He fully admitted that; but he held that there was a public policy in the use which should be made of that surplus. Was it not better to use it as a means of going deeper down among the humbler classes, from whose savings it had accrued, in order to encourage thrift and frugality, rather than to use it to recoup the deficit which the State had incurred by its bad bargain with the old Savings Banks? The old Savings Banks were constituted on the principle of giving bounties to induce people to save; but experience showed that it was no longer necessary to resort to that expedient. While the depositors in the old Savings Banks received, on an average, £2 19s. 4d. per cent, the depositors in the Post Office Savings Banks got practically only £2 7s. What was the result? Why, that on account of the facilities together with the security and the secrecy which the Post Office Savings Banks afforded, the number of their depositors was continually increasing; whereas the depositors in the old Savings Banks were not now so numerous as they were in 1864. The Government had no control over the management of the older banks and that management was costly. It amounted to 1s. for every transaction compared with 5¼d. in the Post Office Savings Banks. The State was paying the difference and supporting a bad system of management, although it could get an abundance of money at the lesser rate of interest. Under these circumstances, it was not right to continue the bounty system. He had expected that this would have been a large measure of public policy, and that the Government would have collected the pence as well as the shillings of the poor. Why did we limit deposits to 1s., and refuse 6d. or 3d.? It would have been wise to have gone deeper in the encouragement of thrift. He had also hoped that the maximum sum to be paid in in one year might have been raised from £30 to £50, and that the wording of the Act might have been amended so that the restriction should apply only to the actual accumulation, and not to the sum paid in irrespective of what might have been drawn out, for at present, if a man had paid in £30 and drawn out £29, he could not pay in any more within the year. We might also raise the maximum of the total deposit, which was now restricted to £150, or, with interest, £200. This restriction was foolish when we had a system which was paying for itself, although it was necessary under the original system, which was carried on at a loss to the State. The mixing up of the accounts provided a surplus which was a convenient surplus for the Treasury to manipulate; but by mixing up the accounts we were deluding the poor. We were giving one set of depositors £2 19s. 4d. per cent, which was more than we could afford to pay, and another set £2 7s. per cent, and the 10s. per cent profit made out of the deposits of the second class paid the higher interest to the former. We might have met the deficit by boldly saying we would not give more than 3 per cent to the old Savings Banks. We might do it by raising the maximum yearly deposits from £30 to £50; or we might do it by allowing depositors to reach £500, instead of forcing depositors to invest in the Funds against their will; or we might do it by appropriating lapsed accounts, of which there were many that encumbered the books and never would be claimed. The first method—that of reducing the interest—would be the best, and it would be better than attempting to get an increased rate of interest by the questionable method of investing in local securities. This Bill simply put the two accounts into a hotchpotch account, and proposed that any deficiency should be met by a Parliamentary grant. It would have been infinitely better to have kept them separate, and to have asked for a Vote if necessary on each separate account. If one account only exhibited a deficit, Parliament, in course of time, would see the folly of continuing such an unnecessary and costly plan, and would not allow the financial failure to go on. There was no difficulty in merging the two systems, for 170 of the old Savings Banks had already been merged in Post Office Savings Banks. The Bill was intended to effect a fusion of accounts, but it really produced confusion, and it would render future reform more difficult. When he was Postmaster General he had looked forward to the opportunity of encouraging thrift by the Post Office Savings Banks, and he believed it might be done without loss to the State. If the Bill passed in its present form, every Treasury Board would oppose future reform, because it would be so convenient to use the surplus to prevent the appearance of a deficiency. Under these circumstances, he must support the Resolution of the hon. Member for Hackney.

LORD ESLINGTON

said, he thought that too much stress had been laid on the failure of the old Savings Banks system as compared with the new. The temptation offered to the poor to in- vest in the new Savings Banks, and accept a much lower rate of interest was the extreme convenience which the machinery afforded them for depositing their money. With regard to the much talked-of success of the new system, he would remind the House that, after all, it was still upon its trial. He hoped and believed that the debate of that evening, and particularly the powerful and warning speech of the right hon. Gentleman the Member for Greenwich (Mr. Gladstone), would have the effect of putting an end to the existence of two systems of Savings Banks. He feared, but trusted his fear might not be realized, that the speech to which he had referred would cause a run upon the old Savings Banks. He had never yet been able to understand why, under the guise of encouraging thrift among the poorer classes in this country, the taxpayers, who were far more largely composed of poor than of rich people, were to be called upon to meet the cost of conducting business which resulted in loss rather than gain. He hoped that some steps would be taken to remove the unnecessary restrictions now in force in reference to deposits in Post Office Savings Banks, and also that, if possible, the poorer class of depositors would be induced to invest in the public funds of the country by the offer of stock in small sums. He noticed that the Bill provided for the investment of the funds of these Savings Banks in the consolidated stock of the Metropolitan Board of Works and in debentures or other securities created by quarter sessions, town councils, or other local authorities. He objected to this invidious selection, and wished to know why the money might be invested in the securities of, say, school boards, while the securities of harbour boards, which were engaged in important national work, were not to be included.

