CHAPTER V.. Legislation on Savings Banks From 1844 to the Present Time.

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 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. 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 2-1/2d. per cent. per day, to 2d. 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 30l. to 20l. and to make the total amount which could be deposited in any Savings Bank, 120l instead of 150l.

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. 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.

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, 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. 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 20l. in the Funds should be dealt with in exactly the same manner as those who had 1,000l. 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 20l. 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 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; 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. 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, 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; 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 27l. 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. 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.

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. 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 30,000l. 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 30,000l. from Government, but without avail.

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. 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. 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. 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 100l. and that the rate of interest should be reduced from 3l. 5s. to 3l. for trustees, and 2l. 15s. instead of 3l. 0s. 10d. to depositors. 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.

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;" (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. 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."

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." 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 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. 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, 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.

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.

In a fortnight from the meeting of the new Parliament Sir G. Lewis, true to his promise, moved that the House go into Committee on the Savings Bank Bill, which had even then reached that stage. His motion was, "That it is expedient to amend the laws relating to Savings Banks, and to provide for the establishment of Savings Banks with the security of the Government." The Chancellor said that almost everybody was agreed as to the principles of the bill, though it was true that the managers of many Savings Banks contested some of the details. The greatest objection to the bill when last introduced being the provision to limit the total amount of deposits to 100l., he would now propose, as it did not affect the bill at all materially, to drop that clause; the law to remain as it then stood. This was the only material difference; there were minor points, but they were not worth pointing out. He then went over the changes which the bill proposed to make in the law; the ample security he wished to give to all who deposited money in Savings Banks, at the same time taking no superfluous securities and imposing no unnecessary restrictions in order to guard the interest of the public. Should the local authorities of Savings Banks still be found unwilling to part with their own control, or admit any interference on the part of the Government, there was only one course left to him--namely, "to abandon the bill," to leave things in their present position, and continue a system by which the depositors are left entirely to the security of the local officers; while at the same time Government is left wholly irresponsible, except for the amounts actually lodged in its hands. "I trust, however, that the plan will be considered a reasonable plan," said the Chancellor, in conclusion, "that it will be found not to impose upon the local authorities any shackles of which they can reasonably complain, and that no securities are demanded on behalf of the public beyond what are absolutely necessary." 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. 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. 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. 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.

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 150l., the Commissioners may, with the consent of the depositor, invest a portion of that deposit in the purchase for the depositor of 100l. 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. 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 8,166,511l., and purchased to the amount of 8,816,400l.; Exchequer bills were bought to the amount of 19,888,100l., and sold to the extent of 13,041,500l. 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. 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. 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, stated that the Savings Bank fund on the 20th of November, 1857, was 34,399,082l. Stock; whereas, if there had been no investment in Exchequer bills or bonds since 1853, the amount would only have been 34,207,371l. Stock. 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."

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 53,000l. 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 750,000l. 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; 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." 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. 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."

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) we shall speak in a subsequent chapter, when we come to consider the law at present regulating Savings Banks.

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."

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.

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 10l. in one year, instead of 30l., or it might go to 15l.; "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 100l.

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 520l. lodged there, altogether his own property, but which he represented himself as holding in trust.

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.

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 3l. 6s. 8d. to trustees and 3l. 0s. 0d. to depositors, and 3l. 5s. 0d. and 2l. 18s. 4d. were proposed against the Government plan, eventually carried, of 3l. 5s. 0d. and 3l. 0s. 10d. respectively. It was declared that the difference of 4s. 2d. 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 3l. 0s. 10d. 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 5,000,000l. 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 30l. to 20l. in each year, and the total amount of deposits from 150l. to 120l. will be highly injurious to the interests of the depositors."

2d. "That the reduction in the rate of interest from 2-1/2d. per cent. per day to 2d. 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.

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."

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

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

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 100l. 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."

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.

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.

The Times and Morning Chronicle strongly advocated the same view.

Hansard, vol. civ, pp. 22-54.

During the interval, Mr. Reynolds, member for Dublin, who had obtained the Committee originally, became Lord Mayor of Dublin, and Mr. Gibson Craig became Sir W. Gibson Craig. Mr. J. A. Smith was appointed chairman on each occasion.

For example, in August, 1852, Mr. Reynolds again brought the subject before the House by proposing that the remaining money due to depositors should be paid by the State. On this occasion he told how he had had the honour, in 1846, placing Her Majesty's Government twice in the same night in a minority on this subject; but, unlike other members who had done the same thing, he had not received Her Majesty's commands to form a new ministry. This style of banter was scarcely suited to his subject, but more serious appeals were equally unavailing.

The following remark had already been made from the judicial bench: "I find that country gentlemen, &c. were willing to lend their names as trustees, in the establishment of banks for the deposits of saving of the poor, but were negligent, in too many instances, in giving their personal services, whereby the business fell almost entirely under the exclusive management of the person appointed as actuary."--Sir John Cross.

