Chapter V (2)

There was every reason to believe that this resolution would have passed, until the Chancellor of the Exchequer rose. _Sir Charles Wood_ admitted that the bill had been far too long delayed; but this was no fault of his. It was thrown out in 1850; he could not get it introduced in 1851: it was ready, however, and it should be brought forward this session. He had not given notice of it, because he had been engaged in consultation with several members in so preparing the measure as to ensure its passage through the House. His firm conviction was, that the delay in the present instance had tended not only to improve the bill, but to diminish the chances of opposition to it when introduced. During the last four years the greatest pains had been taken to frame such a measure as should effectually remove the evils that had been complained of; and within the past few months they had had the assistance of a new Comptroller of the National Debt Office, who had "devoted himself with great diligence to the subject."[92] He submitted, in conclusion, that he was not deserving of the censure of the House, especially as it had been settled to try the measure again during the present session. _Mr. Disraeli_ agreed with Sir Charles Wood, though the resolution before the House was apparently justified by the circumstances, it would not be becoming in them to divide the House after what had been promised. The question was surrounded with difficulties, but notwithstanding these difficulties it was the paramount duty of the Legislature to grapple with it; and an opportunity would be soon afforded. Mr. Disraeli at this time did not know how soon he was to be in a position to grapple with the subject himself. Sir Charles Wood's pledge was not kept. All such measures as those we are considering have suffered greatly from the vicissitudes of administrations, and it was so in this instance. Towards the end of 1852 Mr. Disraeli succeeded Sir Charles Wood as Chancellor of the Exchequer in Lord Derby's first Ministry; but he had scarcely time, supposing him to have had the disposition, to take up the matter where it had been left. When the Derby Administration gave place to the coalition Ministry of Lord Aberdeen, and Mr. Gladstone took the place of chief financial minister, there was soon a better prospect of some settlement. Even under his auspices, however, matters at first went on very slowly; so multiform were the questions and interests involved, that even Mr. Gladstone's powers were severely tried to clear the ground of the incumbrances which time and prejudice had reared. When Mr. Gladstone left office and was succeeded by Sir George Lewis much had been done; the necessary preliminary measure of a full investigation into the Savings Bank question by a Committee of the House of Commons had been decided; the real nature of the connexion existing between the Government and the Savings Banks was better understood: and when after a lapse of two or three years he returned to his old position, he took the matter up where it had been left, and carried the subject, by his unapproachable eloquence and energy to an easy and final solution. Mr. Gladstone's name will go down to posterity covered with honourable trophies of his great powers; but we question whether among the great schemes he has carried any will be remembered longer than those meant to increase among the lower classes the habits of prudence and frugality.

Early in 1853, and when he had but just succeeded to the office of Chancellor of the Exchequer, Mr. Gladstone gave notice that the subject must be taken up, and if possible settled. A bill[93] was allowed to pass the second reading without discussion; but when the subject came up before Committee in July of that year, Mr. Gladstone, compelled to succumb to the wish that Parliament should be prorogued, asked that this and other bills might be deferred till the next meeting of Parliament. He said he had made great progress with the bill since it was first introduced; he had sought to get the opinion of the different Savings Bank managers upon it, and he believed he had acquired a pretty accurate knowledge of the state of feeling in the country on the subject.[94] All this was favourable to the prospects of the bill; but now, as the House had lasted since November 1852, he feared that if it was pushed forward it might fail to pass. He should have liked to have got the question settled, but he now thought his object would be more speedily obtained by the delay proposed. Here the sagacious Minister was mistaken; the old adage of no time being better than the time present could often be well applied to proposals to defer desirable matters of legislation to a future session. No mention was made of the subject for nearly eighteen months; the country had more pressing, and, for the time, much more serious matters to consider, which it will be quite unnecessary to particularize.

