Chapter V (1)

LEGISLATION ON SAVINGS BANKS FROM 1844 TO THE PRESENT TIME.

"If there is any question why such importance should be
ascribed to measures of a purely economic character, the
reply is, that these minor matters insensibly build up the
character of the nation; insignificant, it may be in
themselves, they mark, in the aggregate, the well-being or
the suffering of the British people."--_British Quarterly
Review._

It will be remembered that in the third chapter we described the course of Parliamentary action with regard to Savings Banks down to the year 1844, and in that chapter left Mr. Hume, after an unsuccessful attempt to reduce still further the rate of interest to be given to depositors. The year 1844 is remarkable in the annals of Savings Banks for the carrying of a measure known as Mr. Goulburn's Act. The bill which was introduced by that gentleman, who was Chancellor of the Exchequer in Sir Robert Peel's administration, was meant in great part to provide against the constantly recurring frauds in Savings Banks, and still more especially to allay the consternation among trustees of safe banks, who now loudly complained of the state of the law with respect to their liability. The discussion in the House of Lords to which we alluded at the close of the last chapter may be taken as showing that Savings Bank trustees were by no means satisfied, several years before this, with the uncertain state of the law. The great fraud on the Dublin Bank is described as having come upon many trustees like a thunderbolt, and, aware that they were not spared by the judicial bench[69] in cases of the kind, they now threatened open rebellion. Mr. Goulburn received, as he stated subsequently before a Committee of the House of Commons, a large number of notices from such officers that, if the law were not modified, they would resign their trusts. Moved by such considerations as these, which the Government seem to have felt they could only disregard at the imminent risk of shaking the credit of the entire Savings Bank system, Mr. Goulburn introduced his bill (7 & 8 Victoria, chap. 83,) on the 2d of May, 1844, to amend the laws relating to Savings Banks.[70] The principal matter with which the bill dealt was the liability of trustees, but this was by no means the only one.

Second only in importance was the proposal to again reduce the rate of interest. The remarks with which he introduced his proposal to reduce the interest rate are curious, to say the least, when viewed in the light of the speech to which we have previously referred. He felt confident, he said, that the country _had no right_ to pay upon these investments a higher rate of interest than could be obtained from an investment in other securities. The Savings Banks rate was considerably higher than any other investment of money. Although the Act of 1828 had tended to reduce materially the number of depositors of the better classes, and had increased--as we have shown in the last chapter, we think quite conclusively, so far as figures can show it--in a still greater proportion the number of those who had deposited only small amounts, there were still many who were attracted to Savings Banks on account of the interest given being higher than that obtained from the Funds. Mr. Goulburn now proposed that the bill should contain a clause reducing the rate from 2-1/2_d._ per cent. per day, to 2_d._ With the same object in view, namely, to restrict the operations of Savings Banks to the class of provident poor, the Chancellor proposed to reduce the amount which any one could put by in one year from 30_l._ to 20_l._ and to make the total amount which could be deposited in any Savings Bank, 120_l_ instead of 150_l._[71]

A further proposition, which provided for another wide-spread evil in the same direction, was one requiring that no persons should be permitted to make deposits as trustees without stating the names of the persons for whom they were acting, and that no payments should be made in such cases except under a receipt signed by all the parties interested in the funds deposited. By means of the clauses in previous acts relating to trust accounts, the law was regularly evaded, and many persons had considerable sums of their own in Savings Banks, which they represented as being held in trust for other people, whose names even they were required not to divulge.[72] This clause was carried without any trouble, as it met such a palpable evil; provision was made, however, that the law should not be applicable to trust accounts opened before the passing of the act. Had it not been for such an exception, those who had recourse to the stratagem of feigning the character of a trustee might have lost much of their money, on account of the difficulty or impossibility of obtaining within the time the signature of the party apparently interested. Though the clause was not made retrospective, as some urged it should be, as a punishment to those who had deceived the managers of Savings Banks, it was clearly the best thing that could be done to put an end to the practice, which entirely depended on the powers of the so-called trustees to draw out the money alone.

Mr. Goulburn spoke next on the question of liability of trustees. Though the topic was engaging great attention out of doors, little was said upon the point on this occasion: the section of the act thus passed so quietly, was, however, pregnant with meaning, and, as it turned out, pregnant with results. The clause provided that no trustee or manager of any Savings Bank shall be liable to make good any deficiency which may hereafter arise in the funds of any of these institutions, unless these officers shall have respectively declared, by writing under their hands, _that they are willing to be so answerable_; and not only so, "but it shall be lawful for each of such persons, or for such persons collectively, to limit his or their responsibility to such sums as shall be specified in any such instrument." This declaration was, of course, to be lodged with the National Debt Commissioners. On a trustee or manager making it, he became liable to make good every deficiency that might arise in the bank with which he was connected, whether through his own carelessness, or the cupidity of those under him; if a declaration of this sort were not made, he was liable for nothing.[73]

