HC Deb 21 July 1890 vol 347 cc429-43

Order for Second Reading read.

(10.33.) MR. GOSCHEN

I see two Amendments on the Paper to this Order suggesting that it would be more convenient that the names should be filled in in the first Schedule before the Second Reading is taken. I would suggest to hon. Members who are of that opinion that it is best that we should first see how the Bill turns out before hon. Members and others are invited to form part of the proposed Committee. In discussion with some hon. Members whom I should like to enlist on behalf of the Committee which is to be appointed, the opinion was expressed that unless the duties were sufficiently defined there would be serious responsibility resting upon any one who accepted appointment on the Committee. My view was that in the first instance a Committee should be appointed who should frame a scheme, and that that scheme, when framed, should be worked by another Committee. As I find that the Gentlemen I have asked to be parties to the framing of the scheme shrink from the liabilities attaching to the working of it, I should be prepared to accept Amendments in Committee limiting the functions of the first Committee to framing the scheme and regulations under which the working Committee will be appointed. From this point of view the first Committee, I think, should be something in the nature of an Executive Commission. The Bill is the outcome of a Select Committee, which has conducted a very careful inquiry into the subject, and the thanks of the House are due to that Committee for the manner in which they have carried out the details. I have received deputations from Savings Banks, and representations have been made to me from other quarters, which have resulted in my consenting to make alterations in the Bill, and the course I would propose is that the Bill, if the House will consent to read it a second time, should be committed pro formâ, and then, when the prominent Amendments are proposed, we can see the Bill as a whole, and the House will be in a better position to judge of it. I would mention some of the Amendments we propose. In Clause 1, to meet an objection which has been: made that the section was too strong in its original form, we propose to insert words to the effect that the Government are only responsible or liable for funds invested by Trustees, when under the National Debt Commissioners. We should have it made clear that these Trustee Savings Banks are not Government institutions, and that they have only Government security in so far as they invest in Government securities. It is most desirable that the public—and the ignorant public—who invest in these Trustee Savings Banks, should be as correctly informed as possible of the precise position of these banks with regard to the Government guarantee. Then, in Clause 2, we propose to modify the duties of the first Committee. Besides laying down regulations, we propose that they should fix the mode of appointing the permanent Committee. It would be difficult now to enter upon the controversial subject of how the banks should be represented in future on a Committee of this kind, and I would ask the House to delegate this important function to a certain number of persons to be named in the Schedule, but it will be obvious that I am unable to secure the assent of gentlemen to serve before they know how the Bill will turn out. It is a reasonable view to take to-assume that hon. Gentlemen or gentlemen who are not in this House will not like to accept the' position until they know the precise liability they will incur by accepting such a position. My view is that there should be three gentlemen connected with the Trustee Savings Banks on the first Committee, three other gentlemen, Members of this House, or others, to represent the views of the general public, and one gentleman to represent the de- positor's and investor's position. That would form a Committee of seven to frame a scheme to be submitted to Parliament. I will not enlarge on the basis on which this Committee should be formed, because that will work out more or less identical with the suggestion of the Committee, and the Report of the Committee will show the general view that has been taken as to these duties. I trust that the House will do its best to enable us to pass this Bill, because, however well most of the Trustee Savings Banks have been managed, I think recent events have shown that there is a balance of these banks which require inspection, and I think that the public who invest in them should have the satisfaction of knowing that this inspection exists, and that a more thorough audit exists than has hitherto been possible. Then, as regards the question whether Trustees should retain their office if they do not attend the meetings for a year, I think the House 'will be of opinion that Trustees who do not attend to the business of the bank should cease to be Trustees. It is most desirable that conspicuous names should not be retained upon the Reports, unless the persons take some part in the management, and by that action give to the public that guarantee which the public believe them to give. Therefore, I am prepared to move a clause which will carry this into effect, and provide that a Trustee shall vacate his office unless he has attended once in 12 months. I am informed that sometimes there are very few meetings of Trustees, but there are Committees of Management, and I will introduce words which will provide that if a Trustee is absent from the meetings of the Trustees and of the Committee of Management during a period of 12 months, then he shall vacate his office, but that if he attends the meetings of the Committee of Management that shall be taken as attending full general meetings—because, no doubt, the meetings of the Committee may be more important than the meetings of the body of Trustees. There is one clause as to which I wish to say a word—the clause which gives power to make special investments. There is great liability to abuse in the matters of these investments—though the system has its conveniences—for when you have these two Departments, you have a business, one portion of which is liable to audit and another portion not so liable. I have no wish to disturb the business of the existing banks, and I shall, therefore, propose a clause which will limit in the future the power of these special investments which lie outside the business of the Trustee Savings Banks. Clause 11 refers to the limit of the amount which may be deposited by any single depositor. Hitherto the law has been that £150 has been the limit, but that may be increased by accumulated interest to any sum not exceeding £200. It has been found difficult in practice to distinguish between deposits and accumulated interest, and for that reason it is proposed in the Bill to fix an absolute limit of £200. Some persons, who do not appear to understand the object of the alterations, have taken alarm at the proposed increase of the limit. I do not attach any particular importance to that clause, and rather than expose the Bill to serious opposition, shall be prepared not to press it. Those are the principal Amendments the Government are prepared to introduce into the Bill, and I shall be extremely glad if, in the course of the present Session, we can establish a better system for the control of these banks. I beg to move the Second Reading of the Bill.

