I beg to move to leave out the word "now," and, at the end of the Question, to add the words "upon this day six months."
I and those who are acting with me regret that we have to hold up this Bill, but it contains two Clauses which depart so definitely from the settled policy which has existed for some years past, and we consider them so dangerous, that we are compelled to oppose the Bill. If those two Clauses, 136 and 137, had been absent, we should have helped the Bill through with our good will, and we are prepared to do so now if some amelioration of those two Clauses can be suggested by those who are in charge of the Bill. As I am moving the postponement of the Bill I wish to draw attention to two trivial points and to one which is of more importance. I feel interested in the Bill, and it has my good will because, in common with right hon. and hon. Gentlemen on this side of the House, I have had the happiness of serving my own native city in the position of Chief Magistrate, and I know from my own experience the working of a Bill like this. The two trivial points that I want to mention are dealt with in Clauses 97, 105 and 112. I hope that those in charge of the Bill will take note of what I and my friends feel about the matter. Clause 97 says:
The Corporation may by notice in writing require the owner or occupier of any dwelling-house, warehouse, or shop to provide adequate portable, covered, gal-
vanised iron dust-bins in lieu of ashpits or ashtubs or other receptacles for refuse.
In other words, the householder is bound to provide covered dustbins from which the refuse is to be tipped into a Corporation van. But if the Corporation does not provide a covered van a whole street may be smothered with dust, microbes and disease. The van used by a Corporation for clearing away house refuse should be a covered van so constructed as to prevent dust and refuse escaping into the street. We know what we have suffered from the dust nuisance in London. It is a minor point but one to which this House should draw attention. Clause 105 says:
Section 44 of the Public Health Act, 1875, shall extend to empower the Corporation to make by-laws for regulating the tipping of dust, soil and refuse, and for prohibiting the use of any refuse tip so as to be a nuisance to the occupier of any premises in the neighbourhood thereof.
In my opinion, the greatest offenders in this matter are the Corporations themselves. A Corporation van can be the greatest menace to the health of a locality. Within the last three months I have had to ring up the official of a great municipal Corporation and to complain about the Corporation sending out vans that are uncovered, with the result that dust blows about. If Corporations come along and set up regulations which provide that householders must have covered dustbins, the Corporations at least should play their part and see that their vans are covered.
The other minor point to which I would refer is to be found in Clause 112, which deals with the registration of premises used for the manufacture of potted meats. On one or two occasions attention has been drawn to the sale in this country of foreign cheeses which were made of skimmed or inferior milk and were palmed off on customers without those customers knowing that they were not full-milk or full-cream cheeses. When questions were asked in this House we were told that the Ministry of Health had no power to prevent this fraud on the poorer part of the population. I do not propose to import into this Bill any Amendment for dealing with the grievance, but the Bill gives me an opportunity of drawing the attention of corporations to the need for obtaining powers to go into shops where this abuse of the people's confidence takes place, and to punish those who palm off these inferior foods just as they now punish those who sell food that is unfit for human consumption.
Another point in the Bill is of academic interest. I notice on page 96 of the Bill, in Clause 139, that there is a scheme for the borrowing and repayment of money. The period for repayment is for specified numbers of years from the date of borrowing. What this Clause really deals with is a sinking fund. I take no exception to the periods of repayment or the method of borrowing, or the terms, but what I want to direct attention to is this: In Clause 139 it is provided that any money borrowed under the provisions of Sub-section (2, b) shall be repaid within such period as may be prescribed. How is it to be repaid? This seems to be a very loose provision. We all agree that the money must be repaid by means of a sinking fund to wipe off exhausted assets, but if sinking funds are placed in non-productive undertakings of the corporation that is a breach of sound finance. If a corporation borrows a large sum of money to be repaid within a certain date, I quite agree with the sinking fund being placed in the reproductive undertakings of that corporation, such as water, gas, electricity or trams, where the money can fructify, and by the operation of a further sinking fund help to find the money to wipe off the debt, although it masks borrowing.
I do not object to that method, although it is not the best way of carrying out a sinking fund, but I object to the sinking fund going into non-reproductive undertakings or properties of the corporation, and I see nothing in this Bill to safeguard the finances of the Cardiff Corporation in this respect. Suppose that a debt has been incurred and that so much a year must be paid off that debt. It sometimes happens that that sinking fund money may be put into the gas or water or electricity undertakings of the municipality to avoid the necessity of borrowing on the market. As I have said, there is not much against that method, but it is not the best method. On the other hand, it is not unusual for the sinking fund to be put into non-productive undertakings such as the building of a town hall or the making of a park. When the time comes for the money to be paid to replace boilers and machinery and plant which is worn out or wearing out or obsolescent, there is no money available with which to find the funds necessary for repayment, because the money has been put into a park or a town hall which yields nothing. What is the result? A further loan has to be raised, and a further rate has to be imposed on the people to find the necessary interest. I therefore say that we ought to lay down in this House the method in which local government sinking funds ought to be applied, and there is a much better way than either of the methods which I have described.
