§ Order for Second Reading read.
§ Motion made, and Question proposed, "That the Bill be now read a second time."
§ *(6.5.) MR. BARTLEY (Islington, N.)
I should like to say a few words upon this Bill, which deals with a subject in which I take the greatest interest. I think we shall all agree the Bill is a step in the right direction—in the direction of doing something towards making deposits in Trustee Savings Banks more secure. It is not an ideal Bill; it is not quite the idea that, if I had my own way, I should have liked to carry out. It would, perhaps, have been wiser to have made an arrangement by which the large banks should have developed like those have of a private nature, and been carried on under special charter, in a way most likely to increase the thrift of a district. Of course, banks are hampered by conditions that obtain in large institutions like the Glasgow Bank, and others which are carried on very well; and had this plan been adopted the smaller banks would have gradually closed and been absorbed by the Post Office Savings Bank. The scheme of the Bill, however, is very reasonable. The Bill really does two things, and is based on the recommendations of the Committee appointed by the House two years ago. It establishes a Board of Inspection or, what may possibly be called, a Board of Audit, and gives much greater power to the Commissioners for the Reduction of the National Debt. I am not quite sure that this is wise, but I do not see 1249 that we can put into anybody else's lianas the same power, which must exist, in order that the object of the Bill may be carried out. The history of these banks everybody knows. They have succeeded in doing good service to the State in the past, and have been admirably conducted; while, no doubt, considering the enormous amount of money passing through them, there have been very few lapses. The amount of money depositors have lost, considering the hundreds of millions passing through the banks, has been very small—a great credit to the management. The rules we now have were framed by Act of Parliament, and are, no doubt, satisfactory in every way to secure, if carried out, proper management; but the difficulty has been in all cases that there has been no power, no controlling authority to see that the rules were carried out. The Bill accomplishes that object; it appoints a body of persons who will see that the Regulations advanced by the Act of Parliament are carried out. Three chief duties will devolve on the Inspection Committee. They must make a complete overhaul of existing Savings Banks, and this is no small matter seeing that there are over 300 banks holding 45,000,000 sterling, and having 1,500,000 depositors. The first duty will be a complete overhauling of these institutions. The great bulk of them are, no doubt, thoroughly sound. The next duty will be to establish a complete system of audit, and lastly, they must see that this system is really kept going. There is no doubt that the difficulty all through has been that a system of audit has not been strictly adhered to, and so laxity of management has crept in. The functions of the Committee will be in the nature almost of a Board of Directors to these great institutions. There is one point in which I cannot agree, and as to which, at the proper time, I propose to move an Amendment. We ought, I think, to appoint the Committee straight out, for it is rather a round-about method to appoint one Committee with the duty of appointing another. The hon. Member for Sunderland, whom I do not now see in his place, has given notice of an Amendment to the effect that no Amendment of the Savings Bank Act 1250 will be satisfactory which does not provide for a compulsory comparison of every pass-book with the ledger, and increase the maximum amount allowed to be deposited annually. I hope we shall not make this alteration, for, candidly, I think the State has gone far enough in relation to these banks. Hon. Members, I think, hardly realise the enormous responsibility of the State in connection with these Savings Banks. The State allows every individual in the country—man, woman, or child—to deposit a sum of money with the State security—guaranteed by the State—and returnable at par at any moment to the maximum amount of £200, and, therefore, if this privilege were availed of by every individual in a population of 40,000,000 then the Chancellor of the Exchequer might have to take charge of a sum of £8,000,000,000 sterling. I do not think that amount will ever be reached, but the way the amount held is increasing year by year under the growth of habits of thrift among the people, shows that certainly the time has come when we should say to persons who want to save more than £200 that they must avail themselves of the means of purchasing Consols, or the other means open through the Post Office and elsewhere of investing their money. A man who wants to deposit more than £200 may be fairly asked to take the risks of the ups and downs of Consols rather than to increase his deposits, for which the State is responsible. Another point the hon. Member raises is the compulsory presentation of pass-books can be inspection. I think the hon. Member when he makes that suggestion can hardly have practical knowledge of the working of these banks. I do not believe there is any bank where the sending in of pass-books can be insisted upon. A system by which pass-books are examined as they come in at any hour or any day is quite effectual, and, perhaps, more effectual than any other; and it may be one of the duties of the Inspecting Committee to carry this out. I hope the Bill will be read a second time this evening, and that a good Committee will be secured. The Committee will certainly have no sinecure office. There will be no honour or glory, but plenty of hard work, in the auditing of 1,500,000 of 1251 accounts amounting to £45,000,000 of money, and they will find themselves in hot water pretty frequently in the discharge of their duty. I hope that the Committee will be carefully selected, and that their labours may prevent the possibility of those grave catastrophes happening which have in the past so seriously scandalised the poorer classes of society. To encourage and protect habits of thrift among the poor is without doubt one of the most important things the State has to do, and we must be very careful to give security to the beginning of this habit. The first steps are the most difficult, and if there is then any idea of want of security the consequences are so serious that I am sure the Stats may well go out of its way to provide absolute security for the small savings of the community.
