§ (Mr. Gladstone, Mr. Fawcett, Lord Frederick Cavendish)
§ COMMITTEE. [Progress 18th August.]
§ Bill considered in Committee.
§ (In the Committee.)
§ Clause 3 (Investment of deposits in Savings Banks in Government Stock).
§ MR. MAGNIAC,
in moving, in page 3, line 13, after "deposit," to insert "or any sums deposited with a Post Office Savings Bank for the purpose of investment," said, that this Amendment stood 21 in the name of his hon. Friend the Member for Bedford (Mr. Whitbread); but as his hon. Friend had entrusted it to him, he should like to say a few words in favour of it. The object of the Amendment was one which he was sure they all had at heart—namely, to induce the people of this country to invest their savings in the public funds. It had long been almost a scandal that the people of this country did not hold the National Debt to any large extent, when the national obligations ought to be the best, the cheapest, and the most simple mode of investing their money. The fact was, that every regulation with regard to the National Debt of this country had been made for the convenience of the rich, and not in the interests of the poor—the manner of purchasing the funds, the mode of receiving dividends, and every transaction connected with the subject, had been framed in such a way as to throw great practical difficulties in the way of the people of this country generally becoming holders of the National Debt. If they went across the Channel they found a very different state of things existing. He regretted very much the way in which this Bill had been presented to this House, because it rendered it necessary to discuss the general principle upon this particular clause. But he felt himself at liberty at that time to state a few facts which would warrant the consideration of the matter, if not then, at some future time, when the principle could be developed. As regarded the National Debt of France, it was not nearly so large as that of Great Britain. It was a Debt of comparatively recent growth, and the holders of it, amounted at the present time, to between 4,000,000 and 5,000,000 of persons. That Debt was divided into the Five per Cent Debt, the Four-and-a-half per Cent Debt, and the Three per Cent Debt, and the whole of the Debt under those definitions amounted to £300,000,000. As he had said, the Debt was held by between 4,000,000 and 5,000,000 of persons, which showed an average to each person of something like £80 a-piece. The National Debt of Great Britain, of which they had had a Return within the last few days, amounted to £730,000,000. That National Debt, it was almost incredible to say, was held by only 230,000 people. Thus, they had a National Debt, more than double the National Debt of France, which, instead of being divided 22 between 4,000,000 and 5,000,000 persons, was held by only 230,000 people. The average amount of Debt held by each holder in France was £80, whereas in England the average amount was£84,000. These figures proved that the National Debt of this country was not held by the people as he (Mr. Magniac) believed that it ought to be. He believed that inestimable advantages would be derived by making people have an interest in the welfare and prosperity of the country. He knew of nothing which conduced more to that end than giving persons an interest in the pecuniary affairs of the country. It would make every man pause before he advocated any revolutionary doctrine—if there were any man in this Kingdom who desired to do so. Upon the other side of the Channel a greater interest was given to the people in the Debt of the country, and he believed that that was the best security for ensuring prosperity and peace. He knew of nothing which conduced more to make persons peaceable than having a real stake in the country. The converse proposition was also true; and he knew of nothing that made a man, or a class, more uneasy than to have no stake in the country. He thought that if they could induce all classes to invest their money in the public funds, it would be of very great advantage to the country. That might be done, either at the present time, or at some future time; and his right hon. Friend the Postmaster General would be doing very good service to the country by carrying out that principle. He would be also doing very good service to the agricultural community by adopting his suggestion. In every country with which he was acquainted they had savings banks where the people themselves could invest their money under the sanction of the State. Where the money invested in these savings banks was lent to the Treasuries of these countries, an enormous weight and an enormous responsibility fell upon the Governments of such countries. He did not know whether it was generally known that the amount invested in the Post Office Savings Banks was now £34,000,000, and that there was invested in the other savings banks of the country £42,000,000. Thus, they had no less than £76,000,000 invested at 10 days' call. Besides that, they had the Floating Debt of this country, invested at a short term, amount- 23 ing to £28,000,000. They had thus £104,000,000 hanging on any events that might occur. In this country they had had commercial crises and financial famines; but they had never had a conjunction of a commercial and a financial crisis. If such a thing occurred, they would have a rush of holders upon the savings banks that would be extremely serious for those who were responsible for the finances, and would make them regret that the House had not at an earlier period directed its attention to this question. He might be told that it was impossible for any public institution in this country to become insolvent; but if they had an institution which was unable at once to meet the demands upon it, it was insolvent. It should be remembered, if these institutions had not assets sufficient to cover the demands that could be made upon them, they were practically insolvent. A case occurred in 1866—the last occasion on which they had a commercial crisis. The deposits in the savings banks, together with the Floating Debt at that time, amounted to only £52,000,000, or about one-half of the amount at present invested. There was a rush of depositors upon the savings banks; and they withdrew in the course of a year £3,500,000, in the course of a month nearly £2,000,000, and in the course of a week nearly £900,000. It was an extraordinary fact, that although it was perfectly well known that the demand would take place, the Bank of England had only £700,000 in hand to provide those savings banks with money. That was so; although at the time the demand was not known, it was shrewdly surmised. It was necessary, at present, that an enormous amount of money should be found at short notice, and that was a state of things terrifying to those who had any acquaintance with commercial affairs. If they did not institute some means whereby they could reduce the deposits in the savings banks by some legitimate means, or have some other safety-valve, he felt sure that they would be in the position of a man sitting on a barrel of gunpowder, which might explode at any moment. The Bank of England might be said to be safe, and so it was; but no one would have said that the position of the Bank of England was safe in 1866. The amount of money which a bank ought to hold to meet any sudden demand, had been roughly computed at 24 33 per cent of the claims which might be made upon it. In 1866, at the time he referred to, the liabilities of the Bank of England were £25,000,000, and the assets available to meet those claims were exactly £ 1,750,000. Instead, therefore, of having 33 per cent of its assets in a perfectly available form, the Bank of England had only 5 per cent. That being the case, and this clause dealing with savings banks, he maintained that no Government was entitled to let this question remain in the position in which it now stood. The enormous demand for money in 1866 was felt throughout the country, and the matter had been reported upon by a Select Committee. The Committee said that great alarm had prevailed in London, the centre of all the monetary transactions of the world; that vast sums had been deposited at interest at short notice, in addition to money deposited at call. An enormous amount of money was paid away by all the banks, some of which kept open for the purpose during the evening. They said that 62 Scotch banks had their establishments open at night for the purpose of receiving and paying small deposits. When that state of things was going on the savings banks deposits and the Floating Debt amounted to £52,000,000; while, at the present time, the same items had reached the sum of £104,000,000. Since 1866 they had had no commercial famine, and, practically, no political famine; but if ever they had a combination of those two, they would have a disaster which would be stupendous. On those grounds, he ventured to urge the adoption of the Amendment; and at that late period of the Session he should not do more than express a strong hope that the noble Lord in charge of the Bill would give some encouragement, to what he believed was the universal desire—namely, that the securities of the nation should be made conveniently and practically available for the savings of the people.
