THE DUKE OF ARGYLLmoved to Resolve—
That, inasmuch as the Postponement of this Bill will withhold a Power of effecting a considerable annual Saving which may be made under its Provisions, and will thus practically continue for a Time an unnecessary Liability on the Public, the Circumstances which require Legislation on this Subject appear to this House to be of such real Urgency as to render the immediate Consideration of the same necessary.The noble Duke said, that the questions involved in this Bill, having been already discussed in their Lordships' House at considerable length, he would not now attempt to debate the whole subject over again. He would, however, venture to suggest that although this was not strictly a Bill of Aid or Supply, and therefore did not come under the exception laid down in the general Resolution of the noble Lord the Chairman of Committees, it was nevertheless a Bill which affected the public liabilities. If these funds were lost, the public would be bound to make them good; and under the existing law there was an annual loss to the public, and consequently an annual increase of liability, which the House of Commons thought might to a great extent be obviated by enlarging the field of investment open to the Commissioners for the reduction of the National Debt. The Bill, therefore, although not technically, was yet practically one of Aid and Supply, and as such would be entitled to immediate consideration as a measure of urgency.
§ LORD REDESDALEsaid, he could not agree that this was in any sense whatever a Money Bill. The funds to which the measure related were not public funds; they belonged to the savings banks, and were only held in trust by the Chancellor of the Exchequer, and the Commissioners for the reduction of the National Debt. Their Lordships were as much within their legitimate province in providing for the proper care of the deposits of the people in savings banks as was the other House of Parliament.
§ LORD MONTEAGLEdid not wish to revert to a question that had been already discussed, except to enter his protest against the untenable construction which endeavoured to assign to this measure the character of a Money Bill. That construction, he ventured to say, carried the definition and the characteristic of Money Bills into a class of measures to which, up to the present time, it had never been extended, even by the strongest advocates of House of Commons privileges. Noble Lords on the Treasury Bench would be aware that this was the second Bill which the Government had introduced on this subject. The original Bill which they brought in was, indeed, to all intents and purposes a Money Bill, because it was founded upon Resolutions agreed to by a Committee of the whole House of Commons, and it created a charge upon the Consolidated Fund. That Bill, however, was never reported from the Committee to which it had been referred. The first clause of the Bill was abandoned, and the measure of the Government virtually abandoned. But the present Bill, which consisted of two clauses, was a measure of quite a different kind, and there was no ground for describing it as a Money Bill except an allegation—of which no proof had been given—that it might be the means of effecting some small contingent saving to the public, under very improbable circumstances. In treating this, therefore, as 1553 a Money Bill, noble Lords appeared to be confounding the two distinct measures to which he had referred. He had taken every pains to enable him, if possible, to concur in the Motion of the noble Duke. If he could believe that there was anything in the case to bring it within the category to which the privileges of the House of Commons applied, he should be the last person to raise any question on the subject; but as he did not think so, he should certainly say "Not-Content" to the suspension of the Order.
THE LORD CHANCELLORsaid, he had always been favourable to the Sessional Resolution, and would earnestly advise their Lordships to put a liberal construction on it; for if they drew the line too rigidly it would be found before long to trench on the privileges of the other House of Parliament and upon the prerogative of the Crown. He would not enlarge; but he did earnestly entreat them to attend to the caution which he submitted to their Lordships most respectfully.
§ EARL GRANVILLEsaid he wished to make an explanation on the matter of privilege. It appeared that the reports of what he stated the other night had raised the impression that the Speaker had given an opinion criticising the forms of their Lordships' House; and he wished it to be clearly understood that the fact was the Speaker had given an opinion with regard to the privilege question before the Bill had left the House of Commons. There could be no ground whatever therefore, for imputing to him any discourtesy to their Lordships' House. Of course that did not in the slightest degree diminish the force of his argument. The noble Lord (Lord Monteagle) was not quite accurate in his statement of facts. This was not a different Bill from that originally introduced. It was the same Bill with a number of clauses omitted. He thought the suggestion of the noble Lord as to the dangers that would be incurred by depositors if this measure should pass, was dangerous to the principles on which the savings banks were founded. The depositors in savings banks had no interest whatever in the question raised by this Bill. There was an agreement between the savings banks and the public that the sums deposited should be invested by the National Debt Commissioners, and that a fixed rate of interest should be paid to the trustees of the banks. There was not the slightest doubt as to the right of the trustees, not only to the 1554 interest, but to the repayment of the whole capital whenever, unfortunately, circumstances should require. As to the investment, the savings banks had no other interest than the general taxpayer in economizing the expense to the public. As to the question of the Bill being a Money Bill it proposed to diminish the liability of the public to taxation; whether the saving was £10,000, £20,000, £40,000 or £50,000 a year, it did not signify in point of principle. It so far diminished the liability to taxation.