"Nearly all the frauds, and all the loss which had occurred in Savings Banks," said the Chancellor, "were owing to the actuary or secretary receiving money irregularly, sometimes at his own house, and very often out of office hours."

Even in seaport towns this inspection of pass-books might be accomplished without much trouble; if there was any difficulty in getting in the books, such an inspection might be made as would be sufficient to test the general accuracy of the accounts. Thus at Cork, the year before (1849), 6,623 pass-books had been sent in for examination, and only 1,164 did not come in. The accuracy of the larger number was ample test of the accuracy of all.

The Chancellor here pointed out that the average rate of interest given to depositors at that time (1850) was but 2l. 18s. 4d. and that the reduction would be scarcely felt by any class; that reduction, however, would not only provide against the Government losing any more money, but would meet the expense of the proposed Government treasurers of Savings Banks.

Hansard, vol. cx., third series; and Times, 1850.

It must not be assumed that there was no difference of opinion on these points, even among Savings Bank managers. The following letter, read by Sir Charles Wood during his speech in 1850, is conclusive to the contrary. The writer, who was manager of a large provincial Savings Bank, wrote: "I have had occasion to remark that the chief inducement to deposit money by those for whom Savings Banks are intended, consists in having a safe place for deposit, and that the amount of interest for the most part is but a secondary consideration; whereas those persons whose means are greater, and who do not actually require Savings Banks, use them to suit their convenience when the Funds are high, and take out their money from the Savings Banks to invest in the Funds when low, just at that very time when the withdrawal occasions loss to the country." He then expressed an opinion almost identical with one which Mr. Tidd Pratt has often given, that "20l. would be quite sufficient to allow a person to deposit in one year," and that, "when the deposits reach 100l. there is no necessity to allow further deposits to be made." Again, the Rev. W. Rowan, Treasurer of the Tralee Bank, when asked in the Committee of 1849, if he thought changes were necessary in Savings Banks, answered that, "The Savings Bank system must either become a general failure, and the funds invested in them withdrawn, or you must place it upon an entirely different footing with respect to inspection and working."

A bill to continue the Act of 1848, "for Amending the Laws relating to Savings Banks in Ireland," was carried through Parliament in this session.

The gentleman to whom reference was here made is the present Comptroller-General, the veteran public servant Sir Alexander Young Spearman. This gentleman, of whom all parties speak as a man of irreproachable character and eminent abilities, has now (1866) been fifty-eight years in the public service. To him is no little owing the efficiency with which his department is now managed, and the increased facilities which have been given to the public in all things connected with the provident habits of the people. It may not be out of place here to state, with reference to the office held by this gentleman, that it was formed about the commencement of the present century, whereas the Commissioners date from the creation of the Sinking Fund in 1786. Sir Alexander Spearman succeeded Mr. Higham in the position. As more than one of the witnesses at the Committee of 1858 did not know who formed the Board of Commissioners, of whom they were constantly speaking, and another did not know whether the Board ever met, it may be new to some readers, if we say that the Commissioners for the Reduction of the National Debt consist of the Speaker of the House of Commons, the Master of the Rolls, the Chief Baron of the Exchequer, the Chancellor of the Exchequer, the Accountant-General of the Court of Chancery, and the Governor and Deputy-Governor of the Bank of England. The Board held a meeting once in each quarter. Three Commissioners form a quorum, and their powers are defined by Act of Parliament. The Comptroller-General acts in the capacity of Secretary to the Board, and is entrusted with the carrying out of its orders. The expenditure of the National Debt Office amounted, in 1856, to about 14,000l.; but must have increased considerably since that date.

"To amend the Laws relating to Savings Banks, and, in certain cases, to give the guarantee of Government to the depositors for the repayment of the sums legally deposited in such Savings Banks."

In a long petition to the House of Commons from the Trustees and Managers of the St. Martin's Place Savings Bank, this bill is strongly opposed, thus showing that Mr. Gladstone had not succeeded with the managers of that institution. Speaking of the direct Government guarantee proposed to be given, the managers say that they "find the proposed change fettered with such a variety of intricate and cumbersome official regulations, as cannot fail in practice to prove greatly annoying and vexatious to depositors, and perplexing to the managers of the banks and their officers, upon whom will still devolve duties and responsibilities ill-defined under the provisions of this bill, and not capable of being sufficiently understood or explained; subversive, as the proposed change will also prove, in this and many other well-regulated Savings Banks, of those systems of entry and check under which their present accuracy of accounts is so admirably and indisputably maintained." They objected to the reduction in the rate of interest, treated of several other minor matters, and again prayed that a full inquiry should be made by a committee before any bill was passed.