In page 3, line 13, after "deposit," insert "or any sum deposited with a Post Office Savings Bank for the purpose of investment."— (Mr. Magniac.)
§ Question proposed, "That those words be there inserted."
§ MR. FAWCETT
said, it was scarcely necessary for him to assure the hon. 25 Member for Bedford, or the Committee generally, that he entirely sympathized with the object of the Amendment which had been moved. Long before the present Government came into Office, he expressed the same opinion as the hon. Member for Bedford had expressed, as to the political and financial advantages of offering the people of this country more opportunity of making small investments in the Public Funds. It was, therefore, unnecessary for him to trouble the House with a repetition of those views which had been so well stated by his hon. Friend. If he did not, on the part of the Government, accept this Amendment, he trusted that the hon. Member would believe he did not arrive at the decision he did from any feeling of opposition to the object which he had in view. He would tell the Committee at once, frankly, that they had given the subject careful consideration, and that they did not think it wise to accept the Amendment at the present time. This Bill was, undoubtedly, an experiment of great importance. It was believed that it would succeed; but no one could tell the extent to which it would succeed. They thought it better to proceed by steps and tentatively; but when it was possible, no one would be more anxious than himself to extend the principle advocated by the hon. Member, so as to enable people to invest smaller sums than those proposed in the Bill. It seemed to him, however, at the present time, to be better to let the Bill stand as it now did, with £10 as the minimum amount of investments, and to watch the matter carefully; and if they found there was a desire to invest smaller sums, he could promise, on the part of the Government, that they would at once introduce a measure to reduce the limits of the sums that could be invested. His hon. Friend had referred to the National Debt of France; but it was well to point out the distinction between France and England in this matter. No doubt, France did afford facilities to people for the investment of sums in Government Securities which had been wanting in this country; but it must also be borne in mind that the savings' banks system in France was less developed, and that France was only now beginning to do what they had done in this country years ago. France was now attempting to follow the example that England, long ago, set in regard to savings 26 banks. If this Bill were passed, a man in this country having £11 to invest would be enabled to put £10 in the Funds and £1 in the Post Office Savings Bank. Then, he could keep his money in the savings bank until it reached £10, when he could again invest it in Consols. He hoped that, under the circumstances, his hon. Friend would not press the Amendment. This Amendment, if adopted, would lead to a considerable reduction in the amount of deposits held by the savings banks at the present time. Although the savings bank business was a profitable one, yet he thought it would be better finance to have a portion of the existing deposits in the savings banks converted into investments in Government Stock. But this Amendment would not only affect the Post Office Savings' Bank, but also the old savings banks, which might reasonably object that the House had, at the last moment, after already inflicting injury upon them by reducing the rate of interest, inflicted a second blow by adopting this Amendment, the argument in favour of which was that it would induce a considerable reduction in [the deposits in the savings banks. For all these reasons—first of all, that the matter required watching; secondly, that they ought not suddenly, and without notice, to take this step; and thirdly, that the old savings banks would consider they had had an injury inflicted upon them—he hoped that his hon. Friend would be content with his assurance that they would propose any reduction for which there might be shown to be a necessity at another period, and not press his Amendment.