On the 20th of December, 1854, Mr. Gladstone moved for and obtained leave to bring in two bills during the session of 1855: the one "to create a charge on the Consolidated Fund" of the money due on behalf of the depositors in Savings Banks, and the other, the bill for the management of Savings Banks which was withdrawn in 1853. In the former important proposal the Chancellor of the Exchequer desired to make the law more perfect as to the relation between the depositor and the State, by giving the latter a better title to the money invested with the State. He wished, in his own language, "to reduce the obligation and the contract of the State with the depositor to that simple form which is adopted by every banker." He would propose, "as respects the bulk of the funds received from Savings Bank depositors, that they should be held in this country as they are held in other countries," and not in the complicated form of Stock and other public securities. Mr. Gladstone's view, more than once expressed in strong terms, with respect to the State using the money belonging to Savings Banks, was that it was no matter to anybody what was done with the money,[95] providing it were ready at call and the stipulated interest were given,--the stability of the country being surely a sufficient guarantee for its safety. Savings Bank authorities, on the other hand, disputed the right of the Chancellor to use the money; would prefer to use it themselves in other investments, if the funds were applied otherwise than under statute in the purchase of Bank Annuities; and referred to the uncertain title in law which depositors had for the money according to the governing statute. Mr. Gladstone's bill proposed to give this title to every penny so deposited with the State, by throwing the burden of any deficiency arising on the Consolidated Fund, and so silence at any rate the last objection.[96]

Early in the session of 1857 the then Chancellor of the Exchequer (the late Sir George Lewis) was several times asked if the subject of Savings Banks had not to be brought forward and concluded. These questions led to his promising to bring in the Government measure which, often brought forward and as often withdrawn, was still waiting for a tide of popular favour to carry it into law. On the 27th of February in this year he gave notice of this intention, and earnestly trusted that the House would allow it to pass. In a short speech, the points of which we need not recapitulate--for it dealt with the same facts and came to the same conclusion as those speeches of previous Chancellors already described,--he proposed the first reading. Then came the dissolution of Parliament, and its forcible postponement for one more session.[97]

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 100_l_., 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.

6. That the Rules and Regulations relating to the receipt
and payment of all moneys, and to the purchases and sales
of stocks and all securities, be passed at meetings of the
Commission specially convened for that purpose, and shall
be subject to the approval of the Lords Commissioners of
Her Majesty's Treasury.

7. That the annual accounts of the Commission, containing
the receipts and payments of all moneys, and every detail
as to the sales and purchases of stocks and other
securities belonging to the Savings Banks, within the year
ending on November 20, in each year, be audited by the
Commissioners of Her Majesty's Audit.

8. That monthly accounts of the receipts and payments of
all moneys, and of sales and purchases of stocks and other
securities, be prepared by the Commissioners, and copies
of the monthly accounts shall be forwarded to the Lords
Commissioners of Her Majesty's Treasury, and to the
Governor of the Bank of England, within one week of the
following month.

9. That the annual accounts, containing the receipts and
payments of all moneys, and every detail as to the sales
and purchases of stock, and of other securities of the
Savings Banks, be laid before both Houses of Parliament in
the first week of February, if Parliament is sitting; and,
if Parliament is not sitting, then within ten days next
after the first sitting of Parliament.

10. That no sales, purchases, or exchanges of stocks or
securities held by the Commission shall be made, except as
required for the purposes of the Savings Banks, and that
no funding of Exchequer bills held by the Commission shall
in future be made without the special authority of an Act
of Parliament.

11. That the Commission should be empowered by Parliament
to invest a portion of such funds, not exceeding one-third
of the whole, in other securities than those now
authorized to be purchased with those funds; those
securities being such as are created or guaranteed under
an Act of Parliament.

12. That it is inexpedient that any existing deficiency of
the funds should be made the ground of reducing the
present rate of interest allowed to the banks, but the
whole subject of the estimated deficiency be referred to
the consideration of Parliament.

13. That any future surplus income of the Board shall be
carried to the credit of a guarantee fund, to meet any
casual charges, losses, or deficiency of income; but if
there shall be no surplus to meet such deficiency of
income, the rate of interest allowed to Savings Banks
shall be proportionately diminished.