Hon. Members opposite may say that it is better to have £100,000 going into a sinking fund to be used for the necessary extensions of reproductive municipal undertakings than to go on the market and borrow, but I am not so sure about that. If you have a sinking fund operating by what is technically called "creeping action," year after year—using your sinking fund to rebuy your stock, and to repay your loan on the market, or, if you cannot buy your loan back, using the money by putting it into trustee securities which will become due when your debt is repayable—if you keep a creeping sinking fund going on like that, I know from my own experience as a municipal worker that you maintain the price of the stock of your city at a higher level; that is to say, you maintain your credit much higher. You keep up the price of your stock, and, in the end, if you wish to borrow again for the purposes of your city, you find that the price of your stock is high in the market and you can float your loan higher. We ought to insist on sinking funds not being placed in non-productive undertakings. At the very least, they ought to be placd in the reproductive branches of corporation activity, and I should much prefer if they were put into some liquid form so as to be available for use when the time comes for the repayment of debt. That being so, I propose to move a manuscript Amendment, and perhaps I may be allowed to mention it now as indicating what is in my mind—Clause
141, page 98, line 23, at the end, to insert:
(4) All sums paid into the Sinking Fund under the terms of this Act shall be, with their accumulation by way of interest, applied as far as may be to the purchase or repayment and cancellation of the then existing debt of the Corporation, and/or invested in trustee securities, authorised by the Treasury until the date on which the debt of the Cardiff Corporation falls due for repayment, when the investment so held shall he sold, and the proceeds applied to pay off the debt of the Cardiff Corporation.
That is wholesome finance, and there is nothing hostile about that proposal. All it seeks to do is to reduce the risk of a rise at a future date in the rates placed upon the citizens of Cardiff, the sinking fund having been so provided that it pays off the old debt.
On a point of Order. Is the hon. Gentleman moving that the consideration of the Bill be adjourned for six months. What is before the House? We cannot tell from the hon. Gentleman's speech.
The hon. Gentleman has said that he is going to move certain Amendments, but we are still waiting for him to give some reasons why the consideration of the Bill should be postponed.
I am stating the objections which we have to the Bill, and the reasons why we wish to postpone its consideration for six months. I have already outlined the two minor objections which we have to the Bill and also our objection in regard to the sinking fund. I am now about to come to the main objection, namely, that in reference to Clauses 136, and 137, which deal with the power to establish a savings bank, and the power to make advances for housing. I fancy that no one was more surprised than the Cardiff authorities themselves when they found these two Clauses still in the Bill as drafted. They were passed by the casting vote of the Chairman of the Committee. Owing to an unfortunate and sad reason one member of the Committee was not present who would have voted against these proposals—otherwise these two Clauses would never have appeared in the Bill. I have received a communication from the Cardiff Corporation, giving the main reasons for these two Clauses, particularly the setting up of the municipal bank, and of 11 paragraphs in this statement, 10 base the whole argument on the fact that a municipal bank has been set up in Birmingham. If they use the Birmingham argument in this connection, they cannot have read the Bradbury Report. I may say that I have read this Bill carefully, and I have studied this municipal bank proposal with some industry. Since 1919 no Bill has gone through this House authorising the setting up of a municipal bank and I would ask the House to hear what the Bradbury Committee's Report has to say on the subject.
The hon. Member for Lichfield (Mr. Lovat-Fraser) was not in the House two or three years ago when we had a Debate on municipal banks, which was, I think, one of the most interesting Debates for some years in this House. The Chairman of this Committee which dealt with the subject of municipal savings banks was Lord Bradbury.
The hon. Gentleman is now going into the subject matter of the next Amendment which appears on the Paper in his name. If he proposes to deal with it now, he cannot deal with it again. He can deal with the whole subject now if he wishes, and afterwards formally move the Amendment standing in his name, if that seems to the House to be the convenient course.
I would like to save time, and not to trespass on the patience of the House or on your patience, Sir, and, if you will allow me to do so, I will deal with these Amendments now.
I am in the hands of the House, as regards this matter, but it seems to me that that would be the most convenient way of dealing with the question. I should not like to have the Debate twice over.