§ MR. E. W. HARCOURT
said, that the right hon. Gentleman the Postmaster General had told them that it would be in the power of the poor man to invest his money in the Savings Banks, and to leave his deposit there until it increased to £10. Those who wished to see the greatest opportunity given to persons in this country to become holders of Government Stock would hardly be content with a system by which a person would have to accumulate £10 before it was possible to invest it in Government Stock. However able some of the artizan classes might be to accumulate £10, yet, in the sparsely-populated agricultural districts, the people would not be able to accumulate such a sum as that. The right hon. Gentleman the 27 Postmaster General had told them that one reason for not accepting this Amendment was that it would be striking a blow at the old savings banks. He would wish to ask the right hon. Gentleman whether he had more tender feelings towards those old savings banks than towards the investing public of England? He thought that the savings banks, whether old or new, were to be looked at simply as a means of doing the best possible good to the people of England. Therefore, in his opinion, the argument of the right hon. Gentleman the Postmaster General fell to the ground. He had imagined that the right hon. Gentleman the Postmaster General would have urged as a reason against this Amendment the vast difficulty of paying dividends upon small sums. He thought that was an imaginary difficulty, and that the real difficulty would be to pay interest upon broken sums. For instance, the interest upon £1 would be about 7¾d. per annum, and that would be a difficult sum for the Post Office to deal with. But if they took 16s. 8d., which gave 6d. at 2½ per cent; if they took £1 13s. 4d., which gave 1s.; if they took £8 6s. 8d., which gave 5s.; if they took £16 13s. 4d., which gave 10s.; then there would be no difficulty in the matter. He thought, also, interest might be paid yearly, as in France, and so the Post Office would have the advantage of the half-year's interest. Moreover, investors might call for their interest yearly. The second difficulty which he thought that the right hon. Gentleman the Postmaster General would have raised was with regard to the expense. That might be entirely met if a commission was charged. A commission of 6d. would more than amply repay the Post Office any expenses to which it might be put. It was true that the payment of one commission would have to cover the expenses of dividends for the whole of an investor's lifetime, and if no one ever sold Stock that might be a difficulty; but as, in fact, Stock was constantly being sold, the margin would be very abundant. Again, he thought fees for transfer might be charged. It was no imaginary scheme he was propounding. Already the National Penny Bank in London had been successfully working on those lines. He held in his hand a form of certificate, by which it appeared that, on the 28th November, 1876, an individual purchased, through the National Penny Bank, 28 16s. 8d. worth of Three per Cent Reduced Consolidated Annuities, for which, at their then value, he paid 15s. 8d.; on the back of the certificate, it appeared that the holder sold the Stock on the 4th March, 1880, for 16s., that he paid 6d. commission, and that he received 1s. 6d. for interest, so that 17s. was paid to him for the commodity which had cost him 15s. 8d. Why should such a great Institution as the Post Office be less able than a small private undertaking to initiate these schemes? Another argument against going lower than £10 might, perhaps, be put forward—namely, that more work would be given to the Government officials, who would, consequently, require more pay, and that this would eat up the profits, and probably incur a debt. Now, he was going to answer that the more work that was done by the Post Office, the more good would be derived by the public; and as to the debt, it was fair to argue that increased business brought more profits; and, again, that now that the old savings banks were going to be put upon a sounder footing, the profits of the Post Office Savings Banks would not be required to bolster up their dividends; and then, the sum of £150,000 per annum would be at the disposal of the Post Office to meet any deficiencies. He did not believe there would be any deficiencies; and he thought the profits would be a secondary consideration in the eyes of the country, if only the object was attained of providing an easy means of safely investing small sums to every member of the community. He thought it would take a long time to teach people what Consols meant. He thought it would take many a weary day and many a weary year to amass that fat £10, which it was so easy for Chancellors of the Exchequer to talk about—not, perhaps, in the case of artizans and operatives in towns; not, perhaps, amongst domestic servants, but certainly amongst that class for whom he was specially pleading—namely, the poor inhabitants of rural districts, who had as good a right as any in the land to the full benefit of such measures as the present. And, therefore, whilst thanking the Government for moving in the matter, he must confess he could not consent to consider the question of small investments in the Funds settled by this measure; and he should not be content till he saw it brought with in the power 29 of every Englishman who possessed it, to invest 16s. 8d. in the Funds through the medium of the Post Office.
§ MR. W. FOWLER
said, he entirely agreed with the tenour of the remarks of the hon. Member for Bedford (Mr. Magniac) with regard to the danger of these large sums being held by Government. The Committee would remember that he had himself expressed that view, in the form of an objection to the other Bill which had been withdrawn. He wished to point out to the Postmaster General some figures which had not been referred to by the hon. Member for Bedford. By a Return for the year 1879, he found that a large majority of the deposits in the Post Office Savings Banks was under £5 for each depositor, and that the largest proportion of all ranged from £1 1s. to £5. It would, he thought, also be found that something like 90 per cent of the deposits ranged under the latter amount. He argued, therefore, that it must not be expected that the class who now deposited their money in the Post Office Savings Banks would be able to invest £10 in the Funds. The idea was ridiculous, and he thought they would have to begin operations upon a less ambitious scale. At this point, it would be interesting to the Committee to notice that the total cash received in 1879 was £9,800,000, divided between 3,470,000 persons, which gave an average of something like £3 a-piece. But, notwithstanding these figures, it was said we must have a minimum investment of £10. He did not think the right hon. Gentleman had so clearly explained why this was so sacred a number of pounds, and why it would so certainly succeed. The remarks of the right hon. Gentleman amounted to this—that you must make some restriction; but if he (Mr. W. Fowler) was right in the view he had taken of the figures, there was no prospect of success if it was insisted that so large a sum should be at once invested. This requirement could only be met by those who had already a considerable sum in the savings banks. Again, there were other figures than those brought forward by the Government which would illustrate this subject. For instance, a Return from the Manchester and Salford Savings Bank showed that the sums under £1 1s. formed about 43 per cent of the total deposits, ranging over a great number 30 of years; while those between £1 1s. and under £5 represented 35 per cent of the deposits. Then, another curious illustration of his views upon the inability of the classes concerned to invest this sum of £10, was found in connection with the savings banks conducted by the Manchester, Sheffield, and Liverpool Railway Company, the last Report of which showed that, out of a total of 16,525 depositors for the last year, no less than 12,809 did not exceed 10s. each in the amount of their deposits. It was, therefore, clear that the great bulk of the class of depositors could have nothing to do with the investment of the sum of £10; and that, if the scheme was to be a success, some other starting-point would have to be adopted. He was not himself very sanguine of the desire on the part of these classes of depositors to invest in the Public Funds. He doubted, in fact, whether they cared much about the difference between 2½ and 3 per cent interest. What they wanted was safety, with the knowledge that they could have their money back when they wished it. But if they once had the notion that a war might diminish the amount of their savings, he thought they would soon get weary of investing in Consols. And that brought him to the great national danger which, in his opinion, existed, of holding these vast sums of money payable on demand, and the consequent necessity of having to meet the demand in money, no matter what might be the commercial crisis through which the country was passing; and he desired to express the desire to see, if not at once, at a very early date, an alteration in this respect. He was satisfied, apart from any other argument, that the primary sum of £10 was practically a limit which would make the success of the scheme impossible; and he did not think it wise that Parliament should start a scheme of this kind, with the feeling that there could be hardly a doubt that it would fail. He would like to see the same condition of things in this country with respect to the investment by the people in the public funds, as existed in France; but he feared that the different habits of the two peoples rendered it doubtful that this could be brought about. He felt it his duty to express his doubt that the scheme would succeed; but sincerely wished it might have greater success than he expected.