The above were the three most important changes made in the law of Savings Banks under Mr. Goulburn's Act, but there were several minor clauses introduced into the bill which deserve mention, and which were, there can be no doubt, equally with the more important sections, the direct results of the systematic frauds already described. With his eye direct on the Cuffe Street actuary, concerning whom the Government knew more than was generally known in 1844, the Chancellor, whilst studiously avoiding all mention of the Dublin case, spoke of those who, ignorant of business, took their money to improper places, and made deposits out of office hours. The fourth section of the Act was, therefore, designed to meet such cases, by declaring any actuary or cashier who should so take money out of course, and not account for it at the very first meeting, to be guilty of a misdemeanour, and liable to be punished for fraud. Section 5 required that deposit-books should be produced at the bank at least once every year for purposes of examination and check. Section 17 provided that bonds of sufficient security shall be given by every officer of a Savings Bank trusted with the receipt and custody of money, and that these bonds shall be placed (not with the Clerk of the Peace as before this Act), but under the charge of the National Debt Commissioners. The old arrangement likewise for depositing the Rules of the bank with the Clerk of the Peace was repealed by section 18, and in its place the next section enacted, that when a new bank was proposed, two written or printed copies of the Rules of such bank should be transmitted to the Barrister for his certificate, who, on approval, was to send one copy back to the Bank authorities, and the other forward to the National Debt Office. It was the 7 and 8 Vict. which, in addition, conferred extended powers on the certifying barrister, by appointing him final Arbitrator in any disputed case. The bill, after having been modified in one or two respects, and contested on several points,[74] received the Royal Assent in August, 1844, and was ordered to take effect on the 20th of November following.

It will not be supposed that the bill, of which the above is an outline, was passed through its different stages without a word from Mr. Hume. That member may well be forgiven for alluding on one of these occasions to the past, and stating, how, so far as the rate of interest was concerned, he had been fighting for the very thing which was likely to be brought about. This was clearly a case of patience and obstinacy rewarded.[75] The bill, however, Mr. Hume stated, scarcely went far enough for him, though it was in the right direction. He still held the opinion that persons holding Government security should be placed on the same footing, and that those who had 20_l._ in the Funds should be dealt with in exactly the same manner as those who had 1,000_l._ In this, however, we cannot help thinking Mr. Hume went rather too far, and argued on the assumption that there was no difference between the shilling of the rich and the shilling of the poor man. Mr. Goulburn in replying to Mr. Hume said, he knew this was a favourite point with the member for Montrose; but he could not concede it: a poor man with 20_l._ in the Funds could not and never would be able to bear a fall in the Funds so well as the large stockholder.

Early in 1848 a Committee of the House of Commons, consisting of the Chancellor of the Exchequer, Mr. Goulburn, Mr. J. A. Smith, Sir J. Y. Bullar, Mr. Shafto Adair, Mr. Bramston, Mr. Gibson Craig, Mr. Fagan, Mr. H. Herbert, Mr. Herries, Mr. Hume, Mr. Reynolds, Mr. Poulett Scrope, and Mr. Ker Seymour, was appointed to inquire into the state of the Irish banks. As already related in the last chapter, the Cuffe Street bank soon broke up after the trustees were enabled to take refuge under the Act of 1844. Into this inquiry, which we have before referred to, it is unnecessary to enter much further; it presents little else than information relating to the flagrant breaches of faith of officers to whom were entrusted the hard earnings of hundreds of the poorest people living around them. The scope of the inquiry was limited to Ireland. It seems to have been purposely intended that a full investigation into the general Savings Bank question should not now be made. The inquiry was not extended in any sense to the English banks, though some of the most prominent English managers offered to give evidence. Doubtless the Government feared that a full exposure of the frauds in Savings Banks, an inquiry into several matters connected with the disposal of Savings Bank money already beginning to be mooted, might have the effect of shaking the confidence of the people. People were openly saying that Government had not done its best to make the Savings Bank a secure repository for the people; yet, rather than raise this issue before a Committee of the House, it submitted to have the investigation that _was_ made designated "a perfect star-chamber business," and the members of Government themselves subjected to great ridicule. The Committee sat only nine days, and made a report to the House, which Lord George Bentinck characterized as "the most extraordinary one that ever was presented to Parliament." "It is as remarkable for its brevity as for its vacuity--as brief as it is worthless." The report is certainly brief, and may here be given without curtailment: "Your Committee," it commences, "has proceeded with the inquiry entrusted to them by the House, but owing to the late period of the session they have found themselves unable to bring it to a satisfactory conclusion. They are of opinion that it is advisable that a further inquiry should take place, either during the recess or in the next session of Parliament, regulating the liability of trustees, and providing for the appointment of _auditors_ to Savings Banks."