Motion made, and Question proposed, "That this Bill be now read a second time."—(The Chancellor of the Exchequer.)

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

I am sorry to have to intervene at this moment. I should have been glad if we could have gone into Committee on the Bill and have passed it very rapidly, but I must say I am not satisfied with the statement of the right hon. Gentleman the Chancellor of the Exchequer with regard to the constitution of the Committee. It seems to me that such a Committee as the right hon. Gentleman proposes would be more or less a political Committee to deal with a more or less administrative business—a business largely under the control of the State. I think the House will admit that I was justified in the course I took on this subject in February 1887, when I first brought it under the notice of the House, and pointed out how dangerous it was to leave it in the position in which it then was. The Government, I admit, have behaved well in the matter, having enabled us to deal with such fraudulent banks as those of Cardiff and Macclesfield. But the very severity of the Act that was passed has prevented its being put into operation in a great number of instances where it ought to have been put into operation. The Government consented to the appointment of a Committee, which investigated the condition of things, but I am obliged to say that the Chancellor of the Exchequer, whilst he has done some things for which I never asked, has omitted to do some others which I believe to be essentially necessary. With regard to the question of investments under the 16th clause, I was never very strong on the matter. I regard the system as an outlet for the capital of some of the banks, and one which should not be lightly interfered with by the Government. One fact remains with regard to it, and that is that the banks which have taken advantage of the 16th clause are among the best and wealthiest in all parts of the country, and why they should have been singled out for attack I cannot understand. With regard to the names, perhaps, the modifications suggested by the right hon. Gentleman will meet the circumstances of the case. I never desired that anything should be done with regard to the savings banks to bring them into disrepute, or lead to their being closed. What I wanted was that the law as it stood should be carried out, believing that if that were done all these fraudulent transactions would be prevented. The right hon. Gentleman proposes that Trustees should cease to act on their neglecting their duty for 12 months. Once a year is not often to attend to such duties as that of Trustee. I am not quite sure that is quite sufficient for the purpose, and I am exceedingly sorry that with all the facts the right hon. Gentleman has had laid before him by the National Debt Commissioners and from other sources, so little has been done to deal with many of these banks, which are in a rotten condition. I submit that every one of these banks, which has to close its doors without payment in full to the depositors, is a blow struck at thrift. It is known that the bank that came to grief recently at Chelsea has not yet paid its depositors in full. As far as I can ascertain, many of the small depositors have received the full amount, but the depositors of above £5 have obtained only 15s. or 16s. It has been urged that 15s. or 17s. 6d. in the £1 is a very fair dividend. It might be a very fair commercial dividend in the case of bankruptcy, but it is not a fair dividend in this case. The poor people made their deposits in the Cardiff Bank on the supposition that they were doing so on the security of the Government, and I hold that we are bound to see these poor depositors paid in full. I know that in this matter the Government deserved the thanks of the House and the country for the way in which they pursued the case in Court. Three years, however, have passed away since I brought the subject before the House of Commons, and the Cardiff depositors are not paid to-day. The Trustees have been fighting the case until, so far as I can ascertain, the actual cost of the litigation has amounted to as much as would have paid the whole of the depositors in full. Now, I say that this Bill, if it is to meet the requirements of the case, ought to so amend the law as to make the Trustees and managers of these banks attend to their duties and prevent the depositors being defrauded. Let me refer to the Macclesfield case for a moment. In that case the man who should have been held primarily responsible for the safe custody of the moneys committed