RESOLUTION.

HC Deb 01 June 1888 vol 326 cc888-928

MR. HOWELL (Bethnal Green, N. E.)

, in rising to call attention to the position of Trustee Savings Banks; and to move— That, in the opinion of this House, the relationship subsisting between Trustee Savings Banks and the State is unsatisfactory, and ought to be revised; that Trustees and Managers should be restrained from using the words 'Government Security,' 'Government Savings Bank,' or other words implying more than the law rightfully authorises, in connection with such Banks, the use of which is calculated to deceive depositors, create a false impression of security, and damage the cause of thrift; and that the Trustees and Managers of such Banks should, as formerly, be made responsible for the safe custody of the deposits committed to their care in connection with such Trustee Banks, said, the House would remember that for some 16 months he had been drawing the attention of the House to this matter, and he now found that it was necessary for the House to take some further action. He should not have considered it necessary to make any reference to his motives in bringing the question before the House had it not been for a letter in yesterday's Times in which certain imputations were contained. He might be allowed to say that he did not believe in panics nor in legislating when panics took place. All that he desired in this matter, as was well known both to the Leader of the House and the Chancellor of the Exchequer, was to call attention to certain defects in connection with the management of Trustee Savings Banks so that some remedial measures might be passed, not in consequence of panic, but for the protection of the deposits of the poor persons who had deposited their savings in them. At the present moment there were 405 Trustee Savings Banks in the country, the number of deposit accounts was 1,590,000, and the aggregate amount of deposits standing in the name of these depositors was £46,843,000. If, therefore, they took into consideration the number of the banks throughout the country, the number of depositors in them, and the amount of the deposits, together with the fact that the depositors belonged to the poorer classes of society, he thought a case would be made out for calling attention to the subject. It would be in the recollection of hon. Members who were at all acquainted with the history of these banks, that they were established towards the close of last century, and that they existed for a considerable time as purely voluntary associations. It was not until they had grown considerably and extended to every part of the country that legislation stepped in. Three Bills were brought in in the years 1815, 1816, and 1817; but it was not until 1817 that any Act was passed for the purpose of regulating them. In 1818, another Act was passed to extend the provisions of the first Act to Ireland. The main object of this legislation was to secure the safety of the depositors' money. That object had always been considered of paramount importance; but the Government of that day and the House of Commons went further. They were prepared to give some kind of encouragement as well as protection to the depositors in Trustee Savings Banks, and, therefore, in order to encourage thrift among the working classes, the Government determined to fix the interest upon the amount deposited at £4 11s, 3d. per cent per annum. It was subsequently altered to a lower figure, because a number of persons began to make use of these banks instead of the ordinary commercial banks of the country for the purpose of putting in them, as a matter of convenience, deposits which were used in trading transactions. It was never intended that these Trustee Savings Banks should come into competition with the ordinary commercial banks of the country, but they were encouraged by the State for the purpose of developing thrift among the poorer classes. It was, therefore, deemed necessary in order that these institutions should be made use of for that object that certain limitations should be imposed. In the first place, the annual amount invested by any one depositor was limited, and there was also a limit fixed to the maximum amount which any single depositor could place in them. The main object of the early legislation was the protection of the investor; and it was required that the money deposited should be placed in the hands of the National Debt Commissioners. It was thought that by making it compulsory to invest the deposits with the National Debt Commissioners, something like absolute security would be given to the depositors. Although the Government allowed a certain rate of interest to the trustees of these savings banks, yet a portion of the money went to the management, and the other portion to the investors. The State, therefore, paid an absolute bounty for the management of the banks, and consequently had a right to see, especially as they were regulated by the State, that they were properly and efficiently managed. It so happened that very early in the history of the banks it was found that defalcations existed, and defalcations had continued to exist over a long series of years. The earlier defalcations were of a sufficiently startling nature to alarm a great number of prudent men, Members of that House, among others, as to the safety of the Trustee Savings Banks and of the money deposited in them; and there- fore it had been attempted over and over again to increase the responsibilities of trustees and managers, whose duty it was to see that these banks were managed in accordance with the statutory provisions. It was very singular, and the history of these banks disclosed the fact, although he mentioned it with some reluctance, and certainly with some shame, that whilst the managers and trustees of the banks and their patrons, many of whom had Representatives in that House, used every effort to keep up the rate of interest at £4 11s. 3d. per cent, as at first proposed, and had done everything in their power to maintain and continue that high rate of interest, as an inducement to depositors to place their money in the banks; yet from a very early period they threw every obstacle in the way of increasing the responsibility of trustees and managers, and making them liable for any frauds or failures that might take place in regard to them. He did not intend to say anything against the honour of the trustees and managers. In looking through the history of the frauds and defalcations which had taken place, there was scarcely, as far as he remembered, a single instance in which either a trustee or manager had been found guilty of fraudulent practices in relation to the banks. But that could not be said of other officers, both paid and unpaid, and, to a considerable extent, the trustees and managers were by law made responsible for what was done. While practically anxious, therefore, to increase the responsibility of trustees and managers—and there was no other way of doing it than by increasing their liability—he hoped they would not suppose for a moment that he was calling in question their honour with regard to these banks. He knew they had done good work in connection with them in many respects, and he was prepared to admit that a great many of the banks themselves were in a good and solvent condition; but what he contended was that the facts he had already placed before the First Lord of the Treasury and the Chancellor of the Exchequer during the last 16 months were sufficient to show that something must be done in order to afford greater protection than they now did to the depositors in Trustee Savings Banks. In his communications with the First Lord of the Treasury and the Chancellor of the Exchequer upon the subject, it was his duty to say that he had received every consideration from those right hon. Gentlemen. He had had a long and arduous task in bringing the matter before the House, seeing that it took a considerable time to get all the facts and figures that were necessary to establish a case, and on every occasion he gratefully acknowledged that the First Lord of the Treasury and the Chancellor of the Exchequer had done everything that they could to aid him up to a certain point as far as he could understand their position. Nevertheless he felt that all that had been done was not sufficient. Last year the House was able to pass an Act for the purpose of making inquiries into the position of certain banks where a primâ facie case for inquiry had been made out. But they wanted something more than an inquiry where frauds and defalcations had taken place, where a failure had happened, and a great many persons had been almost ruined. It was not that which was wanted so much as some kind of efficient legislation whereby frauds and defalcations and failures would be prevented in the future. He had already mentioned the bounty given by the State towards the management of the banks. That bounty was altered in 1828 from £4 11s. 3d. to £3 16s. 0½d.; in 1844 it was reduced to £3 5s.; in 1880 it was further reduced to £3, and it was now proposed by a Bill before the House in the present year to reduce it to £2 15s., of which sum £2 10s., equivalent to the interest allowed by the Post Office Savings Banks, would go to the depositors. [An hon. MEMBER: It may.] As his hon. Friend reminded him, that this £2 10s. "might" go to the depositors. At any rate, under the altered circumstances of the case, the condition of the banks would be very much worse than it was to-day, and he was satisfied that in a great many instances it was sufficiently bad to-day. He therefore desired that the attention of the House should be directed to the subject so that some action might be taken before the Bill of the right hon. Gentleman the Chancellor of the Exchequer came into operation. He referred to the Supplementary National Debt Bill, whereby the interest on these deposits was to be still further reduced. In a great number of cases these banks had not a sufficient amount for working expenses already if they were to judge from the returns. He was, however, bound to say that there was very little dependence to be placed on the very elaborate returns which were published from time to time. As far as anyone could judge from them the position of the Cardiff Bank for instance was right enough according to the returns, and a number of other banks were right enough until frauds were discovered in connection with them. At the same time the returns, if properly examined, did give a number of important facts. For example—one bank sent up to the National Debt Commissioners a balance sheet that showed a profit on the right side of something a little under £40; but when that balance sheet was sent up, showing some credit to the bank, it was found that the bank had left unpaid a part of the salary of the actuary, which amounted to a larger sum. That was not the kind of solvency he wanted to see in regard to these Trustee Savings Banks. He thought their accounts ought to be able to show, on the face of them, a perfectly solvent condition, and if they did not do that, then, taking into consideration the fact that the National Debt Commissioners were empowered to pay a bounty of 5s. per cent for the management of the banks, they or some other authority should have power to make some inquiry into the condition of these banks by Act of Parliament. So far as he understood the operation of the Act of last Session that object had not yet been attained. Many hon. Members might not be aware of the large amount of money paid by the State towards keeping up this system of Trustee Savings Banks. If it were a bonus paid only and entirely for the encouragement of thrift, he felt that the House, especially after the experience of what other Parliaments had been doing during the last 50 or 60 years would not grudge a few extra pounds per annum in order to encourage thrift among the working classes; but the House ought to be satisfied that this bounty went to the depositors, and was used for the encouragement of thrift. As he understood it, the object of these banks was not to call into existence an institution that was to provide respectable berths for a number of very respectable people; but the real object was to encourage thrift, and for that purpose the main responsibility with regard to the management of the banks was thrown, not upon the actuaries or secretaries, but upon the trustees and managers. Well, these banks had not paid their way; they had never paid their way, but they had been bounty fed from the first moment of their existence under statutory regulation. They lost in the first year they were instituted—namely, from 1817 to 1818—a sum of £12,000, and it increased year by year until the loss reached something very considerable. During the first 11 years of their existence the actual loss to the National Exchequer was £744,552. These facts were contained in a Return moved for by the late Joseph Hume, for many years a respected Member of that House, and it was published prior to 1828, when the first reduction was made in the amount of interest. It was thought that when the interest was reduced that the banks would be pretty nearly able to pay their way; but, even with the reduction, the banks were not able to pay their way, and a very