The Government immediately set to work to introduce a bill. They saw that a great mistake had been made four years before, in settling the question of the liability of trustees in the way it was done, and now the endeavour must be, if possible, quietly to re-enact the old law in this particular, making trustees liable in the way they were before 1844. The great mistake in this instance, and that which proved fatal to the attempt, was in legislating for English as well as Irish banks, when the inquiry upon which the bill was taken to be founded had been limited to Ireland, and was not allowed under any circumstances to extend to England. The debates to which the measure of 1848 gave rise are certainly the most animated that ever took place in the House on this subject, and it will be interesting, as in different ways indicating the feeling of the country, to notice the expressions of opinion which the discussion elicited. The _Chancellor of the Exchequer_, Sir Charles Wood, in moving the Bill to amend the Law of 1844, appears[76] to have urged that the clause requiring the trustees to voluntarily assume responsibility had completely failed; that few trustees would take the responsibility upon them, and that, consequently, depositors were losing faith in the banks;[77] irregularities were increasing; and the trustees had not even the pretence of a sufficient inducement to make them attend to their self-imposed duties. In place of no responsibility at all, he proposed that each trustee should be responsible for a certain sum, which would be large enough to ensure a reasonable amount of attention, and so small as not to frighten them into resigning their office altogether. This sum it was proposed to fix at a hundred pounds. Clauses in the bill also provided for the appointment of auditors, as suggested by the Committee of Inquiry, and for the examination of depositors' books, "that once in each year the books of every depositor shall be produced at the office of each Savings Bank, for the purpose of being inspected, examined, and verified with the books of the institution by the auditor."

More from the way in which this bill was introduced and the circumstances attending the Committee of Inquiry, than from any decided opposition to the Government proposals, much agitation prevailed among Savings Bank officials, which was ultimately made to extend to depositors.[78] The latter were led to believe that the proposed legislation would in some way be inimical to their interests, and petitions were got up, praying that no further Acts should be passed until a full inquiry was made into every part of the Savings Bank system. _Sir Henry Willoughby_, who for some years before this time, and till his death, took much interest in this and cognate questions, again presided at a meeting of Savings Bank managers in London about this time, and helped them to concert measures of opposition. Before speaking in Parliament on the introduction of the bill under consideration, he presented two large petitions, signed by 79,000 depositors in Savings Banks, praying that Government would cease their interference with these institutions. This gentleman then referred to the quietness with which Government had introduced such an important bill, "not having given such a notice as was invariably given even with respect to the commonest turnpike road." And the quietness was a mistake of no ordinary moment. Had the details of the bill now introduced been understood by the country, there might have been opposition from managers of Savings Banks, but there could not well have been so much dissatisfaction expressed by the Press, or by the body of depositors, whose interest every clause of the bill was meant to conserve. Sir Henry Willoughby also on this occasion gave utterance to the feeling which was in many other minds, and which had led to the opposition then manifested, by alluding to "the impression which had got abroad and which he believed was perfectly true, that the money of depositors was used for other purposes by the Government than those that related to the Savings Banks." Whether the money was used advantageously or not he would not say, for that was not the question. _Colonel Thompson_ spoke strongly of the erroneous impression that everybody had been in about the Savings Banks having full Government security for their money; so strongly, indeed, that in another place we shall make further allusion to him. The bitterest opponent, however, which the Chancellor met with on this occasion was the leader of the Opposition in the House. _Lord George Bentinck_ felt sure that the bill was one which its mover (Sir Charles Wood) did not understand. After going into the details of the measure, and endeavouring to prove that the examination of depositors' books could not be accomplished in the larger banks every year,[79] and that the smaller concerns could not afford to pay for auditors out of the small surplus of interest which went to pay expenses, Lord George added, "Surely a Government which had proposed so much and done so little, can refrain from doing harm, since they cannot do good; and will not press this most discreditable bill through the House at the end of August without necessity for it, and against the opinions of those best calculated to form a judgment." Irish members, seeing the turn the discussion was taking, urged that, at any rate, the bill might apply to Ireland. It was patent to everybody that the poor depositors in Ireland needed every protection, however secure the same classes might feel in England. In Ireland such a bill was really required, and was necessary, to restore confidence in Savings Banks;[80] why not make it apply to Ireland only? After an unsuccessful attempt on the part of Lord George Bentinck to throw out the bill altogether, it was decided, on the motion of Mr. Wodehouse, and by a vote of thirty to eleven, that the words "Great Britain" should be struck out of the motion, and that the Act should simply apply to Irish Savings Banks.

That the bill now passed was a beneficial change in the law, and a considerable step in the right direction, no one now doubts; had not the perverseness of Savings Bank officials prevented the Government from making its provisions apply to England, much subsequent suffering and grievous loss would have been saved to many of the best classes of our industrial population. It was a safeguard such as was wanted in Ireland, and it answered admirably.