THE EARL OF DONOUGHMOREdistinctly understood that in assenting to this Resolution, on the statement of the Government that they considered the Bill one of great importance and urgency, their Lordships were by no means committed to an acknowledgment that they had acted improperly in rejecting the Bill on a former night.
§ EARL GRANVILLEsaid, their Lordships were only bound by the Resolution to which they agreed.
§ LORD REDESDALEsaid, he accepted the assurance that the Measure was one of great importance, and on that ground would vote for the Resolution.
§ Resolution agreed to.
§ "DISSENTIENT:
§ "Because, unless the Orders for regulating of the Discharge of the Business of this House are adhered to with Steadfastness and Impartiality, they become Traps for the Unwary, and aggravate the Mischiefs and Public Inconvenience against the Occurrence of which such Orders were intended to provide a fitting Safeguard.
§ "Because the Sessional Order which fixes a Day after which it is provided that no Bill shall be read a Second Time in this House, except Bills of Aid or Supply, or Bills on which the House shall have determined that the Circumstances making such Legislation expedient are either of such recent Occurrence or such real Urgency as to render the immediatn Consideration of the same necessary, was adopted after full Consideration in 1854, and has been continued for the last Seven consecutive Years, without Opposition or serious Complaint, but, on the contrary, greatly to the Benefit of the Public Service."
§ "Because a Departure from that Order, unless in Cases arising clearly within its specified Exceptions, will render the Proceedings of this House vague and uncertain, will at the Close of the Session subject them to the discretionary Power of the Government of the Day, and will deprive them of Orders of that Impartiality, Weight, and Authority which are required to maintain the Honour and dignity of the House, and to secure the Public against hasty or ill-considered Legislation.
§ "Because the Bill regulating the Investments for Savings Banks and Friendly Societies has been before Parliament during a Period of nearly Seven Months, and has not been dealt with by its Framers or by Parliament as a Bill of real Ur- 1555 gency, neither is it founded on any Circumstance of recent Occurrence.
§ "Because it is not a Bill of Aid or Supply, nor can it be classed as a Money Bill, without the Establishment of a new and dangerous Precedent calculated to impose dangerous Trammels on the free Legislation of this House.
§ "Because this Bill has not been brought up to this House till the 3rd Day of August, when the Period for reading Bills a Second Time in the House had elapsed.
§ "Because a Resolution having been moved on the 13th August to suspend the Sessional Order prohibiting the 2d Reading of all Bills after the 29th July, and to permit the 2d Reading of the Savings Banks Investment Bill, such Resolution was negatived after Debate, and the Order for reading the Bill a second Time was discharged.
§ "Because no further Proceeding was taken in relation to this Bill till the 16th instant, when a Notice was given of an intention to move on the following Day to reverse the former Decision of the House, by suspending the Sessional Order, which it had been determined should not be suspended; and declaring the Urgency of a Bill which the House had prieviously declined to affirm.
§ "Because such a proceeding tends to destroy all Confidence in the Maintenance of a Sessional Order adopted after full Deliberation, without a dissentient Voice, and reasserted in Seven successive Sessions with the same Unanimity of Opinion.
§ "Because no Precedent or Authority has been adduced to justify so extraordinary 3 Deviation from the accustomed Practice of the House, the Maintenance of which is essential to its Dignity, and a Departure from which can hardly tail to lessen the Weight and Authority which ought to accompany all its Decisions."
§ "MONTEAOLE OF BRAKDON."
§ Order of the Day for the Second Reading read.
LORD DENMANsaid, that he was a trustee of a savings hank, of which the trustees had expressed a strong objection to this Bill, as it was introduced into the House of Commons; but as several clauses had been omitted, and no petition "been presented, he did not see any objection to certain clauses as the Bill now stood; but if any petition were sent against the Bill, he should feel at liberty to oppose the second reading.