considerable sum of money was lost to the nation in connection with the management of thrift savings banks, and in the payment of interest up to 1844, when a further reduction was made, and again up to 1880. It would be in the recollection of the House that in the year 1880 the right hon. Member for Mid Lothian (Mr. W. E. Gladstone) brought in a measure whereby arrangements were made to pay off the deficit incurred by the banks. It was somewhat difficult to understand what the actual deficit was, but the sum mentioned to the House was considerably over £3,500,000. It was thought after a still further reduction was made in the amount of interest that the banks would not be landed in further deficiencies; but, as a matter of fact, from 1880, when arrangements were made to pay off the deficit at the rate of £83,272 a-year, up to 1908 the Trustee Savings Banks had cost the nation a further sum of £17,000. The rate was now about £10,000 per annum, £6,000 of which represented the cost of management at the National Debt Office, while something like £4,000 represented the sum paid to the trustees in the shape of interest over the amount actually earned. Only recently the Chancellor of the Exchequer gave some figures in answer to a Question put to him in that House, which showed that last year, 1887, the actual loss to the National Exchequer, instead of being £4,090 as in the previous year, had amounted to £13,746. He could, therefore, understand why it was that the Chancellor of the Exchequer had found it absolutely necessary to bring in this Supplementary Bill to deal with the question of Trustee Banks. So far as the Motion was concerned, that was an important aspect of the question; but with a rich nation like this, he felt sure that the sum of £10,000 a-year would not be grudged if necessary for developing thrift in the country. What they wanted to see was that the money should be used in order to develop thrift, and in connection with perfectly safe and solvent institutions. He was sorry to say that the history of Trustee Savings Banks in this country was not so bright a page as he at one time imagined it would be, and as many hon. Members of the House even now imagined that it was. He had had to go through a number of records in connection with these banks, and his feeling was one of sadness when he remembered the great number of defalcations which had taken place. It was a singular fact that 12 failures took place in the first 11 years after the state imposed some regulations in regard to them—namely, between 1817 and 1828. A great number of failures had taken place in various parts of the country at various times, but the reason why they did not hear so much in regard to some of those failures was the fact that the trustees and managers, rather than have an open inquiry and have all the circumstances of the case brought to light, manfully put their hands in their pockets and made up the deficiency, while the defaulting actuary or secretary, whoever he might be, escaped punishment. In one instance Mr. Hoare paid £7,000 out of his own pocket to make up a defalcation which had occurred in connection with a bank of which he was trustee, while other trustees had paid from £500 to £1,000 according to their means. In many instances the trustees and managers had come forward in this way. One instance occurred last year to which the attention of the House was called. The Bishop Stortford case was sufficiently sad in itself. In that instance trustees and managers paid a large sum of money, although he was not quite sure that all the deficiency was made up, in order to make up the defalcations caused by the fraud and default of their secretary. It was a singular fact in connection with that bank that this man was able to draw sums of money year after year from the National Debt Commissioners without anyone calling him to account. The sums drawn out from the National Debt Office amounted to £8,750, but instead of having that sum in hand £750 was all that stood to the credit of the bank, the rest having been drawn by the defaulting secretary. It seemed to him that even the National Debt Commissioners, placed as they were, ought to have seen that there was something wrong; but they said that they had no authority. All he could say was that there ought to be some authority. The trustees and managers themselves had authority, and it was their bounden duty under an Act of Parliament to see that the rules and regulations, established for the control of Trustee Savings Banks, were carried out. On one occasion some years ago the House of Commons voted a sum of money to make up a deficiency in one bank, a sum of £30,000 being voted towards meeting the deficiency which had taken place in Dublin. It might have been thought that that circumstance would have alarmed the trustees and managers of savings banks throughout the country. It certainly alarmed many Members of the House of Commons, and among others Mr. Joseph Hume, who was not a man likely to give way to panic. It might have been thought that some attempt would be made to increase the liability and responsibility of the trustees and managers, but scarcely had this sum of money been voted by Parliament, when other defalcations were brought to light amounting in the case of St. Albans to £24,000, of Tralee to £36,000, of Killarney to £36,000, of Rochdale to £71,715, of Brighton to £4,000, and of Reading to £3,000. These defalcations occurred from time to time until hon. Members of that House became alarmed, and then an effort was made to increase the responsibility of the trustees and managers. It had been held by a decision at law that trustees were responsible, but they got rid of that responsi- bility. The House of Commons then, in one of these fits of panic which seemed to overtake it, passed a measure which permitted trustees and managers to make themselves responsible and liable by signing a declaration to that effect and sending it to the National Debt Commissioners. The result was that out of the great number of Trustee Savings Banks throughout the length and breadth of the land, only four sets of trustees, who were connected with very unimportant banks, sent in a declaration that they were prepared to incur the liability and responsibility. The trustees and managers of the other banks sent in no declaration to the effect that they were prepared to be held responsible for the money belonging to the poor depositors, and of course this permissive legislation entirely failed to produce any salutary effect. Another effort was then made to increase the security of these banks and the responsibility of trustees and managers. Bills were brought into the House of Commons year after year, and they were rejected mainly on account of the efforts which were made on the part of the trustees, managers, and patrons of these banks, acting, of course, for others whose hands were not quite so apparent. Those Bills were rejected year after year. The right hon. Gentleman the Member for Mid Lothian attempted legislation on two occasions, and a third Bill was brought in by some other Members of the House. The right hon. Gentleman the Member for Mid Lothian seeing that he could not enforce this liability upon trustees, brought in, on that account, another measure creating the Post Office Savings Banks which was thus absolutely brought into existence, because trustees and managers would not undertake the due responsibility of the trust they had taken upon themselves. The trustees and managers seemed to have come to the conclusion that it was perhaps wise that some farther measure should be brought in, and called upon the right hon. Gentleman to help. They were told that the Government had done their part, and that they must prepare a measure themselves. The result was the Act of 1863. The trustees did introduce a measure, but they took very good care in introducing it that their responsibility was not increased as it ought to have been. Now, he ventured to think not only that the time had come when that House, for the sake of its own credit, must see that the provisions passed by it were carried into effect, but also that it should go on to some further legislation with regard to the trustees of these banks. Their position would be much altered by the new Act, which would come into operation in the course of a few months. Whether, however, that Act had been passed or not, the Trustee Savings Banks could not go on as at present. He maintained that the circumstances which attended the failure and defalcations at Cardiff were quite sufficient of themselves to show the absolute necessity of some kind of legislation. The defalcations discovered at Cardiff amounted to over £37,000, and at Bishop Stortford there was a deficiency of £8,000. The Act of 1863, if it had been honestly worked by the trustees and managers, would certainly have prevented those frauds. At any rate, they would have done so to a very considerable extent, and if the frauds and defalcations had not increased, there would not have been any absolute reason for increasing the responsibility of trustees and managers. But what was the actual state of matters. So far from the trustees and managers doing their duty, it seemed to him that they never stopped to consider whether they had any duties to perform or any responsibilities in connection with the money of depositors at all. This singular fact cropped up in evidence in regard to the banks of Sevenoaks, Bishop Stortford, Cardiff, and other places—namely, that the trustees and managers said that they had never known there were any statutory provisions imposing certain duties upon them. All that he could say in answer to that was that the trustees and managers were rendered responsible for the management of these banks by the Act of 1863. One of the first things set forth in the Act of 1863 was that every depositor on making his deposit, should make a declaration that he had nu interest in any other Savings Bank to any extent whatever. It was the duty of trustees and managers to see that this declaration was made by every depositor, and the Act went further, for they were not only required to say that the declaration was made when the first deposit took place, but power was given to them to see that the declaration was made at any subsequent time if they thought fit. Now, in the case of Cardiff, it was in evidence that the declaration was not made by the depositors, and was never expected to be made, and that it was only in comparatively few instances that it was done. Nor did it appear to have been made in connection with other banks where defalcations took place, notwithstanding the fact that it was the first duty imposed by the Act, the object being to see that no man deposited more in one year than £30, or a larger sum altogether than £150. This was not peculiar in regard to any particular bank. A Trustee Savings Bank pass book had been placed in his hands a short time ago. It was given to him by a gentleman who went and put in a sum of money in a certain bank in London about which he should have to say something on a future occasion. This gentleman expected to be called upon to make a statutory declaration, but no such declaration was asked for or referred to, and no trustee or manager was there to initial the book in accordance with the provisions of the Act. The intention of the law was to fix an annual limit of £30 a-year for depositors, and the intention in fixing that limit was that the bank should be used by the industrial classes only; but, as a matter of fact, this annual limit had been exceeded over and over again in various savings banks throughout the country, and not only the annual limit, but the maximum amount of £150. In Cardiff, so innocent were all the gentlemen connected with the bank, notwithstanding the fact that some of the trustees and managers were lawyers, that one of their number, himself a lawyer, deposited thousands of pounds in the bank, and had the principal paid back again with interest, in absolute violation, not only of the spirit, but of the letter of the Act. When the inquiry was instituted at Cardiff, this gentleman, who, it must be remembered, was a lawyer, told the Commissioners that he had no notion whatever of any restriction having been imposed by the law. Then, again, the Act provided that there should be an audit, and that that audit should take place every half-year. He presumed that those who passed the Act and those by whom it was framed, meant, when they used the term audit, that there should be a real audit, and not that a certain number of figures should be totalled up in a book and initialled "all right," and sent up to the National Debt Commissioners to tell any tale it liked. Of the kind of audit that passed muster there was a sad specimen recently in connection with the Cardiff Bank, and also in a case which occurred recently, in which the gentleman who wrote a letter to The Times yesterday happened to be the auditor as well as the actuary of an important London Trustee Bank. This gentleman, who was joint auditor with his partner of several other banks, might be thought, from the experience he had gained, to have known something in regard to auditing, and to have been able to detect any frauds or defalcations that might have taken place. Yet frauds had been