Does not your Ruling, Sir, apply only to the hon. Gentleman the Member for Farnham (Mr. A. M. Samuel)—that he cannot make the same speech over again on another Amendment? Surely, if another Amendment is formally moved, any other Member who is interested in that Amendment can speak upon it.
That is why I said that I was in the hands of the House. I think it would be the most convenient course for hon. Members to make their speeches on these Amendments on the Question, "That the consideration of the Bill be deferred for six months," and that the Amendments should then be dealt with formally.
I shall be content to follow that course with regard to the two Amendments on the Paper in my name and also the manuscript Amendment which I have indicated, and which I shall hand in. I shall make my observations in the general discussion now, and, later on, formally move these Amendments.
The Chairman of the Committee was Lord Bradbury, and I think everyone knows who he is. The other members were Sir Lawrence Halsey, who is, I think, a member of the firm of Price, Waterhouse and Company; Sir Harry Haward whom I have not the pleasure of knowing; Colonel the hon.
Sidney Peel, a Member of this House in former times, and a great scholar, and Sir William Schooling, K.B.E., who is, I think, an actuary for one of the large insurance companies. As I have said, the only Bill containing a proposal of this kind which has become law, was that of Birmingham. Since the Birmingham bank was established, every demand made for a municipal bank has been opposed. Cardiff, having examined the whole proposition on the basis of the Birmingham bank, have omitted to notice that the Bradbury report is adverse to the setting up of further municipal banks. Moreover, a general Bill was brought in in 1923 for the setting up of municipal banks, and it died. In 1925 another Bill was introduced and died. Similarly in 1926; and in 1927 another Bill, based on the Birmingham model, were introduced and died. On many occasions other municipalities have tried to obtain powers and have failed. [An HON. MEMBER: "You have always blocked them!"] Swansea tried in 1920 and Wigan and Tottenham in 1921. Again, Swansea tried in 1922 and Stoke-on-Trent in 1923, Bristol in 1926, and Swansea in 1927, but all were unsuccessful. The London County Council which considered this matter set up a committee with a view to investigating the question of a municipal bank for London. They thought that conditions differed so widely, not only from a population point of view but also from a municipal point of view, that it would be rash of them to think that they might achieve the same success if a bank were established in London on the basis of that established in Birmingham. The Manchester special committee of 1924 dealt with the question of establishing a municipal bank and their report was adverse to any such development. With regard to Liverpool, the finance committee, having considered the report:
did not recommend the establishment of a municipal savings bank in Liverpool.
Those are not decisions of this House, but of important towns. Nottingham's decision was
that it is undesirable, unnecessary, and impracticable to proceed in the matter of the establishment of such a bank at Nottingham.
Then there is Aberdeen. Their report was to the effect that
the establishment of a municipal bank in Aberdeen could not be justified.
Glasgow corporation considered
whether representatives should be sent to give evidence before the Committee, and resolved by 51 votes to 46 that they should not.
We had a discussion on the same subject about two years ago on a Motion for the establishment of a municipal bank. The Under-Secretary of State for Scotland took part in that discussion which was an exhaustive one and one which was carried on on a high plane, and the proposal was turned down. I hope that this Debate will not turn upon the success achieved by Birmingham. Birmingham has been successful, but there is no other case but Birmingham. Birmingham is peculiar. It had no previous facilities. There had been no trustee savings bank there since 1864. The figures of the Post Office Savings Bank showed what happened after the setting up of the Birmingham bank. Had Birmingham had a Trustee Savings Bank it is doubtful whether the municipal bank would have secured any new savings. It simply took what would have gone into other banks, had they been handy. The figures show the total Post Office Savings Bank deposits on 31st December, 1919 and 1925. The 1925 percentage of the 1919 deposits for the rest of England and Wales was 110, and for Birmingham City 82. Why was this? It was because the extra facilities offered in Birmingham had filched away the money from the other forms of savings. [interruption.] If you have two shops and one takes away the trade from the other, that does not increase the total trade. The municipal bank had reduced the amount of money put into the Post Office savings bank and had taken it over to itself. The figures for the head offices show that the 1925 percentage of the 1919 deposits in Birmingham was 81, in Manchester was 125, in Bristol was 104, and in Leeds was 103. This is what is said on page 57 of the report:
On the whole, these figures suggest primâ facie that, if there had been no municipal bank, Post Office deposits in Birmingham would not merely not have decreased but would have substantially increased.