§ LORD MONTEAGLEsaid, that the House had not received on the part of the Government any distinct, or still less any satisfactory explanation of the true object of this Bill, or of the manner in which it was calculated to work. He should be sorry, indeed, if any observations he had made on a previous occasion could be construed as affecting in the slightest degree the credit or safety of the deposits in the savings banks. The Bill could not, in that respect, affect the rights of the depositors. Parliament was unquestionably 1556 entirely pledged to the repayment of the whole amount of deposits. The noble Earl had exaggerated the deficiency, which was only £2,000,000, not £3,000,000; but whichever it really was, it came to the same thing—that the assets were not equal to meet the engagements; but there was no ground that would justify the depositor in feeling any doubt as to the ultimate security of his savings, for that or any greater deficiency must be made up by Parliament. This deficiency had arisen in various ways. When there was a run for money on the part of depositors, it was generally, if not uniformly, in times of pressure, which had a tendency to lower the funds, and the Commissioners, to recruit their balances, had to sell out at a loss; hut when money was plentiful, in consequence of increasing deposits, the Commissioners were compelled to invest, the funds being high, and they bought at high rates. The public have therefore no choice but to buy dear and sell cheap, suffering a double loss. These, however, were not the only causes of the deficiency—there was another, arising from the present state of the law, and which called for a prompt and conclusive remedy. This was not the first time that the attention of Parliament had been called to the evil he complained of. The first Act establishing savings banks was passed in 1718; and now the enormous sum of £40,000,000 deposited by savings banks and friendly societies constituted a glorious monument of the industry, sobriety, and good sense of the English people. But the system on which the deposits of savings banks were invested was liable to strong objection. The objection to which he had now more particularly to refer was, that it left in the hands of the Government an amount of discretion in dealing with savings-bank deposits with which, it appeared to him, and it appeared also to be the opinion of a Committee of the House of Commons, they ought not to be intrusted. Those moneys he regarded as being held in trust for the depositors, and he contended that those to whose management they were committed, ought to submit to such restraint as would deprive them of any power whatever of using those funds for any purposes except those of the savings banks themselves, save in particular instances in which, under the sanction of Parliament, these deposits might be made use of usefully in some financial operations. He would not, however, have them converted to such uses 1557 on the authority of any individual Minister, nor, indeed, upon any authority short of that of Parliament itself. The course, he might add, which had been taken by his lamented Friend the late Lord Spencer in dealing with the savings banks deposits seemed to him to be that which it was right to take. That noble Lord perceived that those funds afforded him an opportunity of effecting a reduction of the interest on the higher stocks, and, having obtained the sanction of Parliament, he had applied a portion of the savings bank deposits to that purpose with great advantage, He (Lord Monteagle) had at various times, and especially on the 22nd July, 1856, called their Lordships' attention to the subject of savings banks deposits, and since then the subject of savings banks had been referred to a Committee of the other House, who recommended that no investments should he made except for the purposes of the savings banks themselves, and that no funding of Exchequer Bills should be effected without the authority of Parliament. It was said, if financial operations were to be effected, to whom could they be more properly intrusted than to the Finance Minister? He (Lord Monteagle) held a different doctrine. For his part he thought the Chancellor of the Exchequer ought to have as little as possible to do with dealings in the public funds. The Finance Minister did not compete on terms of equality with the other interests engaged in the money market, and therefore ought not to be permitted to enter it. Still less was it justifiable that he should do so secretly, and without full responsibility. The Chancellor of the Exchequer had power to issue a verbal order to an executive officer, holding his office during pleasure, directing him to invest or to withdraw funds from any class of public securities, thus altering the value of the securities on which he operated. This power he held to be utterly indefensible. Without denying the legality of the practice, yet when carried to the extent and degree to which it had been carried of late, even if legal, its policy or expediency was questionable. When the Chancellor of the Exchequer went into the market to buy or sell, he went there necessarily with the knowledge of what financial measures he was going to propose, by which the value of the public securities in which he was dealing would necessarily he influenced. This alone gave him an advantage over everybody else. He had not the slightest doubt that the object with which the pro- 1558 ceeding was undertaken by the Chancellor of the Exchequer was the promotion of the public interests; but when transactions were entered on with a view of diminishing the loss sustained by the present system of savings banks by selling out or buying in, by funding or paying off the unfunded debt, and thus speculating on the Stock Exchange, these transactions ceased to be justifiable. It was perfectly legitimate for the Chancellor of the Exchequer, when impelled by the necessities of the State, to borrow money on Terminable Annuities, but it was