LORD FREDERICK CAVENDISH

said, he calculated that the loss to this country on the interest upon deposits in the course of 30 years, or since 1844, amounted altogether to about £3,800,000. In the first five years following 1844 the annual loss of interest was about £24,000, and the £3,800,000 was not to be accounted for by that rate of loss annually, but by the fact that they had to sell out stock at such heavy losses in bad years, as in 1848—the year of the famine—when stocks had to be sold at a loss of more than £2,000,000. The Chancellor of the Exchequer seemed to have carefully kept that fact out of sight, and in the course which he proposed, he was preparing difficulties for his successors. The right hon. Gentleman the Chancellor of the Exchequer ought now, after the experience of so many years, to say what was the rate of interest which could be afforded to depositors. Let them not confess that they were too weak to do what they considered was right. The Government were strong, and had a large body of supporters, and ought to do what was necessary, although it might be unpopular. No one would propose to subsidize the depositors in Savings Banks out of taxation.

MR. GREGORY

said, there would be considerable force in the objections made to the Bill, if it in any degree tended to the disadvantage of the Savings Banks already established; but it did nothing whatever to impede their operations. Again, if it was correct, as had been alleged on the other side of the House, that this was a pure banking operation, the country had an absolute right to the surplus and to dispose of it as it thought proper. The Government, therefore, might, if it chose, apply that surplus to the reduction of the deficiency in the accounts of the Savings Banks. But he could not help thinking, with great respect to hon. Gentlemen on both sides of the House, that this principle of banking operation, as regarded Savings Banks, had been carried somewhat too far. He perfectly admitted that as between depositors and the Savings Banks, it was a banking operation; but, as regarded the public and the Savings Banks, he apprehended it was something nearer the nature of a trust. If it was a pure banking operation to all intents and purposes, he apprehended the persons who held the money would have the same facilities for operating with it which bankers enjoyed. But the Preamble of this Bill showed that the trustees of the Savings Banks had, in the first place, to pay their deposits to the National Debt Commissioners, who gave them receipts for those deposits on which a certain rate of interest was paid; and then came the recital that the National Debt Commissioners had been and were required by the Acts by which they were constituted to invest the deposits in Government securities. He took it that the scope of the Bill was to enable the National Debt Commissioners to employ the money so committed to them to greater advantage than they could under the restrictions now imposed upon them, and thereby to benefit not only the country, but depositors. The Bill would give opportunities to people to invest at 3 per cent if they thought fit. It was essentially beneficial to working people to realize 3 per cent on their savings instead of 2½per cent which they now received in the Post Office Savings Banks. He would suggest that the National Debt Commissioners should have the same powers which were now usually contained in the will or settlement of a private individual, and should be at liberty to invest in Indian or Colonial Government securities, in debenture stock of railway companies paying interest upon their ordinary share capital, and securities of that nature. He very much preferred such securities to those proposed by the Bill. We had gone far enough in giving power to the Commissioners of the National Debt to make advances to local authorities. Very considerable loss, to his knowledge, had been incurred through such advances.

MR. D. DAVIES

expressed his surprise at the statement of the right hon. Gentleman the Member for Greenwich (Mr. Gladstone), that the Government were not responsible to depositors. No doubt, they were not responsible technically, but they were responsible substantially. He believed there was an old debt of £1,500,000. If that were cleared off they might be able to pay the depositors a larger interest; and the Chancellor of the Exchequer would start with a clean balance sheet.

MR. HERMON

said, nothing could be clearer than the statement of the right hon. Gentleman that the Government were entirely responsible for the whole of the deposits paid into the Savings Banks. He was glad that the Chancellor of the Exchequer had made such a clear statement upon the subject. He hoped the Government would devise means for enabling the working classes to invest their savings in the public funds.

MR. MUNTZ

said, that it was no doubt desirable that the depositors should receive the largest amount of interest which could be obtained from the investments on good security. The Government were not responsible to the de positors in the old Savings Banks—unless some change had taken place—but to the trustees of those Banks, but they were responsible to the depositors in Post Office Savings Banks. He did not see any use in amalgamating these three funds. The difficulty of the Chancellor of the Exchequer seemed to be a very simple one, and the right hon. Gentleman ought to meet it boldly by stating that the interest now paid to the trustees of the old Savings Banks must be reduced on all future investments. The loss to the Government, no doubt, arose from their having to buy when the Government funds were high, and to sell when they were low, and consequently there should always be a wide margin in the rate of interest to allow for any loss that might occur. Not only were the depositors in the Post Office Savings Banks secured against loss, but their accounts were kept perfectly secret, and that was not always the case with the accounts of the depositors in the old Savings Banks. In questions of finance he knew no Party; but while he admitted that the Chancellor of the Exchequer was bound to take some step to meet the deficiency which existed, he could not regard the proposed step to be that which should be adopted. Under all the circumstances of the case, he should, if his hon. Friend divided the House, vote with him.