The bill having been made law, and new depositors secured to a considerable extent from robbery and exaction, the attention of the Legislature was called to those who had lost their all by past frauds; and the records of Parliament show that one member after another reverted to such topics until redress was obtained. On the 29th of March, 1849, _Mr. Reynolds_, the member for Dublin, moved for the appointment of a Committee to investigate into the case of the Cuffe Street bank in Dublin, and to ascertain who were liable for the extensive frauds in that bank. He alluded to the unsatisfactory result of the previous inquiry, which was, indeed, not meant to be final. In making his motion, Mr. Reynolds, who had access, of course, to the best sources of information, entered into a full account of this bank, stating, indeed, many of the facts which we have already given. He complained most bitterly of the Government, who had accepted the advice of a "flippant barrister," as Mr. Pratt was designated, and who had suffered the bank to go on when it was known to be in a state of hopeless insolvency. He described the heartrending scenes which he had witnessed in Dublin, owing to the failure of the bank, and during the last eighteen months, and related some of the cases to the House, where they had ended in insanity, death, or suicide. That the depositors were mostly poor persons he proved, by stating the average amount due to each of the 1,664 persons who were creditors of the bank to be but 27_l._ Mr. Reynolds added, that he had no hesitation in saying, under the peculiar circumstances of the case, that the Government ought to make good the loss.[81] If he had not proved that point, he left it to a Committee of Inquiry to take up. "In the name not only of justice, but of mercy and compassion," he besought the House "to agree to his motion, and to save many poor persons from utter and total ruin." The member for Dublin University (Mr. Napier) seconded the motion for inquiry, and discussed many of the details of the failure from a legal point of view. In one remark, he gave expression to a very general feeling: the course of legislation on Savings Banks had plainly been to reduce, for strong reasons doubtless, the responsibility of trustees; in proportion, however, as that responsibility was reduced, so he, Mr. Napier, thought the moral responsibility of the commissioners increased. "Precisely in the same degree as the trustees were relieved, should the vigilance of the other body have been awakened." Nor was it less unfortunate--though this is a matter which was not alluded to--that at a time when it was thought most fitting that the interest on deposits should be reduced, steps should also be taken to make them less secure as well as less remunerative.

_Mr. H. A. Herbert_, the member for Kerry, proposed an amendment, extending the inquiry to this Tralee and Killarney banks, and also to the single case of failure in Scotland, at Auchterarder. Mr. Herbert dwelt upon the case of these frauds in an able manner, but we reserve the consideration of them to the next chapter. The reference to the Scotch case doubtless called up Mr. Cowen, the member for Edinburgh, who was sorry to hear of the necessity for any such inquiry in Scotland; he "had been accustomed to think that they were above suspicion in Scotland with reference to their banking matters." _Mr. Cowen_ said that he regarded all discussions on Savings Banks as most momentous, and as involving the consideration of the most important national questions. "It was of the greatest importance that Savings Banks should be placed on a solid foundation, and cleared of all those injurious anomalies which now attached to them," for he "believed that they might be made the means of aiding in a great measure to stem that flood of pauperism which was now overflowing the land." Much warm discussion followed. The _Chancellor of the Exchequer_ alleged that the proposed inquiry would be both a useless and an expensive one; and Mr. Goulburn, the ex-Chancellor, who was equally committed to the same course of legislation and the difficulties which that legislation had brought upon the Government, rendered prompt assistance by saying exactly the same thing. On a division, it was carried by a majority of three in a House of 100 members, that a Committee should be appointed; and by a majority of eight, that the inquiry should extend to the three Irish and the Scotch defaulting bank.[82]

It was one thing, however, to carry a Committee of Inquiry in the face of both the great parties of the House, and another to nominate the members who should compose it; and this Mr. Reynolds subsequently found out to his evident chagrin and disappointment. The Government had clearly not been sufficiently on the alert, and hence they had been beaten in the first particular; they secured themselves however against any further defeat. In the following April, Mr. Reynolds proceeded according to usage to nominate his Committee, which he wished should consist of eight English and seven Irish members. The Chancellor of the Exchequer objected, and wished for the reappointment of the Committee of the preceding session. Mr. Goulburn promptly assisted by saying, that it would be a reflection on the Committee of last year if it was not so reappointed. In that Committee there were only three Irish members, though the subject then, as now, had exclusive reference to Ireland. Mr. Reynolds, Mr. Herbert, Sir Henry Willoughby, stoutly contested the point, which ended in the names of two additional Irish members being proposed. The Government saw the importance of the question, and that the inquiry would be made in this way to turn upon the administration of Savings Banks generally, and the responsibility of Government in regard to them, and succeeded in resisting any change by an adverse majority of 111 to 74. The whole of the names not having been gone through on this occasion, the Irish members returned to the subject again a few days subsequently. "In the names of the poor who had been rendered paupers by laws badly administered," one member asked, "for an impartial jury." Some of the daily papers had declared that the Government meant to pack the Committee and so get a favourable decision, and this encouraged the independent members to persevere. Mr. Herbert said, "the Government all along most consistently attempted to quash inquiry." He condemned in strong terms, and under the apparent approbation of the House, the conduct of Mr. Pratt in relation to the Irish banks. Mr. Reynolds declared he would divide the House upon all the remaining names offered by Sir Charles Wood. After two divisions, however, when he was left in a minority of 42, and 59, in a House of 202 members, he desisted from carrying out his threat; though he had a close phalanx of followers, he saw he had no chance against the combined hosts which the leaders of the two principal parties in the House had brought to bear.