neither just nor necessary to throw Exchequer Bills into the market or to withdraw them for the purpose of propping up the Government system of finance, and with a view of diminishing the loss sustained by the difference between the interest received and paid in savings banks deposits. The amount of money with which the Chancellor of the Exchequer dealt was no less than £40,000,000, and his power was not confined to operations arising from the necessity of buying or selling to meet the demand of depositors, but he might operate simply with the object of making a profit like any broker in Change Alley. Such a course could neither be defended nor tolerated. It was utterly inexcusable that the enormous sum of £40,000,000 should he placed at the uncontrolled discretion of a single man. The noble Lord on a former evening had instanced different means of investment in which he anticipated that a larger amount of interest might be obtained than from the ordinary Government Securities—such as the Turkish, the Canada, the Jamaica, and the West India loans, all of which were, it was true, guaranteed by Parliament, and in which, therefore, the noble Duke held that it was competent to the Chancellor of the Exchequer to invest the savings banks moneys but the noble Lord forgot that by the very act of going in quest of higher interest, a demand would be created for the particular stock sought to be purchased, which, by raising its price, would deprive the Government of that increased advantage for which the transaction was undertaken. He (Lord Monteagle) thought it most unwise to make such investments The higher rate of interest was a proof of the risk or inconveniency to which such securities were liable. With regard to the Court of Chancery, he believed that the Accountant General only invested in the Three per Cents, either Reduced or Con- 1559 sols; and that was the safest and best security for trustees, because it was liable to the least fluctuation. He also thought that a really responsible authority should be appointed to administer the savings-banks' funds, and that the farce of nominating for such purpose the Speaker of the House of Commons and other functionaries, who knew nothing about the matter, should be got rid of. He wished to make an appeal, which he trusted would be complied with, on behalf of the poorer classes in the country. There was a fraudulent creation of nominal savings banks spreading far and wide. This proceeding was reduced to a system, and the concerns so created were called by various titles, such as "National Savings Banks," "Registered Savings Banks;" but none of them were savings banks under the Act of Parliament, and not a single farthing which the persons connected with them were able to extort from the poorer classes was ever invested or dealt with as savings-banks' money ought to be. He therefore suggested that the Government should introduce into the Bill some provision such as had been recommended by a Committee of the House of Commons, to the effect that no banking concern should be permitted to assume the title of savings bank unless in cases where the rules were properly certified. To this he could not anticipate any objection.
§ EARL GRANVILLEprotested against the imputation with which the noble Lord began his speech, that the Government had never clearly described the Bill. He had himself twice perfectly, accurately, and, he believed, clearly described the Bill, and so had the noble Duke who now moved the second reading. Neither he nor the noble Duke deserved any credit for that, because it would be almost impossible to give anything but a clear description of the Bill, it was so exceedingly simple. The whole thing lay in a nutshell. The Commissioners for the Reduction of the National Debt—who were, as the noble Lord correctly enough stated, all comprised in the Chancellor of the Exchequer—having now the power by law and practice of investing and reinvesting the money deposited in their hands by the savings banks, and on which the Government were pledged to pay a certain interest, in the Three per Cents, the Bill provided that they should be allowed to extend their operations to other securities guaranteed by Parliament. That was the whole Bill, and he defied the 1560 noble Lord to give any more accurate description of it. The noble Lord had certainly not attempted to do so in his rather long speech. He did not think the noble Lord had been very clear in his objections, not to the present Bill, but to the whole system of dealing with the money of the savings banks. The noble Lord began by stating that his objections were embodied in a speech which he made twelve years ago—a speech which their Lordships could not be expected to have in their minds—and also in the Report of the Committee of the House of Commons which sat two years ago. That Committee recommended that the power of reinvesting savings-banks' funds should be taken away, but, at the same time, they suggested that the power of original investment should be made larger than was proposed by the present Bill. Another of their recommendations was that the duties now performed by the National Debt Commissioners should be discharged by other persons; but that recommendation had not been adopted by Parliament, and he believed never would he. The noble Lord had referred to the case of Lord Althorp making use of the money of the savings banks for the purpose of effecting a reduction of the Four per Cents, and said that that was done with the consent of Parliament. He (Earl Granville), bow-ever, believed that the operation was effected before the consent of Parliament was asked. Subsequently, indeed, Lord Althorp applied to Parliament, not for its assent to what he had done, but for authority to pay off the dissentient stockholders. But other operations had been effected under the power now possessed by the National Debt Commissioners, which were very extraordinary indeed. When the noble Lord himself was Chancellor of the Exchequer he did what