to his care, namely, the actuary of the bank, has escaped all kind of condemnation, and remains to-day a J.P., whilst the poor clerk who was under him is suffering six years' imprisonment for embezzlements in connection with the bank. The doings in connection with that bank were of so gross a nature that the squandering of the money must have been known to the Trustees and managers of the bank, and could not but have been known to the actuary. It was a matter of common notoriety in Macclesfield that the clerk was squandering money in an hotel or public house near the bank itself to such an extent that it was impossible for him to meet out of his salary the expenses he incurred. If this was notorious to people generally in Macclesfield, surely it ought to have been known to the Trustees and managers of the bank, and, above all, to the actuary, who was respon- sible to the Trustees and managers, and who ought to have been held responsible at law instead of the clerk. I am afraid we have not yet heard the whole story with regard to the Macclesfield Bank; and unless I am mistaken, a memorial will be addressed to this House, or to the Home Secretary, which will make further disclosures, and may show that the things going on in connection with this Macclesfield Bank were actually known to others beyond the parson who is now suffering imprisonment. I have referred to this case because it is very important, and I want to know how far the Chancellor of the Exchequer has attempted to meet it and similar cases in the Bill now before the House. The attendance of Trustees is a very important matter. If they only attend once in the year, a great deal may be done during the 11 months in which the Trustee does not put his foot in the bank. I want to know what is to be done to save the money of the depositors? With regard to Committees, I do not want to see semi-political Committees constituted. Already the banks in various parts of the country have far too much of a political complexion. I want them to be national in the best sense of the term, and to be national they ought to be safe. I have no great objection to the constitution of a Committee in the first instance to devise a scheme; but the permanent Committee appointed to carry out the scheme that is to be framed and to manage the audit ought to be under the management of the National Debt Commissioners, to whom the money will be sent, and who will have the documents necessary for the detection of any wrongdoing. Recently I was able from the very adequate Returns given annually to the House to indicate that a certain number of banks were going wrong. For instance, I mentioned the case of Bishop's Stortford before it was discovered that the bank had gone wrong. In that case nearly the whole capital of the bank had been silently drawn out by the actuary in the course of a very few months, and nobody seemed to have discovered it, although it was clear as noon-day in the Returns. I bring no charge of wrong-doing against the Trustees and managers of these banks, and I believe that they have given their names with the intention of being useful and doing good work. But, being Trustees, they ought to discharge all the duties appertaining to the Trust. Were that done there would be very little ground for complaint. Some have supposed that I want to make a general attack on the Trustee Bunks. Nothing of the kind. I think there is plenty of room for them as well as for the Post Office Savings Banks. There is not the same need for them to-day as there was 15, or 20, or 30 years ago; but as some prefer the Trustee Banks, I say let them have them by all means. We, however, have a right to see that they are made perfectly safe for the depositors. That is especially so when we remember that year after year sums of money have been appropriated in this House for making up deficiencies in the Trustee Banks. [Mr. STOREY: No.] My hon. Friend does not seem to be aware that in one year it cost £25,000 to make good the deficiencies. The nation has had to find the money, and, that being so, it ought certainly to see that there is some security on the part of the Trustees and managers that the actuaries and servants in their employ will carry out the Act of Parliament. Some of these banks are now tottering. If the Act of 1863 were adequately conformed to, if the checks which it provides were applied week after week, there would be no possible chance of defalcations. In my opinion no sufficient reason has been adduced for not naming the Members who are to serve on the Committee, and I beg to move the Amendment of which I have given notice.

