A History of Banks for Savings in Great Britain and Ireland

by William Lewins

In a fortnight from the meeting of the new Parliament Sir G. Lewis, true to his promise, moved that the House go into Committee on the Savings Bank Bill, which had even then reached that stage. His motion was, “That it is expedient to amend the laws relating to Savings Banks, and to provide for the establishment of Savings Banks with the security of the Government.” The Chancellor said that almost everybody was agreed as to the principles of the bill, though it was true that the managers of many Savings Banks contested some of the details. The greatest objection to the bill when last introduced being the provision to limit the total amount of deposits to 100l., he would now propose, as it did not affect the bill at all materially, to drop that clause; the law to remain as it then stood. This was the only material difference; there were minor points, but they were not worth pointing out. He then went over the changes which the bill proposed to make in the law; the ample security he wished to give to all who deposited money in Savings Banks, at the same time taking no superfluous securities and imposing no unnecessary restrictions in order to guard the interest of the public. Should the local authorities of Savings Banks still be found unwilling to part with their own control, or admit any interference on the part of the Government, there was only one course left to him—namely, “to abandon the bill,” to leave things in their present position, and continue a system by which the depositors are left entirely to the security of the local officers; while at the same time Government is left wholly irresponsible, except for the amounts actually lodged in its hands. “I trust, however, that the plan will be considered a reasonable plan,” said the Chancellor, in conclusion, “that it will be found not to impose upon the local authorities any shackles of which they can reasonably complain, and that no securities are demanded on behalf of the public beyond what are absolutely necessary.”[98] Sir Henry Willoughby held that the law needed consolidating before any new Act was passed. It was not long since 200 petitions were presented to the House for a consolidation of existing statutes, and an inquiry into the entire system. Let the House take this step first. After speaking warmly on the subject of the disposal of Savings Bank money, he appealed to the Chancellor to refer the whole subject to a Select Committee, who should recommend a clear and well-defined legislative enactment. Mr. Sotheron Estcourt and Viscount Goderich took the same view; the former gentleman, however, warmly approved of the Government bill, which had “happily been re-introduced,” and thought that “most of the alterations made were improvements.” As a trustee of a Savings Bank he would consider his position infinitely improved by the bill. If, however, the feeling of the House was for a committee, this course could not prejudice the bill, though it would delay it. Mr. Thomas Baring thought the matter should go before a Select Committee; so did Mr. Henley. The Irish members, Mr. Slaney and others, were for passing the bill, and not deferring legislation any longer on any pretence. The Chancellor of the Exchequer opposed any further delay; the adoption of any other resolution would simply tend to shelve the bill for another session. If honourable gentlemen really wished to reject the bill, let them resort to the direct and fair course of doing so. He also was for consolidating the laws relating to Savings Banks; but till that could be done he thought it by far the best plan to introduce a few more clauses into the law to remedy grievances which could not wait to be redressed. The motion was then agreed to. The second reading came off on the 8th of June. Mr. Ayrton, in a long and animated speech, during which he said that the greater number of Savings Banks were now most efficiently managed on a principle which was most conducive in binding the humbler to the more influential classes, and that he could conceive nothing more calculated to destroy that sympathy than the present proposals—“felt inclined to move that the bill be read a second time that day six months.” The result of the proposals would be a step in the direction of the system which obtained on the Continent, where every function of the community was usurped “by what was called the civil service of the country.” Amidst cries of “Divide,” Mr. Ayrton said he was strenuously opposed to any such system. Mr. McCann said the whole body of the people were unanimous in applauding the measure of the Chancellor of the Exchequer. Sir Harry Verney approved of the principle of the bill, but said he would like to see the subject referred to a Select Committee. Mr. Barrow opposed the bill and the Select Committee also. Mr. Estcourt again, in an admirable and temperate speech, during which he showed an excellent knowledge of the subject in all its bearings, assisted the Government in their proposals. To give the reader a proper idea of the ground taken by Mr. Estcourt, who, when the committee was eventually appointed, was made chairman of it, we need only give the concluding part of his speech on this occasion:—

“He earnestly wished that this session would not pass without a Government Savings Bank bill becoming law, and he hoped the honourable gentleman would persevere with this bill; but even should the bill pass, he joined his voice with that of others in entreating the Government, after giving the poor man the guarantee which he did not now possess, to give to the public generally more accurate information on the whole subject, a clearer account of how the money was applied, and how the deficit spoken of had arisen. That information ought to be given, if only for the purpose of showing the groundlessness of the suspicious observations made against this bill; and therefore, though he heartily concurred in giving his voice for the second reading, he joined with other gentlemen in entreating the Government to give them a Select Committee, not in order to shelve the bill for the session, but, next year, for the purpose of assisting the Government, and giving the public that information which they ought to have.”

Mr. Glyn and Mr. Maguire approved the bill without reference to a Committee, one of these gentlemen submitting that the Committee could sit on the general subject after the bill had passed into law. In reply, Sir George Lewis took the latter view, and said he would be glad to give every facility to the Committee in that case.[99] After demolishing the man of straw which Mr. Ayrton had set up, the bill was carried without a division. So far things went on prosperously, but the opposition gathered in strength; Savings Bank managers again took the matter up, and urged, by petition and otherwise, that nothing should be done till a Committee inquired into the matter, and a bill be founded on the result of their investigation. The Chancellor of the Exchequer appointed several nights on which to proceed with the bill, but each night there were so many notices given of motions with regard to the subject—generally twenty or thirty—that the Government were compelled by the pressure of other business again and again to defer the consideration of it, and ultimately to withdraw it. In reply to Mr. G. A. Hamilton, the Chancellor said, on the 21st of August, 1857, that he had come to this latter conclusion mainly from the considerable misunderstanding existing among the local administrators of Savings Banks. He thought his proposals had not received the approbation which he conceived their merits justified.[100] He would offer no pledge for the future, however, further than this, that if the House next session appeared to wish for a Select Committee, he would agree to the appointment of one.