going on for years undetected by the auditor, although they might have been detected very readily if he had simply carried out the rules and instructions of the Act of Parliament, seeing that the pass book of the depositor was examined with the cash book and ledger at the bank. That not being done, of course the actuary could use the money just as he pleased. He put down certain amounts in the cash book and ledger of the bank, and other amounts in the pass books, and as nobody ever saw the pass books and compared them with the books in the possession of the bank, he was perfectly safe. If the auditor had done his duty, the defalcations which took place at Sevenoaks could not have occurred. The case at Cardiff was worse. The defalcations had been going on there for a great number of years. How many they were not told by the Commissioner; but, at any rate, they had been going on for the last 20 years. In that case, the auditor simply did what the actuary told him, and when the inquiry was instituted it was found that there had not only been a defective audit, but something more. It was found in one instance that an auditor who had acted for many years had been removed, and another auditor was appointed in his place. It so happened that this auditor was not quite so easily satisfied, and in one instance he discovered that a great number of accounts exceeded the full limit of £150, which was the maximum allowed by the Act, or £200, inclu- ding the interest. It was found that some of the accounts had run up to a considerable amount, but that, nevertheless, only one single account had been sent up to the National Debt Office as having been over £200, and in that case it was marked £200 12s. The auditor refused to sign the accounts as correct and wrote the word. "false" against it, to which he signed his name. But what did the trustees and managers do? They absolutely published the balance sheet as signed by the auditor and found correct, but without the word "false" upon it. That account was sent up to the National Debt Office, and it contained the name of one depositor only who had exceeded the maximum allowed to be deposited. Then, again, this singular thing happened in connection with the Cardiff bank. Neither in connection with that bank nor in the inquiry instituted under the Hon. Lyulph Stanley, as Commissioner, was there anything to show that any of the trustees or managers actually benefited themselves to any extent by the frauds and defalcations which occurred, and in asking the House to take steps he was at the same time seeking to protect a body of men who were occupying a post of honour as well as responsibility. But in undertaking the duties it was necessary that they should undertake the responsibility connected with them, and see that the rules and regulations provided by statute were carried out. He had shown that the law was set at defiance with regard to the limit of money to be deposited per annum, also in regard to the limit of the maximum amount, and also in reference to the fact that no real and effectual audit took place. His attention had been called by managers, trustees, and actuaries to certain banks which were, undoubtedly, well managed, but he had never called in question the fact that a great number of these Trustee Savings Banks were well conducted. For instance, there was the Glasgow Savings Bank, which was conducted in every way, as far as he could learn, as a great philanthropic institution; its affairs were managed in a wise manner, and every security was given to the depositors. The same might be said of the Hull Savings Bank, and the Liverpool Savings Bank might also be mentioned, but he did not like to mention individual banks lest it might be supposed that he wished to condemn those he did not mention. All he would say was that there could be no doubt that many of these banks were well conducted. No single charge had ever been made against the Liverpool Savings Bank, and it was managed, he believed, in a proper and judicious manner, and had been placed in a sound and healthy condition in every possible respect. The actuary of that bank seemed to be very angry with him for having brought the question of Trustee Savings Banks before the House, and undertook to get up a trades' union of the actuaries of savings banks for the purpose of opposing legislation on the subject. That gentleman, no doubt believing that he was perfectly right, had said, "We do not break the law in any respect, nor do we parade the name of the Government." Now he (Mr. Howell) had had a circular put in his hands in which this gentleman endeavoured to show that no use was made of the Government name for the purpose of security. Yet, the first passage in that circular said, that as many paragraphs were going round the papers as to the security or insecurity of Trustee Savings Bank, it might be of interest to consider how the matter stood in reference to the Liverpool Savings Bank. In the first place the Liverpool Savings Bank had never assumed the title of "National Security" or "Government Security" in any of its pass-books or other publications. Its full title was "The Liverpool Savings Bank, certified by Act of Parliament," and so on. This circular had been sown broadcast throughout the country, and it was quite true that the pass book was not issued with the words "National Security" or "Government Security" upon it. But in this very circular he found the words "Liverpool Savings Bank, National Security, Government Security." No further observation was, therefore, necessary in regard to that point. His main complaint was that the terms "Government Security" and "National Security" had been used in connection with these banks as traps for the unwary, and that a great number of persons had been induced to lodge their money in these banks, believing them to be absolutely safe and sound, whereas they were not so, but had gone to pieces, and the depositors had suffered in consequence. He thought that some action ought to be taken by the House in the first place to prohibit the use of the name of the Government in the way in which it was so used, even in the simple circular he had referred to. The managers had no right to use the term "National Security" or "Government Security," because it was well known that the only security the Government afforded to Trustee Savings Banks was the security of the money actually lodged with the National Debt Commissioners. The National Debt Commissioners were responsible to that extent for the money belonging to the Cardiff Bank, but what had become of the £37,000 of which the bank had been defrauded, and how was it that a demand was made for so large a sum of money? It was because the rules and regulations of the bank itself had been violated by the trustees and managers, and also the provisions of the Act of Parliament. It became the duty of that House to see that the name of the Government was not used as a trap in the way he had pointed out. In the next place, deposits ought only to be taken during the hours the bank was open. This was already provided for by the rules and the Act of Parliament. Any money taken at any other time was taken fraudulently, and the actuary who took it, together with the trustee and manager who signed the pass book or witnessed the payment, whether they knew it or not, were accessories to a fraud. In the particular instance of the Cardiff Bank he had seen a document which was supposed to have been signed by the Attorney General, in which the public were told by one of these trustees and managers that they had acted in accordance with the opinion of the Attorney General. He much doubted the fact at the time the statement was made, so he said, "So much the worse for the hon. and learned Gentleman's law," but he did not know until a long time afterwards what the terms of the case submitted to the Attorney General were or what his opinion actually was. The trustees and managers mentioned what purported to be the document, but the real document was only extorted by the Commissioner with considerable difficulty. When it was printed in connection with the Report of the Commissioner it turned out that the Attorney General and other counsel who had been consulted on the matter had advised the trustees over and over again for 12 months before he called the attention of the House to the matter that their action had been illegal, and that they would be held responsible. During the whole time the trustees were using the money of the depositors for the purpose of fighting the depositors before the Registrar, before the High Court of Justice, and in the Lobby of that House, they kept the opinion back. As a matter of fact, the opinion of the learned Attorney General did not please them. They therefore consulted another eminent counsel, who also failed to satisfy them. What they wanted was the opinion of some eminent counsel which should absolutely satisfy their consciences, and relieve them of all illegal liability and responsibility, so that they would be able to sleep in peace. But not a single lawyer could be found who was willing to give a certificate to that effect, and, as he had already stated, although this opinion was in the possession of the trustees and managers and the solicitors who were connected with the bank, for more than 12 months, during the whole of that time the money of the depositors was being used for the purpose of contesting their claims before the Registrar and the High Court of Justice, the object being to avoid paying the money which was absolutely due to those who had placed deposits in the bank. The next necessary step to be taken was that the trustees and managers of these banks should be made responsible and liable for loss in exactly the same way as other trustees were liable for money committed to their care. If gentlemen were not prepared to take upon themselves the full responsibility of trusteeship, they ought not to become trustees and managers of a Trustee Savings Bank. They undertook the duties under the provisions of an Act of Parliament on the supposition that they would carry out those provisions, and if they failed to carry them out, then, he maintained, that they were guilty of culpable neglect, and ought to pay for it. There was another thing which, in his opinion, ought to be done, and it had reference to the Registrar's Office. Under the Savings Banks Act, before the Registrar's Office was called into existence, a barrister was appointed to certify the rules. That barrister was subsequently made a Registrar, and it was his duty to see that all matters connected with the banks were in conformity with the provisions of the Act of Parliament. The decision and the award of the Registrar was to be final without appeal. But what had happened in connection with these Trustee Savings Banks was that they had absolutely set at naught every decision and every award of the Registrar. The decisions given by the Registrar time after time had never been obeyed up to the present moment, but the managers and trustees used the deposit money in order to prevent litigation and appealed to the High Court of Justice in some cases to restrain the Registrar from acting. In every possible way they had endeavoured to prevent the poor depositors from obtaining their just demands. The Registrar's Office could be made really useful for carrying out the Act of Parliament. The Registrar should have power not only to make his award but to enforce it. How was it possible for the poor people who lodged their half crowns in these savings banks to employ counsel to fight against the eminent men engaged by the banks to fight against them, and paid by the depositors' money? He asked that something should be done to strengthen the hands of the Registrar, so that these objectionable practices should not take place in future. He would not detain the House further in the matter. What he was anxious for was that the Government would see its way to supplement the Act of last year and the Bill of the present Session by some further legislation in reference to Trustee Savings Banks. He was aware that there was some difficulty in the way of legislation, because the Cardiff case was not yet absolutely settled; but he wanted to impress upon the Government that the position of the matter would be altered very considerably as soon as a further reduction of interest took place. His only fear was that some of these banks with small assets would not, with their present liabilities, bear the slightest test that might be applied to them, and he was anxious to avoid a premature run on any of the banks. At the same time, the existing state of things was a perfect scandal, and it was necessary that remedial legislation should take place in order to prevent the recurrence of the failures and defalcations which had occurred. He had again to thank the Government for the careful consideration which they had hitherto given to this very difficult matter, and he also thanked the House for the attention with which it had listened to his observations. He sincerely hoped that before the end of the Session something would be done to increase the security of these savings banks of the United Kingdom, and to make the trustees and managers absolutely responsible for the due performance of their duties.

