The Marquess of Salisburywished to call the attention of the House to a subject which was likely to excite a great deal of alarm out of doors. Some time since he was sorry to say, there was a serious defalcation in the funds of the Savings' Bank for Hertfordshire, in consequence of a fraud committed by an agent of that bank, a clergyman. That person had drawn considerable sums from the Savings' Bank, and had appropriated them to his own use. It seemed to be ascertained that the trus- 638 tees and managers were liable to a certain portion of the defalcation, about 12,000l. The remainder of this loss must fall on the depositors. He wished to call the attention of the noble Viscount opposite to the manner in which the law now stood, and to ask him whether it was his intention to bring in a Bill to alter the law. As the law now stood, no trustee or manager of a Savings' Bank was to be personally liable except for his own acts, nor even for his own acts except for his own wilful negligence or default. The law was liable to great objections, as it might subject some innocent trustees and managers to an action if any defalcation took place; and the fear of such a liability would render many Gentlemen most anxious to withdraw their names, in a legal manner, from the office of trustees. However, the clause might be ultimately interpreted, he was sure that the evil he had mentioned would be dreaded, and would lead to this consequence. If, on the contrary, the clause was to be interpreted strictly according to the letter, he did not see what security there was for the depositor. It appeared to him that a depositor placed his money in those banks in which, on account of the names of the trustees, he had full confidence. The powers of the trustees were large. Any two of them might draw out a sum of money not exceeding 5,000l. To draw out a greater sum required the signatures of four trustees. The trustees received no remuneration for their labours; and the necessary consequence was, that they could not be called on to give security for the due discharge of their duties. Any trustee would, however, if a literal construction were put upon the clause he had mentioned, be liable for such a loss as he had described. If the other construction was put upon the clause, the depositors would be liable to the consequences of the fraud. This was no trifling matter. When the Savings' Banks were first formed, but few individuals expected that the sums subscribed would amount to what they now were. The amount now was equal to six-teen millions; and it was, therefore, a most important question, whether the Government would think fit to introduce a measure relating to those Savings—the more important as they were the savings of the poorer class of the people—or whether they should be left without any security whatever. He was sure that no persons would consent to remain trustees without knowing what was the amount of their 639 liability. The question affected the noble Viscount as well as himself, for they were both liable, as trustees of this Hertfordshire Savings' Bank, to pay each a share of the loss.
§ Viscount Melbournesaid, that certainly the subject deserved consideration; but much as he lamented what had occurred in Hertfordshire, he did not think that in consequence of one misfortune it would be prudent or wise to interfere with the business of the general Savings' Banks of the country. He believed that there had been considerable negligence in the management of the Hertfordshire Bank. The noble Marquess must not consider such an observation as an attack upon the noble Marquess, for he himself (Lord Melbourne) was just as much liable to the charge as the noble Marquess; but he believed if those precautions had been observed in this case which were observed in the case of other Savings' Banks, the loss would not have occurred, at least to the same extent. He must, however, suggest to the noble Marquess, that if alarming the trustees was a matter to be avoided, the public discussion of this subject was not the best way to prevent it. All he could say on the subject was, that at present he did not see any reason to propose an alteration in the existing law.
Lord Broughambelieved, that there had been some degree of carelessness in this case, but he was happy to find, for the sake of the depositors, that the trustees were such undoubtedly solvent men. [The Marquess of Salisbury: We are only responsible for half the loss.] He regretted to hear that, on account of the depositors—if it had been 100,000l. it would have been equally safe. Spreading alarm among the trustees certainly was a thing to be avoided, and it was much to be desired that nothing should occur to scare men of influence and property from the performance of a duty attended with such beneficial consequences to the poorer classes. On the other hand, it was necessary to see that the regulations of Savings' Banks were carefully enforced, so as to prevent consequences of the kind now described, which must be extensively prejudicial. He agreed with his noble Friend that the subject deserved consideration, and was happy to find that though he would not pledge himself to introduce a measure on the subject, he was ready to give it his serious attention.
§ Viscount Melbournehad not intended to make any promise, direct or indirect, that he 640 should do anything with respect to this subject. He thought it better not to legislate on a particular instance.
The Marquess of Salisburysaid, that from what he knew of the trustees of the Savings' Bank of Hertfordshire, he believed that they would immediately withdraw their names from it if nothing was done to settle the question, and therefore he still hoped that the Government would take up the subject.
§ The Duke of Richmondagreed with the noble Marquess that a great many of the trustees of Savings' Banks would withdraw their names, and the consequence of that would be that the great body of the people, losing their confidence in the trustees, would withdraw their deposits. Such a consequence would be extremely unfortunate, and every thing should be done to avoid it. He was afraid that the Hertfordshire case was not the only one of the kind; there had been another of a similar description within the last six months in Northamptonshire.
§ Lord Denmansaid, that he might be allowed to make a few observations upon this subject. He apprehended that alarm among the trustees was quite unnecessary, for that they had effectual means of protecting themselves from liability, and of protecting the interest of those who were connected with them as depositors. They should take care strictly to enforce the provisions of the act of Parliament, and then defalcations could scarcely happen. With respect to the probability of their withdrawing their names, he was by no means sure that that would put an end to their responsibility. If any money had been paid to them, they had accepted it at their peril, and were answerable for its administration. If there were cases in which difficulties occurred as to legal remedies, it would be the interest of all to see that innocent trustees were taken care of.
The Earl of Wicklowbelieved, that it would be a difficult thing for the trustees to relieve themselves from their responsibility, but he believed also that if the laws of the Savings' Banks were observed, it would be almost impossible that there should be any defalcation. Such defalcation he thought must be owing to the neglect of the trustees, and nothing could be more unjust than that any portion of the loss so occasioned should fall on the depositor. Nothing could be more unwise than to let it be supposed that the depositor would be liable for any loss whatever. He hoped that in this 641 instance the trustees would be found liable for the whole of the loss sustained.
The Marquess of Salisburythanked the noble Earl for his wish. It would be perhaps more satisfactory to state what were the circumstances of the defalcation. Mr. Small, the defaulter, was the agent, and he had drawn out a large sum on the authority of the different contributors, and had appropriated it to his own use. For that sum the trustees were liable, but after notice of a change had been given, and the St. Alban's bank had been detached, as a branch bank, the depositors still continued to pay money into his hands, which money he had never deposited in the bank, but had appropriated it to his own use, and for that money the trustees were not liable.
§ The conversation dropped.