BUILDING SOCIETIES (No. 2) BILL. (No. 246.)

HC Deb 02 August 1894 vol 27 cc1605-60

Bill, as amended by the Standing Committee, considered.

SIR J. LUBBOCK (London University)

said, in the absence of his hon. Friend the Member for St. Pancras (Mr. T. H. Bolton), he should like to ask the hon. Member in charge of the Bill whether he had considered the new clause standing in the name of the hon. Member, as there seemed to be a good deal to be said for it.

MR. SPEAKER

The right hon. Gentleman can move his own clause, but he cannot move the clause standing in the name of another hon. Gentleman.

SIR J. LUBBOCK

said, in that case he would move the clause standing in his own name, and which was as follows:—

(Provisions as to money borrowed in excess of borrowing powers.)

1. "(1) Where any sum has been borrowed by a Building Society by receiving loans, deposits, or otherwise, and the sum would be recoverable from the Society, if in borrowing the sum the Society had not exceeded the limits of borrowing fixed by its Rules or by the principal Act, that sum shall be recoverable from the Society, notwithstanding that the limits of borrowing has has been exceeded.
2. (2) Where any sum has been so borrowed by a Building Society in excess of the limits fixed by its rules or by the principal Act, those persons who were Directors of the Society when that sum was borrowed shall be jointly and severally liable to pay an amount equal to that sum to the Society."

The object of the clause was that where a Building Society had taken money beyond the limits of its powers the officials who were primarily to blame and not the innocent depositors should be made to suffer. It was very hard that a depositor who could not possibly ascertain whether the Society had exceeded its limits should lose his money if these limits had been exceeded and that the shareholders should get the benefit of it. And this was not an imaginary case. It had been held that in the case of a lady, who had deposited £800 in the Portsea Island Building Society, that as the amount was in excess of that which the Society was entitled to receive she must lose it, and that the shareholders must get the benefit of it. There were many other similar cases. It seemed to him that this was reversing the usual order of things, and giving shareholders a prior claim over depositors. He did not propose this clause in the interest of bankers. The Building Societies Association, of which he was President, thought it was not only prejudicial to their interests, but very hard upon depositors, that an anomaly of this kind should be permitted; and though they were primarily interested in the shareholders, they did not wish the shareholders to receive an advantage to which they were not fairly entitled.

Clause brought up, and read the first time.

Motion made, and Question proposed, "That the Clause be read a second time."

COLONEL HUGHES (Woolwich)

thought this clause moved by the right hon. Baronet was necessary. In the Second Schedule of the Bill it was proposed to repeal the existing law which made the Directors responsible if they took on loan more than two-thirds of their borrowing powers. He wished to know what was to be put in the Bill in lieu of the words which were to be repealed? Unless this clause was passed it gave to the depositor whose money had been taken wrongfully in excess of the borrowing powers no remedy against anybody whatever, and that was a very serious matter indeed. The object of the Bill was to strengthen the position of the depositors; and even if these words were not taken out of the Building Societies Act of 1874, it would still be a very desirable improvement, that the remedy of the depositor whose money had been wrongfully taken should be against the Society which had the benefit of the money. At the present moment each individual depositor, seeking to recover a deposit, must sue the Directors, who were in default, and go to the trouble of ascertaining which of the Directors was in default. He knew a case in which a liquidator was applied to for information as to the state of the deposit account at the time his money was lent to the Society, and the liquidator would not give that information in order that the depositor might bring his action, except on payment of some £10 or £15 for a copy of the accounts showing the position of the Society at the time the deposit was made, so that under the present law a depositor had considerable difficulty in recovering that which the law said he had a right to recover. The right hon. Baronet's new clause was to give the depositor so placed the right to go against the Society which had had his money, and the Society had a claim on the Directors for any breach of trust they had committed. In this way hundreds of actions would be saved. This was a highly technical subject, though he understood it, or at all events he had had 40 years' experience with regard to Building Societies, and therefore the House would perhaps excuse him for endeavouring to explain his view. He very much regretted that it was intended to repeal the existing rights of depositors to proceed against the Directors.

THE FIRST COMMISSIONER OF WORKS (Mr. H. GLADSTONE,) Leeds, W.

said, the point raised by the hon. and gallant Member with regard to the repeal of the existing law required attention. He thought there had been some oversight, and he would undertake that the matter should receive consideration either when the Schedule was reached or when the Bill reached another place. The Government, however, could not accept the proposed clause. It would have a direct tendency to increase the existing borrowing powers of Building Societies, and he thought these powers were already sufficiently ample. The clause would, in addition, introduce an anomalous exception into the general law, which provided that where the Directors of a Corporate Body acted ultra vires the consequences of that Act should not rest upon the Society. It was true that the clause gave the Society power to proceed against the Directors; but the class of Directors most likely to break the law were in many cases men of straw, and the burden would therefore fall entirely upon the Society.

MR. BARTLEY (Islington, N.)

could not agree with his right hon. Friend. Many of the misfortunes and difficulties into which these Societies got were owing to their having the power of practically unlimited borrowing. He thought that a Society ought not to borrow so close to its margin as to run any possible risk of getting into difficulties. From their inquiries in the Committee it was quite obvious this was a great danger that ought to be avoided. He should support the Government in resisting the proposed alteration.

MR. CLOUGH (Portsmouth)

expressed surprise at the observations of the hon. Member, as the Societies under the existing law could only borrow up to two-thirds.

MR. BANBURY (Peckham)

pointed out that under the clause of the right hon. Baronet the existing law would practically be abolished, and that a Society would virtually be able to borrow any amount of money; because, as the Society would be liable to the lender, whether the borrowing powers were exceeded or not, the lender would be under no inducement to inquire whether or not the Society were exceeding their powers in taking his money, and, therefore, the existing limit would practically be swept away.

MR. GERALD BALFOUR (Leeds, Central)

said, if this Amendment was passed the limit would be practically swept away with regard to borrowing powers. To sweep away the present limit to the borrowing powers of Building Societies would be a very dangerous change to make. He did not see why the members of and investors in Building Societies should be liable for debts, perhaps improperly incurred, if the limit hitherto imposed were no longer to be a reality. The right hon. Gentleman laid the principal stress of his case upon the hardship to depositors; but the reason he would urge for rejecting the Amendment was, as his hon. Friend had pointed out, that Building Societies in a practically insolvent condition would be able to go to banks or financial establishments and obtain assistance beyond their real borrowing powers. If such loans were not repayable by the Societies it was quite certain that bankers and other lenders would be very careful in making advances. The danger of the Amendment would far more than counteract any advantage which could flow from it.

MR. BYLES (York, W.R., Shipley)

said, the hardship which presented itself to his mind was recently exemplified in the case of a Society which, with a share capital of £5,000, and liabilities on deposits and loans nearly £50,000, had assets of not much more than £10,000; so that depositors after the Society's borrowing powers had been exceeded had no claim whatever. That was a matter which required alteration.

MR. JACKSON (Leeds, N.)

said, in his opinion the Amendment would be productive of more mischief than good. The liabilities of Building Societies were of three kinds: first came depositors entitled to a first claim; then the investors; and then borrowers who might be liable under the Rules of the Society to make good losses incurred. If this Amendment were adopted the result would not be the protection of the poor members of Industrial Societies which, having borrowed up to their limits, were in difficulties, and might obtain from their bankers £50,000, which would come in priority to the investors, the poorest class of members. That was an objection to the proposal. Such cases had been few, simply because of the difficulty of knowing whether Societies were not exceeding their borrowing powers. The matter had been most carefully considered by the Committee upstairs with a result unfavourable to the course proposed by the Amendment, and he trusted that it would not be adopted now.

Question put, and negatived.

MR. BANBURY (Camberwell, Peckham)

moved the insertion of a new clause providing that gifts or commissions not recognised by the Rules of a Society should not be accepted by its officials. Building Societies were particularly liable to offences of that kind, and the very nature of the offence made it very difficult to obtain any direct evidence of the practice. The prevalence of such practices was, however, brought prominently before the Committee last year, particularly by a former Vice Chairman of the County Council of Monmouthshire and chartered accountant, a witness of ability, and with 25 years' experience in Building Society affairs, who said with reference to over-advances that they arose from two causes: one, want of knowledge of the value of property; and the other, the payment of money to persons reporting upon the advances. That witness added that in one case he had good reason to believe £50 was paid to a Society's surveyor who went to report upon a property. One of the chief causes of Building Society failures was found in over-advances, and in view of that fact it was very desirable that no gifts should be accepted by Building Society officials, who were sometimes induced by receiving "tips" or commissions to enhance the value of properties. The Amendment would do no harm to officials acting honestly.

New Clause— (Gifts, &c., not to be accepted by officials.) No director, secretary, surveyor, solicitor, or other officer of a Building Society shall, in addition to the recognised remuneration attached to his office, receive from any other person any gift, bonus, commission, or benefit, for or in connection with any loan made by the Society, and any person paying or accepting any such gift, bonus, commission, or benefit shall be liable on summary conviction to a penalty of £50 with costs, and, in default of payment, to be imprisoned with or without hard labour for any time not exceeding six months, and the persons accepting any such gift, bonus, commission, or benefit, shall be ordered to pay over to the Society the amount or value of such gift, bonus, commission, or benefit, and in default of payment shall be liable to be imprisoned-with or without hard labour for any time not exceeding six months."—(Mr. Banbury.)

Clause brought up, and read the first time.

Motion made, and Question proposed, "That the Clause be read a second time."

MR. BARTLEY (Islington, N.)

said, this clause should be made not only to apply to Building Societies, but to other Institutions. Officials ought always to be paid fairly according to scale, and great risk was run by winking at underhand payments. His hon. Friend had mentioned a case which came before the Committee. It was notorious that in connection with the operations of the Liberator Society large commissions were paid. They ought, if it was possible, to put a stop to the practice of giving douceurs. When it was known that commissions would be paid, the whole staff of a Society was apt to become demoralised, and these gifts undoubtedly encouraged fraud. There was no idea of fraud probably in the first instance when douceurs were given, but fraud was apt to creep in, and it was far better that a clause should be inserted to stop all proceedings as absolutely illegal. He hoped, therefore, that the Amendment would be agreed to.

MR. HOPWOOD (Lancashire, S.E., Middleton)

hoped that the Government would not accept the clause. No one thought it wrong to receive presents in other positions, but such a practice was described as unbecoming in the lowly condition of persons attached to Building Societies, though almost universal in business classes. If such an Amendment was adopted in one direction only, a new precedent would be created from that moment. He could not see the justice of that, and such a clause would require more consideration before being adopted into the Criminal Code of the country. It should certainly be necessary to show something beyond the mere act of receiving money, which might, under certain circumstances, be given in all honesty.

COLONEL HUGHES

said, it was difficult to see how there could be any objection to the clause or that the officers of Building Societies would feel themselves specially attacked by it. A similar provision was passed a few years ago applying to all Local Authorities, and, at all events, it would not hurt any honest person.

MR. WARMINGTON (Monmouth, W.)

said, if persons received anything in addition to their fees they would probably be liable to account for it under the present law. At the same time, those who were familiar with Building Societies could not shut their eyes to the fact that a great deal of harm had arisen in consequence of the officials of such Associations receiving something in addition to their official remuneration, with the result that loans had undoubtedly in my cases been improperly made. He therefore supported the clause.