MR. J. ROWLANDS (Finsbury, E.)

seconded the Resolution.

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, the relationship subsisting between Trustee Savings Banks and the State is unsatisfactory, and ought to be revised; that Trustees and Managers should be restrained from using the words Government Security,' 'Government Savings Bank,' or other words implying more than the Law rightfully authorises, in connection with such flanks, the use of which is calculated to deceive depositors, create a false impression of security, and damage the cause of thrift; and that the Trustees and Managers of such Banks should, as formerly, be made responsible for the safe custody of the deposits committed to their care in connection with such Trustee Banks,"—(Mr. Howell,)

—instead thereof.

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

SIR ALBERT ROLLIT (Islington, S.)

said, he was the more induced to say a few words upon this Motion, because he was trustee of one of the banks which had been referred to by the hon. Member as instances of banks that were under proper and satisfactory management. And, as a lawyer, he certainly hoped that he knew more of the duties and responsibilities he had incurred than some of those who had been referred to in connection with the Cardiff Savings Bank. He had not seconded the Motion, although he thought it would be easy to accept it if the last clause were omitted, and he hoped before the close of the discussion the hon. Member would see his way to omit those words, so as to enable the House to come to a unanimous conclusion, He also trusted that the right hon. Gentleman the Chancellor of the Exchequer would be able to make also some acceptable offer on the part of the Government. With the exception he had pointed out, there was no objection to the principle of the Motion. It was a long time since the matter had been discussed in Parliament, and no one could take exception to the manner in which the hon. Member for Bethnal Green (Mr. Howell) had introduced it. Those who took an interest in the savings banks would welcome the Motion as a means of drawing renewed attention to these institutions, which had been of great value to the country, and of introducing those reforms which would make them still more valuable, and give increased security to the trustees who took an active interest in such work. He fully agreed with the hon. Member that the position of trustee was one of some honour, and ought to carry with it corresponding responsibility; but he would suggest, when it was considered how much the country owed to these trustees, that there was no reason for increasing their responsibility unduly and incurring the risk of getting rid of the great benefit which they had conferred upon the banks. He hoped the result of the discussion would be that the Chancellor of the Exchequer would be induced to give such consideration to the arguments advanced by the hon. Member as to lead him to the conclusion that the subject was one worthy of more formal and detailed consideration than could be given to it in that House, and that, inasmuch as there had been financial changes which altered the basis of these banks, and as there were points in which the law affecting them might be improved, the matter was one which might very well be referred to a Select Committee on the lines suggested by the hon. Member, without interfering with the voluntary work that had been already done with such good effect on behalf of these savings banks. Let them look for a moment at the vast value the savings banks had been to the country. They could hardly realize the importance of their work, the impetus which had been given by them in a difficult period in the history of the country to habits of thrift, and the way in which they had led up to the formation of other institutions of a philanthropic character. True, there had been failures in connection with the savings banks, and if there was one form of robbery more objectionable than another, it was in the plunder of the poor which occasionally took place in connection with philanthropic institutions. But even in the ease of Rochdale, which had been mentioned by the hon. Member in connection with such a failure, the establishment of a savings bank there promoted habits of thrift among the working classes, which gave rise to the great co-operative movement that sprung up in that town, so that indirectly benefit was associated with the bank. And even now that the State had done its duty by establishing Post Office Savings Banks, Trustee Savings Banks were still found to be of great value, for notwithstanding the existence of the new institutions, the Trustee Banks had a sum of £47,000,000 sterling invested in them, which was almost equal to the amount invested in the Post Office Savings Bank, although their number was only 400 against 8,000. In point of fact, the Trustee Savings Banks supplied a national want, and met the convenience of a large numbers of persons in a way the Post Office Savings Banks could not hope to do. The centralization inseparable from the Post Office system was incompatible with the convenience afforded by the Trustee Savings Banks. A bank would pay £10 or £20 without notice, merely on the production of a pass book, having its own ledgers to refer to. Thus, in all respects, the Trustee Savings Banks deserved strong encouragement rather than discouragement. A very great interest was taken in the question, and the hon. Member for Bethnal Green would be the first to acknowledge that it would be an unfortunate day for the saving people of the country if anything was done to discourage them from making these investments. Granted that there had been cases of gross mismanagement, failure, and plunder, still he ventured to say that the general position of the savings banks was satisfactory. The hon. Member had admitted this in reference to some of the instances he had referred to. That they were solvent was shown by the funds invested with the National Debt Commissioners, and there were also surplus funds so invested to the extent of £400,000, on which no interest was paid. He congratulated the hon. Member for Bethnal Green on having brought forward the question, but he hoped the hon. Gentleman would consent to the omission of the concluding words of the Motion, so that the House might unanimously agree to the first part. The first part of the Resolution was— That, in the opinion of this House, the relationship subsisting between Trustee Savings Banks and the State is unsatisfactory, and ought to be revised. They would all admit that it was a long time since legislation took place upon the subject. The Consolidation Acts, which were passed some 20 or 30 years ago, were all based on the Act of 1816, and there ought to be no feeling against modern managers in respect of legislation founded upon the political economy of that date. If only upon that ground it was desirable that the matter should be considered. The State had realized a considerable loss in respect of the obligations of the Trustee Savings Banks; but that loss was not a current loss for which the present managers were responsible, but was incurred years ago in the early history of the system. The hon. Member, instead of blaming the existing managers and trustees, should rather censure the political economy of 1816.