Yes, it did. I will make a special reference to that in view of what was said by the Labour party on
a previous occasion when the matter of interest was discussed. Members opposite suggested that the Post Office should be allowed to offer a higher rate of interest. If Cardiff seeks to encourage thrift which is quite a right thing to do, there is the Post Office, there are National Savings Certificates, there are building societies and the various Government loans for investors, and I believe Cardiff will take money from £50 upwards for bonds repayable at a certain date. Here is an interesting side to the matter. Mr. Holden, chairman of the Accrington Co-operative Society in 1928, said that the municipal banks would injure the co-operative movement. He said that the Birmingham municipal bank had reduced the local co-operative society's capital. Our objection to this particular Clause is the risk or danger to depositors, because banks run on these lines run the risk of borrowing "short" and lending "long." The Bradbury report takes that fact into consideration. It says, in Clauses 93 and 94:
In so far as the bank's funds are invested in liquid short-term securities, that can in fact readily be sold on the market at any time and cannot substantially depreciate, the probability of serious difficulties arising is no doubt remote. But we apprehend that those who desire to establish such banks would not in general be prepared to invest the greater part of the bank's funds in this way, but would wish to invest most of the money either in long-term Government securities or more probably with the corporation itself. The fact that the corporation might undertake to repay the loan at call would not make it a liquid security of the hank since it could not be sold on the market.
Now the use of savings banks deposits for long-term capital expenditure is in effect borrowing short and lending (or spending) long—a practice repugnant to sound principles of banking.
We saw a painful situation in the case of Wakefield which was put to great loss. Suppose that Wakefield had had a municipal bank after the disclosure that the corporation had lost £300,000. What would have happened? There might have been a run on the municipal bank by depositors after they had learned of the loss. One has seen this sort of thing happen before. I wonder if hon. Gentlemen remember the delicate situation set up in Yorkshire 25 years ago. If hon. Members think that some benefit is coming to the corporation of Cardiff through being able to borrow money at 3½ per cent. from the public, let me
point out that if depositors leave money at 3½ per cent. with the corporation, that money does not cost the corporation 3½ per cent., but nearly 5 per cent.
Does the hon. Member not remember that it came out in Debate that money borrowed of the public by a corporation bank at 3½ per cent. has to be administered, that you have to have buildings and so on? I remember well the figures given in this House by one of the speakers in that Debate.
As I was the first chairman of a municipal bank and have had considerable experience of it, let me tell the hon. Member that the cost of the working expenses is one quarter per cent.
This was stated on the 22nd February, 1928:
Interest to depositors, £3 10s. per cent.; expenses of management, 17s. 2d. reserves, one quarter per cent., which is the minimum rate which can safely be placed to reserve; cost of liquid balance, 3s. 9d., being a total of £4 16s. 3d. before any profit at all is made to the bank.
That was said here, and it passed unchallenged. It was also said in that Debate:
The influence and name of Chamberlain will exist in Birmingham for all time. I thought the hon. Member was going to ask me how they get on in Sheffield without them. I was going to say very badly. This municipal bank was formed in March, 1919.…I do not think the ratepayer will get anything by way of reduction in lending his money to a corporation."—[OFFICIAL REPORT, 22nd February, 1928; cols. 1691–5, Vol. 213.]
Colonel Woodcock's. It is not arguable that if you get money at 3½ per cent. you can lend it at that rate. It must cost you something to carry on. You cannot get your money through a municipal bank for very much less than 4¾ per cent., and corporations can borrow in the market at short notice on corporation bills, say, at six months, at less, or for long dates, say, 30 years, at about 5 per cent. There is therefore no saving to a corporation if they borrow money from depositors at something like 3½ per cent. It is said there is a great need for municipal savings banks, but since last year the Trustee Savings Bank Bill has become an Act, and they will give safer facilities than municipal savings banks, because the trustee savings banks have the whole of the guarantee of the State behind them.
I remember that a pledge was given last year by the Labour party in regard to the question of interest, raised by my hon. Friend the Member for Barnstaple (Sir B. Peto). I believe it was given by Lord Arnold, who said that when his party came into power they would insist on raising the rate of interest in the Savings Banks above 2½ per cent. It will be an injustice for the old savings bank if this House lets Cardiff set up a bank giving a rate of interest at 3½ per cent. and prevent the Post Office Savings Bank giving any more than 2½ per cent. I am certain that the pledge was given by the Labour party, and I think it was given by Lord Arnold. I ask the Financial Secretary to the Treasury to say this evening whether the Government are going to fulfil that pledge. Does he remember, when he sat opposite me when I was in charge of the discussion, that he pressed me to raise the Trustee Savings Banks rate of interest? If so, surely it is only an act of justice to carry out consistently the policy which he then advocated, and allow the Savings Banks to charge a higher rate so that they may be able to compete with the municipal banks.