MR. H. GLADSTONE

said, he was prepared to adopt the principle of the clause, and would take care that words were introduced into the Bill at a convenient opportunity to carry out the object of the clause.

MR. CLOUGH

thought that where an official accepted a bribe he ought not to be permitted to get off with a mere fine. There ought not only to be no question of his handing over or repaying the money, but he ought to be punished.

Motion agreed to.

Clause added—

MR. HOPWOOD

moved the insertion of a clause providing that upon charges arising under this Act the defendant and his wife should be admissible as wit nesses. This followed what had been done in other cases. The clause was not compulsory. The defendant and his wife would not be compellable to give evidence; but it was right that a defendant should be furnished with every means of bringing out the truth in a Court of Justice, and he or his wife might be cognisant of many circumstances with regard to books and other matters.

New Clause—

(Wife may be witness in certain cases.) Upon hearing of any charge involving the infliction of fine or imprisonment on summary conviction under this Act the defendant and his wife shall be admissible as competent witnesses."—(Mr. Hopwood.)

Clause brought up, and read the first time.

Motion made, and Question proposed, "That the Clause be read a second time."

THE LORD ADVOCATE (Mr. J. B. BALFOUR,) Clackmannan, &c.

, was willing to accept the clause. Some of the offences provided against in the Bill would not admit of much testimony being given in defence beyond that of the persons charged. There might well be matters as to which no one could have knowledge but the defendant himself. The Amendment, therefore, seems reasonable and in accordance with recent precedents.

Motion agreed to.

Clause added.

MR. CREMER (Shoreditch, Haggerston)

moved a clause providing that the Registrar's certificate appended to the Rules should be accompanied by a statement that it was not to be taken as a guarantee of the Society's financial stability or of its good management. The majority of persons who joined Building and Friendly Societies, when they saw the Registrar's certificate appended to the rules, were led to believe that it constituted a State guarantee of the financial soundness of the concern, and then when a disaster occurred confidence in Governments was shaken, if not destroyed. Of course, Members of the House knew that the certificate of the Registrar did not afford any guarantee of stability, but the public too often interpreted it otherwise, hence the necessity for making it clear. He believed there was no honestly-conducted Building Society that had any objection to the change which would be effected by the clause which he proposed.

New Clause—

(Registrar's certificates not to be a guarantee of financial stability.)

In any case where the rules of any Building Society shall have been deposited with the Registrar of Friendly Societies and the certificate of such Registrar shall have been appended thereto, such certificate shall bear on its face the statement that it shall not be taken as a guarantee of good management or financial stability."—(Mr. Cremer.)

Clause brought up, and read the first time.

Motion made, and Question proposed, "That the Clause be read a second time."

SIR J. LUBBOCK

said, he fully endorsed what had fallen from the hon. Member who had just spoken, and to avoid the possibility of the public being misled the Amendment was desirable.

MR. H. GLADSTONE

promised, on the part of the Government, that words carrying out the principle of the clause should be introduced into the Bill in another place. It would, however, be better to carry out the hon. Member's intention by amending the Schedule of the Act of 1876, which defined the form of certificate.

MR. BARTLEY

said, it would be better to accept the clause, as these Societies would then all be bound to satisfy those concerned with regard to their position and stability. It was therefore desirable that this clause should be inserted in the Bill.

MR. HOPWOOD

opposed the Amendment, and submitted that the House would be sanctioning a very foolish arrangement in allowing such a certificate to be given. What could possibly be the effect of it on the mind of the investor? When they had appointed a Registrar to whom all the extraordinary powers he now possessed were given, and who appended his certificate to the rules of a Building Society, it was impossible to say this was not, in a sense, a State guarantee that they were under good management.

MR. GERALD BALFOUR

remarked that the certificate only applied to the rules of the Building Society. How was it possible that the mere fact of a Building Society being registered could be any security for its good management or financial stability? The real reason why some Amendment of this kind was needed was that experience had proved that the mere fact of Societies having such certificate had been taken again and again, by members of the Society, to be a guarantee by the Government of good management and financial stability, whereas it was obviously impossible the Government should give such guarantee or that the certificate could bear that meaning. The hon. Member opposite (Mr. Hopwood) seemed to hold the opinion that we were living in an unreal world, and that punishment and precautions were unnecessary, but the majority of people would not agree with him in that opinion. He was glad that the Government intended to accept the principle of the Amendment and to give effect to it in another place. The only question was whether the proposed certificate should apply to all Societies or only to new Societies. Perhaps the right hon. Gentleman would give them some idea as to what his views were.

MR. H. GLADSTONE

It is proposed to be extended to all Societies according to the new clause.

MR. GERALD BALFOUR

That is only to new Societies.

MR. JACKSON

thought everybody would agree in the desirability of carrying out what was designed by this new clause in regard to the certificate, except the hon. Member opposite (Mr. Hop-wood). In arranging this matter, however, care would have to be taken that there was not one certificate for one lot of Societies and another for another class of Societies. Take the case of an old Society which had its present certificate. That would never come before the Registrar except in the case of an alteration of the Rules, and therefore they might have a large number of Societies—which for years and years would not need to come to the Registrar's office for an alteration of the Rules—with one certificate, and they might have all other Societies, either newly formed or coming for an alteration of the Rules, with a different certificate. That would obviously not be what the hon. Member desired, because it would place at a disadvantage the new Societies or even the old Societies which made any alteration in their Rules. This was a serious difficulty which ought to be obviated.

MR. BANBURY

considered that all Societies must be put on the same footing, and he thought that it would be easy to draw up a clause which would compel all existing Societies to send in their certificates for revision.

MR. BYLES

said, his hon. and learned Friend near him (Mr. Hopwood) was not entirely alone in the views he expressed. He firmly believed the effect of these restrictions and restraints upon the operations of Building Societies would most inevitably be to increase the fallacious belief of the general public that there was some sort of Government guarantee for their money when they put it into such Societies, and when they were entrusting the Registrar with all these new powers they simply furthered and gave colour to that erroneous opinion. He agreed it was desirable, as far as they could, to state on the face of the Bill that it did not carry any guarantee, and so far he agreed with the clause, but he was bound to say he thought his hon. and learned Friend was perfectly right in saying the tendency of all this legislation would be to increase that wrong opinion. If the public were only left to make their own bargains when they lent their money, just as they had to do with anybody else, they would be more likely to be careful.

MR. WHITTAKER (York, W.R., Spen Valley)

remarked that, if some certificates contained a statement that they carried no guarantee, while others did not contain that statement, it would lead to the belief that the latter did really carry some guarantee.

MR. J. B. BALFOUR

said, the Government would keep in view the points referred to when drawing the clause for insertion in another place.

Motion and Clause, by leave, withdrawn.

COLONEL HUGHES

moved, in page 1, line 10, to leave out "unadvanced," and insert "investing." He said, that "investing" was a modern term, and would be better understood than the word "unadvanced."

Amendment proposed, in page 1, line 10, to leave out the word "unadvanced," and insert the word "investing."—(Colonel Hughes.)

Question proposed, "That the word 'unadvanced' stand part of the Bill."

MR. H. GLADSTONE

said, he was advised that it would be inconvenient to accept the Amendment, as the word "unadvanced" ran all through the former Act.

Amendment, by leave, withdrawn.

MR. HOPWOOD

moved, in page 1, line 12, to leave out from "members," to end of sub-section. The words proposed to be omitted were those which provided that the matters to be set forth in the Rules should include Tables, where applicable in the opinion of the Registrar, showing the amount due for principal and interest separately. His reasons for moving the Amendment were these. They introduced here, and in this Bill generally, the Registrar for the first time as a controlling power, and the Building Societies over which he exercised such supervision would be regarded as having a State guarantee. He suggested that that was a mistake. The Registrar was here invested with a discretion "where applicable in the opinion of the Registrar." The Registrar, he believed, was not desirous of having this jurisdiction put upon him, or he so expressed himself in his evidence. This would throw a good deal of extra work on the Registrar, and must entail an increase of his staff. Again, he should like to know why the Registrar was to govern the modus vivendi of these Societies, which the House must suppose would be financed by people who knew their own business. He did not think they would learn anything profitable from the Registrar, who confessed that he knew nothing practically about the business of these Societies. He submitted, therefore, the House should pause before they arrived at the conclusion that they were so much cleverer than these people, and that they could settle in an Act of Parliament, fixing the language for all time, what should be done. Without injuring the clause, but preserving all that was essential in it, the words he suggested should be omitted ought to be taken out, so that Building Societies should be left in that respect to do what they thought was right for the independent government of their concerns. The more they controlled these Societies, the more they prevented their usefulness; and although some of them had been dishonestly managed, they formed but a very small percentage of the whole. They would lead the public into a feeling of false security if they led them to believe that they had got a Registrar on the spot who was always looking into these matters, and always taking into consideration the interest of Her Majesty's subjects. He begged to move the Amendment.

Amendment proposed, in page 1, line 12, to leave out from the word "members," to the end of Sub-section (b), of Clause 1.—(Mr. Hopwood.)

Question proposed, "That the words, 'with tables, where applicable in the opinion of the Registrar' stand part of the Bill."

COLONEL HUGHES

said, that in any well-managed Society, with definite regulations, there was no difficulty in setting forth a table to meet every case of investment or advance, and nothing could conduce more to the popularity of a Building Society than that the particulars of the contract should be set forth in the Rules. It was a distinct advantage to have these tables in the Rules. They were set forth in the Rules of the Society to which he belonged, and they worked with great benefit to the Society. He pointed out that this was not obligatory upon a Society. If the Registrar was satisfied that the tables were not applicable to be put in the Rules of some Societies they would not be put in. If he thought they ought and could be put in then he would direct they should be put in. Such a provision was desirable in the interests of the Societies themselves and everyone concerned.

MR. BYLES

was astonished to hear the hon. and gallant Gentleman say it was necessary and desirable there should be these tables. Was he aware that in some of the biggest, most prosperous, and well-managed Societies they had no tables at all?

COLONEL HUGHES

The officials must have a table to work by themselves.

MR. BYLES

said, they had no table, but they worked freely, with elasticity and in the spirit that had been expressed by the Mover of the Amendment. The whole idea of this Bill was that there was one certain sort of Building Society and that they could make them all alike in their methods and management. The real advantage to the public was that Building Societies should be as elastic and free as possible, and thus the public got the maximum advantage. He heartily supported the Amendment.

MR. GERALD BALFOUR

observed that the hon. Member for Shipley had said that the House appeared to be under the impression that Building Societies were all of one kind. How could he say that in face of the words the hon. Member for Middleton proposed to omit and which set forth that the Rules should only be published where they were applicable in the opinion of the Registrar? The Registrar would not insist upon the tables where, in his judgment, they were not applicable, but would insist upon them in these cases where they were really required. The hon. Member who moved the Amendment seemed to fall into an obvious error. His view was, as a matter of fact, that all Societies differed from one another, and ought to be left in that condition. Nothing of the kind. The fact was, that Building Societies fell into well - marked classes—Terminable Annuity Societies and those which were not. It was abundantly proved before the Select Committee that the Societies which conducted their business on the principle of Terminable Annuities absolutely required tables to work by. It was, therefore, eminently desirable that those tables should be inserted in the Rules. All that was required here was that if the tables should be given they should be duly set forth. The hon. and learned Gentleman said if this Regulation were inserted in the Bill it would give the public an impression of false security. If that were the case he was at a loss to understand how it was the hon. Gentleman opposed the new clause lately moved, in which the precaution was taken, on the face of the certificate, to show that no such guarantee was given. All the certificate could possibly do was to show that the Rules had been drawn up in accordance with the law and nothing more. It was the object of the Bill to see that the Rules of a Society were so drawn up as would be most likely to ensure that good management and financial stability they all desired to see in their Building Societies.