MR. HOWELL

said, that there was the loss of £13,000 last year.

SIR. ALBERT ROLLIT

said, his contention was that modern legislation was not to be condemned because a financial subject had not been properly dealt with so long ago as 1816. If the political economy of that day had been better, the loss which had been incurred, and which was in a great measure an accumulated one, would not now be the subject of consideration in that House. On the other hand, there had been a succession of legislation constantly reducing the interest paid to depositors, and the Bill introduced in the present Session would make a further inroad upon that interest. That, also, was a matter which required consideration, and if the Chancellor of the Exchequer, on behalf of the Government, were to afford an opportunity for inquiry, the managers and trustees of savings banks generally would welcome many securities which did not now exist, but which were calculated to improve the condition of these banks. There could be no objection to an independent audit, to more frequent comparison of pass-books with ledgers. That would prevent many of the frauds which had taken place in the past. Nor could there be any objection to requiring security to be given by managers and clerks and to Government nominations of local trustees, provided local help and local interest were still maintained. Upon all of these points he believed that the trustees and managers were prepared to welcome inquiry, and he hoped that an investigation would be productive of great good. There was, however, one point on which he seriously differed from the views of the hon. Member. As a trustee, he was fully aware of the responsible position he occupied. It was quite possible that there was a number of trustees who were not lawyers, and who were hardly aware of the responsibility they had incurred; but he thought that the hon. Member had not sufficiently stated those responsibilities. On the contrary, he had somewhat minimized them, and if he would refer to the Act which bore upon the subject, he would find that it made trustees liable in very precise terms for the consequences of their own neglect. Indeed, this had been tested in the Bishop Stortford case, and also in the case of the Cardiff Savings Bank. Trustees were further liable for their own personal default if they did not take full opportunity of inquiring into the position of the bank for which they were responsible, and enforcing those checks which the Legislature had imposed. The last clause of the Resolution, however, sought to make them liable under all circumstances for all the money deposited, the words being— That the Trustees and Managers of such banks should, as formerly, be made responsible for the safe custody of the deposits committed to their care, in connection with such Trustee Banks. This could not mean, as it might appear to do on the face of it, the physical custody of the money—the taking care of the safes and premises; but it meant that the trustees were further to be liable for every default on the part of their officers, who, he presumed, would have been appointed after full inquiry into their character, and who might fairly be regarded as competent to perform their duties. Certainly, since 1816 or 1818, no such responsibility had been placed upon the trustees and managers. At that time their duties were mere clearly defined; and, as far as he could remember, he did not think they had been rendered absolutely responsible and fixed with unqualified liability. Could it he advantageous to the cause of thrift to impose unrestricted liability on gentlemen who had rendered such valuable services to these institutions? Was it wise to place a check and an undue liability upon those who had done, for instance, so much to establish and maintain penny banks? A very large number of those banks were now in existence, and they proved most useful to schools. From those penny banks the depositors were induced to become depositors in the Trustee Savings Banks themselves. Then, was it wise to impose any further responsibility upon the trustees? He hoped the hon. Member would reconsider and withdraw the latter part of the Motion, because there was every reason to believe that the acceptance of those words would impose a liability which very few men of business would be willing to accept in future. They wanted to get as much voluntary agency as possible; and when they found that voluntary agency had, as a general rule, proved so successful in connection with the savings banks, and the trustees were willing to incur great liability, and even to suffer by incurring it, he did not think that Parliament ought to discourage them, but, on the contrary, should offer them every encouragement it could. He would not detain the House longer than to say that he trusted the subject would undergo full reconsideration, and he hoped the Chancellor of the Exchequer, as he was now dealing with the funds of the Trustee Savings Banks by reducing the interest, would make some return by granting a Select Committee.

MR. BARTLEY (Islington, N.)