14. That the Commission shall have power to frame
regulations respecting the accounts to be kept, and the
audit thereof, and respecting the receipt and payment of
deposits, on the adoption whereof by any Savings Bank such
bank shall acquire security for the deposits therein
guaranteed by Parliament, and that such Savings Bank shall
have a special title.

15. That the Commission may appoint such officers as may
be requisite for the proper audit and inspection of such
accounts, and for obtaining due compliance with such
regulations.

16. That no banking concerns should be permitted to assume
the name of Savings Banks, except such as have had their
rules duly certified.

17. The rules of every Savings Bank shall be in force only
after they have been certified by the Barrister, to whom
no fee shall be payable.

18. That the responsibility of trustees be enacted in the
same terms as in the Act 9 Geo. IV. c. 92.

19. That the present limits of yearly and total amounts of
deposits payable on demand be maintained.

20, and last. That whenever any deposit shall amount to
150_l._, the Commissioners may, with the consent of the
depositor, invest a portion of that deposit in the
purchase for the depositor of 100_l._ stock, the interest
on which shall be received by the Commissioners and placed
to the depositor's account.

Arrived at this point, and in order that the general reader may properly understand the next attempt made at legislation on behalf of Savings Banks, we ought to say something in the way of explanation as to the disposition of the funds of Savings Banks after they reach the hands of Government. By the 57 Geo. III. c. 105, the money paid in on Savings Banks account was to be invested in Three-and-a-half per Cent. Bank Annuities.[103] Subsequently, the law was altered, by which the money might be invested in Bank Annuities or Exchequer bills. The purchases of Stock are made upon the order of the Comptroller-General by the Government broker; but no Exchequer bills are bought, except under the special direction of the Chancellor of the Exchequer. The practice is, when the balance at the bank appears to be larger than is necessary, gradually to apply it to the purchase of Stock at the price of the day. It appears that between 1828 and 1844 Stock was sold to the amount of 8,166,511_l._, and purchased to the amount of 8,816,400_l._; Exchequer bills were bought to the amount of 19,888,100_l._, and sold to the extent of 13,041,500_l._ Sir Alexander Spearman stated that he had, on his own authority, bought Stock from time to time, as the state of the balance required it; he contended that he had legally such authority by virtue of his office, and he did not hold himself responsible to give any explanation of his proceedings to the trustees or managers of banks.[104] This was just what Savings Bank managers and trustees did not agree with, and it was an interpretation put upon the statute which even experienced statesmen disputed.

Mr. Wortley told the Committee of 1858 he considered the system of mixing up the Savings Bank funds with the Government money very injurious to Savings Banks. Mr. Boodle strongly objected to the practice of dealing in Stock and Exchequer bills, and of exchanging one for the other. He said Mr. Goulburn had been induced to discontinue the practice, and to publish an account of the different transactions, but that the practice had been revived in 1853, had continued ever since, and in a worse form than ever. Lord Monteagle, who spoke very strongly on these points, stated that the present use of Savings Bank money was entirely at variance with the original design; that the Commissioners had no power to change the securities, and thus become active agents in the Stock Market.[105] Lord Monteagle expressed strong objections also to the power of funding Exchequer bills bought for the Savings Banks at the price of the quarter at which they were bought. Sir A. Spearman, who was somewhat unfairly left to bear all the brunt of every attack of this kind, on account of the Committee neglecting to call upon any of those five members of the House who were or had been Chancellors,[106] stated that the Savings Bank fund on the 20th of November, 1857, was 34,399,082_l._ Stock; whereas, if there had been no investment in Exchequer bills or bonds since 1853, the amount would only have been 34,207,371_l._ Stock.[107] Mr. Boodle dwelt upon the reputed losses which the country had sustained through the Savings Banks, and declared that if there had been any loss, it had been occasioned by the State not treating the funds exclusively as Trust Funds. In this matter, Mr. Boodle undoubtedly had the best of it. "Whenever any bill is introduced into Parliament on Savings Banks," said this gentleman, "this loss is thrown in the teeth of Savings Banks, and used as an argument, sometimes for reducing the rate of interest, at other times for reducing the limits of deposits, either annual or in gross. Therefore, it acts most detrimentally to the depositors; and it has gone out that the Savings Banks are an enormous expense, whereas we are perfectly satisfied that, if this money were properly administered, there would be no expense whatever.[108]"