MR. W. H. SMITH

said, that the obligation of the State to the depositors in the old Savings Banks was limited to the sums which it received from the trustees, together with interest on the total sum thus received at the rate of £3 5s. percent per annum. The possibility of the recurrence of bad times and of runs upon banks had been referred to, and it was said that the Chancellor of the Exchequer might, at such times, be under the necessity of effecting sales in the market at considerable reductions of price; but it seemed to have been forgotten that under the system of Terminable Annuities large sums came into the hands of the National Debt Commissioners—sums greatly in excess of any demands which a run upon the Savings Banks could occasion. The capital to bere-invested from time to time amounted to about £3,500,000 year by year. If the funds were depreciated in value then the result would be that instead of purchasing back, say at 93 or 94, they might possibly purchase back at an amount varying from 85 to 90. The real fact of the case was, that the deficiency on the old Savings Banks account had never been grappled with by any Chancellor of the Exchequer. If the right hon. Gentleman the Member for Greenwich (Mr. Gladstone) had, when he converted £24,000,000 of Stock into Terminable Annuities, dealt with it and extinguished it, there would have been no deficiency now; but it was left untouched, and the deficiency had gone on growing year by year, and had resulted in the accounts now before the House. Grave objection had been raised to placing these three accounts on one page, though there had been no objection to placing these three accounts on three different pages. The honour and credit of the country were pledged for the repayment of the deposits placed in the Post Office Savings Banks; and they were also pledged to the trustees of the old Savings Banks and the Friendly Societies for the amounts placed in the hands of the Government and for the interest upon it. For his part, he was at a loss to see the gravity of the supposed error in substituting one page for three sheets of paper. This, however, he did see—namely, the importance of bringing under the notice of the House of Commons year by year, as it was proposed to do by the Bill—the fact that a deficiency existed in respect of this particular account, a fact which in years past had been kept out of sight, slurred over, and therefore forgotten. It was true that from time to time right hon. Gentlemen and hon. Gentlemen had stated that it was very improper to allow £3 5s. per cent interest on deposits, and suggestions had been made for the reduction of the rate; but although Chancellors of the Exchequer had had large majorities at their backs, Bills on the subject to reduce the rate of interest to be allowed to the trustees of the old Savings Banks had not even been advanced to a second reading. Further than that, no attempt had been made to force the subject upon the attention of the House of Commons until the introduction of the present Bill than which nothing could more fairly raise the question whether the rate of interest should be reduced, or whether it should be, as he believed it ought to be, maintained at its present rate. With reference to the proposed investments, he had to remind the House that the security of the Metropolitan Board of Works was a Parliamentary security, inasmuch as Parliament had imposed upon the Board the duty of levying rates to meet their liabilities, and a similar duty would be imposed upon each local authority contracting a debt. A higher rate of interest did not always mean less security; it meant this—that there was not a ready facility for realizing that security; and the object of another Bill before the House was so to deal with securities of this nature that they should become more easily marketable, and therefore obtain a higher value. But the security was as valid and as real as a first mortgage on the whole lands of the country could possibly be. He could not admit the objection with respect to an increase in the burdens of the taxpayer from the creation of Terminable Annuities under the powers of the Savings Banks Bill and the National Debt Bill, for the whole power of the Chancellor of the Exchequer was limited by the amount of charge for the Debt—namely, £28,000,000.

MR. CHILDERS

said, he must remind the Secretary to the Treasury that the Bill did not, in the smallest degree, limit the amount of charge for the Debt to £28,000,000. It prescribed £28,000,000 not as the maximum, but as the minimum amount of charge; and if the Chancellor of the Exchequer could do such a daring thing, without intimation to Parliament, as to raise the charge for Debt to £29,000,000, the charge would have to be paid. This question of Savings Banks was one which, at the present moment, was attracting very great attention, not only in this country, but in Europe and the United States of America. We were not the most successful country with regard to Savings Banks. The Austrian Government stood at the head of the nations of Europe in having completed a system of Government Savings Banks which not only received a much larger amount of deposits than any other nation in that shape, but was administered under an admirable, compact, and uniform system, the success of which was so great that even during the financial crisis in Vienna and Hungary no practical inconvenience was felt by the Savings Banks, but a large increase occurred in that department. The attention of the French Government had during the last year been specially directed to this subject. Their system was an antiquated one, being fettered very much as to the amount of deposit that could be received or paid within a certain time. They had sent over a gentleman to this country who had studied the whole question, and was investigating it minutely both with regard to the Post Office system and the system of Terminable Annuities. This country, therefore, stood, as it were, on its trial with reference to the subject in the face of Europe. Under these circumstances, the Government had introduced a Bill which was of a final and conclusive character. It was a "Reform Bill" for the Savings Banks. If the subject were dealt with by this Bill in a final way, it would be very difficult to make some of those very reforms which were advocated on both sides of the House. What did the Bill propose to do, and how did it propose to accomplish its purpose? It dealt with an antiquated system, under which persons were invited to make deposits of their savings, not with the Government and on its security, but with private bodies of trustees who stood between them and the Government, so that they had only to look to the trustees for their savings, the trustees being bound to act honestly; and so much of the money deposited as was paid by them to the Government the Government was bound to repay with interest, but there was no privity between the depositor and the Government. That should be distinctly understood. The Government was in no way responsible to the depositor. That was the old, antiquated, and very imperfect system. Under that system the Government had allowed to the trustees a larger rate of interest than they could afford to give. As a consequence, the present deficit had accumulated to the extent of something like £3,250,000, for it happened that the time when the money had to be invested was that at which the funds were highest, and the time when it went out that at which they were at the lowest. Now, looking to the occurrence of wars and depression of business, they might calculate upon a commercial crisis every 10 years; and, therefore, if they adjusted their interest so as to produce £3 7s. per cent, or £3 5s. per cent, allowing only 2s. to meet all expenses and losses, a deficit must be the inevitable result, and it was only wonderful that it was not greater than the amount he had just stated. So much with respect to the old Savings Banks, with their deposits of £40,000,000. As to the new Savings Banks, they had sprung up from nothing to £20,000,000 or £24,000,000 since 1861. This gave the depositor an absolute security for his money. There was no question about the liability of the Government to the trustees, no question about the liability of the trustees to the depositors. There was one liability, and one liability only, and that was the liability of the State to the depositor. The Government was directly liable to him, and must pay him every shilling which he lodged with them. How, then, did the case stand as to the interest allowed? The depositor received nominally 2½ per cent, and practically £2 7s., the result of the working of the system for a certain number of years being that there was an accumulated surplus of £800,000, which was increasing at the present time at something like the rate of £110,000 or £120,000 a-year. Such was the dual system of Savings Banks which the Chancellor of the Exchequer proposed by the Bill to reform. And to what did the reform amount? The Secretary to the Treasury had just stated that at present the Savings Banks accounts were printed on several pages. In the old Savings Banks there was a deficiency of £100,000 a-year, while in the new there was a balance of £100,000; but the accounts of the two, together with those of the Friendly Societies, it was now proposed to print on one page, so that by means of a reform which was not real, but pretended, the three accounts would be lumped together, and all purchases and sales made on a common account, thus rendering it impossible that anyone would be able to ascertain whether the old or the new Savings Banks were paying or not, or to introduce any reform of the accounts. He hoped, however, that that was not the true nature of the scheme of the Government, and that he had failed to apprehend correctly what the Chancellor of the Exchequer intended. Again, the Secretary to the Treasury had informed the House that power would be taken to invest only in the securities of the Metropolitan Board of Works, securities which were, of course, ample—and in those of a certain number of bodies created in accordance with a general Act of Parliament. But that general Act allowed every public body down to the Poor Law Guardians to raise money in debentures for their own local purposes, and under the present Bill the Treasury would be enabled to take up any amount of those debentures, which stood on a totally different footing from the debentures of railway companies, and which might be termed third-class securities. But, such as they were, these were the only reforms which the Government proposed, and never, it appeared to him, was a more untenable proposal made. He could only describe it as a robbing Peter to pay Paul plan, and if the House would allow him, he would briefly point out what he thought would be the best course to take. He did not know what alterations might be made in this Bill; but he would recommend the Government, in dealing with the old and new Savings Banks, to apply a simple business principle, and, if they had to decide what rate of interest they could afford to pay, to decide it on the same principle as to both—namely, to pay as much as the State could afford to pay in each case and no more. He would get rid of the antiquated system established many years ago, and lay down the same rule for all Savings Banks. It was inexpedient that the security of different Savings Banks should stand on a different footing, and the Chancellor of the Exchequer should go to the working classes and tell them that Parliament wished to see the same system carried into effect throughout. The House had been told of the conditions affecting the old Savings Banks, and it would be necessary to get rid of them. This Parliament would be able to do, if it reduced the rate of interest somewhat in the one case, and raised it somewhat in the new Savings Banks. The Government might wisely add further facilities for investments by the working classes in the Funds. There already existed a power in the Post Office to make regulations for these investments; but the system was a cumbrous one, and the working classes had not availed themselves of it to any considerable extent. He trusted that the House would not lose the opportunity of making considerable alterations in the Bill now before it.