MR. BARTLEY

said, there was no doubt that the preponderance of the best opinion examined by the Select Committee was in favour of the insertion of the tables, in order that the investing public should know distinctly the basis of the bargain made. A great number of witnesses stated strongly that these tables should be absolutely made the law in every Society, and the only real objection was in the case of some small Societies, where the cost of printing would be very great. There was something in that, but it really was a very unimportant point indeed. His own opinion was that a Society which could not afford to print the Rules was not likely to be much of a Society at all. The tables were practically alike, and there would be no possible difficulty in pre- paring a table from some other Society without incurring much expense. It seemed to him absolutely necessary that every point in these Societies should be as plain as possible to the investing public. It was their absolute duty, if they had any special laws for these Societies, to see that they were as explicit as they possibly could be made. The provision in the clause was fair and reasonable; it was one to which no bonâ fide Society could possibly object, and the Government would fail in their duty if they did not insist upon its retention.

MR. H. GLADSTONE

said, he would have been more impressed with the necessity for the Amendment if it had come from any of the Representatives of Building Societies. The right hon. Member for the University of London, who represented an Association comprising a great number of managers of Building Societies had not put down an Amendment of this kind, and he was not there to support the hon. and learned Member. Though it was true that there was a considerable difference of practice among Building Societies, he believed everyone would admit that where tables were possible it was most desirable to insert them in the Rules. He thought his hon. Friend was wrong in alluding as he did to the Registrar of Friendly Societies, because, in answer to a question put by his right hon. Friend the Member for North Leeds, the Registrar said that it was certainly desirable to insert the tables. The clause as it stood was a necessary and a good clause, and he could not accept the Amendment.

Question put, and agreed to.

On Motion of Colonel HUGHES, the following Amendments were agreed to:—

Page 1, line 14, after "due," insert "by the Society."

Page 1, line 17, after "due," insert "by the Society."

COLONEL HUGHES

moved, in page 1, lines 26 and 27, leave out "on redemption," and insert "after each stipulated payment." He said this was a necessary corollary to the tables being published.

Amendment agreed to.

MR. HOPWOOD

moved, in page 2, line 6, to leave out from "relates," to "every," in line 10. The clause provided that there should be an annual account and statement made up to the end of the year. That might be a very proper provision, but the clause proceeded, and shall be in such form as the Registrar may from time to time, with the approval of the Secretary of State, direct, either generally or with respect to any Society or class of Society, and it was to those words that he objected. A few minutes ago the House was for relying on the Registrar in all emergencies; he was to put everything in order; but now it was proposed that the Registrar should call in the aid of the Secretary of State, who was already overburdened with duties. He was not opposing the Bill; he was giving to the House the opinions of many of the Building Societies; and on their behalf he moved the omission of words which he thought would place the Building Societies in swaddling clothes.

Amendment proposed, in page 2, line 6, to leave out from the word "relates," to the word "every," in line 10.—(Mr. Hopwood.)

Question proposed, That the words 'and shall be in such form and shall contain such particulars as the Registrar may from time to time, with the approval of a' stand part of the Bill.

MR. H. GLADSTONE

said, the Government could not accept the Amendment. The whole question of Building Societies was gone into most carefully by the Select Committee last year, and the Bill was framed on the evidence, which would be found in a substantial Blue Book. He quite admitted the title of his hon. and learned Friend who moved the Amendment to describe himself as the mouthpiece of individual Building Societies; but it was a significant fact, and his right hon. Friend the Member for London University, who was President of an Association representing 120 Building Societies and invested funds amounting to £25,000,000, did not support the Amendment. The words "with the approval of the Secretary of State" were inserted in the clause, on the representation of witnesses on behalf of the Building Society, in order to give the public a greater feeling of security, and not because there was any feeling that the Registrar would not be competent to discharge the duty. He was certain that the most capable gentleman who held the office of Chief Registrar could be fully trusted to consider the case of each Society on its merits, and to decide the matter according to the character and special circumstances of the Society.

MR. JACKSON

hoped the House would not accept the Amendment. He thought the hon. and learned Gentleman who moved it rather failed to appreciate the reasons why the clause was drawn in its present form. The hon. and learned Gentleman must admit that there must be some form of accounts which those Building Societies were to furnish to the Registrar. That being so, there were two alternatives. One was to prescribe a fixed form; the other was to leave some elasticity in the matter. The Committee were of opinion that it would be very difficult to prescribe a form of account which would be applicable to every class of Society; and for all future time. In order, therefore, to preserve some elasticity, and avoid a rigid form of account, the Select Committee thought it well to leave it to the discretion of the Registrar to alter the form of account from time to time, as he thought necessary, and with the sanction of the Secretary of State.

MR. BARTLEY

said, that the clause would not be placing the Societies in swaddling clothes, as the hon. and learned Member who moved the Amendment had remarked, because similar Rules applied to Assurance Societies, railways, banks, and such public Companies which were obliged to make Returns of this nature. No doubt, if we lived in a state of primitive simplicity and perfect honesty no Rules of the kind would be required; but considering the weakness of human nature it was not at all unreasonable that some such Rule should be made to apply to Building Societies. The Committee took great care to prevent any hardship arising from those Returns. It was felt that circumstances might arise which would render a different form of certificate necessary, and so the Registrar was given discretion to modify it when necessary. The Secretary of State would not be continually troubled to make alterations in the form of account. The form would last a long time, but it was conceivable that circumstances might arise when it would be necessary to alter it, and it was well to provide for such a contingency. If there had been such a power vested in a Registrar, and he was able to put some particular form of Return before the Liberator Building Societies, it was quite certain that some of the great disasters which followed the collapse of that Society would have been avoided. One of the objects of the clause was to prevent cases of fraud of that kind, for experience proved that fraud was prevented when definite and express Returns were insisted on.

Question put, and agreed to.

COLONEL HUGHES

asked, who was the Secretary of State to which the words "Secretary of State" in the clause applied? Was it the Secretary of State for the Navy or for the Army? He presumed it was the Secretary of State for the Home Department; but he thought that should be clearly stated in the Bill.

MR. J. B. BALFOUR

said, the words generally used in Acts of Parliament were "one of Her Majesty's principal Secretaries of State." He did not think it was usual to limit it to any one Secretary of State, though the matter was always referred to the proper Secretary of State, who in this case was the Secretary of State for the Home Department.

SIR J. LUBBOCK

moved, in page 2, line 10, before "provided," to insert— The form of annual account and statement directed by the Registrar under this section, and every alteration of that form, shall as soon as practicable be laid before each House of Parliament, and shall not come into operation until the expiration of three months from that date. The Building Societies had every confidence in the present Registrar; but they thought it reasonable that if their Rules could be altered without their consent, they at any rate should have notice of the alteration, and have the opportunity of laying their views before the Registrar, and if necessary before the Secretary of State. He, therefore, hoped the House would see the reasonableness of his Amendment.

MR. H. GLADSTONE

said, that if the opening of the Amendment was made to read— Every form of annual account and statement prescribed for general use by the Registrar under this section, the Government would accept the Amendment.

SIR J. LUBBOCK

said, he had no objection to the alteration suggested by the right hon. Gentleman.

Amendment proposed, in page 2, line 10, before the word "provided," to insert the words— Every form of annual account and statement prescribed for general use by the Registrar under this section, and every alteration of that form, shall as soon as practicable be laid before each House of Parliament, and shall not come into operation until the expiration of three months from that date."—(Sir L. Lubbock.)

Question proposed, "That those words be there inserted."

MR. CARSON (Dublin University)

asked whether the Registrar in England or the Registrar in Ireland would draw up the forms for Ireland? It had been suggested to him by Building Societies in Ireland that there should be a common control over the Kingdom, and that the Registrar in England should have control over the forms for Ireland.

MR. TOMLINSON (Preston)

asked what was the meaning of the phrase "prescribed for general use" which the Government had inserted in the Amendment? He thought there ought to be in the clause a clear definition of the use to which the forms were intended to be put.

MR. HOPWOOD

thought that the object which the right hon. Gentleman the Member for London University had in view—namely, the protection of every Building Society against capricious charges in the form of account by the Registrar—would not be affected by his Amendment, now that the general words of the Government had been accepted.

MR. BARTLEY

said, the Amendment would lead to a great deal of inconvenience and confusion. He did not object to the form being laid before Parliament, but he could not conceive that anything but mischief would arise if that form was not to be available until after the expiration of three months from that date. Take the present time, for instance. Parliament would rise at the end of August, and would not meet again probably until February. That would mean that six months would elapse before the Registrar could lay the form on the Table of the House, and then three months more should pass before the form would come into operation. Such a delay might lead to the sheltering of transactions in a Building Society, which in the interest of the public ought to be discovered without loss of time. It seemed to him unreasonable to insist that persons like the Secretary of State and the Registrar, who would have no interest in the matter, except the public welfare, should be hampered in the way proposed in the Amendment.

MR. GERALD BALFOUR

thought the Amendment would require careful consideration before it was accepted. Delay in the operation of the form might unduly be prolonged, if the latter part of the Amendment were passed. Again, in the form which the Government proposed to accept the Amendment it would apply only to every form of annual account prescribed for general use. But there were three kinds of form contemplated—a form prescribed for general use; a form prescribed for a class of Society; and a form for some particular Society. If the Amendment were passed in its present shape, the form of account to which it would apply would be the form for general use, and not the form for the use of a particular class of Society. He did not know whether that was the intention of the Government—the matter should be made quite clear. The hon. and learned Member for Middleton seemed to think that the Registrar might use this power in a malicious way against a particular Society. But it was evident that the discretion given to the Registrar to prescribe a particular form of account for a particular Society was intended to enable him, in the case of a Society carrying on a special business, to exempt that Society from the general application of the clause.

MR. J. B. BALFOUR

said, the intention of the Government in accepting the Amendment was very much as indicated by the hon. Gentleman who had just spoken—namely, to make a general rule liable, on cause shown, to be relaxed. If there was any doubt about the clearness of the clause it would be set right in another place.

COLONEL HUGHES

said, the words "prescribed for general use" were quite intelligible, following, as they did, a section which said "either generally or with respect to any Society, or class of Society." As to the nature of the form, it might be such as would make a Building Society disclose information of a private character. While the House took care to protect the public they should do nothing to injure the Societies, and, therefore, he thought it was well to have the form laid on the Table of the House.

MR. BANBURY

thought that, for the reason advanced by his hon. Friend the Member for North Islington, all the words after "House of Parliament" should be omitted from the Amendment.