That Savings Bank money was not only used for financial purposes, but turned to extremely profitable use, there can be no doubt: hence complaints of loss could only be made by persons but partially acquainted with the facts. Mr. Hume indeed, had he been cognizant of the profitable way the funds were used, could scarcely have complained about the loss to the State so often as he did. Mr. Gladstone at this time, and subsequently, never missed an opportunity of putting the matter on the proper footing, and to set it forth that, instead of a loss, the funds had been a source of considerable gain to the State. In 1834, when Lord Althorp was Chancellor of the Exchequer, and Lord Monteagle himself (as Mr. Spring Rice) Secretary of the Treasury, they determined to reduce the interest on the Four per Cents. Those who held money in the Funds and were dissatisfied with the reduction were paid off out of the Savings Bank money (without which, indeed, the reduction could not have been earned through), and a saving to the country of 53,000_l_. a year was the result. Mr. Goulburn, using the power he had in the same way, or with the money of Savings Banks to fall back upon in case of need, effected a saving of 750,000_l._ a year in reducing the rate of interest from four to three and a half, then to three and a quarter, and eventually to three, per cent. Not less useful were the funds of Savings Banks in the time of the Crimean War. By means of Ways and Means bills, the Chancellor of the Exchequer raised the necessary funds to meet the heavy demands, and thus effected an enormous saving of money, which would have been sunk in transacting a loan.

We have already made the reader acquainted with Mr. Gladstone's opinion on the right of the State to use the money entrusted to it for safe keeping; nothing could be more vigorous than his language already quoted. Mr. Gladstone endeavoured to carry a change in the law relating to the investment of Savings Bank moneys in 1855. He now, in the session of 1860, came forward and offered a bill to remedy some of the grievances complained of in the Committee. His proposals were now substantially the same as those of 1855. He voluntarily proposed to be shorn of his strength as Chancellor by the House agreeing to cancel Savings Bank Stock to the amount of thirty-one millions of pounds; and to open a new account for this money, to be called "State Deposit Account, No. 1," virtually giving the money the fullest security of the State, and placing it entirely beyond the reach of his operations. The remaining amount, then about ten millions, Mr. Gladstone proposed should be allowed to be invested at the pleasure of the finance minister as heretofore. One would have thought that at any rate this bill would have been allowed to pass quietly; but it was not to be. The bill proposed was based on two of the recommendations of the Committee of 1858,--namely, those which suggested that the power of funding Deficiency and other bills should be done away, and that the dealings in the stocks should be under the review of the House; but members complained that a bill had not been prepared to embrace _all_ the recommendations. _Sir H. Willoughby_ and _Mr. Estcourt_ took this view. In long speeches they both upheld the decision of the Committee, and asked for a bill dealing with the entire subject; the latter gentleman said that the "barren discussions in Parliament were acting to the prejudice rather than to the support of the excellent institutions with which they dealt. There were not above 600 of these useful institutions in the whole kingdom, whereas they ought to ramify through every parish and every village of the kingdom." _Mr. Malins_ and _Colonel Sykes_ followed, and complained that Government should have neglected to deal with the entire subject. _Mr. Gladstone_ made up for the lack of supporters by a long and able speech. He admitted that it was most desirable to have a bill for the management of Savings Banks, but the general subject had no relation to the mode in which the money of Savings Banks was invested. Better at the end of a session carry one or two points, and put an end to grievances which had been loudly complained about, than bring in a measure only to withdraw it again. He had been charged with ignoring the labours of the Committee. He had not done so, for the bill was founded on part of their labours; he _had_ considered the report, "but consideration does not necessarily involve adoption." He was compelled to decline many of the suggestions of the Committee. Where, however, he agreed with them, he had lost no time in taking action: hence the proposed bill. "From speeches of honourable gentlemen," concluded Mr. Gladstone, "it might be supposed that a dreadful bill had been introduced, giving exorbitant powers to the Chancellor of the Exchequer. The fact is, however, that there is not a power given which he does not already possess, and in one or two respects the surrender of powers is very large." "It is impossible that Savings Bank funds can now be used by Government as a trust; they must be reserved for the discretion of the House." The bill for the first time gives a positive title in law to the deposits in Savings Banks, and it will further provide a true account,--"for nobody has ever yet seen a true account,"--of the National Debt; and for these reasons Mr. Gladstone hoped it would be allowed to pass into law. _Mr. Thomas Baring_, and _Mr. Ayrton_, unconvinced by the Chancellor's arguments, opposed the bill; and _Mr. T. Collins_ contented himself, as usual, with dividing the House on his motion to throw it out. The motion was negatived by a majority of twenty-four, and there was a similar majority on a motion for adjournment made by Sir Henry Willoughby. On the 20th of July, 1860, the bill was considered in Committee, and the discussion was taken on the first clause--the existing stock to be cancelled--when Mr. Hubbard approved of the measure. By the bill the greater part of the money of Savings Banks, viz., that treated as a book debt, would be placed beyond the reach of jobbery. Sir Francis Baring spoke in favour of, and Sir H. Willoughby, Mr. Hankey, and Colonel Sykes again opposed, the clause. The opposition to the measure had gathered strength since the last occasion;[109] and on a division, the Savings Bank managers once more triumphed by a majority of 38, in a morning sitting and a House of 192 members.

