§ 7. £60,686, Savings Banks and Friendly Societies Deficiencies.
§ * SIR ALBERT ROLLIT () Islington, S.
This Estimate is a large one, and shows an increase on the year of upwards of £2,000. Its object is to redress the difference between the interest which the State pays to the savings banks and friendly societies and the interest which the State receives from investments in Consols and other Government securities. That is a loss to 1591 the State, and I think the time has come when it might well be considered whether some other forms of investment might not be added, so as to reduce this loss. In 1903, when the interest on Consols will be reduced from 2¾ to 2½ per cent., that question will become a pressing one. I think also that more power should be given to local trustees and managers in the investment of their funds, especially in local securities, such as Municipal and School Board ones charged upon the rates. They have a better knowledge on the spot, and they are able to take up and to realise such local securities more quickly than is the case with securities with which their knowledge is more or loss limited. This Estimate, of course, though large, is not one which is in reality a loss to the State, for whatever may be given to friendly societies is in aid of some of our best institutions. With regard to the savings banks, I think they are a chief means of encouraging thrift in this country. Apart from the moral value of these institutions, I should like to impress on the Committee that they are a very material saving to the State: they increase its productive power by enabling many who would otherwise never become capitalists to begin business, and they encourage some of our best national characteristics. I believe the banking interest have had the idea that savings banks aided by the State were institutions adverse to their interest; but my experience has taught me that in many cases the savings banks are the beginners of capital for large numbers of persons, who go into business, and thus feed the banking interest of the country. This Vote in aid of these institutions is therefore extremely useful. There are some striking figures in connection with the savings banks. There are now 231 of them. They have depositors to the number of one and a half millions, and deposits amounting to upwards of £50,000,000, in addition to which about £1,000,000 of stock has been purchased through the banks for depositors; and that amount would have been yet larger if even now depositors thoroughly understood the machinery through which such purchases through deposits are made. These figures are not only large but increasing, and last year, so far as deposits were concerned, was the highest recorded. There is no less than £1,000,000 sterling marking the margin between liabilities and assets. I have the 1592 honour to be chairman of the Inspection Committee of the Trustee Savings Banks, and our experience, which is consistent, tolls us that these moneys voted by the State are well expended. Touching a point on which there are differences of opinion, I may, speaking in general terms, say that the moneys are utilised in the way Parliament intends. These savings banks come well within the principle for which the banks were founded. In order to test this point I had some figures extracted, and I. find in eight typical banks the average deposit is £38 odd, and by way of seeing whether those deposits. belonged to the classes for which the banks were intended I had information prepared, and I found that, with the exception of at the most about 5 per cent., the deposits were made by those classes which it was proposed to benefit. There are two classes of depositors, the former of whom would lead one to form a contrary opinion, and on this point the National Debt Commissioners have recently made an inquiry. Those are the depositors who make the maximum deposit of £50 in one sum, and the reason of that is largely the effect of the Workmen's Compensation Act. People obtain large amounts, and are advised to put them into a savings bank. Sums are also banked by parents in the names of their children on birthdays and the like, and those accumulate to considerable sums, while the future owners of them are increasing in social position. Re-deposits in one sum of amounts drawn out separately also account for high deposits since, and under the Act of 1891 there has been an appreciable improvement in the condition and management of the banks. The statutory defaults are few and comparatively trivial, and I am bound to say representations made by the Committee have almost invariably been well received. There is a marked improvement, the working expenses have been reduced generally to an economical point, and in many cases the rate of interest has been increased in a corresponding degree, while there is every reason to believe, humanly speaking, that the banks are safe depositories for the savings of the poor. While speaking on these points I might say the Act of 1891 has served its purpose, and if the hon. Gentleman the Financial Secretary could see his way to carry out some administrative—
* THE CHAIRMAN
Order, order! I must remind the hon. Gentleman that the whole question of savings hanks is not open to discussion on a Supplementary Estimate.
§ * SIR ALBERT ROLLIT
I know I may not go into the details of these matters, but I feel that if a Committee could be appointed to inquire into the requirements of administrative reform, or a Bill such as my own passed for the purpose of enlarging the powers of investment, for the amalgamation of banks, for the superannuation of officers, etc., it would be of great service. These matters might be dealt with by some Departmental measure, and I hope the hon. Gentleman and the Chancellor of the Exchequer will give them their consideration.
§ MR. BARTLEY () Islington, N.
said that the Vote raised a question of great importance which would have to be considered by a Committee of the Treasury or someone connected with the Treasury. He hoped the temporary but serious situation in which the Chancellor of the Exchequer was placed would not be made an excuse for putting off the inquiry, but that the whole of the savings banks would be put on a better basis. He was the last to object to a Vote of £60,000 for the purpose of promoting thrift, but the question was—was it wise to depart from the rule? The numerous defaults of the banks and the enormous liabilities which they were undertaking should be the subject of an inquiry, and he hoped the Committee which had been announced by the right hon. Gentleman the Chancellor of the Exchequer would inquire as to what the class of persons was who used the banks.
§ * MR. CALDWELL
said that the principle upon which this question was being treated by hon. Members opposite amounted to nothing less than State socialism. Subsidies were granted out of the Imperial funds in order that investors might have a higher rate of interest than was realised by the Government itself. When the banks were created it was intended that they should be self-supporting, and it was never intended that a subsidy should be given. He was of opinion that the Chancellor of the Exchequer could invest the savings 1594 banks money at a higher rate of interest, in which case the deficit which appeared in the Estimate would disappear. It was expected that investments under the Colonial Loans Act of last session would afford additional opportunities for investing savings banks deposits at an increased interest. It was not wise that the managers of local banks should have power' to borrow money on local securities, leaving any losses to be made up by the Government. The principle was not sound.
§ MR. HANBURY
I cannot follow my hon. friend below the gangway in the statistics which he gave. The thing which we should have judged is the deficiency which is to be made up by the Vote. That deficiency arises from three causes. One cause is very satisfactory—namely, the increased number of depositors and the increased amount of the deposits. Another factor which necessitates the Vote is the increased difference between what we have to pay and what we receive from our securities. It is always well to remember what a great advantage savings banks are in the way of encouraging thrift, but still there is now a state of things that was not originally contemplated. The price of Consols has lately risen very high, and the greater portion of the loss was due to the fact that we had to buy Consols at a price which did not give a sufficient interest on the investment. The Chancellor of the Exchequer, recognising that the time has arrived for re-considering the position, gave notice a fortnight ago that a Bill dealing with the whole question would be introduced.