Then again hon. Members must remember that National Savings Certificates issued in an area enable money to be obtained by the area from the National Debt Commissioners for municipal purposes, and so with trustee savings banks. If fewer National Savings Certificates are issued in districts owing to municipal banks taking the money for themselves, it will be less possible for the municipalities to obtain the money which they need from the National Debt Commissioners. There are municipal short-term loans quite as safe as municipal banks, and not so dangerous in the event of a run or a panic. I had to study the history of English banking before and after 1844 two years ago, when it was my duty to bring in the Bank Notes Bill, and it came into my mind time after time, while I was going through those
records, that the catastrophes and smashes of private banks throughout the country were caused by the banks placing their deposits into two few baskets and putting their eggs into local baskets. Here you will have the same thing again. You will have municipal banks with all their eggs in one municipal basket, lent to one corporation alone, with one type of borrower, and if anything happens, such as a catastrophe or a breakdown of trade in the district, what must the result be? Think of some of the districts in Wales where, on account of the misery in the coal trade, they are now becoming almost depopulated. Suppose you had a municipal bank there, with all its money invested in the district, how could you get it without falling back on the State or some other helper to repay the depositors? The Bradbury Committee says, on page 42 of its report:
We feel, therefore, that we cannot disregard the possibility that a Municipal Savings Bank might become, or seem likely to become, seriously embarrassed, and that it is necessary to consider what reactions its embarrassment might have both on the Municipality and on the general credit structure. While the two aspects of the question should not be sharply distinguished, since each reacts on the other, they correspond to some extent with two different types of difficulty, the gradual and the sudden. In either case there is a presumption that the general financial position of the municipality is already difficult and that the whole credit system is somewhat strained.
Who will control these municipal banks? The council, which is the borrowing authority and which is also the spending authority? We do not even allow that here. On the Public Accounts Committee we have one official who intervenes between the spending and the legislating authority. Are you going to have an Auditor-General and a Comptroller intervening between the authorities overseeing the borrowing of the bank and the authorities who oversee and authorise the lendings of the bank? If you do not, disaster must occur, and that is why we oppose this Bill. I should like to quote one other thing from this Report:
We are much impressed with the great vigour of municipal life in this country, the general efficiency of local government and the immense value of the civic spirit, and we fully recognise the importance of enlisting that civic spirit in the service of thrift. At the same time, municipal func-
tions are already many and varied and there is a prima facie presumption against adding to them unnecessarily. After very careful consideration of the whole position in all its bearings, we have come to the definite conclusion that in view of the present position of national finance the extension of Municipal Savings Banks within the next 10 years would not be in the interest of the community as a whole, and that even apart from questions of national finance it is exceedingly doubtful whether the special incentive to thrift provided by such banks is so great as to outweigh the risks involved.
We do not wish to offer an uncompromising opposition to the proposals in this Bill; we have no intention or wish to hold up the Bill. We had hoped that by patting down these Amendments, the Cardiff authorities would make some accommodation with our views. There may be, and I think that there are probably, some middle courses that would meet our objections and the objections which I have outlined in the two Amendments. [HON. MEMBERS: "Whose objections?"] They are my objections which I make from such ability as I have, but they are backed up by the Report of the Bradbury Committee. There may be some middle courses which would meet our objections, and which would give the safeguards which we desire. Perhaps the Financial Secretary, who is in charge of the Bill, can reconsider Clauses 136 and 137 as they now stand, and propose some processes by which the assets of the municipal banks can be maintained in a form sufficiently liquid to ensure security both to the depositors and to the corporation. That was recommended by the Bradbury Committee. Let me read their recommendation:
Had we been dealing with the question entirely afresh"—
that is, with regard to the Birmingham Bank—
we should have been disposed to recommend that the bank should keep in cash and at its bankers a balance of 5 per cent. of its deposits that 40 per cent. or 45 per cent. should be placed with the National Debt Commissioners, who would invest the money in short term securities, allowing the interest actually earned, and would undertake to repay it at call if the cash balance should at any time be exhausted, and that the Corporation should have the use of the rest of the money for their own purposes or for housing advances, paying interest on terms to be prescribed by statute or fixed by the Treasury.
We must oppose this Bill on account of these two Clauses. Perhaps those in charge of the Bill may see fit to move
Amendments on the lines of those which I am supporting. I think that Paragraph 138 of the Bradbury report would probably meet our objection.
I beg to second the Amendment.