said, he had taken for many years a great amount of interest in this important question; and he was, therefore, anxious to say a few words in connection with the Resolution which the hon. Member had moved. He must candidly say that in the main he fully agreed with the hon. Member. He thought that the statement made by the hon. Gentleman clearly showed that the time had arrived when the subject should be carefully gone into. The hon. Member who had just spoken had referred to the last clause of the Resolution, and he agreed with the hon. Member that, as it stood, it was somewhat bald and open to objection. But, on the other hand, they must re- cognize the fact that if trustees and others connected with these banks took on themselves the responsibility of looking after these institutions, if they failed to carry out the law as it was laid down by Act of Parliament, they should be responsible for not attending to those rules and regulations, which, if they had been attended to, would have prevented all of those catastrophes to which reference had been made. At the same time, they ought not to forget the enormous amount of good which these Trustee Savings Banks had effected. They had been the pioneers of the great movement of thrift in this country. Nearly 100 years ago, when they were first commenced, there was no other movement or institution for promoting thrift and this branch of the well-being of the country. Although it was perfectly true that some of these banks had failed, and there were instances of the very unsatisfactory manner in which they had been conducted, yet he thought that no impartial man would deny that the instances of failure had been comparatively few. The work which had been done had, as a general rule, been done well, and it would be a disastrous thing if they were to do anything to endanger the existence of these institutions. He thought they might take it for granted that it was owing to the failure of some of the Trustee Savings Banks that, some 20 years ago, the right hon. Gentleman the Member for Mid Lothian (Mr. W. E. Gladstone) brought forward his scheme for the establishment of the Post Office Savings Banks. When that scheme was introduced, most persons thought that the Post Office Banks, by affording such great facilities in all parts of the country, that by opening all the Post Offices throughout England, Wales, Scotland, and Ireland for deposits, would shortly absorb the Trustees Savings Banks, which were comparatively few in number and covered a comparatively small area. As a matter of fact, that had not been the case; but it had been proved that the more they gave facilities for thrift in all parts of the country, the more advantage was taken of it. He did not wish to make a long speech; but those of them who had studied the subject were aware that a great number of Trustee Savings Banks had gradually dropped out of existence, and been swallowed up by the Post Office Savings Banks. Although that was the case, still the enormous sum of £47,000,000 was held by these banks. He agreed most heartily with all the hon. Gentleman (Mr. Howell) had said about the system of audit. The system of audit in the Trustee Savings Banks was anything but satisfactory. Unless there was some machinery by which the depositor's pass book could be brought systematically before the auditor, and by which deposits should be received only in regular hours, all other checks would be useless. There was no doubt that many trustees did not realize the great importance not only of an accidental audit taking place every half-year, but of the system of banking being such that there should be a systematic plan by which the audit should go on continuously from week to week and from month to month. Under the present system, by which an auditor simply went to these banks twice a-year, it was perfectly impossible, considering the enormous number of transactions which the banks had, and the carelessness of may of the depositors, to expect a systematic check. In the institution he had a great deal to do with, they were so careful about this that they had a regular staff of men who did nothing else but continuously go about accidentally, without system, rule, or time, or place, and in the most miscellaneous manner, in order to see that the pass book was absolutely compared with the ledger to see that the two tallied. At the present time these Trustee Savings Banks were considered by the public and the depositors to be practically Government institutions. It was no use saying that the public did not understand this; they believed it, they thought that this Government security made these banks Government banks; and although it might be said that the papers did not distinctly state it, the fact remained that the great bulk of the depositors really did believe there was Government security. This was a very serious matter, because there was really no Government security; the State was in no way responsible, the State was simply responsible for the money which was handed over to it, and the State was in no possible way responsible to the individual depositor for getting back his money. He went further, and considered that since the Post Office Savings Banks had been established, there was no reason why the State should take upon itself the responsibility of these banks as well as of the Post Office Banks. In olden days, of course, it was different. Before the Post Office Savings Banks were established, it was reasonable, possibly, that these banks should have some sort of Government guarantee; but at the present time it was not reasonable, inasmuch as the State had created a magnificent system of Post Office Savings Banks. But, on the other hand, he considered it would be a most serious disaster if these Trustee Savings Banks were allowed to lapse. He believed it would immensely retard the cause of thrift in this country; he believed it would be a disaster second hardly to any we had had if, by any means, this House were to settle that these Trustee Savings Banks should collapse. Therefore, he thought we were on the horns of the dilemma how to make it perfectly clear that the State was not responsible, and, on the other hand, so to legislate for them that they should be made perfectly secure and reasonably and practically safe from the depositors' point of view. Many of these banks were very large and important institutions. The banks the hon. Member (Mr. Howell) had referred to—the Liverpool, the Glasgow, the Hull, and others—were banks which were doing an enormous amount of good; but there were a great number of these banks which were very small and unimportant. Some of them had only 200 or 300 depositors; some had only 100 depositors, and some of them had even less than that number. He considered, inasmuch as the Post Office Savings Bank system existed in every small town and village, it was not reasonable that a system should be continued by which these small savings banks should be allowed in small places, and, therefore, he thought the Legislature should so arrange that the smaller Trustee Savings Banks should be worked into the Post Office Savings Bank. As he had said, it was important that there should be a regular system of auditing. The cost of auditing in many of these institutions, no doubt, was very great; in the institution in which he was interested a very large part of the expense was paid in auditing machinery. Now, he agreed most distinctly that there should be a Committee of Inquiry into the whole question; and he thought that what would result from that inquiry would be that a Bill would be framed by which the position of these banks would be placed on a more distinct and clear footing, which should be so laid down that the Bill should contain clauses providing machinery for auditing and all the various details connected with the banks. He thought that after a certain period, say, two, three, or four years, or whatever period might be fixed in the Bill, it should be clearly laid down that, unless, of course, a bank was wound up in that period, or handed over to the Post Office, the whole responsibility of the State in connection with the banks should cease, and that they should become, as it were, Companies or Corporations, say, under the Board of Trade regulations. In that way each one of the banks would become an independent corporation of itself, and would carry on its own business on the terms laid down by the Bill. He would then do away with all privileges as to the money being deposited with the National Debt Commissioners, and he would allow the managers of the banks to invest their money in Consols, or in local loans, or in any other things according to the precise terms of the Bill under which the banks existed, and by that means, he thought, they would get the banks established on an independent footing. He believed that they would thus do a great deal more good than they were doing now; and that the smaller banks, which were really the shaky ones, would be merged as a matter of course into the Post Office. Now, if that were done, it would be quite clear that those who wished to have Government security, those who wished to invest their money on the security of the State, would then put their money into the Post Office Savings Bank or into Consols. Those, however, who preferred the great facilities which these savings banks gave, would continue to invest their money in the banks, which would be in future rigidly looked after, though they would have clearly no state guarantee. There would be in all large towns these great institutions, gradually developing by School Penny Banks, Workshop Penny Banks, and other schemes, a regular network of thrift which would be of enormous advantage, and which never could be established under the present system. He thought he had already said as much as he need on this matter; but perhaps he would be allowed to add that on the Governing Bodies of these reformed Trustee Savings Banks there might fairly be put representatives of the depositors, for it was strongly desirable, if they were to promote thrift as they were doing in this way, the depositors themselves should take an interest in the management of the banks, as members of the great friendly societies and other institutions did in their concerns. He could see no possible reason why, with the spread of education, the people should not have a voice, and some decided voice, in the management of those institutions, and he believed that by such a system very great benefit would accrue. In that case, of course, the responsibility of the trustees would be clearly and distinctly defined; they would be under ordinary articles of a Corporation or Company, and by that means the whole difficulty which had been raised by the hon. Member (Mr. Howell) would be overcome—namely, that the trustees and managers would, as in large Companies, be responsible for the carrying on of their business. One result would be that all idea of Government security would be done away with, and in every district there would be, as it were, a large institution with a special charter, which the State would not be responsible for, but which would be responsible absolutely under its charter, working side by side with the State guaranteed Post Office Savings Bank. By such means they would have in all the large towns a most efficient system for promoting thrift, and in the smaller villages we should be content with the Post Office Savings Banks. He hoped, therefore, that the Government would agree to the appointment of the Committee of Inquiry, so that the subject might be most carefully threshed out. This was a most opportune moment, inasmuch as we were reducing the interest to be paid to the banks. There must be a great change in the banks, and, therefore, the present moment was opportune for overhauling the whole organization of the banks, and putting them on a permanent and satisfactory basis.

THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN) (St. George's, 917 Hanover Square)