MR. ASSHETON CROSS

said, he regretted that, in consequence of Public Business, he had been unable to hear a portion of the debate on this Bill. He had been asked by the Chancellor of the Exchequer to state that, as he was debarred from answering many of the arguments urged during the debate through having spoken already, he proposed to take the opportunity in Committee, on the Motion that the Preamble be postponed, to reply to some of the objections which had been brought forward. He wished now, on his own part, to say that a great deal he had heard against this measure had filled him with astonishment. There were two classes of Savings Banks. The one, the Post Office Savings Banks had certain advantages of their own. They offered to depositors greater facilities, greater absolute security, because they dispensed with the intervention of trustees, and perfect secrecy. It was also of the greatest advantage to artizans and labourers in the manufacturing districts, who often went from one town to another in search of work, to be able with so much facility to transfer their account from one post office to another, and to withdraw their money when they wanted it. For these advantages they were willing to receive a less percentage than the depositors in the old Savings Banks. But he could not understand why it should appear to be the express object of right hon. and hon. Gentlemen opposite to depreciate as far as they could the old Savings Banks, which had done so much good in the country. They could not dispute that the old Savings Banks had done an incalculable amount of good; and he could not, therefore, understand why their tone should be one of so much hostility to the old Savings Banks, and why they should regard them as two rival systems, one of which must be destroyed in order to make way for the other. The old Savings Banks were paying 3 per cent to their depositors in the large towns, and if these depositors were willing to give up the special advantages offered to them by the new Post Office Banks, he could not understand why right hon. Gentlemen opposite would not allow the old Savings Banks to live as well as the new. They argued that it was impossible for the Government to undertake to pay the trustees of the old Savings Banks 3¼ per cent with safety, because they sometimes had to sell at low rates and to buy at high rates. The right hon. Gentleman who had just spoken had not, however, taken any notice of the statement of the Secretary to the Treasury that the instances had been very rare, and that no instance had occurred for many years in which the Commissioners had been compelled to sell in order to meet any run upon the old Savings Banks. There was, therefore, very little risk of loss, and the Government could well afford to pay to the working classes who were disposed to give up the peculiar advantages of the Post Office Savings Banks a larger rate of interest upon their investments in the old Savings Banks. If, however, hon. Gentlemen opposite regarded this matter of so much importance, why did they not, during the many years in which they held office, and when they wielded a large and powerful majority, pass a Bill to effect this object? They were perfectly aware of this large loss, and why did they allow it to go on without making an attempt to stop the drain?

MR. LOWE

We introduced a Bill, but dropped it in consequence of the factious opposition it received.