I should like to remind the House of the circumstances under which these Clauses have come down to this House for discussion. They are very remarkable. To begin with, in Committee upstairs these Clauses were carried by a majority of one, the Chairman having voted twice. I have always understood that it is the usual practice for the Chairman of a Committee, where there is a proposed innovation, not to give his casting vote in favour of the innovation, but in favour of the status quo. [Interruption.] I would remind the House that one Member was unavoidably and regrettably absent from the Committee. It does not seem to me fair to the House that Clauses of this magnitude should be carried by the casting vote of the Chairman upstairs. I would further remind the House of the witnesses who were called before the Local Legislation Committee. It is a remarkable fact that on Clauses involving such a great departure of policy, no witnesses were called in opposition to the Clauses. Only three witnesses were called by the Cardiff Corporation to give evidence—
If the hon. Gentleman listens to what I am saying, instead of putting his own thoughts into words, he will not make such an absurd suggestion. I made no such statement. I said that I understood—and I may be wrong—that it is the usual practice for a Chairman not to give his casting vote—in other words to vote twice upon the same point—in favour of an innovation, but to give his vote, if it is required, in favour of maintaining the status quo.
Mr. DEPUTY - SPEAKER (Mr. Dunnico):
It is not in order to call into question the conduct or action of a Chairman upstairs, but it is in order to use such an illustration as the hon. Member is using for the information of the House.
I have no intention of casting a reflection on the Chairman, but it is a remarkable thing that Clauses involving such a wide departure of policy should have been decided by a casting vote of the Chairman. Hon. Members may have a different view, but I do not like to think that Clauses of this magnitude should be decided by what I will call unusual procedure on the part of the Chairman. I want to call attention to the number and quality of the witnesses who were called to be examined on this question. There were three witnesses, all of whom were prejudiced, biased, and with interests to serve. There was the general manager of the Birmingham Bank, and nobody would suggest—[Interruption.] I am casting no reflection on him. I only say that one would expect that he would be in favour of municipal banking. The second witness was the chairman of the Birmingham Bank, and I leave it to hon. Gentlemen to decide whether it is not possible that the chairman of a municipal bank in Birmingham would be in favour of municipal banking. Lastly, there was the City Treasurer of Cardiff, who evidently wishes to extend his sphere of activity. These were the only three witnesses called to discuss these main Clauses, and I maintain that it is a remarkable fact that in a wide departure of policy of this kind, there was no opportunity of hearing evidence in opposition.
It is very remarkable because in the past applications from local authorities for power to start a municipal bank have always been strenuously opposed by the Treasury. On this occasion, the Cardiff Corporation were amazed, and their chief counsel expressed his astonishment that no opposition from the Treasury had been met with. When Swansea applied for powers, they were opposed by the Treasury. When Bristol, which I represent, applied for powers, as recently as 1926, they were strenuously opposed by the Treasury. I will deal with Bristol later. I am only pointing out that in the past the Treasury have always offered the most strenuous opposition to any Clause giving powers to local authorities to run municipal banks. On this occasion, by a remarkable coincidence—it may be coincident with the arrival of a Socialist Government in office—the Treasury withdrew their opposition.
I come next to another important happening upstairs, to my mind the most remarkable one, and that is that the national aspects of this question were ruled out by the Chairman. When my hon. and gallant Friend the Member for Henley (Captain Henderson) endeavoured to extract some information and some opinions regarding the effects of municipal banks on the country as a whole, he was ruled out of order by the Chairman. I propose reading the Chairman's remarks. The hon. and gallant Member for Henley had tried to introduce a consideration of the national aspect of the question as opposed to the purely local and selfish interests of Cardiff, and here is an extract from page 150 of the minutes of evidence:
I really think we should discuss the Corporation Bill on its merits, without any prejudice from any report that is issued from the national standpoint."
That was Mr. Palin's view, and the Chairman supported it.
That report is a national report, and I should like to say that we have to accept it as a national matter; but I submit that we are not dealing with the question from a national point of view. We are discussing the question as to whether or not Cardiff is a city that ought to have a bank.
The report offered an opinion as to whether all municipalities should be entrusted with these powers. We are discussing the question of whether one municipality of a very high financial standing should be entrusted with these powers."
Hon. Members opposite cheer that ruling by the Chairman. For all I know the Chairman may have been perfectly correct in his ruling, according to the laws of procedure upstairs, but I submit that the national standpoint is all important,
and it is the national standpoint, and not the purely local and selfish interests of Cardiff, which I ask the House to consider this evening. To rule out entirely the effect of municipal savings banks upon the finances of the country as a whole is to adopt a most extraordinary attitude. It is the more remarkable because the Bradbury Committee, which was appointed in 1926 and reported in November, 1927, was expressly set up to consider
whether it is desirable to promote a further extension of municipal savings banks, and, if so, within what limits, and subject to what conditions, statutory or otherwise.