A few days afterwards the _Chancellor of the Exchequer_ proposed the fourth clause of the defeated bill, or that which gave the Commissioners an uniform power of holding and dealing with all stocks under Parliamentary guarantee, and stocks and securities, under whatever name, that constituted the National Debt. At present, Mr. Gladstone stated the Commissioners had power to hold Terminable Annuities, but no power to sell them. There ought to be a uniformity of power with regard to these securities, and this bill, which was founded on the fourth clause, gave it. He had only been induced to take the matter up again by finding an unanimous feeling in the House for this proposition. _Mr. Estcourt_, in speaking for the clause, hoped the Chancellor would soon bring in a measure on the general subject. So he did, soon afterwards, but not the kind of measure Mr. Estcourt desiderated. When this bill reached the Lords, it was rather violently opposed by Lords Monteagle and Redesdale; and on a division the voting was found to be equal. According to usage, the bill was thrown out. The Government, however, re-introduced the measure, "as a matter of urgency;" and though there was an outcry in the Lords against it, no less than in the Commons, for interference with what was considered a Money Bill, the clause passed, and received the Royal Assent on the last day of Parliament.

Mr. Gladstone, thwarted in all his attempts, except in the last insignificant case, to bring about a better state of things in connexion with the management of Savings Banks, determined upon another course of action altogether. He, and other statesmen who had preceded him in his office, had tried their best to improve the existing banks, but they had been persistently hindered and obstructed by the force which Savings Bank officials could bring to bear. For some time now Mr. Gladstone must have had under his eye several proposals which went to the very root of the matter upon which so many difficulties had from time to time arisen, and which promised a thorough and substantial reform. He bent his great energies in this direction; saw his way, not only out of a dilemma, but to the origination of a simpler and more perfect system; and may be said henceforth to have left the friends and partisans of the old Savings Banks to look after their own interests. With the legislation relative to the scheme of Post Office Savings Banks, with which Mr. Gladstone's name will always be prominently associated, we shall deal in a special chapter, and will therefore hasten to describe the remaining steps which the Legislature has taken with regard to Savings Banks proper up to the present time.