MR. ASSHETON CROSS

said, he was perfectly aware of that Bill, but why did not the late Government provide the funds in some form and shape such as was recommended by Mr. Ayrton? Would the right hon. Gentleman tell him why the late Government did not press to a second reading and carry, if they could, a Bill for reducing the rate of interest given in the old Savings Banks? What he wanted to know was why the working men who had put their money into those Savings Banks—as many in his own county had done—were not to receive the higher rate of interest, and why it was to be reduced? The right hon. Gentleman the Member for the University of London (Mr. Lowe) brought in a measure to remedy the state of things which existed when he was in office. Knowing that the people had the choice of putting their money either into the Post Office Savings Banks or the old Savings Banks, the right hon. Gentleman said to them—"If you will keep your money in the old Savings Banks we will reduce the interest, and force the Post Office Savings Banks down your throats." But the people of this country resented the proceeding, and with all the power of the late Government they did not press their Bill to a second reading. He (Mr. Cross) took an active part in an opposition, which was not factious, but bonâ fide, to the right hon. Gentleman's attempt to take away from the working men of this country the rate of interest to which they had a right. The late Government, therefore, had failed in two points—first, in making up the deficiency which they knew existed; and secondly, in the only remedy which they proposed—namely, to deprive the working men of the rate of interest which they ought to have upon their earnings—a measure to which the country was so decidedly opposed that they did not dare to press the Bill to a second reading. He hoped both the Post Office Savings Banks and the old Savings Banks would long continue to flourish. He believed that they were both equally sound, and could not conceive why these two systems should be placed in antagonism. One man was willing to invest his money at a lower rate of interest on account of certain advantages which one institution offered, while another wished to obtain a higher rate of interest. He believed the State was able to meet the requirements of both, and they were doing great good to the working classes.

MR. LOWE

said, he could not help thinking that this case would gain much by being stated in the plainest manner and the fewest words. There must be a right and a wrong in the matter—a good way of conducting Savings Banks business and a bad way—and by way of showing their wisdom they attempted to keep up the system which was in every respect inferior at the expense of the superior system. The old Savings Banks did not give the same security as the Post Office Savings Banks, and the depositor, if defrauded, had no remedy from the Government. But for the depositor in the Post Office Savings Banks there was a complete remedy, and he could not lose a farthing. In the one, as had been very truly remarked, there was a publicity which might sometimes be disagreeable, and in the other there was not. But so superior had the one shown itself that though the interest was lower, it had gained and was gaining on the other, and the wonderful thing was that the whole efforts of the Government were directed to keep down what was admitted to be a good system and to prop up a bad one. He hoped they would have some explanation why right hon. Gentlemen thought it right to lavish all the means in their power to promote an inferior and discourage a superior system. The Home Secretary had said that it was the right of the working men to have the high rate of interest they now enjoyed. But if that was so, the right was not confined to the working men who put their money into the old Savings Banks—it was just as good for those who deposited their money in the new. He would like to know on what principles the right hon. Gentleman advocated a measure which, so far from giving the depositors in the Post Office Savings Banks the interest to which they had a right, proposed to take away the money from them in order to endow another class of depositors? We were not equal in all respects in this country; but there was no such extraordinary aristocratic privilege connected with one class of depositors compared with another, as to entitle them to plunder the revenues earned from the other and confiscate them to their own use. He would like to know why they ought to pay £3 5s. to those who had money in the old Savings Banks when they could not afford to do so to those who had money in the new? Some four or five years ago, when the late Government found there was a deficiency of some £2,000,000, they brought in a Bill to remedy it. But the old Savings Banks had great influence on the other side— hon. Gentlemen opposite best knew why; the Government had no interest in doing anything except for the benefit of the country, but they soon found they had no chance of passing the Bill. When such subjects was under discussion, hon. Gentlemen went into the Library or elsewhere, and when the division bell rang they came into the House in a body and divided against the measure. The right hon. Gentleman asked him why the late Government had not applied a remedy? The reason was because they found their efforts perfectly useless against the systematic tactics of the Opposition. The Post Office Savings Banks had earned a considerable sum of money, and that money had two legitimate destinations. It might be legitimately employed, either in paying off the National Debt, or in increasing the interest to be paid to the depositors; but why should the one class be plun- dered in order to enrich the other? Or, if that was to be done, why should it not be done openly? Why not state the accounts, so as to show the surplus on the one hand and the deficiency on the other, and how much of the surplus was carried to the deficit account? That would be the proper thing to do, instead of jumbling up the accounts, and stating in the Preamble of the Bill that it was expedient that those accounts should be kept together. The only expediency in the business was the expediency which always existed when people wished to do wrong and to conceal it. Though it was impossible for the late Government to do what they had attempted, it would be quite easy for right hon. Gentlemen opposite to do it; because Members on that—the Opposition—side would not offer them the same opposition. But there was another thing worse than anything which Her Majesty's Government had proposed, and that was to invest in a certain class of quasi-public securities. He could imagine nothing more dangerous or more liable to abuse. Of course, it would be an immense advantage to any local body to get Government to invest in its securities. It would be a piece of patronage of almost boundless value, and they well knew the pressure which would be put on Government to invest in those securities, if it were only to the extent of £1,000. It would become a means of corruption, and must tend to demoralizing results. Numbers of people would start up and claim for the particular railway or other stock in which they were personally interested that they presented as good security as could be found, and that if they were not included within the scope of the measure serious injury must follow. He had no doubt that Members of Parliament would be found to back up claims and complaints of this kind; and in the end the rule might perhaps be so far relaxed as to allow the Government to invest in Indian, Ceylon, Australian, Canadian, American, or even Spanish securities. On the whole, he thought the principle a most dangerous one to be adopted, and one that once adopted could not be departed from. At the present time this country had two Savings Bank systems, one of which was admittedly superior to the other; and he could be no party, in the first place, to cockering up one at the expense of the other, and then passing laws in order to conceal the fact that they had been acting in a spirit of gross injustice and unfairness. For these reasons, he could not assent to the Bill.