"You take the money of these depositors, and you give them the entire security of the State for their money. They cannot have a better security; and if you give them that, they have no interest in the employment of the money: it does not signify to them if you fling it to the bottom of the sea. So long as the Treasury of the country is sound, it does not matter one rush what the Chancellor of the Exchequer does with the money. If he invests it well, they are no richer; and if he plays all the tricks of the mountebank, or disposes of it with the artifice of the swindler, they are none the poorer. The depositor in Savings Banks have nothing to do with the question, and it is only weakening and impairing their position to make them depend upon the prudence of the minister, instead of upon the credit of the British public." Savings Bank managers held a strong opinion against what they called jobbing with their funds. They said Mr. Goulburn had promised that the practice should be stopped; and it was, in 1844; but that Mr. Gladstone had revived the practice illegally in 1853. These bills were not introduced in 1855.

Hansard, vol. cxxxvi. 1854.

Hansard, vol. cxliv, p. 1292.

A clause was added to the bill now introduced to prohibit the assumption of the title of "Savings Banks," by institutions not established under the Savings Bank Acts.

A few days after this, Sir George Lewis gave a pledge to Viscount Goderich that, if the bill passed, the Committee should be appointed to consider every question that Sir H. Willoughby had raised.

The trustees of the principal Savings Banks again petitioned against the bill. The petition from the St. Martin's Place institution prayed "your honourable House to pause ere you pass such an Act as would assuredly compel your petitioners, and, in their view, all parties similarly situated, to resign the charge which they have hitherto had so much pleasure in fulfilling, and, as they may venture to assert, with entire satisfaction to the parties pecuniarily interested." In their opinion "considerably more importance has been attached to the terms 'Government security,' and 'Government guarantee,' than the facts of the case would require."

Mr. Sikes said (2,628), "I believe that one great essential for the future progress and prosperity of Savings Banks would be the guarantee of the Government for every deposit duly made in the hours of business." Mr. Wortley said (1,570) that he thought it a desirable thing, and also Government auditors or inspectors. Mr. Hope Nield (1,937) thought it "desirable decidedly, if it can be obtained without trammelling or destroying the operations of the banks." Mr. Maitland "had no doubt whatever about it being a desirable thing, if it can be safely given" (2,153). Sir Alexander Spearman gave his opinion at greater length (4,368). "There will be no satisfactory amendment of the law unless the security of Government is given to depositors. I think it is impossible that the present state of things should be allowed to continue. The question has often been discussed, and depositors in many cases have believed that they had the security of Government, and found to their cost that they had not; complaints are constantly arising; applications are constantly made to know whether they have the security of Government or not. I think myself that depositors are entitled to have the real protection of a Government security, but I think also that it will be quite impossible to give this security without at the same time giving to the officers of Government a very different power of dealing with the management of Savings Banks. It would be idle to talk of the one without the other." So weighty are the conclusions to which the Committee of Inquiry came on the subject of this guarantee that we present them here in extenso. "A very general impression prevails throughout the country that the Government is bound to make good a deficiency whenever a deficiency occurs; a claim accordingly has been made, in several instances, on Parliament to replace the money of depositors in cases of defalcation. This impression is not warranted by the laws which regulate Savings Banks. It is difficult, however, to maintain that Parliament, having released local trustees from their liability, should not be bound to provide some other guarantee for the money of depositors, who have no share themselves in the management of their bank. It appears to your Committee that an alternative ought to be given, and freely offered to the choice of trustees, either to secure the guarantee of Parliament upon such conditions as the commission shall prescribe, or themselves to undergo the same liability in regard to Savings Banks as was enacted by 9 Geo. IV. c. 92, s. 9. The able actuaries connected with various large banks, who have attended your Committee, have detailed various methods by which imposition and error may be rendered almost impossible in large establishments; but in the case of the smaller banks, where the funds are not adequate to provide a staff of paid officers, it will be for the Commission to see what arrangements they can make to check misconduct, and to afford to depositors, at least once a year, a certainty that their money has been duly lodged with the Government, for which purpose some valuable suggestions were made by several of the witnesses experienced in the practical management of banks. In one point all the witnesses concur; and your Committee must record their own opinion to the same effect, that the most effectual restraint upon malversation is to be found in the presence of a second party in every transaction where money is paid or received; and that a rule to this effect ought to be imperative in all banks, under a penalty on its infringement."

The Committee sat six days deliberating on their Report after all the witnesses had been examined. Draft reports were proposed by Mr. Ayrton, Sir Henry Willoughby, and the Chairman, the report ultimately carried, after a few emendations, being that by Mr. Estcourt.