Left to themselves, the leading Savings Bank authorities in the House--viz., Mr. Estcourt, Sir H. Willoughby, and Mr. Ayrton--obtained leave, on the 11th of March, 1862, to bring in a bill "to Amend the Laws relating to the Security and Management of Savings Banks."[110] The points sought by the bill were, briefly, (1) to enforce upon all local banks the regulations of the well-managed ones; (2) to repeal the Act of 1844; (3) to force an auditor upon every bank and define his duties; and, lastly, to provide for the security of the depositors, by enacting that no transactions should take place except at the office, during office hours, and in the presence and with the signature of more than one person. Mr. Estcourt, who briefly explained the drift of the bill, intimated that they were not desirous of altering the relation in which Government stood to Savings Banks, or of interfering in any way as to the disposition of the money. Mr. Gladstone, after stating how completely Government had been baffled in their attempts to alter the law regulating Savings Banks, expressed approval of the bill, though he reserved the right of Government to take any steps they chose at any subsequent stage.[111] On the 20th of May this bill shared the fate of all preceding attempts to place these institutions on a sound basis, by being withdrawn. Savings Bank managers had again interfered, and this time they went against their devoted friends. _Mr. Estcourt_, on withdrawing the bill, said he had received numerous representations from managers that his measure was "inapplicable" to them; and "only that day an influential body of managers of great experience, and fully to be depended upon," had waited upon him, requesting him to withdraw it; and if he would consent to this course, _they_ would endeavour to devise some scheme which should meet the requirements of the various establishments. Mr. Estcourt's measure was unquestionably a good one, but it involved too much trouble and risk to trustees: hence its defeat. _Mr. Gladstone_ thought it was high time that those gentlemen should take their turn in devising a scheme. If they proposed a real improvement, Government would make no objection. Referring to the Post Office Banks, Mr. Gladstone said: "Undoubtedly, however, the main question had been disposed of; they were now able to say to the people of England who were disposed to lay by their savings, with a moderate interest and with a perfect security, the Government had provided some 3,000 places where these savings would be received." _Mr. Henley_ was much discouraged with the difficulties everybody found in the way of legislation. He was "disposed to think that the well-managed banks might go on as usual," but rather than "tinker" at the others, "the very small banks under the old system, which would not afford the proper machinery for perfect management, ought to be urged to hand over their business to the Post Office Banks." _Mr. D. Griffith_ "for once agreed with the Chancellor of the Exchequer;" he was glad to hear the Post Office Banks were working so well, and expressed his opinion that "they would ultimately swallow up all the old banks."[112]

In March, 1863, Mr. Gladstone brought forward once more his propositions relating to the investment of Savings Bank money. He moved--

"That it is expedient to amend the laws relating to the
investment of the moneys of Saving Banks, and to create a
charge for such Savings Banks upon the Consolidated Fund,
in place of certain perpetual annuities now standing in
the names of the Commissioners of the National Debt; to
give the power for converting certain other amounts of
such perpetual annuities into certain other annuities, and
to provide for the due payment out of the Consolidated
Fund of any deficiency which may arise from insufficiency
of the securities to meet the legal claims of the trustees
of such Savings Banks."

After considerable discussion, the bill (26 and 27 Vict. c. 25) was sent up to the Lords under the charge of Lord Stanley of Alderley, and received the Royal Assent on the 8th of June, 1863.

We come now to the last item of legislation on the subject of Savings Banks. On the 14th of April, 1863, Sir H. Willoughby and Mr. Ayrton obtained leave to introduce the bill which, according to promise, had been prepared by a convention of Savings Bank managers. To a great extent this measure "to Consolidate and Amend the Laws relating to Savings Banks," was identical with the one which Mr. Estcourt introduced and withdrew during the previous session. The managers had met during the recess, and had consolidated into one the eight Acts, or parts of Acts, which then governed their establishments. Mr. Tidd Pratt, on being consulted in the matter, certified that the new Act "would constitute a fair and just measure of improvement." Mr. Gladstone, too, it seems, had been furnished with a copy, had suggested some trifling emendations, which had been frankly adopted and embodied, and was therefore disposed to offer no captious opposition to it. Not only so, but he thought it creditable to the gentlemen who had it in charge, and, so far as it went, likely to be effectual. Several clauses were altered, struck out, or inserted, and the bill, known as the "Consolidation Act," received the Royal Assent on the 28th of July, 1863. Of this Act (26 and 27 Vict. c. 87, a full description of which will be found in the Appendix)[113] we shall speak in a subsequent chapter, when we come to consider the law at present regulating Savings Banks.

