HC Deb 23 May 1919 vol 116 cc785-96

Order for Second Reading read.

Mr. BOTTOMLEY

I beg to move, "That the Bill be now read a second time. This Bill deals with one aspect—and one aspect only—of the problem of bringing into the Exchequer, for the benefit of the State, the vast sums represented by unredeemed moneys in the hands of various corporations, companies, and others. Those sums, roughly speaking, consist of dormant balances and unclaimed securities in the hands of bankers, sums in the hands of insurance companies, gas companies, telephone companies, solicitors, trustees, and others; but this particular Bill deals—and deals only—with dormant balances and unclaimed securities in the hands of the bankers in the United Kingdom. The provisions, stated very shortly, are these: That every bank, every corporation carrying on the business of banking shall, after a given date, make a periodical return of all unclaimed securities and dormant accounts, which have been in their possession for a period of six years and upwards; and, after certain formalities, hand those amounts over to the Public Trustee, to beheld by him, subject, of course, to the rights of the owners, if they ever offer, in the meantime, the money to be used for the benefit of the State. If one were criticising the Bill from the Committee point of view, I admit at once there are many points in it that require careful amendment. The principle is this, and this only, that, by the operation of the banking system of this country, it follows inevitably, and from the experience of every country which has this law in force, that vast sums and a vast amount of securities have accumulated in the hands of bankers to which they have no moral right whatever. Those sums ought to be held for the benefit of the State.

Upon four occasions I have had the honour of introducing a similar Bill to this into the House. Under the Ten-minute Rule, in June, 1908, I introduced it. It was opposed by the then Member for Wandsworth, himself a bank director, but the House gave it a First Reading by 119 votes to 54. In June, 1909, it was opposed by the present hon. Member for East Nottingham; notwithstanding that fact, it was carried by 185 votes to 54. In June, 1910, it was again opposed by the same hon. Member. There was no Division; a First Reading was granted; while again in May, 1911, the Bill received a First Reading. For the purpose of emphasising the position, my desire has been, as far as possible, to bring in the measure to synchronise with the Budget discussion, in order that the Chancellor of the Exchequer might have brought to his special attention what I believe to be a veritable El Dorado, from which he can derive wealth beyond the dreams even of an avaricious Chancellor of the Exchequer Apart from these four Readings, many questions have been put by me from time to time to the Chancellor of the Exchequer, the late Prime Minister, and the present Prime Minister. Various answers have been given. These were all practically in the same category, that the matter is not one of sufficient importance, and the amounts involved are not large enough to justify legislation. When I further questioned these Ministers as to the sources of their information they told me, with a childlike innocence which was amazing, that they had consulted the bankers themselves, who had assured them they had nothing in their possession to which they were not properly entitled. I remember on one occasion illustrating the matter by suggesting a stained glass window representing the Soul of Candour divulging the truth to the Spirit of Simplicity. At any rate these inquiries went on. We arrived at the one point that both the late Prime Minister and the present Prime Minister came to the conclusion that there might be a case for the appointment of a Select Committee to inquire into the whole thing.

In circumstances over which I had no control, instead of looking after the funds of the bankers, I have to attend to my own affairs, and I temporarily disappeared from the scene. Since that time not very much has been done in the matter. But in my Parliamentary experience of eight years I cannot, I think, recall any measure which has received such general assent from all parties of the House. There is scarcely a Minister on the Front Bench today, or a Leader in the Front Opposition Bench, including half of the Ministers of the Inner War Cabinet, who did not vote for this Bill. They include Members of the Irish party and the Labour party, and the names of the hon. Members which appear on the back of this Bill show that it is a matter well worthy of attention. The Press, including the banking Press and to my amazement even the "Daily News," favour this measure. The "Daily News" says: The Bill introduced by Mr. Bottomley is of so much importance that we hope the present House of Commons will find an opportunity to proceed with it. When I find the "Daily News" praising anything I do I think it must be something that will commend itself to the orthodox supporters of certain sections in this House. The "Bankers' Magazine" says: We hold no brief for Mr. Bottomley but candidly we think he never did anything better than when he introduced this Bill. Let me mention to the House that I believe we are the only civilised country in the world which has not dealt with this question.

Major O'NEILL

What is the estimated amount of these balances?