The members ultimately appointed were the Chancellor of the Exchequer, the ex-Chancellor, Mr. Herries, Sir George Clerk, Mr. P. Scrope, Sir G. Y. Bullar, Mr. Ker Seymour, Marquis of Kildare, Mr. Adair, Mr. G. Craig, Mr. W. Fagan, Mr. Bramston, Mr. J. A. Smith, Mr. H. Herbert, Mr. Reynolds. This Committee sat thirteen days, and examined nine witnesses, including several officials connected with the Cuffe Street bank, Mr. Tidd Pratt, Mr. Higham of the National Debt Office, and Mr. Boodle of the St. Martin's Place Savings Bank, but came to no conclusion, and recommended nothing to the House.

On the 13th of May, 1850, the same gentlemen were reappointed under the self-same conditions as in the previous year: they sat eleven days, and examined some of the same and other witnesses, and on this occasion made a long and exhaustive report to the House.[83] This report, for which all the members except Mr. Reynolds and Mr. Herbert voted (each of these gentlemen having produced a report of his own which the Committee would not accept), went over the case of the defaulting Savings Bank in Dublin very succinctly; exonerated National Debt Commissioners and their officers from blame; stated that they found the commissioners did not exercise all the powers they possessed, but this arose "partly from a misgiving as to the effect of an exercise of their authority, and partly from an unwillingness to run the risk of creating a discredit of these institutions;" and that if the trustees had taken the advice of the commissioners, when in 1845 they advised them to close the bank, the loss to the depositors would not have exceeded five shillings in the pound. For these and similar reasons the Committee came to the weighty conclusion, relative to this particular case of fraud, that "while they cannot admit the existence of any legal liability on the part of Her Majesty's Government, they recommend the case of the depositors in the Cuffe Street bank to the favourable consideration of the Government, with a view to the adoption of some measure which shall at least mitigate the extent of their loss." With regard to the other frauds into which they were instructed to inquire, they reported that there were "no peculiar features connected with them differing from those of other banks which have suffered from the dishonesty of their actuaries." They concluded by expressing their conviction of the unsatisfactory state and working of the existing law; proper power did not reside with any authority "to check abuses, however indisputable;" by expressing their opinion that the provisions of the law of 1844 had worked in a manner obviously at variance with the intentions of Parliament, and wound up by the following important paragraph:--

"Your Committee have observed with much satisfaction that
the Chancellor of the Exchequer has introduced a Savings
Banks bill, which is calculated to remedy several
important defects in the existing law, and extends the
responsibility of Her Majesty's Government to the
depositors; and they therefore abstain from all
observations on this part of the subject, further than to
state the conviction, which this inquiry has forced upon
them, of the urgent necessity for further legislation, if
those institutions, which have of late years acquired an
extent and importance so little anticipated by the
original founders of Savings Banks, are to preserve their
hold on the confidence of the country, or produce the
beneficial results expected from them in encouraging and
rewarding the industry and self-denial of the working
classes."

This report was presented to the House on the 1st of August, and at once referred to a Committee of the whole House. Next day, the Chancellor of the Exchequer proposed that a grant of 30,000_l._ should be made to the defrauded depositors in the Cuffe Street bank, out of the Consolidated Fund. _Sir James Graham_ opposed the grant. If this money was a matter of charity, he argued, they were opening the door to a dangerous principle; if of justice or equity, the claim ought to be paid in full. It was unworthy of the British public to compromise for ten shillings in the pound. Other members asserted that if Cuffe Street depositors were paid, the poor creditors of other insolvent banks would likewise have to be paid. Generally, however, the House felt with the Committee; it was altogether an exceptional case, the claims of the former being, as Sir Charles Wood expressed it, "something between equity, sympathy, and charity." _Mr. Bright_, a resident of Rochdale, and _Mr. Sharman Crawford_, the member for that borough, whose ears had lately rung with the tales of heartless deception practised there, were both for paying these depositors in full; "there might be no legal claim, but there were the claims of equity and morality." Mr. Bright, indeed, went so far as to say, that if Government would bring in a bill to secure other banks in future from these dreadful calamities, he would willingly vote that all claims from Savings Bank failures should at once be met by the State. The House divided on Sir Charles Wood's motion, when 118 members voted for it, and 39 against it. We may as well say here that several attempts were subsequently made to get the remaining 30,000_l._ from Government, but without avail.[84]