Amendment proposed, To leave out from the word "That," to the-end of the Question, in order to add the words-"in the opinion of this House, it is inconvenient to assent to the Second Reading of this Bill before the terms of the First Schedule of the Bill have been filled in."—(Mr. Howell.)

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

*(11.10.) MR. J. E. ELLIS (Nottingham, Rushcliffe)

I rise in no spirit of hostility to the Bill to second the Amendment. I accept with gratitude the Amendments which have been referred to by the right hon. Gentleman the Chancellor of the Exchequer as being an improvement of the Bill. The Select Committee which considered the question was appointed on the Motion of my hon. Friend (Mr. Howell), and although I thought that my hon. Friend, in moving for the Committee, played the part of an alarmist, I feel bound to say that as witness after witness came before the Committee my opinion more nearly approached his, and I have now to endorse what he has said respecting the somewhat dangerous position of some of these banks at the present time. I agree entirely with my hon. Friend that Parliament has very considerable responsibility in this matter. Undoubtedly there has been thrown on the taxpayers of the country some financial burden in connection with Trustee Savings Banks, and in proportion as these Banks are likely to be useful so it is bound to remedy any evils marring that usefulness. There is much greater latitude given by them with regard to the withdrawal of deposits than is given by the Government Savings Banks. There are, however, undoubtedly very erroneous ideas among the working population as to the responsibility of the State with regard to these banks. I think that the investment of large sums under the Act of 1863 is not without danger. Undoubtedly, use is made by some of these banks of the names of persons who have long ceased to be of any service, or to feel themselves responsible for the conduct of the bank. I hope the Bill will prove successful in grappling with these difficulties. Coming to its provisions, I think there should be some distinct notice, as suggested in Clause 1, that the State was only responsible to a limited extent for the sums deposited. I agree entirely with my hon. Friend as to the desirability of having the names of the Committee, and also full particulars under Schedule 1, and I do not think that the Chancellor of the Exchequer has disposed of that objection. With respect to the Committee of Inspection, the proposal is based upon the recommendations of the Select Committee. That recommendation was only carried by six votes against five, and I think the Chancellor of the Exchequer will agree that that did not amount to a very strong expression of opinion on the part of the Committee. I am not prepared to take the responsibility of taking steps to throw over the Committee under the Bill, although I am not at all sanguine as to the advantage of setting it up. The issue of the matter rests entirely on the names of the persons selected to serve upon the Committee. I am very glad to hear that the Chancellor of the Exchequer has determined to stand by Clause 6. The Select Committee reported unanimously— It is evident that the character of the names appearing on the list of Trustees must have great influence on the depositors, and there is some reason to think that names are often retained on the list after the persons have become unable, through ill-health, removal from the locality, or other causes, to make themselves responsible for the conduct of the bank. As to Clause 7, no one who has looked into the matter will deny that the clause is most essential. I hope we shall see no weakening of it in Committee. I agree with the hon. Member for Bethnal Green that it is most extraordinary how the Lord Chancellor can have seen it compatible with his duty to retain in the commission of the peace Messrs. Stringer and Eaton, whose conduct was so animadverted upon in regard to the case of the Macclesfield Bank. Clause 10 deals with special investments. I am glad there is to be some alteration as to investment, When I look at Return 51, which was laid before the House this Session, and saw the character of the investments that have been made by banks in certain districts, I am obliged to say, speaking from some years' experience of banking, that those banks have carried out rather risky operations. In conclusion, I have only to say I do not object to the scheme of an independent Committee; it may fail, and I am quite sure it must fail, unless the Framing Committee are extremely careful as to how the Committee of Inspection is constituted, and as to the nature of the duties it has to perform. I believe that, if Trustee Savings Banks are prudently conducted, as a number of them are, they have a very useful and successful career before them. In districts where gentlemen of position are found ready to give up much of their time without any hope of reward, and just as a labour of love to the work of these banks, these banks succeed. It is only those banks which fall into the hands of mere officials which fail. I therefore hope that the Amendments which the Chancellor of the Exchequer has enumerated will be adopted, so that the Bill will bring about a much-needed reform.