Amendment proposed to the proposed Amendment, to leave out from the word "Parliament" to the end of the proposed Amendment.—(Mr. Banbury.)

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

MR. JACKSON

said, he agreed that as to the general form of accounts to be applied to all Societies those interested should have previous knowledge so as to enable them, through their Representatives in the House or in some other way, to raise necessary objection. There could not be a doubt that protection of that kind should be afforded. He was in some doubt, however, as to how the words the Government proposed to insert would be interpreted. Suppose there were half a dozen classes of Societies, some containing a large number of Societies and some very few. How would the form of account that would be applicable to the smallest class of Societies be interpreted as coming within the form of account prescribed for general use?

MR. J. B. BALFOUR

said, that the term "general" must be taken in these matters as opposed to "particular."

MR. JACKSON

said, the right hon. Gentleman would admit that there was a little difficulty in the words selected. His (Mr. Jackson's) desire was to take care that they did not put into the clause words which might be interpreted hereafter in a sense which was not intended. He did not know whether the right hon. Gentleman the Member for the University of London attached great importance to the period of three months, but that certainly appeared a long time. One month, or even 40 days, would be sufficient.

MR. BARTLEY

objected to the period of three months, for the reason that such a delay at certain seasons would frustrate the object in view.

MR. HOWELL

said, the ordinary course in matters of this' kind was to have the form of accounts on the Table of the House for 40 days.

MR. GERALD BALFOUR

said, that if the words in question were omitted the form of accounts would come into operation at once instead of at the expiration of three months. It would be inconvenient to wait three months, and then, if Parliament objected, allow the matter to go back. It was idle to enact that a certain form should come into operation, and then allow Parliament a kind of posterior power of review.

COLONEL HUGHES

said, the object of having the matter before Parliament would be that corrections might be made in the form if necessary. For this purpose 40 days would be sufficient, but to say it should be laid on the Table of the House after it had come into operation seemed to him to be useless.

SIR J. LUBBOCK

said, he would be willing to accept the period of 40 days.

Amendment to the proposed Amendment, by leave, withdrawn.

Amendment amended, by leaving out the words "three months," and Inserting the words "forty days."

Words, as amended, inserted.

MR. H. GLADSTONE

said, he would move to omit Sub-section (b), on the ground that if it were retained it might act as an incentive to Building Societies to keep their properties in arrear, and not take possession of them, so as not to give full particulars.

Amendment proposed, in page 2, line 24, to leave out Sub-section (b).—(Mr. H. Gladstone.)

Question proposed, "That Sub-section (b) stand part of the Bill."

Question put, and negatived.

MR. BYLES

said, he desired to move to omit Sub-section (c), which required that every annual account and statement should set forth, in the case of every mortgage to the Society where the present debt exceeded £5,000, certain particulars shown in the first part of the First Schedule. He had been com- municated with by a great many Building Societies of very high character, and he found that the very best experts in Building Society work—men who were most trusted and relied upon for advice—were unanimously opposed to the proposals contained in this and the next sub-section of the clause. The development of the town of Bradford, where the working classes were as well housed as in any town in the Kingdom, was in the main due to the operation of the large Building Societies. The whole community had profited by them. They had invested their money in them, and had built their houses by means of them. Now it was proposed that those Societies who were doing a beneficial and legitimate trade should make such returns as would undoubtedly deprive them of a very large and profitable portion of their business. He objected to legislation which, in endeavouring to catch those who were dishonest and fraudulent in the discharge of their duty injured, and to a great extent destroyed, not only the Societies in Bradford, but a large number of other Societies in the West Riding which were doing a similar class of business, and he was assured on authority which he could not doubt that that would be the effect of the sub-section. He quoted from a letter written to him by Mr. Binns, who had given evidence before the Committee, to the effect that the clause would practically extinguish the present large business carried on by his Society. "What," said the writer— was a Society with an annual income of £600,000 a year to do? No borrower would apply, if his circumstances were liable to be discussed by Tom, Dick, and Harry, at an annual meeting. There were other Institutions carrying on precisely the same business who were not interfered with, and the inevitable effect of the clause would be that persons who wanted to borrow large sums of money on mortgage for a perfectly legitimate purpose would no longer go to Building Societies whose directors were members of the highest probity, and were by their character the best possible guarantee for the solvency of the Society, because their transactions would be exposed to the world; but they would go to other Institutions which escaped these restrictive conditions. Thus a useful and highly legitimate business would be destroyed. He, therefore, moved the omission of the sub-section.

Amendment proposed, in page 2, line 31, to leave out paragraph (c), of Subsection 1, of Clause 2.—(Mr. Byles.)

Question proposed, "That the words 'in the case of every mortgage to the Society,' stand part of the Bill."

COLONEL HUGHES

said, that the sub-section which it was proposed to omit was very necessary, because it had been proved by experience that Building Societies had often gone wrong by lending large sums to contractors, and when a Society lent on mortgage a sum of £5,000 and upwards it was necessary, for the protection of the shareholders, that the fact should be published. The objection raised to the sub-section was that it would compel the disclosure of business transactions; but there was nothing in the Schedule which would lead to identification of the property. If Building Societies, which were really formed for the purpose of providing their shareholders with the means of acquiring property for themselves, and in most cases for their own occupation, were to be diverted into agencies for enormous loan transactions for the building of large blocks of buildings on estates, forming doubtful security, it was necessary that the shareholders, who were of the poorest classes, should be made acquainted with the nature of the investments; and therefore where £5,000 was lent on one mortgage, it was right that the facts should be published by the Building Society.

MR. HOPWOOD

supported the Amendment. If Building Societies were to be left the power to lend £5,000 on a mortgage, why impose conditions which would prevent the exercise of the power? Why treat their managers as honest, and at the same time take security against dishonesty? He had been told a few minutes ago that a number of public Companies had to give accounts. He was aware of that; but no public Companies were required to render such accounts; and banks, which often went wrong, were never subjected to such degrading conditions. The proposal went beyond the due bounds of legislative interference, and he, therefore, heartily supported the Amendment.

MR. H. GLADSTONE (Leeds, W.)

said, that the hon. Member for Shipley Division had spoken as if the sole object of the framers of this Bill had been to strangle all the Building Societies throughout the country, and seemed to consider that the sub-section they were considering was intended to dictate to the Directors what sort of business they might in the future alone engage in, and how they were to do it. That was not so at all. The main object of the Bill was to give protection to members of Building Societies, and he considered that the members of Building Societies had a right to know in detail the nature of the transactions that the Directors entered upon. He could not help wondering whether the hon. Member had really seriously considered the painful lesson taught by the failure of many of these Societies that had taken place lately in all parts of the country. Many large Societies had failed, of which they had heard. But numbers of smaller Societies of which they had not heard had failed, bringing loss or ruin to the poorer classes. How could members be expected to know the state of the law, and after the experience gained by considering the Liberator failure, did his hon. Friend think they could really get at the true character of the people they were dealing with? His hon. Friend said also that this sub-section would have the effect of stopping Building Societies from advancing large sums of money. That was not the purpose for which Building Societies were founded, and recent experiences showed pretty conclusively that that kind of business was not desirable. The hon. Member had quoted from a letter of Mr. Binns in support of his argument. He himself had examined Mr. Binns when he gave evidence before the Select Committee, and he had put this very point to him. Mr. Binns then said distinctly that he had no objection to offer, so far, at any rate, as his own Society was concerned. He felt, therefore, that he was entitled to stand by the evidence which Mr. Binns had given before the Select Committee rather than by the opinion he had expressed in his letter which his hon. Friend had quoted from.

MR. GERALD BALFOUR (Leeds, Central)

said, that the hon. Member for Shipley Division seemed satisfied with existing legislation, but he was of opinion himself that it had, at any rate, not been sufficient to protect the members of Building Societies against the evil doings of the officials. He maintained that there was a very great difference between banks and Building Societies. The Birkbeck was the solitary exception that he knew of where the two classes of business had been successfully carried on together. He pointed out that Building Societies were not founded with a view to carrying on business of the same nature as that of banks, and on that account they had been granted special privileges. It was exactly this very carrying on of business other than the strict business of Building Societies by them that they desired to see checked. If Building Societies wished to carry on the business of banks, then they should register themselves as limited Companies.

MR. BILLSON (Devon, Barnstaple)

said, that, although he approved of the clause as a whole, he was not in favour of the sub-section, which he considered would be quite unnecessary if the classification of mortgagees were carried a little higher.

MR. BARTLEY

said, that if there had been such a Return as this in the case of the Liberator Society, where there were mortgages amounting to £2,000,000 or £3,000,000, was it conceivable there would not have been some alarm taken years before? From his experience he could say that there was not much risk in lending a number of small sums in different quarters, but the danger came in where large sums were lent not for Building Society purposes proper, but for building speculations. Against such risks the members of Building Societies ought to be protected.

MR. JACKSON (Leeds, N.)

said, the hon. Member for Shipley, in moving the present Amendment, desired, not to amend, but to kill the Bill. He hoped the House and Building Societies also would understand that that would be the effect of the Amendment. The hon. Member quoted a high authority for the statement that if the sub-section was included in the Bill it would destroy the most profitable business of Building Societies. In reply, he could assert that all the men coming before the Select Committee who had had experience of the winding-up of these Societies, and to whose judgment great weight ought to be attached, were strongly in favour of the clause as proposed in the Bill. In the Select Committee there was not a single Division upon this clause, nor, indeed, in regard to the whole Bill; the Committee were absolutely unanimous in passing the Bill as it stood. He stated boldly and frankly that, in his opinion, the Building Societies Acts were never intended to carry on the class of business affected by the sub-section. If Building Societies desired to lend £20,000, £30,000, or £50,000 on mortgages, that was not the kind of business for which they were established. He could not refrain from saying—the hon. Member forced it from him—that it was a remarkable fact that the high authority quoted represented a Society that made no return of its properties in possession. The gentleman had been one of the strongest opponents of this Bill. He made rather an extraordinary statement to the members of the Building Societies Association. He took the position that the safest mortgages were the largest mortgages. Mr. Binns, however, spoke with two voices, because, when he came before the Select Committee, he stated, in answer to a question put by himself, that— The more you spread the risks and the smaller the individual amounts the better for everybody concerned. That was not quite consistent with the opinion this high authority expressed in the Association. He thought the House might take it that Mr. Binns before the Committee confirmed the view that really the danger was in the larger mortgages. Reference had been made to the fact that the requirements contained in this clause were not put upon bankers and others. There had, however, been a very pressing demand for investigation as to the investments of large Trust Companies. That demand had been resisted by the Directors of such Companies for a long time, but had at last been conceded. In his opinion, if such a power as was given by the subsection had been put into the hands of the members of Trust Companies an enormous proportion of the disasters that had resulted from the operations of such companies would, in all probability, have been avoided. He did not think it was desirable to subject business to too many legislative restrictions, but the business with which this Bill dealt was of a particular kind. The sub-section was intended to protect small people against, it might be, the officers of Societies. All that was asked for was that the members of business Societies should be placed in such a position that they would be able to ascertain more accurately and in greater detail how such Societies stood. He thought they were entitled to the information referred to, and that it was information which would be of the greatest value to the Societies, whilst at the same time it would not do a particle of injury to a sound and solvent Society. Although this Bill had not become law, a large proportion of the Societies which had held their annual meetings since the return of properties in possession was moved for in the House of Commons had taken up the question and given the information to their Members. He was certain that if the information were not required by Parliament it would be demanded by the members themselves in the future. Therefore there could be no harm in inserting this provision in the Bill.