Sir, I think that great advantage will arise from the fact that this subject has been brought before the House by the hon. Member for the North-East Division of Bethnal Green (Mr. Howell). It will, I think, help to dispel some of the doubts which are resting on Trustee Savings Banks, and likewise to put in a proper light both the responsibility of the managers and trustees of those institutions, and possibly also the proportion which the defalcations that have taken place bear to the enormous total which those institutions represent. Amid the many dark spots of our civilization, I think we may point with some pride to the fact of those enormous reserves belonging to the working classes of this country, and to the great development of thrift which is shown by the deposits both in the Trustee Savings Banks and in the Post Office Savings Banks, deposits which now amount to the stupendous sum of over £100,000,000 sterling. I entirely recognize, and the Government recognize, the importance of a question so deeply affecting a vast portion of the community as this question does. We can conceive of no greater disaster than any blow that might be struck at the confidence of the working classes in institutions like the Trustee Savings Banks, with investments amounting to £40,000,000; and I was a little apprehensive sometimes that the account which the hon. Member for Bethnal Green gave as to some of these cases of failure that have occurred, might fill depositors of Trustee Savings Banks generally with undue alarm as to the safety of their deposits. It seems to me that shareholders in limited liability companies might just as well be alarmed by the breakdown or the frauds of a few of those companies, and that such a scare might operate against the whole system of limited liability. But any undue alarm of that kind would be a very great misfortune. While, therefore, I am very glad that the attention of managers and trustees has been called to their responsibility, I think, on the other hand, it would be much to be deplored if general confidence in those institutions should receive a shock which is scarcely justified by the evidence before us. If one contemplates the proportion which the frauds that have taken place bear to the magnitude of these investments and that of these institutions themselves, I do not think it will be found to be greater than that of the frauds occurring in other departments of business. I admit that the frauds in the case of Trustee Savings Banks are more deplorable, because, as an hon. Member had said, the plunder of the poor must come home very forcibly to the imagination of every man, and it is a very sore disaster when humble people who have deposited some of their scanty earnings in Trustee Savings Banks find that their thrift is of no avail to them owing to the default of those in whom they placed confidence. Such disasters are not only economical disasters but also moral disasters of the gravest character. Looking at the frauds which have taken place, I quite admit that they show that there has been great laxity on the part of some trustees and managers—I hope that in many of these cases it has been from ignorance—and I think that the hon. Member for Bethnal Green has rendered considerable service in calling the attention of trustees and managers to what their duties are. An hon. Member of this House or any other member of the community may undertake one of these posts in a moment of enthusiasm, and forget afterwards the great responsibility attaching to them; and it is quite right that the sense of what they owe to depositors in those institutions should be brought home to the managers by these discussions and revelations. An hon. Member has suggested that this is a good opportunity for looking into this question because of the change that is taking place in the financial position of these savings banks; but I would point out to the House that the solvency of these savings banks will not be affected in the slightest degree by the reduction of the rate of interest they receive, because that reduction in the rate of interest will be accompanied by a parallel reduction in the rate of interest which they will pay to their depositors, so that none of the Trustee Savings Banks will be the richer or the poorer by the action that has been taken. The hon. Member for Bethnal Green seemed to consider that possibly the reduction of the rate of interest was contemplated on account of the annual loss which in the past has fallen on the Treasury in consequence of the amount of interest allowed to depositors being somewhat greater than was justified by the circumstances. That is not so. The reduction of the rate of interest that will take place, if the House should agree to the proposals to be made to them at the end of the present financial year, is a simple corollary of the conversion scheme. The House will see the point in a moment. The Commissioners for the Reduction of the National Debt hold £40,000,000 in round numbers belonging to Trustees Savings Banks. If the rate of interest on their investments is reduced by ¼ per cent, that means a difference of £100,000. Therefore, unless there was this parallel reduction of the interest paid by the Commissioners for the reduction of the National Debt to the trustees of savings banks, it would be necessary for the House to vote £100,000 a-year to make good the deficiency that would arise. Therefore it follows that, as the rate of interest has fallen, it is necessary to reduce the rate of interest received by Trustee Savings Banks. Then there is another annual loss, apart from the annuity of £83,000 a-year that has to be paid in order to make good the £3,000,000 of the deficiency of past years. My hon. Friend behind me was perfectly right in saying that the managers of these savings banks are in no way responsible for that deficiency or loss to the Public Revenue. No blame or odium ought to attach to the trustees in consequence of that deficiency. But this other deficiency of £10,000 a-year is due to the fact that the National Debt Commissioners have at times been obliged to invest savings banks deposits in the funds when the funds were above par, and accordingly, whenever they received a large amount of deposits in the course of the year and had to invest them at a rate that would not give three per cent, there was an additional loss. That additional loss is, I think I may say, very slight, considering the enormous amount involved. It is £10,000 a-year upon deposits amounting to £40,000,000. The loss has arisen from the fact of the funds being high during the last few years, and no portion of this loss falling on the State is due to what the trustees have done. I turn now to the suggestion of the hon. Member who moved— That in the opinion of the House the relationship subsisting between Trustee Savings Banks and the State is unsatisfactory and ought to be revised. The hon. Member further moved— That Trustees and Managers should be restrained from using the words Government Security, 'and Government Savings Bank;' and, thirdly, he pointed to the liability of the trustees. As to the use of the words "Government Savings Bank" and "Government Security," of course you can lay down in an Act of Parliament that the Trustees shall not use these words in the description of their institutions. Even now it is questionable whether they are not committing an illegal act for which they might be prosecuted if they use such names. But if they simply put in print "Government Securities," it is sufficiently near the truth in one sense to make it extremely difficult to attack them for using the term and to make it out to be illegal. Their investments are in Government securities, but they have not got Government security for the management of the bank. It is a misfortune that the words "Government Security" have this double meaning. It is a difficulty, however, which must be faced, and I am afraid it will be very difficult to deal with it by Act of Parliament. Various suggestions have been made, and the question has been raised whether the relations existing between the State and those institutions are satisfactory. I am perfectly prepared to admit that I cannot consider them entirely satisfactory. But the suggestion made by the hon. Member for North Islington (Mr. Bartley) is a very sweeping one, and practically amounts to destroying the whole present character of the Trustee Savings Banks and putting them entirely on the footing of limited companies.

MR. BARTLEY

Under a charter.

MR. GOSCHEN

Yes; just so. In many respects I can conceive that very strong arguments can be advanced in favour of that proposal; and I hold with the hon. Member strongly up to this point—nothing can be more unsatisfactory than illusory security of any kind. Any forms or any arrangements which give the impression of security which does not exist are infinitely worse than those forms and arrangements under which security does not profess to exist at all. Therefore, it must be the duty of the House or a Committee, if it should be appointed, to analyze most carefully the existing arrangements and to see whether they are illusory in their nature. I am prepared to say, on the other hand, that whatever securities you may take, whatever laws you may lay down, whatever regulations you may draw up, it will be impossible to make it absolutely certain that frauds will not take place. No private bankers, with all their shrewdness, are able altogether to avoid frauds; no limited liability companies have been able to avoid them. It seems as if the ingenuity of the fruadulent really defeated every precaution that can be taken. There is one quality in the end upon which you must rely—the general character of the people who are appointed. Trustees may study Acts of Parliament, they may investigate all their regulations; they may have a man on whom they stake their reputation, but sometimes he abuses it, and terrible frauds result. I fear, therefore, no regulations can be framed which will prevent occasional disasters. Here comes the immense advantage of the Post Office Savings Bank, where, if any disaster takes place, there is the credit of the country behind the Bank. In that case there is absolute security, which cannot be given by any private establishment, however watchful the audit may be, or however excellent the rules. It may, however, be said that that point is acknowledged, but what is wanted is personal liability. But in that case is there not force in the contention of an hon. Member that if you make trustees liable generally for the losses which may be caused by the negligence of officers, you will not get trustees who will make themselves responsible with their own fortunes. You may get men of straw to act, but you would not get that which you want—namely, trustees with money behind them to make good any loss which takes place. If you compare the various cases of frauds which have been committed, it is seen that there is a family likeness among them; and you might be able to put a finger on the point where reform might be useful, and by which you might counteract the designs of the fraudulently disposed. We could not agree to the suggestion that trustees should be liable in the form in which the hon. Member for Bethnal Green proposes, because liability, even formally, means that they are to be liable indefinitely for all that takes place. I do not say that we may not find moans to enforce liability to a greater extent on the trustees. You may be able to make regulations, or pass a law to bring them to book more easily. That, however, seems to me to be a matter for most anxious consideration; but to say that trustees should be liable in the manner suggested is a proposal which I do not think will be generally desired. What, therefore, I would suggest to the hon. Member is this—that he should allow his Motion to be negatived, the Government undertaking on its own Motion, or at the suggestion of the hon. Member himself, to move for a Committee which should inquire into the operation of the law of 1863, and into the questions which he raises in his Motion. The Committee should inquire into the liability of trustees; into the use of the words "Government Security;" generally into the relations between the State and the Trustee Savings Banks; into the relations with, and the duties of, the Registrar; and examine the question of audit. Personally, I should rather deprecate an official audit, because I think it would be in the direction again of strengthening the idea that you had a Government security when really you had not. There ought to be an independent audit in every case, and on which we ought to insist. I understand that those institutions are themselves desirous of being reformed, and I think they will welcome any broad, fair, and impartial investigation. I think it may tend to dispel any alarm which may be created if we allow the best as well as the worst about these institutions to come before the public eye. Unfortunately, it is only the disasters with which the House of Commons and the public are acquainted, and we see little of the considerable service and magnificent working of many of the larger institutions which have done so much credit to the country. But in the case of an inquiry they would be granted the opportunity of stating their case fully. Even the sweeping suggestion of the hon. Member for North Islington might be placed before the Committee. I think, however, the House will see that there is one point which ought not to be referred to the Committee—the financial relations between the State and these institutions. The question of the rate of interest which should be allowed is a subject to be dealt with in a clause of the National Debt Supplementary Conversion Bill, and ought not to come before the Committee; but on every other point the Government would welcome the fullest inquiry, believing that nothing but good could come of it. There is no jealousy on the part of the Government of these Trustee Savings Banks from the point of view of the Post Office Savings Bank. If we had initiated an inquiry of this kind perhaps there would have been a suspicion abroad that we desired to prove the greater soundness of the Post Office Savings Bank; but coming, as the Motion does, from the hon. Member for Bethnal Green, there can be no suspicion of any desire to throw impediments in the way of the full development of the Trustee Savings Banks. I say again, therefore, that the hon. Member has done considerable service in bringing this most important matter before the public.

MR. HOWELL

said, he should be glad to accept the offer of the Government, and to withdraw his Motion. He thought the object he had in view would be attained by accepting the recommendations of the right hon. Gentleman the Chancellor of the Exchequer.