*(1.1.25.) MR. BARTLEY (Islington, N.)

It seems to me obvious that it is almost impossible for the Chancellor of the Exchequer to give the names until it is known what the Committee has to do. I am sure hon. Members have no idea of the responsibility of this Committee, and I cannot conceive anybody accepting the appointment as the Bill now stands. There are about 350 of these banks; they hold something like £45,000,000, and they have 1,500,000 depositors. Until the Committee is appointed, the gentlemen who are named in the Schedule will have themselves to carry on the inspection and audit of all these banks. Clause 4 provides that the Committee shall not be a paid body, but shall do its duties simply as a labour of love. It seems obvious that no one can undertake these duties until this clause is somewhat altered in the direction of the duties being made somewhat less onerous. With reference to the views of the Select Committee, it seems tome a great pity that the recommendation of that Committee upstairs was not adopted more completely. Unless the audit is done most thoroughly, the result must be disastrous. I am one of those who believe that Trustee Savings Banks have been very wonderfully conducted. When we look at the history of these institutions and find the enormous sums of money that have passed through them—something like £250,000,000 in 25 years—and we find that, with the exception of the Cardiff Bank, there has been hardly any loss at all. I think they reflect great credit on those who conduct them. But, at the same time, there is no question that machinery is wanted to secure that the accounts shall be properly audited. The Committee upstairs went into the matter very carefully; and although I candidly confess I do not like this Bill as much as I hoped I should, I trust we shall read it a second time. I think it may eventually be knocked into a shape that will do a great deal of good.

*(11.30.) THE FIRST LORD OF THE TREASURY (Mr. W. H. SMITH,) Strand, Westminster

I would make an appeal to the House to allow the Second Reading of the Bill to be taken now, as there is other important business to be taken. My right hon. Friend the Chancellor of the Exchequer has undertaken to re-commit the Bill for the Amendments he-proposes to introduce, and the House will then have the measure in its more-perfect form, together with the names which my right hon. Friend has-promised. I hope the hon. Member will, for the sake of the convenience of the House generally, allow us to take the Second Reading of the Bill now, and he will have a better opportunity for his observations in Committee.

*(11.32.) MR. HOWELL

After the intimation given, I beg leave to withdraw my Amendment.

(11.33.) MR. STOREY (Sunderland)

And I, Sir, beg leave to move the adjournment of the Debate.

Motion made, and Question proposed, "That the Debate be now adjourned."—(Mr. Storey.)

* MR. W. H. SMITH

I hope the hon. Member will not insist upon that. To adjourn the Debate now may possibly endanger the Bill and prevent its passing this Session. We cannot re-commit the Bill until it has been read a second time.

(11.34.) MR. STOREY

With the indulgence of the House I may be allowed to explain my action. I think the Trustee Savings Banks have been very badly treated, both by the Government and by the attacks made upon them in other quarters. It is extremely important that some persons who know these banks and their work should speak upon the matter, and the proper time for that is on the Second Reading of the Bill. The Chancellor of the Exchequer asks the House to give a Second Reading to a Bill in which the most important clauses are to be entirely re-cast. That is the most extraordinary proposal I have ever heard.

(11.35.) MR. GOSCHEN

It is just because I am anxious that the House should have the Bill in the form we propose it should assume that I wish to re-commit the Bill. I have received a deputation from nearly all the Savings Banks in the country, and they are fully satisfied with the proposed Amendments.

MR. STOREY

But the House does not know what the Amendments are.

MR. GOSCHEN

The House cannot know until the Bill is re-committed. But if the Bill is committed pro formâ and re-printed, an opportunity will be given for the consideration of the Amendments. I will undertake that time shall be given for the circulation of a copy of the Amendments among the banks, and then hon. Members will have an opportunity of preparing any Amendments in the interest of the banks. It is the most business-like course, and I trust the hon. Member will accept it.