MR. BYLES

Therefore there can be no good.

MR. JACKSON

I think the hon. Member hardly sees the tendency of his argument. Why do not the members get the information now?

MR. BYLES

They do in our Society.

MR. JACKSON

If so, I do not quite see why the giving of it in future can do any harm, and why Members should not have a statutory right to demand it.

MR. BYLES

It is given in the aggregate, and not in such a manner that every individual mortgage can be traced to the detriment of business.

MR. JACKSON

said, the fact was that it was given in a form that the Members could not understand. The Bill did not provide that there should be given name or locality or description of property, and therefore nobody without special knowledge would be able to identify any one of the properties given. In his opinion, without the Schedules the Bill would not be worth the paper it was printed on. They were the vital part of the measure, and the hon. Member knew it perfectly well. What was the hon. Member's reason for opposing the sub-section he (Mr. Jackson) could not say. The hon. Member's object was not to amend the Bill but to destroy it, and he hoped the House would not assent to his Amendment.

Question put, and agreed to.

MR. BYLES

moved the omission of Sub-section (d), explaining that he did so, so as to have the opportunity of replying to some of the observations of the right hon. Gentleman opposite (Mr. Jackson). As to Mr. Binns, he (Mr. Byles) could see nothing in the evidence given by that gentleman that was inconsistent with what he had stated. It was perfectly clear that Mr. Binns was suspicious of any information being asked for which would enable individual mortgages to be traced. When he (Mr. Byles) said that there was unanimity he meant that amongst the many correspondents from whom he had had letters, and who represented good Societies, there was practical unanimity. Mr. Binns had been perfectly consistent all through, and there was nothing in the evidence he gave before the Committee to show that he did not object to returns which would result in revelations being made. The right hon. Gentleman said he believed that no particle of injury would be done by this provision, and that it would be impossible to trace particular properties. All he (Mr. Byles) could say was that the authorities who had been in correspondence with him thought that injury would be done, and that the properties could be traced. He was told that in the West Riding of Yorkshire (which was a Register county) everyone who liked would be able to ascertain the name of the mortgage, the estimated value of the property, and the state of the Building Society's account in regard to it. The right hon. Gentleman and the hon. Member behind him (Mr. G. Balfour), as well as the right hon. Gentleman (Mr. H. Gladstone) in charge of the Bill, were Members for the Borough of Leeds. There was a great Society at Leeds, and some Building Society experts thought they could see the hand of that Society running all through this Bill. It was a little unfortunate that three influential Members representing one borough should have been on the Committee, and should be promoting this Bill when they were told by Members from other parts of the country that the measure was extremely objectionable to other Societies. Subsection (d) proposed that additional particulars should be given of properties in possession. He believed that to give such particulars in the manner proposed in the Schedule would be detrimental and misleading. One of the particulars asked for was the original valuation of the property. Of what good, he asked, would such information be? He could give instances of properties which had been added to since they came into the possession of the Society, and which were now worth a great deal more in consequence. He could give instances of other properties where fires had occurred, and where, perhaps, half the properties had been destroyed. What was really wanted, if anything was wanted, was the present value of the property. The only effect of asking for particulars of properties in possession was to oblige the Societies at once to realise such properties. [Cries of "No!"] That would be the natural effect, because the Societies would wish to get their borrowing limit restored. They would, therefore, be almost forced to realise properties at a time when they could not be favourably realised, and the Societies would consequently suffer very considerable loss. It seemed to him that gentlemen who were taking part in the Debate in favour of the Bill were thinking of a totally different class of Building Societies from that which he had in his mind. There were no doubt many insolvent Building Societies, and it might be desirable to subject such Societies to the legislative restrictions proposed by the Bill, but there was also a class of Societies of great importance, magnitude, and value which were absolutely trusted by their members; which were doing legitimate and beneficial business, and which would be seriously injured by the proposals of this Bill. This legislation, which was aimed at dishonest Societies, would inevitably injure honest Societies. In casting the net to catch the guilty the promoters of the Bill were catching the righteous too. He could not help suggesting in regard to the bad Societies which the Bill was aimed at that there was no certainty that true returns would be obtained from them. The Directors of such Societies as the Liberator were surely very skilful in fraud and in the process of driving a coach-and-six through Acts of Parliament. When this Bill was passed it would be found that it would be laughed at by such men. Those who were fraudulent would be fraudulent still, and the returns they would send in would be untrustworthy. He firmly believed that this kind of legislation ought to be more carefully thought out. It was legislation in a panic. It was legislation that had been suggested by the Liberator frauds.

An hon. MEMBER: They were two years ago.

MR. BYLES

said, the Bill would never have been thought of but for those frauds. He had, of course, no desire to defend fraudulent Companies. He should be very glad if the promoters of the Bill got all the rascals into their net, and he should not care much what was done with them, as he thought there was nothing worse than defrauding honest working men. He had no arrière pensée in proposing the Amendment. It was the honest, straightforward, well and democratically managed Societies that he had in mind, and he asked the House to be careful how it imposed upon them restrictions which would destroy their legitimate business.

Amendment proposed, in page 2, line 35, to leave out paragraph (d), of Sub-section 1, of Clause 2.—(Mr. Byles.)

Question proposed, "That the words 'in the case of every property of which the Society' stand part of the Bill."

SIR J. LUBBOCK

said, that no one would suspect the hon. Member of any arriére pensée in this matter, or that his wish was other than to promote the good of Building Societies. He was a little surprised to hear it said that the object of his hon. Friend and those with whom he acted was to destroy the Bill. Having been in frequent communication with the hon. Member on the subject, he (Sir J. Lubbock) felt bound to say that the hon. Member's desire was to make the Bill a good Bill. It was not the fact that all the authorities were in favour of this sub-section; and if the Committee on the Bill did not divide on these points it was only because the minority knew that they would be outvoted, and, therefore did not put the Committee to the trouble of taking Divisions. It must not be supposed that the Committee were in favour of all these suggestions. He very much feared that the clause would have the effect which the hon. Member for the Shipley Division had indicated; but he recognised that high authorities believed its advantages to outweigh its disadvantages. He would suggest, however, that the hon. Gentleman in charge of the Bill might meet the hon. Member for Shipley by modifying the Schedule. It might in two particulars be altered to meet in some degree the objections which had been urged. The publication of the roll number of the property secured no particular advantage, while it made identification easier; and, in the second place, there was nothing to be gained by requiring a statement of the amount of debt when possession was taken.

MR. HOWELL

said, that one of the advantages of the Schedule was that the amount of the debt was stated.

SIR J. LUBBOCK

said, it was desirable that that statement should be made, but it would be given in column 9. He had spoken in regard to column 8.

MR. HOWELL

said, that the Leeds Society set an example to other Societies all over the country; and it would be highly advantageous to have their Rules universal. Under their Rules one could see in a moment from the accounts the amount of the debt remaining to be paid and the amount of the redemption wanted on the property.

MR. BARTLEY

said, that sometimes too much was made of the bogey of identification. No doubt it was not desirable that every property should be advertised, and that everything about it should be known, but the importance of identification was over estimated. If property was in arrear over £5,000, he did not think any great harm would happen if somebody knew about it. He laid great stress on column 8 of the particulars. It was very important that people should see the amount of debt when possession was taken, for that, together with the statement of the present amount included in assets, showed whether the property was getting worse or better. No doubt there were cases in which the property taken over was quite good, but they were special cases. As a general rule, it was the worst property which came into possession. It did not follow that because property was valuable over and above the advance it would not come into possession, or that the owner would not like to sell it. But as a rule these were properties which were of the least value, and the value of which was getting less and less. These two columns would show everybody the class of property and whether it was improving or not. Considering the great importance to depositors and those interested in the Societies of knowing whether the Societies were developing or deteriorating these two columns should remain.

MR. H. GLADSTONE

said, he was afraid the suggestions of the right hon. Member for London University as to the Schedule could not be accepted. He had an Amendment on the Paper requiring a statement to be made of the present debt on properties in arrear, and to require a statement of the amount of debt on taking possession was only one step further. The hon. Member for Shipley thought that there was a sinister influence from Leeds at work to frame the Bill so as to injure all Societies out of Leeds. But no less than four Bills were brought forward last year, and two of them did not emanate from Leeds. So far as the Government Bill was concerned it was drawn on the lines suggested by the Registrar from his own large experience. With regard to the particular Amendment under discussion he might say that he could not accept it, but he proposed to accept that which stood upon the Paper in the name of the hon. Member for the Spen Valley Division of Yorkshire, which would have the effect of providing that properties in possession should not be scheduled until after they had been 12 months in possession. He thought that that would meet the practical objection to the clause which had been pointed out by the Building Societies' authorities. In the case of well-managed Building Societies, when properties came into possession a considerable amount of money, sometimes equalling, or exceeding the rental, was expended upon them in order to make the best of the properties with a view to disposing of them to the best advantage. As he had said, during the first year it often happened that the outgoings on the property actually exceeded the income. That might have a very deleterious effect on the selling value of the properties, and so the Government had concluded to accept the Amendment of his hon. Friend which, he thought, really met any serious objection to the clause. He had only one more remark to make on this question. The opinions of various authorities had been referred to, and the hon. Member for Shipley had said, in connection with the Liberator Society, that a skilled auditor would be able to drive a coach and six through an Act of Parliament. The skilled evidence taken on the subject did not support this view. Mr. Stewart, the liquidator of the Liberator group of Societies, was asked whether it would have been possible for creditors, if this clause had been passed into law at the time, to remain in ignorance of the position of the Society, and he replied that if the auditor had done his duty and acted up to his certificate it would have been impossible. The Government proposed to alter the certificate of the auditor, and he believed that under the provisions of this Bill what happened in the case of the Liberator would be practically impossible. The opinion of Mr. Stewart was upheld by other experienced gentlemen, amongst them being Mr. Peek, who was the official liquidator in the Portsea Island Building Society's case. Under the circumstances the Government must ask the House to reject the Amendment of his hon. Friend.

Question put, and agreed to.

On the Motion of Mr. WHITTAKER, the following Amendment was agreed to:—Page 2, line 35, leave out "is," and insert "has been 12 months."

Amendment proposed, in page 2, line 37, after Sub-section (d) to insert the words— In the case of every mortgage to the Society where the repayments are upwards of 12 months in arrear at the date of the account or statement, the particulars shown by the tabular form in Part III. of the First Schedule of this Act."—(Mr. H. Gladstone.)

Question proposed, "That those words be there inserted."

Amendment amended, by inserting, after the word "society," in line 1, the words "not included in Part I. or Part II. of the First Schedule of this Act."—(Mr. Whittaker.)

Amendment proposed to the proposed Amendment, in line 1, to leave out the words "repayments are," and insert the words "interest is."—(Sir J. Lubbock.)

Question proposed, "That the words 'repayments are' stand part of the proposed Amendment."

MR. J. B. BALFOUR

said, the Government could not accept the Amendment of the right hon. Baronet, but they would meet the point by adding, after the word "repayments," the words "or interest where no capital is overdue."