§ MR. CHILDERS
said, he was fully alive to the importance of the business transacted by the National Penny Bank, as he was one of the Trustees of that Institution. He agreed in the hope which had been expressed by the Postmaster General, that the time would soon come when further facilities would be given and would be taken advantage of by the classes depositing in savings banks, for investment in the Funds. It would almost appear, from the arguments of hon. Members, that the question before the Committee was one of restriction in this respect on the part of the Government. But this proposal was an attempt to carry out a system under which persons would have these facilities for the first time. It was not a proposal to restrict them, for no such facilities existed. The Government proposed to go a great length in the direction of affording these facilities; and the question was, whether the Committee was satisfied with waiting to see how their scheme worked, or whether, before the experiment had been tried, they would force Her Majesty's Government to go very much further than they at present thought right? His own opinion was that the best course would be not to carry the scheme further at present. If, however, it was found that the expectations of the hon. Member who had just spoken were realized, it would then be time to consider the propriety of carrying it further. He did not agree with the hon. Member for Oxfordshire (Mr.E. W. Harcourt) that a fee should be charged on transfers; nor with his proposal that people should have to go to the post office to receive small sums in the way of interest. The object of the Government was to prevent the people having any such trouble. He thought there had been some exaggeration with regard to some of the figures cited in the course of the debate, and would point out to the hon. Member for Bedford (Mr. Magniac) that the National Debt of France was not £300,000,000, but £750,000,000; and the average sum held by the holders of Rentes was between £170 and £180. He need hardly point out to the Committee the danger of basing arguments upon figures so entirely erroneous. The figures of the hon. Member for Cambridge (Mr. W. Fowler) were also, in some respect, open to the same remark. According to the detailed account of the Post Office Savings Bank, out of the 32 sum of £32,000,000 deposited there, £29,000,000 were held by depositors of £10 and over—that was to say, something like ten-elevenths of the whole amount; and only £2,800,000, or the remaining eleventh, were held by depositors of less than £ 10. If, therefore, the figures quoted were correct, it would hardly be worth while to make, at first starting, the alteration suggested for the sake of the eleventh part of the sums deposited. Upon these grounds, he hoped the House would not force Her Majesty's Government to carry the experiment further than they proposed to do.
§ MR. E. W. HARCOURT
said, with regard to the commission referred to, he had only proposed this in accordance with the suggestion of the Postmaster General, and in order that the State should not lose. It required only a scanty knowledge of the feelings of the investing classes to know that they, in common with all Englishmen, had a dislike to having their banking affairs made a matter of public notoriety. The arrival of a parcel from the post office containing interest on investments would be known to all the neighbours, and it was in the interest of investors that the proposal that they should call for their dividends was made. The Post Office officials were well aware of those feelings, and had themselves tried to meet them by special arrangements.
§ MR. MAGNIAC
said, after the frank and courteous speech of the Postmaster General, he was hardly prepared for the lecture which had been read to himself, and hon. Members who thought with him, by the right hon. Gentleman the Secretary of State for War, charging them with exaggeration, and enjoining him in particular, to take the trouble to inform himself better with regard to the figures in connection with this subject. But he had expressly stated that he refrained from going into greater detail than he had on account of the lateness of the Session, and his consequent desire not to detain the Committee. He now took the liberty to state to the right hon. Gentleman that he had informed himself thoroughly as to the figures relating to this subject during some years past, and was prepared to show that those which he had quoted were not exaggerated; that was to say, if the right hon. Gentleman would accept the authority of the Agent of the French Government from whom they were derived. He 33 repeated, as a fact, that 4,000,000 of the French people held £260,000,000 of the French Debt; and he hoped the time would come when the people of England would hold the English Debt in the same proportion. Again, in France, one person in twelve deposited in the savings banks, and the proportion was daily-increasing, as well as the deposits. He thought this showed that the statement of the right hon. Gentleman the Secretary of State for War, that the savings banks of France were in their infancy, was hardly correct; and in making that remark, he would express his belief that there were many rules and regulations belonging to the French system which might, with advantage, be adopted in this country.
§ MR. WARTON
said, he hoped, before the Committee proceeded further, some agreement would be arrived at with respect to the figures involved. He wished to point out that the number of the depositors in Post Office Savings Banks who held less than £10 was 94½ per cent of the total number of depositors. The only safe way of judging of the future investments of the poorer classes was, by taking into consideration the amount which they did invest, and it was not right to ask a man with only two sovereigns in his pocket to try and invest £10.
§ MR. CHILDERS
said, the total number of persons who held deposits over £10 was about 700,000, and the total number under £10 was about 1,200,000.