SIR EDWARD REED (Cardiff)

said, he desired to express his indebtedness to the hon. Member for the action he had taken. As to the Cardiff Savings Bank, he thought it ought to be borne in mind that the trustees in that case had erred by negligence and not with the intention or hope of getting gain for themselves. They had been as much deceived as anyone. He thanked the Government for the course they had adopted in this matter.

MR. WHITLEY (Liverpool, Everton)

said, he would assure the hon. Member for Bethnal Green that the statement he had attributed to the actuary of the Liverpool Savings Bank, to the effect that the actuaries of savings banks were going to form a trades union to oppose legislation, was not correct. What the actuary of the Liverpool Savings Bank stated, he was informed, was that the managers of the Liverpool Savings Bank, and other large banks, together with the actuaries, were most anxious to assist the Government in every legislation for the benefit, both of Post Office and Trustee Savings Banks; and, so far from opposing the Motion, as the hon. Member had supposed, the Members for Liverpool intended to support it. The actuary of the Liverpool Savings Bank was a man of high character, and in justice to him he thought it just to set right the no doubt unintentional misrepresentation of the hon. Member.

MR. TOMLINSON (Preston)

said, he had heard with satisfaction the proposal of the right hon. Gentleman the Chancellor of the Exchequer. There was not the slightest reason why these banks should sail near the wind in the way of appearing to hold out the inducement to depositors that they were founded on the basis of a Government security. He held in his hand papers relating to a most successful Trustee Savings Bank in his own constituency, and there was not a word in the rules, depositors' books, or reports tending in that direction. Yet the amount of the deposits had more than doubled, and the number of the depositors had been nearly doubled within the last 10 years.

SIR JOHN LUBBOCK (London University)

said, that before the Debate closed there were one or two questions which he should like to ask the right hon. Gentleman the Chancellor of the Exchequer. No one could doubt that the Savings Banks had done much good. The question was whether there had been serious loss to the country or to depositors. The hon. Member for Bethnal Green in his interesting speech had referred several times to a deficiency of £3,500,000 in the Savings Bank account, and to a sum of £83,000 a-year set aside to wipe this out. If, however, he was not mistaken, that deficiency was calculated at a time when Government securities were much lower than at present, and he believed that the actual difference between the amounts due to the Savings Bank and the securities held by the Commissioners was only £120,000. Perhaps the right hon. Gentleman the Chancellor of the Exchequer would state whether this was so, for he (Sir John Lubbock) was afraid that otherwise an erroneous impression would be created. He would also like to ask the right hon. Gentleman whether he could state what loss had been suffered, say, in the last 20 years, by depositors in Savings Banks? Most of the cases referred to by the hon. Member were either of some years back or the loss had been made up by the trustees. His impression was that the loss to depositors of late years had been very small, and he should like to ask if the right hon. Gentleman could state what the amount had been? He (Sir John Lubbock) thought that the Savings Banks on the whole had been well managed, that the country was indebted to the trustees and managers of Savings Banks, and that they would not object to such an inquiry as proposed by the right hon. Gentleman.

MR. J. ROWLANDS (Finsbury, E.)

hoped he understood rightly that the right hon. Gentleman the Chancellor of the Exchequer was about to accede to the suggestion made by his hon. Friend (Mr. Howell). The offer of the Chancellor of the Exchequer was that they should allow this Motion to be negatived. His hon. Friend, however, asked that he should be allowed to withdraw it. He (Mr. Rowlands) would like to know whether the Government accepted that, because it made a very vast difference as to the action his hon. Friend would take. He (Mr. Rowlands) did not intend at the present time to inflict a speech upon the House, but he desired to make one remark as to the position his hon. Friend had taken up. With regard to the use of the name of the Government by many of these banks, the hon. and learned Member for Preston (Mr. Tomlinson) said, that the bank with which he was connected, and which he told the House was a very well governed bank, in no way flaunted the name of the Government before the public, but stood on their own financial position. But that was vastly different to many other banks. He held in his hand the book of a bank whose name he would not for obvious reasons give. Upon the book was given the local name of the bank, and then came the words "Government Bank for Savings." That implied that there was some direct connection with the Government, and ordinary individuals who deposited their money in Trustee Savings Banks were not well versed in legal matters, and therefore they were readily deceived by this palpable fraud upon them. That was a matter which it would be well for the Chancellor of the Exchequer to deal with at once, even before waiting the result of the Committee. If, as the Chancellor of the Exchequer said, he believed it was already illegal to use the name of the Government, in the way it was used in the book he held in his hand, he would like to ask the right hon. Gentleman whether it was not possible for the National Debt Commissioners or some of the legal officials of the Government to send out a warning to the trustees of these banks, that if they used the name of the Government, they were using it illegally? He believed that great good would result from such action on the part of the Government. They must all agree that the debate which his hon. Friend (Mr. Howell) had raised on this occasion must result in good; they knew that there were too many gentlemen in the country who had lent their names to these institutions, he was afraid without realizing the responsibility they incurred to look after the institutions to which they had lent their names. There were of course others who, realizing their responsibilities, did attend to the business of the banks. It was impossible, however, for the general depositor to draw a distinction between these two classes of persons. There were defalcations which had been brought before the notice of the House. Some of the defalcations which his hon. Friend had mentioned were not those of times gone by, as the hon. Baronet (Sir John Lubbock) seemed to think; some of the worst cases had only just occurred, and it was because there was some fear, on account of these defalcations having become publicly known, that there might be other banks in the same position, that an inquiry was desired to see whether these banks were solvent or not. Those Gentlemen who were connected with banks in which they had the utmost confidence need not fear an investigation; indeed, an investigation would result in their banks being placed in a better position than they had hitherto enjoyed. He hoped the Government would accede to the request of his hon. Friend, and allow him to withdraw the Motion, and then at some future time they might have a Committee to investigate the whole question, which he thought was now ripe for thorough investigation.

MR. BRADLAUGH (Northampton)

said, that before the right hon. Gentle- man replied, there was one matter which he did not think had been made quite clear. He felt indebted to the Government for the manner in which they had met the Motion of his hon. Friend the Member for North-East Bethnal Green (Mr. Howell), and he quite agreed with what had been stated by nearly every hon. Member that anything which checked in any fashion the growing habits of thrift—for he believed them to be growing habits, despite what was said outside—would be a misfortune. He understood the Chancellor of the Exchequer to make some exception as to how far the inquiry was to go. That exception was as to the interest to be paid to the Savings Banks' Trustees. He (Mr. Bradlaugh) did not quite understand whether the inquiry was to extend to everything else. It was a matter of great importance that the powers of the Registrar and the methods of enforcement should be included in the inquiry. He only rose for the purpose of emphasizing that, in case it had been overlooked.

MAJOR RASCH (Essex, S.E.)

said, there was only one point to which he desired to call attention. In the county of Essex, which he represented, there was a Trustee Savings Bank which was conducted on the best principles. Now, if they arbitrarily took away from that bank the name of Government Savings Bank, the depositors—who were, as a rule, ignorant men, and who knew nothing of finance—would be seized with panic, and the result would be very much like the panic which took place the other day in Victoria Street, without, however, the same fortunate result. He fancied any drastic change in these banks would do considerably more harm than good.

MR. GOSCHEN

, in replying to the questions addressed to him, said, that all the questions to which reference had been made would be referred to the Committee of Inquiry, the only exception being the rate of interest between the Government and the Trustee Savings Banks, which was dealt with in a Bill now before the House. The whole question of the relations between the Government and the Savings Banks, and between the Registrar and the Commissioners for the Reduction of the National Debt and the Savings Banks, would be included in the inquiry. He should himself wish the nquiry to be as thoroughgoing and to cover as much ground as possible. He would consult with the National Debt Commissioners as to whether it was possible to take any action with regard to those banks which wore using the words "Government Security" and "Government Savings Bank" so as to prevent the use of such descriptions. The question was one partly of law, and he could not give a definite opinion upon it now. As regarded the point mentioned by the hon. Baronet the Member for the London University (Sir John Lubbock), it was perfectly true that the deficiency of £3,500,000 was calculated at a time when the Government Stocks were very much lower than they were now; and that deficiency was almost wiped away, if they took the present market value of those Stocks. It was also correct that the amount of actual loss suffered over a series of years by depositors in Savings Banks had not been very large.

Question put, and agreed to.

Main Question, "That Mr. Speaker do now leave the Chair," again proposed.