Amendment to the proposed Amendment, by leave, withdrawn.

Amendment further amended, by inserting, after the word "repayments," in line 1, the words "or interest where a part of the capital is overdue," and by leaving out, in line 2, the words "date of the account or statement," and inserting the words "end of the official year."

Words, as amended, inserted.

COLONEL HUGHES

moved, in page 3, line 3, after the word "him," to insert the words— and it shall be the duty of every auditor to verify and sign a book containing a record of all the deeds relating to each of such mortgages. He said, in well regulated Societies a deed book was kept, which contained not only the statement that there was a bundle of deeds but as to every deed in the bundle, and the auditors should be responsible for examining each of these bundles thoroughly. He had known many Societies where wrong-doing had taken place, and one frequent source of dishonesty had been the abstraction of deeds either by or through the negligence of officials. Unless the deeds were signed for on the occasion of the audit they could never prove whether the auditor saw them or not. This book containing a record of deeds would be an additional security, and he therefore begged to move the Amendment.

Amendment proposed, in page 3, line 3, after the word "him," to insert the words— And it shall be the duty of every auditor to verify and sign a book containing a record of all the deeds relating to each of such mortgages."—(Colonel Hughes.)

Question proposed, "That those words be there inserted."

MR. CROSFIELD (Lincoln)

ventured to hope that this Amendment would not be accepted. It appeared to him that the very cumbersome duty the hon. Member sought to impose upon an auditor would defeat the very object of the audit. Those hon. Members who were at all acquainted with property would know that a very small area of ground might involve a very large number of deeds. These deeds, in practice, were made up into a bundle, and they remained in possession of the Society for many years in succession. The auditor would be required to verify the schedule and list of these deeds for each annual account. He would never do that, but in practice he went over them. The first time they appeared in the Society's book he would make them into a bundle, and if he knew his business he would put his own seal on that bundle. The next time he verified these deeds he did not do it by breaking his own seal, but he satisfied himself that the seal had not been broken and again certified that he had seen the bundle of deeds. Surely to ask a man to see every document in the bundle of deeds would be an impossibility.

MR. HOWELL

hoped the House would accept the Amendment. Some time ago he was solicited to become a trustee of a Society. He consented, after a good deal of negotiations and upon certain conditions, the first of which was that he should see for himself the deeds representing the property of the Society. He was told that there was no necessity for this, that the deeds had been examined and were all right, and so on. He was told that he might feel quite assured that everything was perfectly safe. This did not satisfy him, and if he was to become a trustee he insisted on the fulfilment of the condition that he should see the deeds. He had no further communication from the Society for a period of three months, when some of the Directors wanted to know why it was that he did not take his position as trustee. The object in the particular instance to which he referred was to obtain his consent to act as trustee of the Society without the possibility of seeing the deeds representing the property for which he was to become trustee. The bare fact that an Institution—and an Institution in London—should imagine for a single moment that a man would accept the position of trustee without an opportunity of verifying the deeds for himself showed the absolute necessity of putting provision in an Act of Parliament. He hoped that for the protection of members, officers, and trustees of Societies, as well as auditors, the Government would accept this Amendment.

MR. GERALD BALFOUR

said, he could quite understand that when the hon. Member became trustee of a Society he might have been careful to go through every deed seriatim. But supposing it was part of the duties of a trustee to go through every deed every year, the hon. Member and many others would hesitate before they accepted the officer of trustee. He very much doubted whether the words of his hon. Friend's Amendment really carried the meaning which he gathered from the hon. Gentleman's speech he intended they should carry. He doubted whether the words It shall be the duty of the auditor to verify and s'gn a book containing a record of all the deeds relating to each of such mortgages, carried with them any further meaning than that the auditor should satisfy himself that the deeds were there. If the auditor had adopted the very common plan suggested by the hon. Member for Lincoln—namely, of once for all looking through the packet of deeds and sealing it with his own seal, it would be quite unnecessary for him each year to go through all the deeds. He understood his hon. Friend would be satisfied with an Amendment to the effect that the auditor should satisfy himself that all the deeds were there, which he could easily do without going though them seriatim each year.

MR. H. GLADSTONE

said, the Government could not accept this Amendment because, although they were all agreed as to its object, he did not believe that the Amendment of the hon. and gallant Gentleman went much beyond the Bill as it now stood. The Bill provided that the auditor should certify that he had actually inspected the mortgage deeds and other securities belonging to the Society. If a document was missing and he certified the number as correct he gave a false certificate. It appeared to him that the sub-section as it stood was quite sufficient if they had an honest auditor. Of course, if they had a dis- honest one the Amendment of the hon. and gallant Gentleman was no protection at all. That was how the matter struck the Government, and therefore they could not accept the Amendment.

COLONEL HUGHES

asked leave to withdraw the Amendment.

Amendment, by leave, withdrawn.

MR. CREMER

desired to move an Amendment by way of addition to that of the hon. and gallant Gentleman the Member for Woolwich.

An hon. MEMBER: It is withdrawn.

MR. CREMER

said, he should then address a question to Mr. Speaker as to what course he ought to pursue, and if he should be able to move the words as a separate Amendment. The words he desired to add were these— And if such mortgages have been effected on houses, the auditor shall state whether such houses are occupied, and if unoccupied how long they have been so. The object of such an Amendment would be manifest to anyone who had any practical acquaintance with Building Societies.

MR. SPEAKER

As the Amendment of the hon. and gallant Gentleman has been withdrawn, the hon. Gentleman cannot add the addition to it which he has indicated, but he can bring up the words as a separate Amendment imposing that duty on the auditor.

MR. CREMER

intimated that he would take the opportunity of doing this at a later stage, when he should be able to adduce what he thought would be deemed to be sufficient reasons for giving this information to the shareholders. He would ask the right hon. Gentleman to consider whether he could not see his way to requiring that this information should be duly set forth.

MR. J. B. BALFOUR

said, he was afraid the hon. Member (Mr. Cremer) was proposing something which was entirely beyond the scope of the auditors' duties. The business of the auditor was to look through the books and documents placed before him and to verify what he saw, but it was a matter of outside information altogether whether the houses or properties were occupied or not. If that information was required, it would require to be demanded in another form.

MR. CREMER

said, he would move it in the form of a new column to the Schedule.

COLONEL HUGHES

said, the next Amendment he desired to move raised the very important question as to the proportion of members who might ask for an inquiry. An inquiry must naturally put a Society not only on its defence, but almost lead to a cessation of business, because people were naturally timid, and, although he thought it a most desirable thing that there should be an inquiry, it was a most serious matter for a going concern, and should not be done on the motion of a few discontented people, who might have had some dispute with the Society which they ought to have referred to arbitrators. As the Bill now stood, any 10 members could combine and harass and even ruin a Society on the suspicion of something being wrong. It was true the Registrar had got to grant it, but the application was a thing which would be known, and this in itself might do a great deal of harm. It seemed to him a pity not to make it some sort of proportion of the total number of members—say, one-tenth of the whole number. By the present proposal he thought they were giving 10 people a power for mischief which they ought not to have, and for the security of the bulk of the shareholders it ought at least to be a tenth of the whole number. Then the question was, whether it should be the whole number of members or only those who were investors? He did not think a borrower had much right to an investigation unless he participated in profits. There were Societies of different kinds. In a Society to which he belonged the whole of the profits and losses belonged to the investing shareholders. The borrowers were exempt by the Rules from any liability for loss. In that case he did not think the borrowers ought to have the right to investigate the affairs of a Society of their own motion, or to join with others in investigating the affairs of the Society. He did not attach so very much importance to this point, but he did lay great stress upon the proportion of one-tenth of the whole number.

Amendment proposed, in page 3, line 19, to leave out the word "ten," and insert the words "one-tenth of the whole number of the."—(Colonel Hughes.)

Question proposed, "That the word 'ten' stand part of the Bill."

MR. BARTLEY

said, he did not think they could possibly agree to such a proposal as this, because in the larger Societies it would render it quite impossible to have an inquiry at all. The subsequent sub-clauses were so carefully drawn that he thought it prevented any possibility of such a case happening as the hon. Gentleman (Colonel Hughes) had referred to. First of all, the Registrar was to be the judge, and then all expenses incidental to the inquiry were to fall upon these persons if it was a fictitious case. He thought persons would be very careful in bringing up a case of this sort where they were liable to pay the costs unless there was some foundation for it. The Committee thought over this a great deal, and they saw the difficulty of fixing any number without making it unreasonable for some Societies. In giving the Registrar the discretion he thought the Bill as it stood really covered all difficulties, and to make the proportion one-tenth would render the clause practically useless.

MR. FIELD

said, he thought there ought to be some ratio of the total number of members. He knew perfectly well that discontented persons who had to do with Building Societies could do a great deal of harm unless this section was drawn in the way suggested. This would give greater security to those who had perhaps sunk all their money in one of these Societies.

MR. GERALD BALFOUR

said, he thought the hon. Member who had just spoken had failed to observe that the protection he desired was provided by the clause as it stood. He believed that if an application were made and actually refused by the Registrar the probable effect would be not to weaken but to strengthen a Society.

MR. BANBURY

said, he thought if some words were put in limiting the 10 to those who were shareholders, and who shared in the profit and loss, it would meet the case. He did not think that the borrowers who did not share in the profit and loss should have the power in their hands. Anyone who had had experience of shareholders knew the tremendous difficulty it was to get a body of shareholders to move, and if they made it too large a number it would be absolutely impossible in many cases to have an inquiry at all. As it was entirely with the discretion of the Registrar, and as a certain sum had to deposited and the expenses defrayed by those making the application, he could not think any harm could possibly result.

MR. CARSON (Dublin University)

said, he asked at an earlier stage of the evening as to the position of the Registrar in Ireland, and the right hon. Member in charge of the Bill gave him an answer privately that he was practically subordinate to the Registrar here. Since then his attention had been directed to the words "Chief Registrar" in the 21st section, and he would like to ask what was the difference between "the Registrar" and "the Chief Registrar"?

MR. H. GLADSTONE

said, the Registrar practically included the two gentlemen in London who were at the head of the Office. Their jurisdiction was superior to the jurisdiction of the Registrar in Ireland or in Scotland. He could not accept the Amendment for the reasons which had been stated by previous speakers, and with which he quite agreed. He thought the provision was adequately safeguarded, and that the Registrar would not grant the inquiry unless satisfied that there was, at any rate, a primâ facie case made out. He thought it might be assumed that he would take care to ascertain what the position of the Society was, and that he would not give his permission for an inquiry unless he felt there was a good case made out.

MR. JACKSON

said, he would take the case of one of the Leeds Societies, in which there were 11,250 members. One-tenth of the total number would require 1,120 members of that Society to make an application to the Registrar, and when he said he believed that at the annual meetings, although great efforts were made from time to time to get members to attend, it was with the greatest possible difficulty they could get 500 members present, he thought it would be seen that the Amendment was quite impracticable.

Question put, and agreed to.

COLONEL HUGHES

said, he did not think it was sufficient that the application should be made by dissentient share- holders, and that the Registrar should decide on that ex parte application whether there was to be an investigation or not. He thought that, before he could judge as to whether it was necessary to act under Section 4, he ought to give the Society notice of the application and ask for evidence in support of the application. He did not say what evidence he should have, but something that was to his satisfaction.