§ MR. WARTON
said, he held it to be a very curious experiment, to begin so high in the scale as £10; and as all were agreed that it was desirable that the people should be able to invest in the public funds, he should shortly propose that the limit be fixed at £1 13s. 4d., which would yield an income of 1s., the minimum sum which could now be paid in to the Post Office Savings Banks.
§ MR. W. FOWLER
said, he had quoted the figures with regard to the current business, and had stated that, judging from them, no success could be expected except from the accumulated deposits, and that continuous investments could not take place. The right hon. Gentleman had, therefore, rather lectured him upon what he had not rather than upon what he had said.
§ Amendment, by leave, withdrawn.34
§ MR. WARTON
proposed, as an Amendment, in page 3, line 16, after the word "shall" to insert "be one pound thirteen shillings and four pence, or any multiple of that sum."
§ Amendment negatived.
§ MR. J. G. HUBBARD
moved, as an Amendment, in sub-section (b), page 3, to leave out lines 19, 20, 21, 22, and 23, and insert—The amount deposited in any one year shall not exceed fifty pounds, and whenever the amount deposited by any one depositor shall exceed two hundred pounds, the Savings Bank authority shall invest a portion thereof in the purchase of one hundred three per centum stock (the interest whereof shall be placed to the credit of the depositor): Provided, That within one month, upon notice given to him, the depositor shall not forbid such investment.
§ LORD FREDERICK CAVENDISH
said, he sympathized with the object of this Amendment; but he thought it would not be wise to accept it before the present experiment had succeeded. They could not be too careful that the experiment should he made with the full and entire sanction of all concerned; and it was possible that considerable grievance might be felt by persons who did not understand these matters, whose money might be invested in the way suggested. As the system became well known and established, he thought it possible that the principle might be adopted; but until it was so known and so established he thought it wise not to introduce it.
§ Amendment, by leave, withdrawn.
§ MR. W. FOWLER moved, as an Amendment, in page 3, line 23, to leave out "five," and insert "three."
§ DR. LYONS
said, he found that considerable apprehension existed on the part of the banks in Ireland, with regard to the amount of Stock proposed to be credited to one account; and it had been proposed that the amount should be limited to £250, with the object of preventing competition between the savings banks and the general banks of the country. The Committee would, perhaps, remember that he had had the honour of presenting to the House, on the part of the Irish banks, a very important Petition with reference to this Bill, which pointed out that the general banks in Ireland held on deposit the sum of £31,000,000 sterling, of which it was stated that 60 per cent was in 35 sums of £300 and under; and that the Petitioners were apprehensive that, if the Government came into competition with them, from the superior character of the Government security, the depositors would withdraw a considerable amount of the deposits naturally flowing into the banks, and now used in the general circulation of the country. In the present restricted condition of credit in Ireland, it was of great importance that attention should be bestowed upon this matter. He was glad to hear that the noble Lord was willing to accept the limit of £300, which he thought would, to a considerable extent, do away with the objection raised by the Irish banks; and if he would but go a little further, all practical difficulty would, he thought, be removed. It was a matter of serious moment, in the present financial condition of Ireland, that nothing should interfere with the natural circulation of the capital of the country through the banks. One of the effects of the condition of things in Ireland had been that a very considerable diminution of the general circulating medium had taken place already. He had intended to move to amend the clause, but would be glad to hear what the noble Lord had to say upon the question.
§ LORD FREDERICK CAVENDISH
said, the remarks of his hon. Friend applied rather to the provisions of the original Bill than to the present. He had, however, much pleasure in accepting the Amendment to limit the amount of Stock to £300, inasmuch as it did not affect the principle of the Bill, and appeared to be fair to all parties.
§ Amendment agreed to; word substituted accordingly.
§ LORD FREDERICK CAVENDISH
moved, as an Amendment, in page 3, line 34, to leave out "corresponding," and insert "equivalent."
§ Amendment agreed to; word substituted accordingly.
§ MR. MAGNIAC,
in moving, as an Amendment, in page 3, line 36, after "commission," to insert "and send to the depositor a certificate thereof in the prescribed form," said, the object of the Amendment was that persons should have something tangible in exchange for their money. He believed that it would be impossible to bring 36 to the minds of many people the nature of the investment in the way proposed by the Bill, without they were furnished with a certificate, which would satisfy them that there was some security attached to it. That plan was generally adopted in France. He held in his hand one of those documents issued in France, which had a coupon attached to it; and it would be seen how useful this would be to persons in settling small accounts. The system was of great use amongst the people in France, and he trusted the noble Lord would agree to the Amendment which he now begged to move.
§ LORD FREDERICK CAVENDISH
said, the certificate would, no doubt, be of use in the sense indicated by the hon. Member for Bedford, and he saw no objection to accepting the Amendment.
§ Amendment agreed to: words inserted accordingly.
§ On the Motion of Mr. W. FOWLER, Amendment made, in page 4, line 3, at the end of the Clause to add "and shall forthwith pay over the same to him."
§ MR. MAGNIAC,
in moving, as an Amendment, in page 4, to leave out lines 4 and 5, and to insert—In the event of a depositor not claiming the certificate of stock bought for his account, the savings bank authority shall collect the; dividends on such stock and shall deal with them,said, the Amendment went in the same direction as that which had just been proposed by him, and accepted by the noble Lord. It was an endeavour to popularize a doctrine not generally known. Few people were aware that, if they chose, they could have coupons for the interest on their Consols, although the Bank of England had not shown themselves ready to facilitate business in this respect. He hoped, however, the regulations of the Bank might next year be amended. He could imagine no more convenient document than a coupon to holders of Stock, and was glad that the Government had intimated their willingness to accept the Amendment. At the same time, he wished to guard himself against being supposed to think that very large results would follow; because he thought that it would be found that the operations of the Bill required to be largely extended.