Mr. BOTTOMLEY

I will endeavour to give the hon. and gallant Gentleman some information on that point. As regards our Colonies, I may mention them because when you find new and small countries whose banking history is quite modern have something substantial in this respect, you can form a rough estimate as to what must be the situation in this country. The last annual return made by Canada covers a thousand closely printed pages of dormant balances and unclaimed securities. The State of Alderney shows 55,000 dormant accounts, and this was the first return they have made and it goes back ten years. Some years ago I put a question to the Postmaster-General relating to the Post Office Savings Bank in this country, and he admitted in this House that in relation to accounts of less than £1 the Post Office had half a million of money of absolutely dormant accounts the owners of which had utterly disappeared. With these illustrations I think it must follow that when you come to our huge banks, with their palatial buildings, which I do not hesitate to say have never been erected out of the money lent at bank rate, and when you consider the huge dividends paid to their shareholders, and the specific instances of which I have hundreds, it follows that the total amount of these balances must be something enormous. The hon. and gallant Gentleman opposite asked me if I can form any estimate of the total amount. Of course, it is very difficult to form an estimate of what is in the vaults of our large banks to-day, to which I have no right of access, or of the dormant accounts in relation to books which are not open to me, but I am hopeful that the outcome of this measure may be the appointment of a Select Committee to inquire into this subject. I am, however, going to say to the representatives of the Treasury that I believe the total would amount to over £100,000,000, which will go some way towards putting things straight in these abnormal times. There are certain banks, private banks—one does not want to mention names unnecessarily, but take any respectable bank; take Coutts—where it is notorious in business and in banking circles that in the days of the French Revolution the wealthiest families from France deposited their securities, their title deeds, and their money. Millions must have thus accumulated. I have written to every bank in the Kingdom more than once in relation to this Bill, and have said, "Will you assist me by doing one of two things: either by telling me, approximately—never mind the legality of the matter—what you have or say that you decline to do so?"

In no case did they give me any information. I commend this to the Chancellor of the Exchequer, who honours me by coming into the House. A bank is under no legal obligation to give any information. In these modern times of respectability I happen to be the director of something which calls itself a bank—it is a 2½d. affair—and it has existed only about ten years, but we have dormant securities and unclaimed balances, and by virtue of being a registered bank—I do not want to advertise it by mentioning its name, but I will tell the right hon. Gentleman—we received a printed letter from a well-known firm of solicitors in London, saying, "Do you happen to have any moneys or any securities belonging to Mr. So-and-so, for whose estate we are acting? We find that shortly before his death he deposited large sum6 of money and securities in a London bank, and we can find nothing about them." It happens that we were the bankers in that particular case, and we at once disclosed the information. Take another case. The mother of one who went down in a submarine a few years ago said that her son always told her that he had saved a considerable sum for her benefit, and that she knew that he had it in some bank. She had tramped through London from bank to bank asking them if they had any account in her son's name, and in every case the answer was the same: "We can give you no information." I could give case after case of that kind.

The fact is that according to some old legal decision, which I am sure would not be maintained in these days, when a certain period has elapsed and an account becomes dormant and securities have obviously become unclaimed, the bank claims that they are entitled to keep them. They say that the relationship between bank and customer is not that of a trustee and beneficiary, but that of debtor and creditor. Some banks deny anybody's right to ask them what they have in their possession. I have mentioned Coutts. Go to their vaults—I do not know whether under "Dora" you have power to do so, but you can soon get power—and see some of those old boxes bulging with title deeds and securities. Let the Chancellor of the Exchequer give me an opportunity of bringing before a Committee case after case of private banks who in these modern days have sold their undertakings to joint stock enterprises. I know of one case where there is something approximated to £2,000,000 worth of securities and title deeds unclaimed. Go through the evidence which I can produce of people who suddenly hear that they have something standing to their credit. There was an hon. Member of this House who, a few years ago, gave an illustration of that. He said that fifteen years previously he contested a certain constituency and opened a banking account for his election expenses. In the excitement of victory he forgot all about it. Time passed and he got elected for another constituency. Fifteen years elapsed and then he revisited old scenes, and one day he met the local bank manager who said, "I suppose you know you have a few hundred pounds standing to your credit." We have all heard of cases of parents of officers and soldiers who had money in the bank. I have had one particular case brought to my notice of a young Canadian who came and brought his bank pass-book with him and left it with his parents. He had an account in Canada, but he transferred a considerable sum from that account to a bank in Southampton for his own personal expenditure. The father knew nothing about it. The poor fellow was killed, letters of administration were taken out, and it was only when his personal belongings were sent home and examined that they found documents from the Southampton bank showing there was a considerable sum to his credit, no mention of which had been made.