Amendment proposed, in page 3, line 24, after the word "follows," to insert the words— (a) The application shall be supported by such evidence as the Registrar may direct, for the purpose of showing that the applicants have good reason for requiring the inspection to be made; and (b) Such notice of the application shall be given to the Society as the Registrar may direct; and." — (Colonel Hughes.)

Question proposed, "That those words be there inserted."

MR. J. B. BALFOUR

said, he did not think the Amendment was necessary, and he thought in some degree it might be injurious. The words were "if he thinks fit," and of course, anyone exercising his discretion would require to see such a primâ facie case as was satisfactory to himself. That might, or might not, require evidence to be gone into. A frivolous application he would refuse at once, and the Registrar would certainly take such methods as he thought were necessary to enable him to judge whether he should grant or refuse an application. The Amendment would, accordingly, fetter him. It might compel him to ask for evidence, where there was not a primâ, facie case, to go any further. Then as to notice to a Society. That, surely, was a thing which hardly came in here, because it was a duty to be performed by the Registrar, and if the Registrar knew his duty he need not say anything to the Society until an application was made.

MR. JACKSON

said, this really arose in the Committee on the proposal, which was largely supported, that there should be the power to an individual member of a Society to inspect the books of the Society. Opinions varied, but the Committee came to the conclusion that there were a great many objections to allowing an individual member of the Society to go worrying the officers from time to time, and, in all probability, if he did he would get no advantage, because everybody knew that if a man who had no knowledge of accounts were simply turned loose into the office to inspect the books, he might inspect the whole of them and be no wiser afterwards than he was before. But it was felt there might be cases where the officers were refusing to give information, and that in principle it was right that members should have the power to inspect the books. Therefore, the Committee adopted this form as being, in the interests of members in such a case, the most effective manner of their obtaining the information they wanted. His hon. and gallant Friend would see that the other important question he had raised was provided for in the next clause, and that in that case notice was given to the Society. Obviously, in this case where information might be desired they ought to have the means of obtaining it; but at the same time there ought to be the protection to the Society and to the officers that they should not be harassed and worried by cantankerous persons who might obtain no benefit from the result of their inspection. It was suggested the number should be three members, but that was thought too few, and so the number of 10 was adopted in order to give some protection to the Society.

SIR E. CLARKE (Plymouth)

said, he could quite understand the reasons for which this was adopted, and the reasons which suggested to the Committee that it would be an extremely bad thing for Building Societies that they should be liable to be harassed by the inspection of single members. But it really did not seem to him that any answer had been given to the suggestion that this Amendment was a useful one. What had been said was that if the Registrar was doing his duty he would require a primâ facie case to support the application. He protested against the phrase "primâ, facie case." It meant anything or nothing, as the case might be, and he thought there ought to be some satisfactory reason for granting this inquiry. It was appointing an accountant or an actuary, at the expense of the Society, to go all over the books of the Society to examine them, and if it was conceded that the Registrar ought to have some evidence before him before he granted the application he thought it ought to be specified in the clause. As the clause now stood the Registrar might for any reason, or for no reason, quite frivolously grant this expensive inquiry, and there were no means of checking it at all. It was admitted he ought to have some reason for granting the inquiry, and why was it not allowable to put in some evidence before him in order that it might be decided otherwise? It appeared to him a matter of such importance that it ought to be put on the face of the clause, and he thought the Amendment was worth while accepting.

MR. GERALD BALFOUR

said, he thought it was clear the Registrar would be grossly neglecting his duty if he were not to act in the sense of the Amendment, so long as he proposed to grant that application; but if it appeared to him, on the very face of it, that the application was a frivolous one, why should he be compelled by Statute to give notice to the Society? It would be far better when this evidence, which he considered perfectly frivolous, was laid before him, he should be able immediately to tell the applicants, "No, you have made out no case, and I decline to proceed any further in this matter."

MR. CARSON

said, it appeared to him the argument just adduced to the House was the very strongest argument in favour of the Amendment, but the hon. Member said that before he granted an inquiry the Registrar ought to insist on having the particular matter before him that they said the Amendment provided for. Surely if the Registrar ought to do it, there was no harm in having the Amendment there, and seeing that he did do it. It occurred to him that if it was necessary to put this limitation upon the power of the Registrar in Section 5, it was equally necessary to put it in the 4th section.

MR. TOMLINSON (Preston)

said, it seemed to have escaped some hon. Members that there was already some security against frivolous applications, inasmuch as it was provided that the applicants should deposit such sum for security as the Registrar might require. That, he believed, would do something to check frivolous applications.

Question put, and negatived.

MR. DANE (Fermanagh, N.)

said, the Amendment which he desired to move was for the purpose of constituting an appeal from Sections 4 and 5. By those sections the Registrar was given very large and very unlimited, and, in some degree, judicial powers. These unlimited powers, in his opinion, ought to have some controlling effect, and therefore he proposed by his Amendment that the Society might appeal to the Court in the manner prescribed by it. It was all very well to say that the Registrar would not act on merely slight evidence, or that he would not act in a frivolous or vexatious way. But the best way to secure that was to have an appeal to some tribunal which would possess the confidence of the public as well as the confidence of members of the Society, and the Court which he had suggested in his Amendment was to be the Court which was defined in Section 4 of the Act of 1874. Again, there was no definition in the Bill of the word "Registrar," and he found in the 21st section the words "Chief Registrar," which showed that there must be a difference between "Registrar" and "Chief Registrar." He had carefully gone through all the Building Societies' Acts, which were to be considered as one with this Bill, and the only definition of "Registrar" he could find was one in the principal Act of 1874, which described the Registrar as the Registrar for the time being of Friendly Societies in England, Scotland, or Ireland, as the case may be. Therefore, the wide powers given under this Bill would be placed in the hands of gentlemen whom he might call District Registrars throughout the Kingdom. Surely there ought to be some check upon these gentlemen, and therefore an appeal ought to be allowed to the County Court in England, to the Sheriff's Court in Scotland, and the Civil Bill Court in Ireland.

Amendment proposed, in page 4, line 43, after the word "members," to insert the words— A Society may appeal to the Court in manner to be prescribed by it from any decision of the Registrar made under this or the preceding section, and thereupon the Court may make such order rescinding, confirming, and varying such decision and upon such terms as to costs or otherwise as to the Court shall seem proper."—(Mr. Dane.)

Question proposed, "That those words be there inserted."

MR. H. GLADSTONE

said, the Government were unable to accept the Amendment. With regard to the question of the Registrar, there were two officials in London—a Chief Registrar and an Assistant Registrar, and they acted together in England. In Scotland and in Ireland there was a Registrar, and both were subordinate to the Chief Registrar, and therefore the members and officials of a Building Society could appeal to the Chief Registrar against the decisions of the Registrar. It appeared to the Government that the functions of the Registrar under the clause were executive and devolved upon him subject to the authority of the Secretary of State. This clause was practically taken from the 23rd section of the Friendly Societies Act, 1875, and, as far as he knew, no difficulty had been experienced in the working of that section.

MR. CARSON

admitted that there were reasons why the Government could not accept the Amendment, and agreed with the right hon. Gentleman that this matter was to a large extent one of an executive character. So far as he was concerned, speaking on behalf of a very large Building Society in Dublin, he should be content if there was an appeal in all cases to the Chief Registry in London; but he was bound to say that he had looked carefully through the principal Act—the Act of 1874—and he could find in it no provision for an appeal from the Registrar to the Chief Registrar.

MR. H. GLADSTONE

The Friendly Societies Act of 1875 contains it.

MR. FIELD

Why not make it clear by introducing it into this clause?

Question put, and negatived.

COLONEL HUGHES

moved to add at the end of the last sub-section of Clause 5, which enacts that where evidence is furnished by a statutory declaration of not less than three members of facts which in the opinion of the Registrar call for investigation, or for recourse to a meeting of members, the following new proviso:— Provided that the Registrar shall forthwith, on receipt of such declaration, send a copy and notice thereof to the Society, and such Society shall, within 14 days from the sending of such copy declaration, be entitled to give the Registrar an explanatory statement in writing, by way of reply thereto; which statement, if received, shall also be submitted to the said Secretary of State. The Building Society seemed to be ignored altogether in the transaction. Surely, both sides ought to be heard in the matter. When a declaration was made against a Society it was only fair that the Society should be sent a copy of it, and have the opportunity of answering it.

Amendment proposed, in page 4, line 43, after the word "members," to insert the words— (d) Provided that the Registrar shall, forthwith, on receipt of such declaration, send a copy and notice thereof to the Society, and such Society shall, within 14 days from the sending of such copy declaration, be entitled to give the Registrar an explanatory statement in writing, by way of reply thereto, which statement, if received, shall also be submitted to the said Secretary of State."—(Colonel Hughes.)

Question proposed, "That those words be there inserted."

MR. J. B. BALFOUR

said, the Government were willing to accept the Amendment minus the words at the end—"which statement, if received, shall also be submitted to the said Secretary of State."

COLONEL HUGHES

said, he had no objection to the omission of those words.

Amendment amended, by leaving out the words "which statement, if received, shall also be submitted to the said Secretary of State."

Words, as amended, inserted.

Amendment proposed, in page 7, line 12, to leave out the word "present."—(Mr. Dane.)

Question, "That the word 'present' stand part of the Bill," put, and agreed to.

Amendment proposed, in page 7, line 16, to leave out the words "present at the meeting," and insert the words "of the Society."—(Mr. Brookfield.)

Question, "That the words 'present at the meeting,' stand part of the Bill," put, and agreed to.

Amendment proposed, in page 7, line 20, after the word "Society," to insert the words— (3) A notice of any such meeting stating the nature of the proposed scheme, together with a form of proxy, shall be sent by post to every member of the Society at least 14 days before the date of the meeting, and members shall be at liberty to vote at such meeting by proxy."—(Mr. Bousfield.)

Question proposed, "That those words be there inserted."

MR. H. GLADSTONE

said, the Government would accept this Amendment.

Question put, and agreed to.

SIR E. CLARKE

asked, as the words "present at the meeting" were retained by the Government, what was the use of agreeing to the sending of proxies?

MR. BARTLEY

said, the Amendment would introduce trouble and expense. It meant that the Society would have to go to the trouble and expense of sending proxy forms to everybody.

MR. FIELD

said, that everyone having an interest in a Building Society should be consulted as to its affairs.

MR. CREMER

thought that if voting by proxy was introduced, in the majority of cases of Societies in which malpractices had taken place the officials, if they desired unduly to influence the members, would have a splendid opportunity for doing so.

COLONEL HUGHES

said, that words enabling "those present in person or by proxy" would have to be inserted in order to make sense of the clause.

MR. H. GLADSTONE

said, that he would take care that adequate words were inserted.