§ MR. COURTNEY
said, he merely wished to make one observation upon this Amendment. According to the construction of the Bill, it appeared to him that it should have come in after subsection 7, between sub-section 7 and sub-section 8. He hoped that would be considered by the draftsman before the Bill was reported, as that seemed to be the natural and logical position for it.
§ MR. MAGNIAC
said, that this Amendment was put in at this particular point on the advice of the draftsman himself.
§ Amendment agreed to; words substituted accordingly.
On Motion of Mr. MAGNIAC, the following Amendment was inserted in page 4, line 17:—
(7.) Subject to the regulations under this Act, on a request from a depositor to obtain for him a stock certificate with coupons annexed, under 'The National Debt Act, 1870,' for such amount of stock standing to his account, being either fifty pounds or a multiple of fifty pounds, as is specified in the request, the savings bank authority shall, in the prescribed manner, write off the amount of stock from the account of the said depositor, and procure from the National Debt Commissioners a stock certificate for the same amount of stock: Provided, That the sum required to pay for the commission, the expenses, and the fee for the sick certificate, shall be paid by, or debited in account to, the depositor in the prescribed manner.
§ Clause, as amended, agreed to.
§ Clause 4 (Regulation as to investment in Government Stock) agreed to.
§ Clause 5 (Definitions).
§ Amendment proposed, in page 5, lines 27 and 28, to leave out the words "New Three and a-Half per Centum Bank Annuities."—(Lord Frederick Cavendish.)
§ MR. WARTON
said, he should like to add to that Amendment to leave out the words "New Two and a Half per Centum Annuities," also. It was a very small Stock, and it seemed to him it was better to omit that Stock also.
§ Amendment amended accordingly; and, as amended, agreed to.
§ Clause, as amended, agreed to.
§ LORD FREDERICK CAVENDISH,
in moving to insert the following new Clause;— 38(Amendment of 26 and 27 Vic. c. 87, s. 29, as to the separate surplus fund of Trustee Savings Banks.)Nothing in section twenty-nine of 'The Trustee Savings Bank Act, 1863,' shall require the trustees of any Trustee Savings Bank to ascertain, certify, and pay over annually to the National Debt Commissioners the amount of any increased stock and property except when they are required so to do by the said Commissioners, and any amount so paid over shall carry interest at the same rate as any other sums standing to the credit of the said Trustee Savings Bank,said, its object was merely to carry out the agreement he made with respect to the separate surplus fund.
§ Clause read a first and second time, and added to the Bill.
§ (Minimum of deposits.)
§ "And whereas it is provided by 'The Post Office Savings Bank Act, 1861,' that no deposit shall be of less amount than one shilling, and it is expedient to reduce the said amount: Be it therefore Enacted, That it shall be lawful for the Postmaster General to fix, and from time to time to alter, the minimum amount which may be deposited at any one time," said, that as he thought it was really the key to all the improvements which might be looked forward to in the interest of thrift he should press it to the best of his ability. He wanted to reduce the amount which any person was allowed to pay into the Post Office Savings Bank. He knew that he should be met by two objections on the part of the Postmaster General; first, in respect to the expense of the transaction; and, secondly, that the increased business which it would bring to the Post Office would require entirely new staff arrangements. The profit which was at present made by the Post Office, under the heading of Post Office Savings Banks, amounted to £150,000 per annum; and the cost of each transaction, according to the Return, was 7½d. It was, therefore, not fair to consider the minimum deposits were in any way the same as the average deposits, because if 1s., which at present was the minimum deposit, were also the average deposit, and if every transference of 1s. cost 1s. 3d., there could be no profit left at all to the Department. Experience had shown that the average deposit was 56 times as great as the minimum deposit; and, therefore, if the average were in any degree maintained 39 there would be no fear that lowering the minimum would destroy the profits. On the contrary, he maintained that the increased business which would be brought would result in increased profits, sufficient to meet any expense of extra staff that might be necessary. The present profits had been used to bolster up the old savings banks, which paid an interest that they could not afford. It was to be hoped this Bill would create a new state of affairs; and those profits would be now used instead to develop the Post Office system to the great advantage, moral as well as financial, of the nation. Then, with regard to the alterations in the staff of the Post Office, which might be rendered necessary in consequence of lowering the minimum, that was a question which would have very shortly to be faced quite independently of his proposal. It was quite clear that the business could not always be carried on in London as it was at present. Then, if more responsibility was given to the local postmaster, that would, of course, imply larger pay. But at that point his argument applied. If more business was brought into the offices, more profits would accumulate; and, by that means, the Department would be able to meet the increased pay at the branches. He would not prolong his observations at present, although, had a better opportunity been afforded, he should have desired to have expressed his views at greater length. He would now, however, merely express his strong hope that a diminution in the minimum deposit would be agreed to; and if he now failed to persuade the Committee, he should bring in a Bill on the subject during the next Session.
§ New Clause (Minimum of deposits,)—(Mr. E. W. Harcourt,)—brought up, and read a first time.
§ Motion made, and Question proposed, "That the Clause be now read a second time."
§ MR. FAWCETT
said, he very much regretted that he could not accept this clause. In the first place, it threw too great reponsibility upon the Postmaster General. According to the wording of the clause, not only would he have power to reduce the minimum, but he would also have power to increase it, 40 if he thought necessary; and, therefore, without notice to the public, the power was to be placed in the hands of one Minister, without consulting Parliament, of changing this minimum of deposit as he liked.