MR. HANKEY

said, that the Chancellor of the Exchequer had laid down the principle that Savings Banks money was not held by the Government as any matter of trust; that they held money as representing the nation, and that the nation was bound to refund it whenever called upon to do so. The right hon. Gentleman contended that he was at liberty to invest it within certain limits from time to time. That was a most dangerous doctrine, and it would be much better to cancel the whole of the stocks invested by the Savings Banks at once. If it was a debt owing by the nation, why should not the whole amount be invested in stock, and why should not that stock be cancelled, leaving the Government of the day to refund it whenever it might be required. The Bank of England held a large amount of unclaimed dividends, but they were not allowed to leave it unemployed. They were bound to pay it over at the expiration of 10 years. What was done with it? He believed that stock was cancelled to the whole of the amount, and when it was reclaimed so much more stock must be bought. Why should not the interest of the Savings Bank money be paid every year, and a full statement on the subject be made to Parliament. He did not see the right of any parties to receive a fixed amount of interest. It was desirable to give them as large an amount of interest as possible; but that must from time to time be determined by Parliament. That would be a much better plan than the one proposed by the Chancellor of the Exchequer.

MR. WHEELHOUSE

observed, that there was one class of institutions in some danger of being lost sight of altogether, he feared—that was the Penny Savings Banks. He should like to know what was to become of that class of institutions which existed to such a large extent in the West Hiding of Yorkshire, if they were to be merged in the Post Office system? He trusted that the system of penny deposits would be allowed to continue, and be encouraged, indeed, because in many parts of the country it had proved very successful in promoting habits of thrift. There seemed to be some possibility also of overlooking an element about the old Savings Banks, that could never be attained by the new Post Office Savings Bank—namely, the moral influence—if he might so call it—that the trustees and directors could bring to bear upon the class of servants and other employés by inducing them to invest and save.

MR. SAMUDA

said, he thought it desirable to retain the present system of Savings Banks, and that it would be a great hardship to have to reduce the rate of interest. If the Motion of the hon. Member for Hackney (Mr. Fawcett) should be carried it would be necessary that the rate of interest should be reduced. He thought the proposal to extend the means for investing trust monies was a valuable one, and one which tended in a direction that had been favoured by Parliament for several years past. He would certainly oppose the Amendment.

MR. FAWCETT

expressed his satisfaction at the debate which had occurred and begged leave to withdraw his Motion.

Motion, by leave, withdrawn.

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

Main Question, "That Mr. Speaker do now leave the Chair," put, and agreed to.

Bill considered in Committee.

On Question, "That the Preamble be postponed? "

THE CHANCELLOR OF THE EXCHEQUER

said, he was anxious to make a few remarks in reply to the various criticisms that had been advanced against his measure, and which he was precluded from doing while the Speaker was in the Chair. The right hon. Gentleman the Member for the University of London (Mr. Lowe) had put the case against the Bill, as he said, in very plain language—he said they had two systems of Savings Banks in this country, one inferior and the other superior, and the Government were making every effort to promote the inferior and suppress, keep back, or in some way to injure the superior. To that question he could only give the same answer that the Fellow of the Royal Society made to Charles II. about the fish—"I dispute the fact." He entirely denied that there was anything in this Bill, or in-the proposal of the Government, to justify that description. The right hon. Gentleman altogether forgot the moving object for the introduction of this Bill. This was a simple financial question with which the Government had to deal. The right hon. Member for the University of Edinburgh (Mr. Lyon Playfair) said they were dealing with the subject of Savings Banks and dealing with it badly, but they were not dealing with the subject of Savings Banks.

MR. GLADSTONE

wished to know whether this was not a complete prolongation of the debate on the Bill?

THE CHANCELLOR OF THE EXCHEQUER

apprehended that on the Question that the Preamble be postponed he had a perfect right to discuss the Bill.

MR. GLADSTONE

observed, that the right hon. Gentleman was continuing a debate which had occurred in that House.

THE CHAIRMAN

said, it was very unusual to discuss the principle of the Bill on the Question that the Preamble be postponed; but as that course had occasionally been taken without any exception being raised, he had not thought himself justified in stopping the right hon. Gentleman from entering upon some explanatory statement. Of course, it was not customary in Committee to enter into any matter in the nature of a reply to arguments on the principle of a Bill.