§ *(6.15.) MR. LENG (Dundee)
I concur in the hope that the Bill will now be read a second time. I have had occasion to make representations to the Chancellor of the Exchequer in the interest of certain Scotch Banks, and I desire to acknowledge the very conciliatory attitude taken by the right hon. Gentleman. He has made large concessions on consideration of the views placed before him, and the Bill in its present form is much amended as compared with the shape in which we had it before us last year. Several of the regulations which were then of a cast-iron character have been made considerably more elastic, and are now very much more likely to meet the requirements of the poorer class of depositors, and those who desire to make investments. I regret, however, that the limit of deposits within the year has not been increased from £630 to £50. I know there is a difficulty in making this alteration in Trustee Savings Banks so long as the limit of £30 is maintained in the Post Office Banks, but at the same time it seems to me that, as compared with the period when £30 was fixed as the limit, the ability of the working classes now to save money has increased very considerably, and the amount of possible yearly savings would now be more nearly represented by £50 than by £30. In the case of Scotch banks these deposit accounts are 1252 used in a more operative manner than is the case usually in England. Not only do depositors continue to add small sums during the course of the year, but they take out sums more frequently to meet payments of rent and other periodical engagements; but under the peculiar clause in the older Act they are limited to putting in £30, and cannot occasionally take out £5 or £10, so as to leave a total increase of £30. It is, I think, very desirable that this defect should be remedied. Still the Bill shows a great improvement in its form to that it had before. No sound Savings Bank will object to a thoroughly systematic audit, and the proposal in this direction contained in the Bill has for years been carried out in the bank with the management of which I am connected; there the audit is systematically carried out by one of the first accountants of the city. Only in the case of weak or improperly conducted banks can any objection be taken; but by every soundly conducted bank I am sure the regulation will be welcomed. I cannot concur with the hon. Member (Mr. Bartley) in the desire that these banks should develop into what I suppose would be called Joint Stock Banks. The reason that such large sums have been deposited in these banks in our large towns is that from the beginning they have been conducted by sound business men, actuated by benevolent and philanthropic motives, and desiring to encourage that national thrift of which we have heard so much in a recent Debate; and the fact that eminent citizens have given so much of their time—several nights in the week often—to superintending the operations, has given a degree of confidence to the working classes, which, it is to be hoped, will continue. I hope that the conciliatory spirit which the right hon. Gentleman has shown hitherto will be maintained in future discussions, and that comparatively minor matters which we may desire to have improved will have his favourable consideration.
§ *(6.20.) MR. E. BRODIE HOARE (Hampstead)
The Bill is very much in accordance with the recommendations of the Committee, and I only wish to refer to one important omission. A clause which did not come under the cognizance 1253 of the Committee, because the subject had not been raised to the prominence it now occupies. I think everybody will admit there is no class in the country which is considered worthy of so little sympathy as the bankers. On the one hand they have been represented as a sort of vampire, sitting in a strong room stuffed with gold, and fattening on the unearned increment; while on the other hand, the Chancellor of the Exchequer has represented them as having no gold and being a distinct danger to the community. But the Chancellor of the Exchequer is himself the largest banker in the country, and he, under one head alone—the Trustee Savings Banks—holds deposits of £44,000,000. But when we come to examine his proposals, his assets, liabilities, and securities, we find in the first place that he is insolvent. But that does not very much matter, for he an appeal to the shareholders and obtain the £6500,000 by which he is insolvent. When we come to look at the amount of his reserves, we find he has not a single light half sovereign. The Chancellor of the Exchequer has on this account £70,000 in the Bank of England waiting investment, and therefore, we may suppose the right hon. Gentleman thinks it right to hold £44,000,000 of other people's money, and the moment there is a demand for it, and the moment there is a run upon the banks and they come to him for assistance he must realise his securities. The Chancellor of the Exchequer has sent me an authoritative copy of his memorable speech at Leeds, and having in mind what he there said, I hope he will, in Committee, introduce a clause—the right hon. Gentleman will not object to it as far as he is himself concerned—to bind his successors, in whom we may not have the same reliance, to keep an adequate reserve against such a very large liability.