§ MR. E. W. HARCOURT
said, he was sorry to interrupt the right hon. Gentleman; but he thought his proposition had been scarcely understood. What he proposed to do was to give the Postmaster General power merely to lessen the amount of deposits.
§ MR. FAWCETT
said, he would not pursue that point further. The hon. Gentleman had, however, talked of the profits of the Post Office. For his part, he thought they were not making too much profit for safety; because it must be borne in mind that much of their money was invested in Consols; and, if they were suddenly called upon to sell, there might be a loss on the sale. There were two reasons why the Bill at present should remain as it was. If it proved at all successful, and the investment clauses were resorted to by the public to any considerable extent, the effect would be that the Post Office would lose some of its best accounts. Of course, the accounts on which they made profits were not the small ones, but those between £100 and £200 and, if a great number of those accounts should be invested in Consols they would evidently lose a considerable number of those accounts from which they made their best profits. Another way in which this Bill might affect the profits of the Post Office would be that, if people invested largely in Consols, the extra demand for Consols would increase their price, and this, pro tanto, would reduce the profit of the savings bank business. For these reasons, he could not accept this Amendment. The last time this proposition was under discussion, his right hon. Friend the Member for the City of London (Mr. J. G. Hubbard) denied the accuracy of their system of accounts, and said that the expenses were more than 7d. per transaction.
§ MR. J. G. HUBBARD
I beg pardon; I did not deny its accuracy. I had never heard what it was. It was only my own estimate, and your figures may be more accurate for all I know.
continuing, observed, that, however that might be, even if the cost of each transaction were 7d. the 41 liability was considerable, and be felt that the State ought not to undertake business which might involve a loss. At the same time, he was very anxious to assist his hon. Friend in the object he had in view; and, with that purpose, he was on the point of carrying out an experiment which had been suggested to him by one of the officials at the Post Office, Mr. Chetwynd. There would be obtainable from every post office a form containing 12 divisions, in each one of these could be placed a stamp, and when the form was full it would be received at the savings bank, in lieu of 1s. as a deposit. He was about to try this experiment, and he should be exceedingly glad if it succeeded. At the same time, he was extremely anxious in all cases to proceed cautiously and with care; and, therefore, he had arranged that, for the present, this plan should be tried in five counties of England and Wales, in two of Scotland and two of Ireland. In order as little as possible to infringe upon the business now carried on by the Penny Banks, he had selected those counties where there was a small number of those banks. The counties selected had also been chosen as representing different industries, and were as follows:,*— Somerset and Norfolk, as representing the agricultural industry; Leicester, as partly manufacturing and partly agricultural; Cumberland, as partly mining and partly agricultural; Aberdeen, as representing the North of Scotland, and Ayrshire the South; while in Ireland, the two counties chosen were County Down and County Waterford. He should watch that experiment with very great interest; and, if it succeeded, he would extend it to the whole of the country. That experiment, if successful, would go a long way towards meeting the views of his hon. Friend, without infringing the present rules of the Post Office.
§ An hon. MEMBER asked what county had been chosen in Wales?
§ MR. J. HOLLOND
said, he had an Amendment to almost exactly the same effect; and, therefore, be might as well deliver any remarks he had to make on it at the present time. He would remind the Committee that there really was a need for a reduction in this minimum at the Post Office; because it 42 must be remarked that not only was there a fixed minimum of 1s., but only sums which were a multiple of 1s. could be paid in. The result was that no person, for instance, could deposit such a sum as 2s. 6d. at one time. That seemed rather an absurdity; and it would be very much wiser, in his opinion, if, with the view of encouraging thrift generally in the country, the Post Office Savings Bank would undertake to say that though they would not take sums below 1s., they would take any sums over 1s., whether in pence or not. There was a Return, No. 342, which seemed to show that this reduction which he advocated was not needed, because deposits of 2s. and 5s., and even 10s., were greater in number than the single deposits of 1s. If, however, they compared that Return with the Return of the National Penny Bank, which had been alluded to, issued in 1877, he thought they would come to the conclusion that there must be some other explanation of this fact; for, certainly, the Return proved that where the mass of the people had facilities for paying in very small sums they did take advantage of them. In the year 1877, the Return of the actual deposits, in one week, at the National Penny Bank, which had 66 branches, showed that more than half were under 1s. The total number of deposits was 10,236; and of these 5,774 were actually of sums below 1s; and the greatest number of all consisted of sums of 6d., of which there were 1,856. This showed the real want there was for some institution where the very lowest sums could be paid in. The objection to the reduction of the minimum—that it would cause a great deal of trouble, was, no doubt, worthy of consideration; but he thought that the extra profit, which, possibly, might be made by a large increase in the number of deposits, would, to a great extent, meet this difficulty; and, if not, it must be remembered that the Post Office Savings Bank Department, at the present time, was working at a considerable profit. In his opinion, it would be perfectly fair for them to use some part of their profit for the purpose of giving greater facilities for small deposits. They had been told that the cost of every transaction was 8d.; and that, therefore, to receive a deposit of 6d. would not pay; but, in a calculation of that kind, they must take not the individual sum, but the great mass of the 43 sums, and consider what the profit was on the whole number of transactions; and if that calculation showed that there would still be a gain, the reduction would be well worthy of consideration. On the whole, however, the right hon. Gentleman the Postmaster General had shown that he was so fully alive to the importance of this subject, and the experiment he had undertaken to make was so very desirable a one, that he (Mr. J. Hollond) did not think it would be fair to press him to go any further until they saw the result of that experiment.