There is another case which I have mentioned in this House on a previous occasion—the case of an old lady who had £28,000 to her credit in a well-known. London bank. Once every year she drove up in her carriage, asked to see the manager, examined her book, drew out a cheque for the full amount, got it cashed and then having carefully counted the notes and satisfied herself that the money was safe paid it back again into her account. I can give the name of the bank if necessary. After some years her visits ceased and for fifteen or sixteen years she has not been heard of. Perhaps she is in a lunatic-asylum, or she may be engaged in some other sphere of activity. But her relatives are unknown, and the bank will probably never hear of her again. It is a rather amazing fact that, on a former occasion on a Division on this Bill, the first Member who came out of the Lobby in opposition to it was a director of that particular bank. I have many other cases with which I do not propose to weary the House. Time is short, and I want if possible, to get the Second Reading before five o'clock. The case of this Bill can be put in a sentence. We are the oldest banking community in the world. It follows as a matter of course that people put money and securities in banks, they move about, their address is lost, and they die. There is no bank manager in this House who will get up and deny that there must be millions and millions in possession of the banks, and I want to point this out to the Chancellor of the Exchequer that you may look through the balance-sheets of the great joint stock enterprises and you will not find one single figure indicating that there is a single penny dormant balance-or unclaimed security in that bank. They are all treated as the bank's property, and I do suggest that there is a primâ facie case for this Bill under those circumstances. I do not care if there is only £1,000,000, £2,000,000, or £3,000,000; there is a principle. You have a Public Trustee, and the whole of these funds should be held by him for the benefit of the State. However many years these funds have been accumulating at the banks in this way, the money does not belong to them, and the Public Trustee is the man to hold it for the benefit of the original holders if they ever turn up. There is no confiscation. Let us have a periodical return from the Public. Trustee, or other safeguards put in the Bill. Let him hold these securities and take steps to find out the owners, and if he cannot, let him realise the securities, title deeds, jewels, and other valuables which exist in millions in London to-day, and then do something to add further lustre and usefulness to the office he adorns. I appeal to the Chancellor of the Exchequer to give some sort of inquiry in order to ascertain what and how much there is behind this measure.

Major CHRISTOPHER LOWTHER

I beg to second the Motion. I do so in no hostility to the banking interests of this country. Those who are not specially -acquainted with those interests cannot justly realise what a very valuable service they rendered to the country during the War. I second the Bill because there is underlying it a principle of fairness and justice. What is the position to-day? If a man dies, probate is taken out of his will by his executors. They will go to the bank where they know he has kept his account, and on production of that authority they will naturally be able to ascertain what funds he had and to make disposition of them. But there are many men who keep accounts which are not known to their executors. There are many men who store away things either because they do not wish their relatives to know of their existence or because they are of a naturally secretive disposition. There is nothing to compel a bank to disclose to the executors of that man what he might have, although they may know perfectly well that their client is dead. I understand that the attitude adopted by the Bank of England and other bankers is that in order to obtain a reply to an inquiry, the applicant must be prepared to produce an authority from the representative of a deceased person, however many years pre- viously the death might have taken place, and that the particulars of any stock, the exact amount of the funds, and the last names of all persons on the register must first be produced. All that is for an inquiry only. If that information were in the possession of the applicant, he would scarcely need to make an inquiry, because he would have the facts at his fingers' ends. The hon. Member for South Hackney (Mr. Bottomley) has given instances of unclaimed balances, some of them very amusing. Curiously enough, not so very long ago there came under my notice an instance of much the same kind. In the early part of the nineteenth century the old banking firm of Devain and Company was wound up. There is excellent reason to believe that much of the stock and funds of that bank wore transferred to the Bank of England, also various securities standing in the name of the senior partner. Mr. William Noble. I have seen correspondence between the solicitors of the beneficiaries of one of these trusts and the Bank of England wherein the bank has declined to give information as to what may be lying in that trust. The net result is that while there is good reason to believe that the claimant is entitled to a certain amount of money which is held by the Bank of England he is unable to obtain it. I think that even the Bank of England themselves realised this, especially some ten years ago when I think that I am right in saying the late Sir Israel Hart at a meeting of the court did urge upon the Governor and directors that they should adopt a more reasonable attitude in this respect.

To turn to the Bill itself, its objects are twofold, first, that the bank should make a return of what they have, unclaimed balances, etc., upon which no call has been made for six years; and second, that after a given period the securities, balances, or whatever it may be which they have should be handed over to the Public Trustee. It may be claimed that the secrecy which is always part of the contract between a banker and his client is likely to be violated. If that be so my observation is that in that case the disclosure would be made to a most respected public official, the Public Trustee, and that the disclosure itself is not at all to the detriment of the beneficiary, but on the other hand very much to his advantage, because it is provided by the Bill that the Public Trustee should hold the same in trust for the persons entitled thereto, subject to such terms and conditions as may from time to time be laid down. It appears to me to be such an elementary principle of justice, that an heir to any property should receive whatever he is entitled to, that it should commend itself very widely not only in this House but in the country at large. What would happen to a solicitor who held certain, shall we say stocks, or whatever they might be belonging to a client, and on the death of the client did not disclose the fact that he held those stocks, or whatever they were, to the man's executors? I fancy that he would find himself in a very awkward predicament. I am not at all sure that the Law Society would not take action in the matter.