§ (6.25.) MR. HOWELL (Bethnal Green, N.E.)
I am glad we have got to the point when we are able to say a few words upon the Second Reading of this Bill, and I am exceedingly glad that my hon. Friend the Member for Sunderland (Mr. Storey) is not present to delay the Second Reading. For nearly five years we have been trying to get 1254 something done for the Trustee Savings Banks, and I support the present Bill, not because I believe it is exactly the Bill we ought to have, and I hope we shall be able to amend it in Committee, but, under the circumstances, it is as much as we could expect considering the opposition which has been brought to bear. In regard to the point raised by the hon. Member for North Islington (Mr. Bartley) I do not think we need at all fear that the Chancellor of the Exchequer will ever have £8,000,000,000 at command in the savings banks. The idea that every man, woman, and child in the United Kingdom should have in the banks an amount the total of which would reach that sum is to me a very pleasant prospect, but it is not likely to be realised. What I want to see is the savings banks in the country established by Act of Parliament for a specific purpose—a safe means of deposit for the people. I think I have a little more experience in regard to these matters than the hon. Member for North Islington, and I cannot pretend to say that the majority of these banks are in perfectly sound and solvent condition. My investigations have been a little closer than those of most hon. Members, and my conclusion is founded on facts which might have been brought before the Select Committee, as the hon. Member knows, had not certain circumstances prevented the evidence being brought forward. However, whatever may be the position of many of the banks, if this Bill can, and in a great degree I believe it will, create greater safety in the future, I am content so far as the present is concerned. I hope that some Amendments may be agreed to, so as to ensure more thoroughly and completely the enforcement of the provisions of the Act of 1863. If that Act had been really carried out by trustees and managers, we should not now be in the position we are to-day with regard to the Trustee Banks throughout the country. The hon. Member (Mr. Leng) has spoken of the, Dundee Savings Bank; but I am sorry to say that all the banks throughout the kingdom are not conducted on the same principle as the Dundee Bank is conducted, nor indeed are the majority of the savings banks in England conducted so well as is the smallest and 1255 humblest of the Trustee Banks in Scotland. In Scotland, so far as investigations have gone, the Trustee Savings Banks are carried on according to the spirit and letter of the law, with the result that in that country there have been no defalcations, and the depositors are not defrauded of their money. In this country, on the contrary, we have had a great number of very disastrous defalcations. Had it not been for the fact that a great many depositors in banks have died, and no applications have been made for the money standing in their names, the losses in some cases would have been enormously greater than any brought to light before the Select Committee. In one instance alone—an instance only partially investigated upstairs—in one bank in London the amount of money that thus fell into the hands of the Trustees in the course of a few years was £20,000, and this enabled them to tide over their difficulties. There would have been a thorough overhauling of these savings banks under the Act of 1887 had it not been that by the action of the House of Lords derelictions of duty were in that Act made criminal offences. But for this we might have been able to have investigated many circumstances which might have prevented losses. However, it is in the hope and belief that this Bill will do something to make deposits more safe in the future, that I support the proposals of the Chancellor of the Exchequer. I hope it may be possible to introduce in Committee some small Amendments which the Government may be able to accept with a view to induce managers and trustees to carry out the law in reality, so that depositors may be no longer defrauded. I wish the Government could see its way to increase the maximum amount of the deposits. The hon. Member for North Islington does not want that, because, as he says, people can buy Consols. But they do not understand Consols, and if they did they might not, perhaps, buy them. I should like to see the sum of, £30 per annum increased to £50, and the maximum yearly amount from £200 to £400. It is, however, not for us to do anything that might wreck this Bill, and if the Government cannot see their way to 1256 increasing the maximum I will support the measure, as far as it goes, in the hope that these savings banks, as aids to thrift, will become more flourishing than ever throughout the country.