[69] In a case that arose out of the Carnarvon Bank fraud of 1824,
in the Court of Bankruptcy, both the Commissioners, Sir John Cross
and Sir George Rose, expressed very strong opinions on the point
as against trustees. The former judge, after giving a decision
against the trustees in the case, said, "The case could not be
made too public," and he "trusted that it would operate as a
warning to the trustees of Savings Banks generally." Sir George
Rose "fully concurred" in the observations of his colleague. He
thought "it should be borne in mind that deposits were made by
parties, not on the faith of the persons acting as actuary or
cashier, but upon the faith of the gentlemen who acted as
trustees; where such persons neglected the duties which were
incumbent upon them, their conduct was deeply deserving of
censure. If, therefore, the clerk, or other person employed by
them, were guilty of peculation, they were themselves liable for
any defalcation that might ensue."

[70] Speaking of Mr. Goulburn, when he first took office, a
contemporary said, "He possesses that degree of talent which
renders him highly respectable without exciting any invidious
feeling. He is content to be useful without aspiring to the
reputation of an innovator; and, if he shall introduce nothing
new, he will at least abstain from anything that is dangerous."
Mr. Goulburn's legislation for Savings Banks scarcely bears out
this estimate.

[71] This arrangement, which was quietly dropped before the bill
became law, owing to the pressure which managers of Savings Banks
brought to bear upon the House, was strongly urged by Mr. Tidd
Pratt. That gentleman and Mr. Higham, Comptroller of the National
Debt Office, prepared this bill. In the Committee of 1848, Mr.
Pratt gave it as his opinion (140), that no depositor should be
allowed to put in more than 10_l._ in one year, instead of 30_l._,
or it might go to 15_l._; "but I am quite sure that this latter
sum is as much as the small savings of the industrious classes can
amount to." He also proposed to limit the total amount to 100_l._

[72] In this same Committee, Mr. Pratt stated that in the course
of his investigations in Ireland he had found one man who had had
seventeen books out of one Savings Bank, and money to the extent
of 520_l._ lodged there, altogether his own property, but which he
represented himself as holding in trust.

[73] Only four sets of directors of banks, and these banks of very
insignificant size, made a declaration of the kind in question
between 1844 and 1848.

[74] It was during the passage of this bill that the managers and
trustees of the different Savings Banks in the country first
combined to influence the action of the Legislature. On this
occasion it can be shown that they made their influence felt, and
provoked several divisions in both Houses. With the House of Lords
they were most successful, owing, no doubt, to the great number of
peers who were honorary officers of Savings Banks. For example, in
the House of Commons they succeeded in dividing the House twice on
the question of the rate of interest. They wished no reduction to
be made in that rate; but, when it was decided that the rate
should be reduced, amendments making it 3_l._ 6_s._ 8_d._ to
trustees and 3_l._ 0_s._ 0_d._ to depositors, and 3_l._ 5_s._
0_d._ and 2_l._ 18_s._ 4_d._ were proposed against the Government
plan, eventually carried, of 3_l._ 5_s._ 0_d._ and 3_l._ 0_s._
10_d._ respectively. It was declared that the difference of 4_s._
2_d._ only would not defray the cost of management. It was
objected also, and not without reason, that the Government erred
in not naming the exact sum, instead not more than 3_l._ 0_s._
10_d._ per cent. which should be given to depositors; that this
was a matter which ought not to have been left in any sense to the
trustees. Much unpleasantness might have been saved if the sum had
been definitely stated, and instead of twenty or thirty different
rates of interest, all had been paid alike, and there had not been
left any doubt as to what depositors should consider their right
in the matter. Out of doors there was a regular combination;
deputations waited upon the Chancellor of the Exchequer, and
gentlemen from all the leading Savings Banks in England, Scotland,
and Ireland, met in London to concert those schemes of defence to
which we have just alluded. A meeting was held, at the important
institution in St. Martin's place, with Sir Henry Willoughby as
Chairman, when the following resolutions, among many others, were
agreed to by the deputies from banks representing 5,000,000_l._ of
deposits. Nothing could of course better show how the action of
the Legislature was regarded by the managers of the institutions
in question:--