It will not be difficult for the reader to understand the position of affairs up to 1850. The law was clearly unsatisfactory; it had been pronounced so by Committees which, though composed of nearly the same members, had sat in three successive years, and patiently examined into the question in its every detail. The only difference of opinion indeed in the Committees was, as to the persons who were liable, and to what extent, for the defective state of the law, and the results to which it had led. Nor is it at all wonderful that legislation should have been needed. Savings Banks, as it was often pointed out about the time, had increased enormously within a short period, and beyond all proportion to the expectations which were originally formed with regard to them. When they were first started, many benevolent individuals entered heartily into the work of managing them, and asked for no return, except the sense that they had assisted in a humane and praiseworthy object, for the labour they underwent. Putting two considerations together--the great increase of business, and the no less certain decrease in the first ardour attending such enterprises--the increase of paid officials became absolutely necessary, and in almost a corresponding ratio did the unpaid machinery decline. Slowly but surely the management of Savings Banks went out of the hands of an unpaid into those of a paid staff of officials, and every year the system of check became more nominal than real.[85] It was apparent, not less from the proceedings of solvent Savings Banks than from the exposures made in the case of unsound ones, that those who had originally taken part in the establishment of these institutions slowly became honorary in place of active members of the board; and of those who still continued to take a share in the work, many had got into the habit of leaving their duties to subordinates, in some cases signing blank forms, and even cheques, to be filled up by the acting-manager at his discretion.

At this stage in the history of Savings Banks, the Chancellor of the Exchequer came forward,--as the reader has already learnt from the Report of the Committee of 1850,--with a bill to amend the law. This bill he introduced to the House of Commons on the 29th of April, 1850, and it forms part of our object to explain in detail the plan now proposed, inasmuch as for many subsequent years the same measure, with only trifling modifications, was offered over and over again to the consideration of the House, and as often declined, through the overpowering influence of the Savings Bank interest in the country. On bringing forward his bill, the Chancellor said he wished to avoid all reference to the past, except in as far as the experience of the past was a guide to future legislation. He very briefly traced the history and progress of Savings Banks, remarking at the time that, if he were not to do so, few could be aware of their real nature, and how they had grown to their present dimensions. We need not follow Sir Charles Wood through this account, nor even repeat the reasons which actuated the Legislature in making changes in the law from time to time up to the year 1844. Referring to the Act of that session, he described it as "most defective," and the bill he wished to introduce would amend it. Speaking of the responsibility as to loss in Savings Banks, which many persons thought should rest with the Government, he repudiated the notion, unless Government was allowed to have some control over the persons who might occasion the loss. On the other hand, he did not wish to do away with "the most invaluable feature in Savings Banks--the local management." He thought, however, that Government might take a medium course, and fairly meet the case by making such arrangements as "would end in the State bearing nearly the whole responsibility as regarded the receipt and payment of money." What he proposed was to alter the enactment that the treasurers of Savings Banks should receive no emolument, _and to vest the appointment of Treasurer in the hands of the Commissioners for the Reduction of the National Debt_. The existing treasurers might in most cases be continued, and if they wished to work for nothing, they might still have the option; but he insisted on the Government reappointing such officers, and upon having a control over them. To this officer, or some one acting for him, all payments should be made over--the receipt and payment of money by any other person to be declared illegal.[86] He considered that this arrangement would guard against the possibility of fraud. The treasurer and secretary, acting for different interests, as it were, could scarcely be guilty of collusion, and the one would in all cases act as a check upon the other. If this plan were agreed to, the Government would of course be responsible for every farthing paid to the treasurer.

This was the great and distinguishing feature of the measure which the Government was disposed to adopt; but there were other features in the bill of considerable importance, which ought not to go unmentioned. Thus, it proposed that the Act of 1844 should be repealed, and that trustees should be responsible for their wilful neglect or default, as in the Act of 1828. It was clear, however, that under the appointment of treasurers the responsibility would be little more than nominal. Another point which the bill provided for was an efficient audit of the accounts, the trustees of each bank to appoint an auditor, and the pass-book of each depositor to be annually examined, the auditor in each case comparing the book with the ledger of the office.[87] The bill proceeded, further, to give power to the National Debt Commissioners to send down to any Savings Bank, should they see occasion for it, an Inspector, to test the accuracy of the accounts of that bank: with the other provisos already mentioned, depositors would thus be absolutely safe. The next clause provided against any further loss to Government. The Chancellor in introducing this subject spoke of the different rates of interest which had been given to Savings Banks, and said all of them were higher than could be given without loss. But this was not all. The loss sustained in having to pay out a large sum of money whenever called for, no matter how low the Funds were at the time, was equal almost to the former. After explaining the case, and giving examples of its working, he added that Government thus suffered a loss on capital and a loss on interest. "It had been proposed that Government should merely act as a broker, making depositors subject to all the fluctuations of the Funds; but," said the honourable gentleman, "from the numerous communications I have received from all parts of the country, depositors think much of their getting their money back as they put it in, and looked to the amount of interest as a secondary consideration." He then gave a variety of statistics, and proposed that the limit to the amount of deposits should be fixed at 100_l._ and that the rate of interest should be reduced from 3_l._ 5_s._ to 3_l._ for trustees, and 2_l._ 15_s._ instead of 3_l._ 0_s._ 10_d._ to depositors.[88] The Chancellor of the Exchequer concluded by expressing the wish that the bill of which he had given the principal clauses, should be discussed fully and temperately: it involved no party feeling, but it involved many things intimately connected with the welfare of the classes for which Savings Banks were established: he said he had done his best to meet the difficulties of the case, but difficult as it was to do, the matter ought at once to be settled, and to be settled once for all.[89]