THE CHANCELLOR OF THE EXCHEQUER

said, he would, of course, submit to the Chairman's ruling; but he thought it would be in Order that he should supplement his observations by one or two remarks on a point on which there should be no mistake. He thought it desirable, before proceeding to discuss the details, that they should clearly understand the object of the Bill—that they should not go into a discussion of its clauses under any false impression. He wished, therefore, to state that, in introducing this Bill, the Government did not undertake at all to deal with the general question of Savings Banks reform. That was a very important and interesting question with which it might be very proper at some time to deal; but, at the present moment, they were dealing with a finan- cial question of importance and difficulty. There was this deficiency which must not be lost sight of. The deficiency had existed for a considerable time. It had gone on increasing, and unless some means were taken to stop it, it would go on increasing. The question, therefore, was—by what means could they stop it? It must not be supposed that this deficiency arose from any impropriety in the present arrangement as to the old Savings Banks. If they could sweep away the past altogether—if they could get rid of the deficiency and begin tomorrow with a clean sheet of paper, treating those Savings Banks on the terms on which they were now treated—there would not be any deficiency in the future, or any difficulty whatever in carrying on the business. It was perfectly true that there would still be falls in the price of stock; but the difficulty in that respect, as the Secretary to the Treasury had pointed out, would no longer exist, inasmuch as there were large sums of money coming every year into the hands of the National Debt Commissioners—owing to the system of Terminable Annuities and to other circumstances—which would enable them to meet any run without having recourse to the sale of securities at a low price. In former years the ease was different. If—as he had shown—the present arrangement was one which could be carried on without difficulty or loss, what justice or policy would there be in cancelling the arrangement, and in calling on those Savings Banks to submit to a reduction of interest? The existing deficiency arose mainly from the fact that in former years they paid much too high a rate of interest— namely, £4 11s. 3d. There were also other causes in the past, and no longer existing, which contributed to it. His right hon. Friend the Member for Greenwich (Mr. Gladstone) some years ago made an arrangement by which he paid a certain sum—say, £2,000,000—as a contribution which was intended to put an end to the deficiency, but unfortunately he did not give enough to extinguish it. He left a deficiency still standing, and, of course, it went on accumulating at compound interest. It was said to be a bad system to have the two accounts kept together; but, in point of fact, the two accounts had been kept together all along, and the difficulty in which they found themselves had arisen from their not having separated the old deficiency from the new system. Government saw a way by the arrangement now proposed to put a stop to the deficiency, and they believed it to be a perfectly fair arrangement. There would be nothing in the new system which would prevent the introduction of improvements with regard either to the one class of accounts or to the other, and similarly there would be no difficulty in ascertaining whether one class of banks was paying and the other not. It had been suggested that the money ought not to be kept in a fund, but ought rather to be applied in cancelling stock. If this were done, however, there would be the objection to which the former state of things was open—namely, that it would become necessary at times to sell stock at unfavourable rates. He hoped the Committee would proceed at once with the discussion of the Bill and make some progress with it. He had said nothing with regard to the new mode of investing funds, for that was a matter which would require a deal of consideration on the part of the Committee. He hoped, however, to show when they came to that point that there would be sufficient safeguards to prevent abuse. If more safeguards were desired, it would be possible to provide them.

MR. GOSCHEN

said, that no doubt the Chancellor of the Exchequer would be glad that he was now in a position to answer all the questions which would be addressed to him, for there were many points in this Bill which would require discussion. In his supplementary speech, the Chancellor of the Exchequer had not touched upon the position of Friendly Societies under the Bill. All the explanations which had been given referred to the deficiency under the old Savings Banks; but, besides that, there was a deficiency of £1,000,000 on the Friendly Societies, involving an annual charge of £50,000, and that was a portion of the charge which was to be met by the surplus which arose from the Post Office Savings Banks. It was matter of complaint that those who sat on the Opposition side had not sought to remove the general deficiency. The right hon. Gentleman, however, had admitted that the right hon. Member for Greenwich (Mr. Gladstone) had paid £2,000,000 towards meeting the deficiency, but the present Government did not propose to pay any- thing towards it. What they proposed was to appropriate the surplus derived through the Post Office Savings Banks to the payment of interest upon the Debt. The Chancellor of the Exchequer had pledged himself to the statement that the interest of £3 5s. per cent was remunerative. Why, then, was no more than £2 10s. to be allowed to the working men who invested in the Post Office Savings Banks, which had not been shown to be more expensive to administer than the old Savings Banks? That could not commend itself to the justice of the Government. Why was one set of depositors to be allowed a higher rate than the two others? The rates of interest ought to be re-arranged, and the whole brought under one system, and he contended the Post Office Savings Banks depositors were entitled to some consideration.

THE CHANCELLOR OF THE EXCHEQUER

said, he thought he had already explained the point. When the bargain was made in the first instance with the trustees of the old Savings Banks, they were the only ones then in existence; but when the right hon. Member for Greenwich (Mr. Gladstone) wished to set up the Post Office Savings Banks, he stated his intention to offer £2 10s. per cent interest, and intimated that the Government contemplated that some profit would accrue to the State from the transaction. The right hon. Gentleman had admitted that evening that such a surplus might be applied as was required, and thus, having an available sum, proposed to use it, not for bolstering up the old Savings Banks, but to extinguish a deficiency which was growing against the Government, and must be met. This money confessedly belonged to the State, and he denied that any wrong would be done to the depositors in the Post Office Savings Banks.

MR. GOSCHEN

remarked that the right hon. Gentleman had failed to see the distinction that he wished to draw. There was the past and there was the future. With regard to the £800,000 which had already been made, he saw no objection to applying that sum to the diminution of the existing deficiency; but what he wanted to know was, why should the depositors in the Post Office Savings Banks in the future be taxed in order to secure the continuance of the £3 5s.?

THE CHANCELLOR OF THE EXCHEQUER

observed, that objections had been made to subsidizing providence, but the right hon. Gentleman would subsidize providence by proposing to give a bonus to depositors beyond what was necessary to induce them to invest their money in the Post Office Savings Banks.