§ MR. E. W. HARCOURT
said, he quite agreed that the Post Office must make profits; but all hon. Gentlemen who took an interest in this matter would agree that it was not so much the amount of interest which was paid to the depositors which was of importance, as the security which they obtained for the money they placed in the Bank; and if the Post Office could not make profits at the present rate of interest, he was quite sure that the right hon. Gentleman the Postmaster General would propose to reduce the interest, and give less. It was evident, however, that the right hon. Gentleman was fully alive to the importance of this question; and, in view of the experiment which he was about to try, he (Mr. E. W. Harcourt) would not press this clause.
§ Motion, by leave, withdrawn.
§ (Post Office Savings Banks to be established wherever there is a Post Office.)
§ "Whereas it is expedient that greater facilities should be afforded to the public in the use of Post Office Savings Banks in the view of the promotion of thrift: Be it therefore Enacted, That a Post Office Savings Bank shall be established wherever a Post Office exists."
said, the strongest arguments in favour of the new clause he was about to propose would be found in the Report of the Postmaster General himself—in his 25th Report. He there said—
That the numerous bank failures, whilst shaking public confidence in many modes of investment, could not fail to draw attention to the advantage of depositing savings under the security of the Government Savings Bank.
Well, it was his object to obtain for every possible investor the advantage which the Postmaster General pointed
out. What was the present fact? Why, that one-half of the population were, at the present moment, without the advantage of Post Office Savings Banks. Moreover, they were told in the 25th— which was the last—Report issued by the Post Office, that it was never the intention of that Office to extend Post Office Savings Banks to "retired and sparsely populated districts;" in other words, of bringing thrift to the doors of many who would certainly not go out of their way to look for it. He was not going to argue that it would be expedient to convert every post office into a money order office, nor that it would be necessary to have expensive employés everywhere; but he was going to maintain that it was possible, that it was practicable, and that it was desirable, that employés should attend, at least one evening in the week, at offices to transact savings bank business. Last year a deputation waited on the Chancellor of the Exchequer on the subject—he was sorry to say without any effect—and an account of the proceedings of that deputation was described by the Postmaster General with a delicious roundness of period that it would seem rude to interfere with. They were told—
That the facilities now afforded to the public were all that could reasonably be desired with due regard to the interests of the State.
Now, he had innocently conceived that the interests of the State were best consulted when the greatest possible facilities were afforded to the public. There was no standing still in these matters; and if those intrusted with their management were unable or unwilling to move, there was nothing left to the public but to take things into their own hands. Petitions were pouring into the House on the subject; and it was not likely that, when people had begun to realize the benefits of thrift, which, thank God, they were doing now, and more and more every day, they would be satisfied with half measures, or be willing to be put off with timid excuses. Well, now, how did the Postmaster General, in the 25th Report, propose to meet this matter? He suggested that private Penny Banks should be resorted to—very simple indeed; but there was this objection—that there was no guarantee that these amateur bankers were in all cases competent, in all cases punctual, and in all cases honest; and he affirmed that the
"illiterate people in country places," as the Postmaster General called them, had a right to the best security for their hard-earned savings which it was possible to give them. And he said, moreover, that if they were deterred by the machinery of the Post Office Savings Banks, as the Postmaster General said they were, from putting their money into those banks, then the Post Office Savings Banks were a failure as far as half the population were concerned. Therefore, he asked, in the interest of a large and deserving class who were endeavouring to help themselves, and in behalf of a still larger class whom they were endeavouring to teach to help themselves, that a Post Office Savings Bank should be established wherever a post office existed. They had just heard that the Postmaster General was organizing an experiment on this very subject, and he should be very glad to hear from the right hon. Gentleman with what success it was attended. It was not his wish to ask the right hon. Gentleman to tread in any unexplored paths; all he asked was, that work already found to be good, already proved to be acceptable to the people, and to possess the confidence of the people, should be extended within the discretion of the Postmaster General into channels which would work untold good to the nation at large. No fainthearted excuses would find favour with the public; and those who had these matters at heart would continue to press them upon the authorities until success was obtained, a success which was sought for to serve no private ends, but in the sincere belief that it would benefit the most necessitous and the deserving members of the community.
§ New Clause (Post Office Savings Bank to be established wherever there is a Post Office)—(Mr. E. W. Harcourt,)—brought up, and read the first time.
§ Motion made, and Question proposed, "That the Clause be now read a second time."
§ MR. FAWCETT
said, he wished to offer one word in explanation. The experiment to which his hon. Friend had referred was not only going to be tried, but had been tried. About a month since, he ordered every Post Office surveyor to select two or three villages in his district, in which different industries were 46 carried on, and where there were no Post Office Savings Banks. At those villages a weekly Post Office Savings Bank was to be established, and a clerk sent over from the central office to receive deposits, and to carry on a money order business. Thirty places had been selected in England, Scotland, and Ireland, and 145 visits had been already paid. The average expense of each visit had only been 6s. 8d., including everything; and already more than £290 had been received in a single month, while less than £35 had been withdrawn. If the experiment went on in the future as satisfactorily as it had worked up to the present, he could only assure his hon. Friend that no one would be more rejoiced than he would to gradually extend it. If that experiment did succeed, they could easily send out clerks once a-week from the central office to do savings bank business and money order business in country villages, and thus confer a great benefit on the public, and introduce a very advantageous system without any great amount of cost. He hoped his hon. Friend would be satisfied with that experiment, and would feel that he had done his best in the matter.
§ MR. E. W. HARCOURT
said, after the very satisfactory explanation of the right hon. Gentleman he would withdraw his Motion.
§ Motion, by leave, withdrawn.
§ Schedule agreed to.
§ Bill reported; as amended, to be considered To-morrow.