The Committee, which was composed of very eminent authorities, considered this question from every angle and came to very definite conclusions, which were adverse to a further extension of municipal banks.
The principal argument in favour of the establishment of municipal banks is that they will encourage thrift and stimulate saving through the medium of a bank owned by the citizens, which can use their accumulated savings to assist the finances of their city. The encouragement of thrift is the great aim. The Bradbury Committee examined this contention and came to the conclusion that
municipal banks would provide some additional incentive to thrift, but that the proportion of new savings which they and they alone would obtain was small in relation to the whole.
They arrived at that conclusion after a very careful examination of the only municipal bank which had then been established, the Birmingham Municipal Bank. When they examined the deposits of the Birmingham Municipal Bank they estimated, and it was a conservative estimate, that no less than 30 per cent. had been diverted from the Post Office Savings Bank, that 20 per cent. had been diverted from investment in National Savings Certificates, that 15 per cent. had been diverted from the ordinary joint stock banks and ordinary investments—[Laughter.] I see nothing to laugh at in that. Perhaps hon. Members will cheer this more heartily—10 per cent. was diverted from co-operative societies and from miscellaneous agencies. If we add those percentages together we find that only 25 per cent. of the savings which the Birmingham Municipal Bank has secured are really new money; 75 per cent. of the money accumulated
in the bank has been diverted from other agencies which would have collected it. Therefore, the Birmingham Bank has been of advantage in encouraging thrift only to the extent of 25 per cent.
I would point out that in Birmingham there were exceptional advantages in favour of such a bank. There was no trustee savings bank, the building societies were not strong, and the municipal bank was established when trade was good and wages were high and people had, presumably, more money to put by than is the case at the present time. Further, I understand that the Birmingham Bank took over from a previous savings bank, and therefore started with a substantial balance in its coffers. In every way the Birmingham Bank started under the most favourable conditions, but in spite of that has been instrumental in securing new savings to the extent of only 25 per cent. of its total deposits.
My argument does not rest on that. I do not reject the savings bank as a means of thrift; obviously every new agency which is created taps some source of savings; but what I am pointing out is that we must not attach too much importance to the power of a municipal bank to stimulate savings, as the savings which it secures consist for the most part of money diverted from other agencies which would have collected it.
I know nothing about Cardiff, but I do know something about Bristol. One thing I have discovered is that Cardiff does not possess quite the same amount of civic spirit as Bristol possesses. I have made a very careful examination of the various savings agencies in Bristol and I assume that they are typical of the whole country. I do not say that Bristol is more go-ahead than the rest of the country, but I find upon examination that there are quite a large number of agencies in Bristol encouraging thrift and saving among the people. I would like to mention, first of all, the building societies, which are very strong in Bristol and which do the work that the Cardiff Corporation is seeking to do under Clause 137 of this Bill. Those building societies are doing a great work in assisting the purchase of houses in Bristol. Then there are the co-operative societies which are fairly strong in Bristol, and they have savings banks which encourage their members to save their money, and I congratulate them upon the good work that they are doing.
There are also in Bristol the ordinary joint stock banks, which not only cater for the wealthy classes, but which have set themselves out to capture the poor man who has not very much money, and all credit to them for doing that good work. These banks have started the system which is now known as home safes. Not long ago I took the trouble to discuss the matter with the bank managers of Bristol, and I find that these home safes are going like hot cakes in the various parts of the city and they are encouraging saving among those men and women whom the municipal savings bank is designed to catch. Those joint stock banks, by the initiation of home safes, are doing much to encourage thrift and saving among the working classes.
Then there is the Post Office Savings Bank. Not long ago I asked the Postmaster-General a question on this subject and his reply was to the effect that
The total amount deposited in the Post Office Savings Bank through the post offices in the Bristol Town delivery area amounted to £781,375 in 1928 and £779,286 in 1929.
Those are remarkable figures, and they show that a great deal has been done by the Post Office Savings Banks in Bristol to encourage thrift. There is, in addition, the corporation mortgage loans for three, five, seven or 10 years for a minimum sum of £50, at the ordinary current market rates. I admit that that does not appeal to the very small investor, but at any rate it taps a very wide circle of investors who have an opportunity of lending their money to those in their own city at reasonable rates. There are a number of other minor systems which encourage saving and thrift.