MR. GLADSTONE

said, the more they went into this matter the greater the difficulties became, and the more retrogressive appeared to be the course proposed by Her Majesty's Government. His right hon. Friend near him (Mr. Goschen) had made the admission that it might be a legitimate thing to do to apply the £800,000 profits on the Post Office Savings Banks to meet a deficiency in the old Savings Banks accounts. That doctrine, however, he begged altogether to dispute. Its adoption would destroy the whole system of public accounts which had been in operation for the last 40 years—which was, that every account should bear its own responsibilities. In fact, the transfer of the profits of one account to make up the loss on another would be fatal to all good housekeeping. He was, therefore, unable to endorse what had been said on that point by his right hon. Friend, he supposed in a spirit of charity. With regard to the main question, the Chancellor of the Exchequer did not see the real point at issue. The right hon. Gentleman had asserted strongly that in which they entirely differed from him as a matter of fact—namely, that the State could afford to pay £3 5s. per cent of interest to the old Savings Banks depositors, and, at the same time, in some mysterious manner could be secured against loss. If that were so, it was impossible to justify the maintaining of the rate of interest on the Post Office Savings Banks at so low a rate as £2 10s. The right hon. Gentleman set up the plea that what was proposed was a subsidy for providence. A subsidy forsooth! Did the ordinary retail tradesman who sold an article to the public at the lowest price at which he could afford, or if he found he had been charging more than was necessary, and desired at once to accommodate his customers and extend his business, subsidize the public? Their business was to draw the maximum number of depositors, and with that view to give to the thrifty among the working classes every advantage which the State could give without subsidizing them at the charge of the public. If the propositions of the Chancellor of the Exchequer were correct, he could offer more, and, if he could, he ought. They were told that they were to give the old Savings Banks a higher rate of interest on account of certain disadvantages to which those Banks were at present subject. But why should the public be called upon to make up the difference, and on what conceivable principle could such a demand be based? It was impossible that such a doctrine could be supported, and sustained by sensible and experienced men conversant with such matters. His proposition was that, if the system of Savings Banks conducted by the State be good and sound—and he thought experience showed it to be good and sound—Parliament ought to give it the utmost extension, and the proper way to do that was to endeavour to do more business. There was no justification whatever for paying one class of persons 3¼ per cent in order that they might undergo certain disadvantages from which no human being reaped the slightest benefit.

MR. DISRAELI

The question is really very simple, although it has been surrounded with a good deal of mystification. It is simply whether the securities held by two different classes of Savings Banks are the same, or whether they are different, and if so, whether one is superior to the other. There can be no doubt which is the superior system, but this question must not be argued as the right hon. Member for Greenwich (Mr. Gladstone) argues it, as if we had brought forward a measure like this purely as a financial measure. We must bear in mind the circumstances that the Government have had to deal with. There is a deficiency, and it is agreed that this deficiency must be met, and the Chancellor of the Exchequer has brought forward a purely financial plan to meet that deficiency. I cannot conceive that we could take any step more inprudent than to seize such an occasion to enter upon a plan of reforming the Savings Banks of the country. If we were about to start a Savings Banks system for the first time we should no doubt not adopt the principles which were adopted 40 or 50 years ago, and it is not impossible that we might perhaps make propositions even superior to those embodied in the Post Office Savings Banks system. Nothing, however, can be more important than that people having invested their money under the old Savings Banks system that arrangement should not be disturbed; and nothing could be more unwise than to take this opportunity of a financial arrangement to disturb existing arrangements in which people have trusted and upon which they have invested their money. I can conceive nothing more unwise than to take this opportunity of raising those disturbing ideas and principles that the right hon. Member for Greenwich has circulated to-night. The discussion certainly has done no harm, I think, to the views of the Government, because the principles which were hotly contested in the beginning of the evening have been, it seems, rather imprudently and injudiciously admitted by the right hon. Gentleman the Member for London (Mr. Goschen). The right hon. Gentleman the Member for the University of London had previously made the same admissions—[Mr. LOWE: No!]—and I am surprised that the right hon. Member for Greenwich did not take that opportunity of remonstrating with his recreant Colleague. Under the circumstances, however, we do not propose to continue the discussion to-night, and I think that it would be for the convenience of Public Business that you, Sir, should report Progress—that is, after the Motion that the Preamble be postponed has been agreed to.

MR. FAWCETT,

complaining that no opportunity had been given for any discussion on the second reading, in consequence of the Bill being hurried through at 1 o'clock in the morning, opposed the postponement of the Preamble on the ground that other Members might wish to speak on the principles of the Bill.

Preamble postponed.

MR. FAWCETT

said, he hoped the Government would fix the resumption of the debate on a day when an opportunity would be afforded to hon. Members to discuss the Bill fully.

MR. LYON PLAYFALR

asked the Government to accede to the suggestion of the hon. Member for Hackney.

MR. DISRAELI

would not say the request was reasonable, but it was not unreasonable, and he would endeavour to meet the wishes of the hon. Member. He was told, however, that the second reading had been agreed to before 9 at night.

MR. GLADSTONE

asked when the Bill would be taken again, and observed that the debate had been really one on the second reading.

MR. DISRAELI

said, he could not yet fix the day, but time would be given.

MR. FAWCETT

assured the right hon. Gentleman that the second reading took place at half-past 12 at night, and not at 9 as he stated. That he knew from his own personal knowledge, because he moved the adjournment of the debate, and would have divided had not the House been nearly empty.

MR. W. H. SMITH

said, the hon. Member was quite right, and the mistake was made by him.

Committee report Progress; to sit again To-morrow.