The House of Commons met in the November of the same year, when the question being again raised, Sir George Lewis gave notice that immediately after the holidays, he would propose a Committee of Inquiry, who should be instructed to go into the entire subject. The Committee which was appointed on the 9th of February, 1858, “to inquire into the Acts relating to Savings Banks and the operation thereof,” consisted of the following members:—Mr. Sotheron Estcourt (Chairman), Mr. Bouverie, Mr. Ayrton, Viscount Goderich, Sir Henry Willoughby, Mr. Bonham Carter, Mr. E. Egerton, Mr. Fagan, Mr. Cowan, Mr. Grogan, Mr. J. A. Turner, Mr. Henley, Mr. Whitbread, Mr. Bramstone, Mr. Adderley, Mr. Gregson, and Mr. Thomas Baring. They sat twenty-one days, and examined Sir Alexander Spearman, Mr. Tidd Pratt, Lord Monteagle, Mr. C. W. Sikes, Mr. John Craig; and the following eminent actuaries or other officials of the principal Savings Banks in the kingdom:—Mr. Edward Boodle, of the St. Martin's Place bank; Mr. Shopland, Exeter; Mr. Wortley, Finsbury bank; Mr. Saintsbury, Moorfields bank; Mr. J. Hope Nield, Manchester; Mr. Maitland, Edinburgh; Mr. Meikle, Glasgow; Mr. Sturrock, jun., Dundee; Mr. Jameson, Perth; Mr. D. Finney, Marylebone bank; Mr. Hatton, Brighton; Mr. Deaker, Dublin. Mr. W. H. Grey, a Government actuary, and Mr. Edward Taylor, of Rochdale, attended to give evidence on the subject of Savings Bank frauds. The Committee, as might be expected, from this imposing array of names, collected a most interesting and important body of evidence, and presented, pretty unanimously, an extremely exhaustive and important report to the House.

Upon the report of this Committee we shall have to draw pretty largely in more than one succeeding chapter, and will therefore content ourselves with describing briefly the general nature of the evidence, and with giving a summary of the Report presented with that evidence to the House. Further on in the present chapter we propose to attempt some account of the arguments used in the Committee with regard to the investment of Savings Bank money, when, two years later, a bill founded on the recommendation of the Committee was brought before the House of Commons, where the subject was warmly discussed. In this way, all the important conclusions come to by the Savings Bank Committee will at one time or another be fairly noticed. The evidence itself may be classified as follows. Mr. Tidd Pratt came on first, and gave information of the course of legislation on the subject, and in other ways the results of his long experience in such matters. Sir A. Spearman gave a full account, in an examination lasting over four days, of the mode in which investments were made at his office, and of the principal financial operations connected with these investments. Lord Monteagle, by permission of the House of Lords, attended and gave the Committee the benefit of his long and intimate acquaintance with such financial subjects. Mr. Boodle, who took the lead of the actuaries, and who, while falling into several inaccuracies, showed perhaps the greatest practical acquaintance with the subject in all its different bearings, described not only the manner of conducting the St. Martin's Place bank, but conveyed to the Committee the prevailing impressions of Savings Bank officials on the subject of the investment of their capital. Mr. Craig, of the Bank of Ireland, explained at length his system of book-keeping, and humorously described its introduction into the Cork Savings Bank. The other actuaries described the peculiarities of the different banks they represented; described frauds, and spoke of checks which had been devised for preventing their recurrence; and gave their opinion, which will be seen subsequently to have been anything but unanimous, on such disputed points as the limits of deposits, the rate of interest, making the audit, and regulating the expenditure. Few of the witnesses left the box without offering some practical suggestion, or recommending something of value. All the gentlemen agreed as to the necessity of doing something. Most of them thought an independent Commission should be appointed to manage the affairs of Savings Banks. Every witness expressed his opinion that the one thing needful was a Government guarantee for the absolute safety of all deposits; and although Mr. Craig and others thought that this should be supplemented by a staff of Government inspectors, regarded the change as imperatively required.[101] It is impossible, however, that we can at any greater length give the recommendations which were made on this and other important matters of which the witnesses spoke. Nor indeed can we do more than condense into the fewest possible words the full and voluminous Report which the Committee made on the occasion. Seeing that the demand for this Committee was so great, that so much pains were taken to arrive at a just conclusion, and that the Report itself was not without its effect on the institution of Savings Banks, we doubt not that we shall be readily excused for giving prominence to it, and for presenting the resolutions in which the principal points of recommendation are embodied.[102]

1. That the laws relating to Savings Banks in the United Kingdom require to be amended, and to be consolidated in one Act.

2. That it is expedient to place the superintendence and management of the general funds of the Savings Banks in a Commission consisting of five members.

3. That it is desirable that this Commission be constituted of the Chancellor of the Exchequer, the Governor of the Bank of England, and three other persons appointed by the Crown, all of whom shall be paid.

4. That all expenses of the Commission be paid out of the moneys of Savings Banks; that the surplus fund shall be invested in public securities, and the interest carried to the account of the surplus fund, out of which such expenses shall be defrayed.

5. That the powers and duties of the Commission shall be defined by Act of Parliament; that provision be made for the summoning and holding, at stated intervals, the meetings of the Commission; that three shall be a quorum; and the minutes of each meeting duly recorded and signed by the Chairman.