Sir Alexander Spearman, who clearly explained the facts to the Committee of 1858, also described the routine gone through when Savings Banks made investments with Government. They first certify the appointment of trustees; then, appoint an agent in London, generally a banker, through whose hands the money passes. When the trustees of a Savings Bank wish to invest, they send up a notice to their agent, who presents it at the National Debt Office, where an order is given to the Bank of England to receive the stipulated sum and place it to the account of the fund for the Banks for Savings. Next morning a receipt is sent from the Bank of England to the National Debt Office, and from thence to the trustees who remitted the money. A somewhat similar proceeding takes place on the trustees of any Savings Bank wishing to withdraw money. It is done through the agent, who gives the necessary notice of withdrawal. No money is paid or received at the National Debt Office, but at the Bank of England, the Commissioner simply keeping the accounts.

"Suppose any bank should question the way in which their funds had been invested?"--"My answer would be," said Sir A. Spearman (4,029), "that this was a matter which did not in the least concern them. I am not aware that the Act of Parliament in any shape or in any manner makes the Commissioners or their officers responsible in the slightest degree to the trustees of Savings Banks." When asked if, "Supposing the money were used for financial purposes, or not invested at all, or invested so as to produce little interest, would Savings banks have a right to complain?" this witness answered, he "did not think so. What the Commissioners are responsible for is, to repay to the trustees of Savings Banks the amount received from them, together with the amount of interest due, whenever they call for it." "They are responsible for that, and nothing more."

A little prior to this, Lord Monteagle had spoken at great length and with great animation on the same subject in the House of Lords. He then went the length of saying, that, "now the money was coveted not so much on account of inculcating the growth of provident habits, but that it should afford the Chancellor of the Exchequer a large capital, which might be sold, bought, exchanged, or invested in Exchequer bills, or in stock, at the will and pleasure of the financial minister; and, consequently, that he could thus be enabled, as he saw fit, to influence the Money-market to an extent which no individual or combination of capitalists could possibly either equal or counteract." He added, that he could have no objection to the mere buying and selling of securities, so far as the Savings Banks were concerned; what he objected to was, that these transactions should be so carried on as to affect the value of the public securities and influence the Stock-Market--"rig the market," as a member of the House of Commons said at the same time.

Sir Francis Baring, Sir Charles Wood, Mr. Gladstone, Mr. Disraeli, and Sir George C. Lewis.

Exchequer-bill purchases, as we gather from the evidence taken before the Committee of Inquiry, are made in two modes. If the purchases are to be made in the market, the Cashier of the bank is directed in the same manner as when he is told to purchase Stock; pays for the bills out of the Savings Bank fund, and carries them to the credit of the Commissioners. The other mode is, by the issue of temporary Exchequer bills, such as Deficiency bills, or Ways and Means bills. Deficiency bills are bills issued under the authority of 57 George III., to enable the Government to provide for a temporary deficiency of money in the Exchequer. Deficiency bills are issued either to the Bank of England, or held temporarily by the National Debt Commissioners through the bank, the bank paying the money to the Exchequer, and paying itself the next day out of the Savings Bank fund. Ways and Means bills are of a pretty similar character, but chargeable to the revenue of the next succeeding quarter, and not, as in the former case, of the current one. Supply bills are of a still more permanent character, and are often held on from year to year, and are exchanged from year to year.

Mr. Boodle was for allowing part of the money to be otherwise invested than with Government. He suggested land drainage. Mr. Sturrock and Mr. Sikes were for keeping one-third of the money in the hands of trustees, to be invested "in freehold securities of unquestionable character," or in railway debentures. Mr. Deaker, Mr. Jameson, and Mr. Finney agreed. Lord Monteagle was "driven to the conclusion" of saying that in investing Savings Bank deposits, "you ought to deal in State securities and nothing else." The opinion of the Committee on the subject may of course be gathered from the digest of their report already given.

The indefatigable bank managers of London again sent round petitions against the proposals, and when they were presented to the House, one member, Mr. Hubbard, remarked they "were all apparently from one mint:" and indeed no secret was made of its being so.

So convinced was one individual organ--accustomed to treat largely of such subjects--that the bill now proposed would fail to accomplish any good, that it insisted upon its being called a "Bill to provide for the speedy extinction of all old Savings Banks, and to give a heavy blow and great discouragement to the trustees and managers thereof."

Hansard, vol. clxvi. p. 1394.

Hansard, vol. clxvi. p. 1974. It is not often that Mr. Griffith speaks the sentiments of the generality of English people, but he almost did so in this instance. No amount of tinkering could now make the old banks as simple, secure, and efficacious as those on the new plan. Mr. Griffith not having gone the length of mentioning any time, his prophecy was eminently a safe one. No one is more to blame, if indeed any one is to blame at all for such a state of things, than the authorities of Savings Banks themselves. Whilst they were systematically opposing with suicidal obstructiveness every measure of amendment, the whole ground was suddenly cut from under them by the institution of Postal Banks.

Appendix B.