1. "That the proposed reductions in the amount of
deposits from 30_l._ to 20_l._ in each year, and
the total amount of deposits from 150_l._ to
120_l._ will be highly injurious to the interests
of the depositors."

2d. "That the reduction in the rate of interest from
2-1/2_d._ per cent. per day to 2_d._ is far too
great, out of proportion to the reduction of the
interest in the Funds, and would be extremely
prejudicial to the depositors in all Savings
Banks, but more especially to those in the
smaller banks, throughout the kingdom."

3d. "That clause 7, requiring the production of the
books of every depositor once a year, will cause
annoyance to depositors, is not capable of being
enforced, and is no efficient security."

4th. "That the proposed alteration respecting the
liability of trustees and managers of Savings
Banks seems highly objectionable. The present
provision, of no trustee responsible except for
his wilful default or neglect, is well understood
as applicable to all cases of voluntary trusts,
and should undergo no alteration."

5th. "That it is not expedient that trust accounts be
altogether abolished, but that provision should
be introduced to meet the case of fictitious
deposits and the abuse of trusts."

And so on throughout almost all the clauses.

[75] On one occasion, about this time, Mr. Hume had complained of
the "impudent conduct" of some Government official, to which Sir
Robert Peel, as Premier, replied. Sir Robert said, he "would not
quarrel with the hon. gentleman," (an experiment he had often
tried without much success,) "considering him a good judge as to
how far impudence might be carried with impunity." Mr. Hume at
once owned the soft impeachment. "If I had not had the impudence
of the devil," said he, "I should never have done any good in this
House." _The Times_, the next day, give it to Mr. Hume smartly, as
was its wont, and congratulated him "on his generous, though
rather startling, acknowledgment of the source of all his
strength."

[76] His speech on the occasion does not seem to have been fully
reported.

[77] The trustees of four small banks made the declaration: those
of Tonbridge, Ashby-de-la-Zouch, Fareham, and Carshalton in
Surrey.

[78] At a meeting of the managers of the principal Savings Banks
held on the 29th of August, 1819, it was resolved: "That this
meeting has read with mingled feelings of pain and alarm the
clause in the proposed bill virtually requiring trustees and
managers of Savings Banks to give security or 100_l._ each, and
making such trustees and managers responsible to an indefinite
extent if they should neglect to limit their responsibility to
that sum, as pointed out in the Act."

[79] Mr. Brotherton, the member for Salford, soon after stated
that the managers of the Manchester Savings Bank, with 20,000
depositors, insisted upon every person bringing his book to the
office annually, as a precaution against fraud.

[80] The Committee of 1848 went very fully into the changes which
were needed in Ireland, and many witnesses were asked what they
would propose. For example (1579), Mr. W. Keating Clay was asked:
"Do you believe, in consequence of the Cuffe Street bank, the
deposits will decrease in Dublin and neighbourhood if the law is
not amended?" and replied, "I should say they will be altogether
withdrawn. I don't think the other Savings Banks in Dublin, which
have conducted their business faultlessly all through, can exist
another year under the present law." Another witness, in answer to
a similar question, said (1205): "I am quite satisfied that the
Savings Bank system in Ireland will crumble to dust unless there
is legislation." A third witness said, nothing would do but
trustees fully liable, and a system of Government inspection and
regular audit of the accounts.

[81] _The Times_ and _Morning Chronicle_ strongly advocated the
same view.