*(11.36.) MR. SHAW LEFEVRE (Bradford, Central)

I think we all recognise the importance of reading the Bill a second time, and I think my hon. Friend will find a full opportunity for discussion when he has the Bill before him in the amended form the right hon. Gentleman proposes.

(11.36.) MR. CONYBEARE (Cornwall, Camborne)

The right hon. Gentleman thinks we are more innocent than we look, but a number of old birds are not to be caught with salt. We thoroughly understand the tactics. For my part, I am fully prepared to support my hon. Friend. I have been bombarded with numerous letters from constituents and others expressing the greatest disapprobation of the proposals of Her Majesty's Government, and I certainly think it is our duty to insist upon a Second Reading discussion. The Amendments may modify materially the whole scope and character of the Bill, and we ought to know what we are doing before we commit ourselves to a Second Reading.

(11.40.) The House divided:—Ayes 86; Noes 184.—(Div. List, No. 192.)

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

MR. STOREY

I do not know, Sir, whether I have exhausted my right of speech——

Mr. SYDNEY GEDGE

rose in his place, and claimed to move "That the Question be now put," but Mr. SPEAKER withheld his assent, and declined then to put that Question.

* MR. SPEAKER

Do I understand the hon. Member for Bethnal Green desires to withdraw his Amendment?

* MR. HOWELL

assented.

* MR. SPEAKER

Is it your pleasure the Amendment be withdrawn?(Cries of "No."]

*(11.52.) MR. W. H. SMITH

I very much regret the opposition shown to the passing of this Bill. ["No, no."] However, it is not my desire to enter on a contest with hon. Gentlemen in the interests of those who are concerned with the safety and security of Savings Banks, and with those hon. Gentlemen the sole responsibility must rest if a measure which is designed to improve the security of those who place their hard-earned savings in those institutions cannot, in consequence, be passed during the present Session. The Bill has received support from all parts of the House, and my right hon. Friend has shown his desire to meet the wishes of those who want Amendments to be made in a reasonable way. In those circumstances I will not detain the House longer, but allow the House to proceed to the other business which has been fixed for this evening. I agree to an adjournment.

Motion made, and Question proposed, "That the Debate be now adjourned."—(Mr. W. H. Smith.)

(11.54.) MR. W. E. GLADSTONE (Edinburgh, Mid Lothian)

I feel obliged to say two things upon this subject. In the first place, I sincerely hope that the right hon. Gentleman will not infer from the Division which has just taken place [Laughter, and cries of "Order !"] either that there is any cause for the unseemly manifestation which has just taken place, or that there is any hostile disposition to the principles of this Bill on this side of the House. [Laughter.] Notwithstanding these manifestations of the manner in which hon. Gentlemen prefer to pursue the Debate—notwithstanding this and the waste of time these interruptions cause—I venture to express my belief that this Bill has excellent objects in view, and I sincerely hope that it will pass into law this Session. But I think that the right hon. Gentleman did not see the point which has arisen, which seems to give strength to the appeal of the hon. Member, which I, for my own part, cannot resist. My hon. Friend has a right to a Second Reading discussion. Under the old practice in this House a commitment pro formâ has been of frequent occurrence, and is a most useful proceeding; but after that, when re-commitment was used, it would have been in the power of my hon. Friend to resume his Second Heading discussion. Now, by the Rule which has been passed, my hon. Friend is obliged to have his Second Reading discussion now or never, and, therefore, it has been impossible for me to resist the appeal of my hon. Friend. I hope that the right hon. Gentleman will be led by the occurrence of to-night to consider a matter which is of great importance in the procedure of this House, namely, whether when you have made a Rule abolishing the power of debating a Bill on the Speaker leaving the Chair, it would not be wise to make an exception to that Rule when a Bill is committed pro formâ, when it might undergo any amount of changes, and when there is no power whatever of questioning any of those changes. With regard to this Bill, I, for one, should be glad to see it advanced with all possible expedition.

Question put, and agreed to.

Debate adjourned till to-morrow.