had never been done before. Exercising a power indirectly derived from the Savings Banks Act, he used the money deposited by the savings banks to pay off deficiency bills, and thus added very largely to the National Debt, without any sanction whatever from Parliament. The noble Lord, no doubt, had excellent reasons for doing so. His example was followed upon one occasion by his successor, Sir Francis Baring, who stated, however, that he was only yielding to the pressure of circumstances, and that upon principle he disapproved such a transaction. The noble Lord, no doubt, might have urged the same plea. Since that time nothing of the kind had been attempted, 1561 and it was clearly against the spirit of the Act that any such course should be taken. In the eulogium which the noble Lord passed upon the provident habits of the nation, which had resulted in the accumulation of £40,000,000, he cordially concurred. The noble Lord, however, proceeded to point out what should be done with the view of prohibiting the Chancellor of the Exchequer in future from dealing with that enormous amount of money. If Parliament should think it necessary to restrict the Chancellor of the Exchequer in the manner suggested by the noble Lord, its action in that respect would not be at all hindered by the present Bill. Their Lordships ought to recollect that the Chancellor of the Exchequer was not a great stock-jobber, acting for his own individual advantage, but the financial agent of the country at large. In that capacity, as long as he kept within proper bounds, he was not only entitled, but it was his duty, to obtain for the public any fair advantage which his position and knowledge might place within his reach. Was he to be prevented, for example, from using any portion of the money of the savings hanks for the purpose of paying Exchequer Bills? If so, the interest payable upon those Bills for a period of twelve months would be so much money thrown away, to the disadvantage and loss of the public. The operations of the Chancellor of the Exchequer were closely watched. If he acted wrongly, or even indiscreetly, he would be immediately criticised and the censure of Parliament would fall upon him. As long as the country employed a financial agent to look after its interests, he ought to be allowed to use his own discretion in such matters for the common good, and not obliged to throw every possible advantage into the hands of private capitalists. The noble Lord had attempted to illustrate his case by the practice of the Court of Chancery. But it was not correct that the Court of Chancery could not invest in any security but the Three per Cents. That used to be the case; but the noble Lord was probably not aware that the Court of Chancery had now by law exactly the same power which the present Bill proposed to give to the Commissioners for the Reduction of the National Debt. The noble Lord had argued farther that, if the money of the savings banks were invested in small and unmarketable stocks, when a pressure came there would be greater difficulty and loss in selling them than would be ex- 1562 perienced in the case of the Three per Cents. It was to be observed, however, that under the present Bill the Chancellor of the Exchequer was not enabled to invest more than £7,500,000 out of the whole £40,000,000in the smaller kinds of stocks, and that, consequently, should he be obliged by a sudden pressure to sell he would be able to get over the difficulty by disposing of a portion of his Consols, leaving the other investments untouched. The clause which the noble Lord had suggested might be useful, and should receive the careful consideration of the Government. He believed the objection to it in the other House was that it would be inconsistent with the rest of the Bill. However, it might be of some use, and, provided no strong objections were entertained to it, he would introduce it upon the third reading. The noble Earl concluded by protesting against the Government being supposed to have said that the subject of this Bill was one of great magnitude, and that it was on that ground that they pressed it.
§ LORD REDESDALEsaid, his objection to the Bill was that it dealt with a subject which should be treated in a much larger way. It appeared from the statement of the noble Earl that although one or two operations in these funds which had been conducted by the Chancellor of the Exchequer were advantageous more of them had been injurious ones. In his opinion, the most important and advantageous clause of the Bill was that which required that a statement of all such transactions should be made to Parliament. He doubted whether the clause which had been suggested by the noble Baron (Lord Monteagle) could properly be introduced into this measure; but if it could he should not oppose it.
THE LORD CHANCELLORsaid, having been appealed to by the noble Lord (Lord Monteagle) as to the practice of the Court of Chancery, he was in a position to give him most authentic information, for he held in his hand an Act that must have been passed without the knowledge of the noble Lord, or he would have strongly opposed it, and said that the Lord Chancellor was about to dabble in the Funds. The Act authorized the Lord Chancellor and three of the Judges of the Court to invest the money that came into the Court either in the Three per Cents or in such other stocks, funds, and securities as they might see fit; and the Lord Chancellor had also power to order the conversion of money, now invested in Three 1563 per Cents, into any other stocks that he might think would afford a more liberal interest. There was another clause which provided that trustees might with safety and security invest their funds in any stock in which the Lord Chancellor invested.
§ LORD MONTEAGLEsaid, it appeared from the last returns that no funds had been invested out of the Three per Cents.
§ Motion agreed to.
§ Bill read 2a accordingly, and committed to a Committee of the Whole House on Thursday next.