It, however, was not to be settled so soon. Before we refer to any further expression of opinion on the subject in Parliament and the ultimate decision in the case, it is only right that we should present the other--the Savings Bank--view of the matter, as uttered by the powerful, we had almost said corporate, body at St. Martin's Place. The Committee of Managers of this important London institution met, as their custom was, to pass resolutions on any matter affecting Savings Banks. A petition to Parliament was framed on the resolutions come to in this as in other instances, and similar petitions were got up and presented to Parliament from other Savings Banks, who naturally looked to the St. Martin's Place institution for advice and guidance. At a meeting held at this representative bank on the 14th of May, 1850, Lord Walsingham in the chair, the proposals of the Chancellor of the Exchequer were gone through _seriatim_, and all of them, without exception, disputed and condemned. It came to the conclusion that (1) the proposed introduction into Savings Banks of a Government treasurer, &c., "must lead to great confusion, and eventually to the disruption of these valuable institutions;" (2) that "the proposed reduction of the existing rates of interest and the limit in the amount of deposits will, besides imposing injurious restrictions on depositors, so diminish the means of defraying the expenses of management as to render it extremely difficult in some, and impossible in other cases," to engage efficient assistance; (3) that any further reduction of the rate of interest to depositors would only tempt them to withdraw their money from Savings Banks and place it in "more attractive, but frequently hazardous investments;"[90] (4) that the grand principle on which well-conducted Savings Banks have hitherto been so efficiently managed, viz., "that of having the constant superintendence of gentlemen unconnected with the receipt or payment of money, will be destroyed if the new bill should be passed into a law." We ought to add that this Committee did not object to the abrogation of the law of 1844, which was passed "contrary to their expressed wishes and recommendations;" that, although they urged that frauds were comparatively rare, and far less in amount and extent than in public or mercantile establishments, and that for such reason there was no just ground for the introduction of an entirely new system such as was now proposed, they had no objection to a measure adapted still further to promote the solvency and good management of Savings Banks, only they must insist that the necessity for such important changes "should be considered by a Select Committee, and evidence taken from men of long experience in Savings Bank management." The last resolution to which this body came was, "That a petition to the House of Commons, founded upon the foregoing resolutions, be printed and circulated for the information of other Savings Banks."

To return to the discussion in the House of Commons on the bill now proposed, _Mr. Hume_ in a temperate speech supported, on the whole, the Chancellor of the Exchequer. He held that Government ought to undertake one of two things--either to leave Savings Banks altogether alone, or else to ensure perfect security to the depositors, which he saw no difficulty in doing. Of course he agreed with the proposal to reduce the rate of interest and the limit of the total amount of deposits, remarking on the latter subject that he had known many cases where Savings Banks had been taken advantage of in a way that, he was about to say, was quite unworthy of them; "but let no man say that anything was unworthy where profit was the object, for he found in all ranks and classes a tendency to avail themselves of the folly of the public." Government, he thought, could not do better than try to encourage among the labouring classes the habit of saving; "for the moment a man had a nest-egg he desired to add to it, and thus were habits of economy and prudence fostered among the mass of the people." _Sir Henry Willoughby_ opposed the bill; he thought the proposal to reduce the rate of interest would be "an extremely disagreeable measure." He referred, however, on this occasion principally to the management of Savings Bank funds, and expressed his opinion that what was required was that the management of the affairs of Savings Banks should be taken out of the hands of the Commissioners of the National Debt, and a separate commission appointed for the purpose.