MR. CARSON

moved, in page 7, line 26, after "Scotland," insert "or Ireland." The Amendment would have the effect of enabling Building Societies in Ireland as well as in Scotland to lend upon the security of second mortgages. He could not understand why the distinction should be drawn in this matter between Scotland and Ireland, as the system of lending on second mortgages was identical in Ireland and Scotland. The difficulty in England with regard to lending on second mortgages was that there was no registration, but in Ireland, owing to the system of registration, it was easy to see what security there was in a second mortgage. One of the largest Building Societies in Dublin, which had lent £1,500,000, had advanced considerable sums upon second mortgages, which had turned out satisfactory in every way, and there had been no difficulty in realising them. If the Bill passed as it stood, it would prevent loans in Ireland being made upon the security of second mortgages, so far as Building Societies were concerned.

COLONEL HUGHES

Not affecting existing securities.

MR. CARSON

said, he saw no distinction drawn in the clause between existing Societies and Societies to be formed hereafter; nor was there any distinction between existing securities and securities to be created hereafter. If it were made illegal to lend on second mortgages, he was inclined to think that those Societies would have to realise their securities on second mortgages in order to bring themselves within the Act, which, in the case of the Dublin Society he had mentioned, would mean that the Society would have to be wound up. He wanted to know why Ireland should be placed in a different position to Scotland, and he appealed to the right hon. Gentleman for some explanation.

Amendment proposed, in page 7, line 26, after the word "Scotland," to insert the words "or Ireland."—(Mr. Carson.)

Question proposed, "That the words 'or Ireland' be there inserted."

MR. H. GLADSTONE

said, it was with some misgiving that the Committee put this clause into the Bill. They considered that second mortgages were dangerous. They had, however, a great deal of evidence from Scotch Building Societies which showed that a large number of them made a practice of lending on second mortgages, and on very strong representations being made the Committee consented to put the clause in the Bill. As far as Ireland was concerned no representation at all had been made, and no evidence was tendered to the Committee by any Irish Society. He was afraid he could not accept the Amendment offhand, but he would undertake to make inquiries into the subject, and if the circumstances in Ireland were found to be identical with the circumstances in Scotland the Government would be prepared to include Ireland in the clause.

MR. FIELD

said, he could assure the right hon. Gentleman from personal experience that there was a great deal of money lent by Irish Building Societies on second mortgages, and he trusted that the Irish Societies would not be placed in a worse position than the Scotch Societies.

MR. T. W. RUSSELL

thought that most Irishmen would be inclined to ask for that which was conceded to Scotland.

MR. T. M. HEALY

was disposed to think that the right hon. Gentleman would do well to accept the Amendment. Unless the Committee had distinct evidence on the point and acted on it, he thought it would be better to omit Ireland from the Bill. It would be rather a hardship on the general body of property-holders if they were debarred from obtaining loans on second mortages.

MR. J. B. BALFOUR

explained that a second mortgage in Scotland was quite a different quality of security from second mortgages in England, and he believed also in Ireland. But if it were found that in Ireland second mortgages constituted the same class of security as in Scotland, the Government would be willing to grant the concession to Ireland.

MR. BARTLEY

said that, as far as England was concerned, he would rather see the Bill go than that English Societies should be allowed to lend on second mortgages.

MR. TOMLINSON

hoped the Amendment would not be pressed. The law of Ireland approached very closely to the law of England, and he could not help thinking that it would seriously depreciate the value of the securities of these Societies in Ireland if they were allowed to lend on second mortgages.

MR. CARSON

said, that on the assurance that the matter would be considered and if necessary the Amendment inserted in another place, he would withdraw the Amendment.

Amendment, by leave, withdrawn.

MR. BYLES

said, he felt bound to move the Amendment standing in his name for the omission of the 13th clause, for the reason that several Societies had expressed to him their objection to the provision very strongly. What did it propose? It provided that in calculating the amount for the time being secured to a Society under the Building Societies Acts by mortgages from its members, for the purpose of ascertaining the limits of its power to receive deposits or loans at interest, the amount secured on properties, the payments in respect of which were upwards of 12 months in arrear at the date of the Society's last preceding annual account and statement, and the amount secured on properties of which the Society was in possession at the date of such account and statement, should be disregarded, provided that the section did not effect the validity of any deposit or loan which was within the limit provided by law at the time when it was received, and should not come into operation until the expiration of 12 months from the passing of the Act. It was absurd to suppose that, because the property upon which money had been advanced was in possession, therefore it ceased to be of value, or that it ceased to be of value so soon as the repayments fell into arrears. He hoped therefore, if the Government did not see their way to omitting the clause from the Bill altogether, at any rate, they would greatly modify its application.

Amendment proposed, in page 7, line 32, to leave out Clause 13.—(Mr. Byles.)

Question proposed, "That the words 'In calculating the amount,' stand part of the Bill."

COLONEL HUGHES

said, this was really the most important matter in the entire Bill. Many Societies had undoubtedly taken loans by way of precaution, and they might have done to the extent of two-thirds of their mortgages. Take a Society with £300,000 mortgages. By loans it might have secured on them £200,000. There might be on property dealt with over some years, involving millions of money advanced, some £60,000 due on lapsed properties. The property on which that money was due could not be worthless. £40,000 of deposits might be borrowed on security of it, and it did seem a strong thing to require from a solvent Society the paying within 12 months of this £40,000 to the depositors, the depositors having given no notice of withdrawal. The transaction had been legalised by the Act of 1874. He should have no objection to the acceptance of the Amendment of the right hon. Gentleman the Member for the University of London, by which the clause would have applied to future Societies. But for existing Societies, which were in the position of having two-thirds of the amount of their mortgages borrowed on deposits, to have their business suddenly restricted in this way would be most unfair. The clause, he felt sure, would work a very great injustice to these established Societies that had just managed to struggle through the crisis of the last two years and were now looking forward to better times. These Societies were to be attacked not by the public nor the depositors, but by the Legislature, who would say to them, "You shall shrink your deposits by this large sum of £40,000, which is lent on mortgages of £60,000." Only 75 per cent. of the value was lent, leaving a further margin of 25 per cent. It was not reasonable to require a person in trade, because he happened to have done a wise thing in having gone into possession because the parties were three months in arrear with payments—it was not a wise thing to require him to reckon his asset at nothing. Such difficulties should not be placed in the way of Societies which had hitherto weathered the storm. If these Societies were called upon to find this money they would have to sell whatever property they could realise, and that within the short space of 12 months from the passing of the Bill. It might compel them to stop their business. Unless some assurance were given them that the clause in its present form should not apply to existing Societies, or some other concessions were made, he hoped that the matter would be pressed to a Division.

MR. HOPWOOD

said, that he also had had an Amendment down to leave out this clause. He thought the Government would make a great mistake if they insisted on retaining it in all its deformity. While smarting under a terrible calamity caused by dishonesty the Committee was being urged in a fit of panic to proceed with severe legislation in regard to Societies which were perfectly unimpeachable, the result being to probably destroy them and to inflict injury on millions of persons. The Government could not foresee the extent of what they were now doing. But he would not enter into the matter more fully, as the hon. and gallant Member opposite (Colonel Hughes) had dealt with the clause thoroughly. He was sure the experience of the hon. and gallant Gentleman would weigh largely with many hon. Members in the House. It was intimate and of long standing. He (Mr. Hopwood) would divide with the hon. and gallant Member.

MR. GERALD BALFOUR

said, he was not prepared to admit that the Liberator catastrophe was the only cause of this Bill being called for, nor that it was legislation in a panic. The Bill had been before Parliament for at least two years, and had been carefully considered in the Committee upstairs and again in the Grand Committee. With regard to this particular Amendment, while he himself would not be personally indisposed to give a certain period of grace before the clause came into operation, he must say he did trust that the Government would stand to the clause. His hon. and gallant Friend had spoken of the hardship it would be to existing well-managed Societies if the clause was passed; but he did not think that well-managed Societies should borrow up to the edge of their borrowing powers. He supported the clause, because it would discourage borrowing up to the limit of two-thirds of the amount at present allowed by law. In his opinion, Societies ought to be most careful to keep a long way from that. It was undesirable that Societies should be tempted to maintain properties in possession instead of selling them. He did not wish to see provisions introduced into the Bill compelling disastrous sales, but he imagined that if a period of grace were given, the terms of the clause and of the Bill were such that they would not bring about rapid and disastrous sales, but would put gentle pressure on the Directors of Societies to realise property in possession.

MR. BILLSON (Devon, Barnstaple)

, said, the Government might adopt the period of five years in the clause.

MR. JACKSON

said, he hoped the Government would not accept that. He thought the clause would do a great deal of good, and that it might be modified in two respects. He would appeal to the Government or rather suggest that they should make an alteration to the effect that the clause should apply not to property in possession but to property which had been 12 months in possession. That would be an alteration rather consequential on what had been already done. As to the period of grace, he might say that as far as he had been able to form an opinion on the subject he thought the greatest importance should be attached to the clause, and to the influence which would be brought to bear on Societies to get rid of properties in possession. He had seen a list of 15 Lancashire Societies which showed that the total mortgage assets were £1,300,000 and the total amount of properties in possession £574,000. He did not think that bore out the statement that Societies did not need stimulating in this matter. He hoped the Committee would adhere to the clause. If the Government would make a concession that the operation of the Bill as regarded this section should be two years instead of one, that would be a fair compromise. That would allow a longer time for getting rid of these properties in possession.

MR. J. B. BALFOUR

said, that in line 39 the word "was" was struck out, and the words "society has been 12 months" were inserted. If "two years" were put in in the second line of the next page that would give three years' grace. They were all agreed as to the desirability of bringing about a reduction in the amount of property in possession.

MR. BYLES

I will take what I can get.

Amendment, by leave, withdrawn.

The following Amendments were agreed to:—

Page 7, line 39, leave out "was," and insert "had been twelve months."

Page 8, line 2, leave out "twelve months," and insert "two years."

MR. DANE

moved to amend Clause 14 by providing that a Society established after the passing of the Act should not use any name or title other than its registered name, and should not accept any deposit except on the terms that not less than one month's notice might be required by the managers before repayment or withdrawal. This would prevent a grievous wrong being done to Irish Societies.

Amendment proposed, in page 8, line 3, after the word "Acts," to insert the words "established after the passing of this Act."—(Mr. Dane.)

Question proposed, "That those words be there inserted."

MR. H. GLADSTONE

said, that this clause originally was prepared by the Building Societies themselves, and appeared in the Bill brought in on their behalf by the right hon. Gentleman the Member for the University of London. The Government could not accept the Amendment, which had been carefully considered by the Committee upstairs.

MR. CARSON

said, he was sorry the hon. Gentleman could not accept a modification of the clause. He himself had put down an Amendment, but exempting Societies established prior to the Building Societies Act, 1874. He had been addressed on this matter by a large Building Society in Dublin—he thought the largest Building Society in Ireland—in whose case banking was a large part of the business done. When they had been engaged in such operations Parliament should not, at a time like the present, take away from them what was one of the most substantial parts of their business. If the House passed the clause unamended they would practically enact that Societies that had long and honourably done banking business would have to be wound up. While they wanted to protect the public against bogus Societies, Societies which had flourished for 25 years should be protected by suitable limitations.

MR. FIELD

said, he understood the object of the Bill was to strengthen the working of solvent Building Societies rather than destroy them. What had fallen from the hon. and learned Member (Mr. Carson) was quite correct.

Question put, and negatived.

It being Midnight, Further Proceeding stood adjourned.

Proceeding to be resumed To-morrow.