§ *(6.32.) MR. SHAW LEFEVRE (Bradford, Central)
Having been Chairman of the Committee to which this subject was referred two years ago, I wish to express a general approval of the details of the Bill. It affords an illustration of the fact that the delay of a year in the consideration of the Bill is not always thrown away, and I am glad to see that the Chancellor of the Exchequer has availed himself of the opportunity to remove points of difficulty which have occurred. As to the Committee of Inspection, however, I am rather disposed to agree with the hon. Member for Islington that the method proposed is a roundabout process. Almost everything will depend on the constitution of the Committee. If it is to consist of nominees of the Government, then the Government will be practically responsible for the savings in the Trustee Banks. Two years ago the Select Committee unanimously came to the conclusion that the Audit Board should not be a Government Board, and that the Government should not undertake an audit for the savings banks. I hope that some other means will be devised of selecting the persons who are to form the Committee of Inspection. In regard to the general subject of Trustee Savings Banks, I must again point out that, if the regulations laid down by the Act with regard to Trustee Savings Banks are properly carried out, there can be no doubt that security will be afforded to the depositors. Those regulations, however, have not in some cases been properly carried out, especially in the case of audit. Many of the banks, of course, carry out a system of continuous audit, which makes them perfectly safe, but undoubtedly a small section of the smaller banks do not strictly carry out the regulations with regard to audit, and the result is that the depositors are placed in considerable danger. The scheme of the Bill is to supply this deficiency.
§ (6.38.) MR. FINLAY (Inverness, &c.)
I wish to express in one sentence 1257 the interest taken by my own constituents in this measure, and to say that it is regarded by them as being a very useful and valuable Bill. I would, however, call attention to the date of November 20th, 1890, mentioned in the 10th section, and suggest that it should be altered to 1891, in order to give time for the savings banks to come within the operation of the Act.
§ (6.39.) THE CHANCELLOR OF THE EXCHEQUER (Mr. GOSCHEN,) St. George's, Hanover Square
I am gratified to see that there is a general consensus of opinion in the House in favour of the Bill, and I thank hon. Members for the reasonable criticism which has been offered. When the Bill gets into Committee it will be my anxious wish to meet any reasonable Amendments as far as I can. I agree with my right hon. Friend opposite that the audit must not be one instituted by the Government, and that the Committee of Inspection must not be nominated by the Government. Its constitution will be a question to be dealt with in Committee.
§ Question put, and agreed to.
§ Bill read a second time.
§ (6.40.) Motion made, and Question proposed, "That the Bill be committed to the Standing Committee on Law, &c.—(Mr. Chancellor of the Exchequer.)
§ *(6.41.) MR. BARTLEY
I think the Bill would be got through in less time in Committee of the Whole House.
§ MR. BUCHANAN (Edinburgh, W.)
I think also it would be more convenient if the Bill could be discussed in Committee of the Whole House.
§ MR. GOSCHEN
I think it would be better to refer the Bill to the Standing Committee, on account of the danger that there may not be sufficient time found for its discussion in the House. My experience last year was a rather unhappy one in this respect, and I should prefer to have the Bill referred to the Standing Committee, so that we might make progress with the Bill while other business was going on.
§ (6.42.) MR. HOWELL
I think the right hon. Gentleman will be well advised to take it in Committee of the Whole House. Otherwise I am afraid we shall have to move Amendments at a later stage, which will raise the whole of the questions involved in the Bill. If the Bill goes to a Standing Committee and discussions occur upon it in this House in addition, we shall run a great risk of losing the Bill altogether. As one desirous of seeing the Bill passed into law, I appeal to the right hon. Gentleman to agree to the measure being dealt with by a Committee of the Whole House.
§ MR. GOSCHEN
I suggest that we should, in the ordinary way, refer the Bill to a Committee of the Whole House, and see how we get on. If it be found impossible to find time for it, or if the proceedings be delayed, the Bill might then be referred to the Standing Committee, if hon. Members assent to the adoption of such a course.
§ MR. SHAW LEFEVRE
If the right hon. Gentleman waits until the Amendments are on the Paper he will be able to form a judgment as to whether the Bill is likely to occupy much time or not.
§ Motion, by leave, withdrawn.
§ Bill committed to a Committee of the Whole House for Thursday.