Few members questioned the wisdom of the proposals at this time, but many expressed themselves dissatisfied that the bill would have no reference to the past, and that the Chancellor had not alluded in any way to the depositors who had lost their all by the bank failures and by the action of the bill of 1844. Mr. Crawford spoke of the Rochdale depositors, Mr. Fagan of the Killarney depositors, and Mr. Herbert of the Dublin and Tralee depositors. _Mr. Slaney_ thanked the Chancellor of the Exchequer for the amount of attention which he had bestowed on the bill, which he "deliberately thought would interest more persons than any other measure that would be introduced this session." He thought the security now promised would be real, though he was sorry the Chancellor meant to make the people pay for it. His opinion (and he had considered the subject of industrial investments very largely) was that neither the amount of, nor the interest on, deposits should be reduced; he would "be most willing to pay a small bonus to tempt the savings of these poor people." We are glad, however, to say that this view of the case did not meet with much approval. After several more appeals from such members as Mr. Bankes and Colonel Thompson, that Government would come to the rescue of the defrauded depositors who had, in their ignorance it might be, looked to the country for security, the bill was ordered to be brought in by the Chancellor and Mr. Attorney-General. On the motion made to read the bill a second time on the 8th of August, 1850, Mr. Hume and Sir Henry Willoughby importuned the Chancellor of the Exchequer to defer the consideration of the bill to the next session; the former urging that honourable members might study the reports of the Committees of 1849-50, during the interim, and the latter that time might be given "to allow of a consolidation of all the statutes relating to Savings Banks, and an inquiry into the whole subject." The Chancellor replied, that after the agitation which had been got up among the managers of Savings Banks, and the considerable misunderstanding which prevailed relative to the provisions of the bill, he reluctantly consented to withdraw it.[91] Several members took the opportunity to urge that the Chancellor should bring the matter forward the first thing in next session; but the Savings Bank interest proved still stronger in 1851, and again Sir Charles Wood got nothing done, and never heartily took up the question again.

In 1853 an Act was passed to "Amend and Consolidate the Law relating to the Purchase of Government Annuities." The bill was introduced and carried through by the Chancellor of the Exchequer. This Act continued the same powers to the Commissioners as were given in 1833, and the clauses relating to the purchase of annuities, deferred and immediate, were continued. It further empowered them, however, to grant deferred annuities for a sum to be paid down at once, and not returnable, and also to grant annuities otherwise than through Savings Banks. It was said that the reason why the Act of 1833 had been practically inoperative was the want of such a clause: that the fact of only being able to buy a deferred annuity on the condition of money being returnable, not only caused many lapses, but made the tables heavier than they ought to be. Under the fresh clause better things were augured; any one purchasing such an annuity, it was argued, takes the chance of his not living to receive it, just as the member of a benefit society takes his chance of never being ill, and therefore never needing what he pays to secure if his health should fail. The benefit in return for this risk is, however, proportionally increased, inasmuch as the contributions of those who do not live to the term when the annuities commence, go to swell the contributions of those who may,--the purchase-money, in the case of money being returnable, being of course much larger than in the other, where more risk is run. We give the argument for what it is worth; but it is certainly curious that at a more recent date, when again the law regulating the purchase of annuities underwent alteration and amendment, a great outcry was raised, because the tables of rates, "with money returnable," were temporarily kept back; one respectable organ of public opinion going so far as to say that the changes would be inoperative till these tables were produced. An opposition was got up during the progress of the measure in Parliament, owing to the clause empowering the Government to grant life assurance policies to those who should likewise buy annuities. It was said now, just as it was urged, though much more strongly, subsequently, that there were great objections to the Government becoming a trading community, or doing anything which could be carried out by a private company. "The system of life assurance," said a well-known Scotch member, "was at present carried on so successfully and so judiciously by the ordinary life assurance societies, that it would be most unwise to interfere with them." Another member argued that the annuities scheme had so lacked success that no amount of tinkering would make it applicable to the country. The Secretary of the Treasury explained that Government were not anxious about doing the business of insurance offices, but only desired to give facilities, which the law did not then allow, for the conversion of Savings Bank deposits into a satisfactory provision for want or old age. The bill was read a third time, with a majority of 28 in a House of 56 members, and soon afterwards passed without any further difficulty, and received the Royal Assent. Such a measure, whatever the poorer classes might think of it, was well calculated to spread the spirit of independence amongst them. The State did well to offer the opportunity of increased facilities; and if those for whose benefit such schemes were intended did not avail themselves of them to secure, by a very small amount of temporary sacrifice in seasons of health and prosperity, a provision against those risks to which all the poorer classes are liable, of falling through unexpected contingencies into poverty and pauperism, the blame would rest elsewhere than with the State.

As we have already said, the session of 1851 passed without any attempt at legislation, and in the beginning of 1852, there being still no sign of action on the part of the Executive, the late _Mr. Herbert_, so well known in connexion with the Irish banks, proposed a resolution to the effect--

"That this House has observed with regret the continued
neglect of Her Majesty's Government to fulfil their
promise of introducing a bill for the regulation of
Savings Banks, by which those important institutions may
be enabled to preserve their hold on the confidence of the
country, and a due encouragement be thus given to the
industry and providence of the working classes."