Take a more humble instance. Suppose that I were fortunate enough on leaving the House this afternoon to secure at an exorbitant rate the services of a taxi-cab, that I was able to persuade the driver to go the way I wanted to go, and not the way he wanted to go, that after completing a very short journey and paying a large fare for the honour he had done me that I was so excited with my triumph that when getting out of the taxi I left my umbrella in it. Now I had deposited myself and the things I had with me, including my umbrella, in the taxi-cab, and the driver is not entitled to go away with my umbrella and not disclose the fact that he has got it. It is incumbent on him to go to Scotland Yard and declare that he has found the umbrella in his cab, and I can have it by going to Scotland Yard and paying a small fee. I cannot help thinking that that, though it is a rough instance, is more or less on a par with the case of the balance that you may hold in a bank. I trust that the Government, though they may deny us a Second Reading of this Bill, will consider that we are approaching the subject not in a spirit of hostility to the banking interests but merely from a sense of fairness and justice, and that from that point of view they will give it their sympathetic consideration.

The CHANCELLOR of the EXCHEQUER (Mr. Chamberlain)

I was very glad to hear my hon. and gallant Friend who seconded the Motion—and I dare say the same sentiment was uttered by my hon. Friend who moved it; at any rate, it would be shared by him—disclaim any attitude of hostility to the bankers. That is the right spirit in which to approach the proposition. They are an honourable body of men, and I should have felt it my duty to resent, if there had been such a suggestion, any suggestion that they behaved themselves otherwise than as honourable men would. But there is no such suggestion, and I may proceed at once to the merits of the proposal. I gather that I shall agreeably surprise both my hon. Friends by saying that to the principle which underlies their proposal the Government have no objection, and from the. inquiries which I have made I think I am entitled to go further, and say that the bankers have no objection, if it pleases Parliament to pass legislation on. this question. No doubt, as the hon. Mover has said, the legal relation of a. banker to the client who has deposited money is not that of trustee, but of debtor and creditor, but no banker acts upon that legal right, or to a proved owner or heir of the owner would refuse payment of a balance standing to his credit, merely because the time within which he could legally recover a debt was past. The hon. Member who moved the Bill had great anticipations for it. The hunt for buried treasure has always fascinated the minds of the youthful, and equally the imagination of some of us who are no longer youthful, but the finding of the buried treasure and the realisation of your hopes occurs more often in romance than in reality. I think the hon. Gentleman ventured to prophesy that there were a hundred millions of really unclaimed money and securities in the possession of the banks. I do not pretend to have any estimate that I could lay before the House, but if, like the hon. Mover, I were a sporting man, T should offer' him a series of bets that he would not realise not merely the figure he has named, but anything approaching it. I am almost afraid to suggest figures, but I think if I put it at 2,000,000 or 3,000,000 that is multiplying on my own side the largest estimate that has been given to me by those who ought to be in a position to know. But be it large or small, all I say is, "Do not have exaggerated hopes." The principle of the measure remains unaffected. As regards the measure itself, I am sure the hon. Members will see when they consider it that it requires considerable amendment, and the proposal which I make is that we should read the Bill a second time, if that be the will of the House, but that we should then refer it to a Select Committee, where evidence can be taken as to the practical working of it and where it can be moulded into a form which will avoid inconveniences which no one desires to see. The hon. Member gave us an interesting account of an old lady who visited annually a certain bank. I was talking on the subject to a banker the other day and he said on some previous occasion when this question was disturbing public feeling the bank with which he was connected felt that- perhaps they were not doing all it was their duty to do to trace claimants, and they began to examine their dormant balances. The first considerable one they found was. I think, for a sum of £20,000, which had been untouched for thirty years. It stood also in the name of a lady, presumably if not elderly no longer quite young. They accordingly communicated with her and asked whether she was aware that she had this sum of money which stood in their books. She replied rather tartly that she was perfectly well aware of what her property was, and where it was, and, since she could not leave it with this bank without being worried by them, she had taken steps to transfer it to another. That is one old lady against another.

The hon. Member is taking six years. I know why he is taking six years. It is in order to include countless accounts which it would be most inconvenient to a customer to disturb. Take a single case. Numbers of firms in the City of London open accounts with the Bank of England in order that they may have relations with it in case of certain contingencies for which they may wish to provide. They open an account of, say, £1,000. That is not their operative account. They are banking with another institution. They open an account in order that they may be a client of the Bank of England for their own convenience, and very likely six or more years may pass without their disturb- ing the balance or having any reference to it. Quite clearly you do not want accounts of that kind transferred at the end of six years to the Public Trustee. I must not say more. I have said enough to confirm what the hon. Member said, that the provisions of the Bill need amendment, and if he will be content with my proposal that we should send it to a Select Committee and have it examined, I offer no opposition to the Second Reading.

Mr. BOTTOMLEY

I accept with gratitude.

The remaining Orders were read, and postponed.