Last but not least, I come to the National Savings Certificates which, to my mind, are doing a tremendous work in the encouragement of thrift. I was amazed at the figures which I obtained for Bristol, and I have no reason to doubt that those figure are typical, and that they represent quite an average estimate of the savings in other towns and cities. I find that in 1926 the people of Bristol bought £477,000 worth of National Savings Certificates, in 1927 £508,000, in 1928 £563,000, and in 1929 £606,000. Those figures show a steady upward movement each year in the number of National Savings Certificates which are brought by the people of Bristol. I would like to point out that in buying National Savings Certificates these people are not only helping the Government, but they are advancing their own interests, because the Public Works Loan Commissioners are prepared to advance loans to municipalities to the extent of 50 per cent. of the purchases of National Savings Certificates in a year, and, as a result of that arrangement, Bristol has been able to borrow no less than £620,000 from the Public Works Loan Commissioners, and this year Bristol has applied for a further loan of £225,000 to cover the sale of National Savings Certificates which were issued last year. Those facts are not generally known in this House and the country as a whole, and I was amazed when I read the evidence submitted by the representatives of Bristol to the Bradbury Committee to discover that those representing the financial interests of the Bristol Corporation did not know those facts.
I understand that the hon. Member for West Bristol (Mr. Culverwell) is giving as an illustration the working of saving agencies in Bristol, and suggesting that as in Cardiff there are similar agencies, the powers sought should not be granted. He is going rather too wide of the subject now before the House. The question that we are discussing is whether or not this Bill relating to Cardiff should be now considered.
Surely it is quite impossible for any hon. Member to address himself to the question whether Cardiff should institute municipal banks under this Bill unless he is allowed to show what takes place in other cities in regard to municipal banks in order to show that such a system is not necessary?
I have ruled that the hon. Member is entitled to argue that there are sufficient saving agencies in all cities at the present time, and that the powers asked for under this Bill are unnecessary and harmful.
In the discussion of a Clause of this kind, the figures I have given are of general interest. I do not say that Bristol is more patriotic or has more of the civic spirit than Cardiff, but I believe that the argument for establishing a municipal bank is entirely dependent upon the existence of that civil spirit. The figures I have given show that hon. Members opposite would be well advised to consider whether they could not effect the same purpose which they are seeking to carry out by giving more encouragement—
I am not going into any more detail upon that point, although I am quite prepared, at any time, to explain why Bristol was refused those powers, and that is much more pertinent to the argument. I want to ask whether you cannot get money for corporation purposes as effectively through existing institutions as you could by establishing a municipal bank. The success of a municipal bank is dependent upon a keen civic spirit. That was admitted by the promoters of the Birmingham Municipal Bank, and you must have keenness in regard to propaganda and voluntary effort. Unless those things are present, municipal banks are bound to be a failure. If hon. Members opposite would only put the same energy and enthusiasm into the encouragement of thrift as they do into the destruction of capital they would be doing a much greater service to the cities they represent and to the country as a whole.
I do not want to go into the general objections to municipal banking; they have been dealt with very adequately by my hon. Friend, and have been dealt with at great length in the Report of the
Bradbury Committee; but I want to say something about the national standpoint. I pointed out at the beginning that the Cardiff Corporation Bill has so far been considered only from the point of view of local and selfish interests. I speak of selfish interests not in any spiteful spirit, but obviously, while it may be in the interest of Cardiff to run a municipal bank, it may not necessarily be in the interest of the rest of the country. In fact, the Bradbury Committee expressly stated that it was not. They stated, in the third conclusion of their Report, that:
We think that the general establishment of such banks within the next 10 years would cause serious embarrassment to national finance during what is likely to be a very difficult period.
I would ask the Financial Secretary whether conditions have changed for the better during the last three years? Why should it have been inappropriate, inadvisable, and undesirable to establish municipal banks in 1927, and not to-day, when there is more unemployment, and when the financial conditions are certainly no better? It seems to me that, if a Committee of that influence, and after such careful discussion and consideration, has definitely reported that in its opinion it would be undesirable in the national interest to extend municipal banking during the next 10 years, it is folly for this House to embark on that enterprise at the present moment.
I would like to read these few further lines from the Bradbury Report:
The Governor of the Bank of England thought that the establishment of municipal banks would cause very serious embarrassment to Government finance, and that no worse time than the present or during the next 10 years could be chosen for recommending their extension.
Is the position any better to-day; is the need for converting debt any less urgent than it was three years ago; is unemployment better; is trade better; are financial conditions better, that we can go back on this considered opinion of the Governor of the Bank of England, expressed less than three years ago? The Treasury said that they
could only view with the greatest apprehension any project which tended to
reduce the £8,000,000 or £10,000,000 of new capital resources which comes in every year from the Post Office and Trustee Savings Banks.
Have conditions altered since the Treasury expressed that view? I venture to suggest that the conditions are even worse than they were in 1927.
I now want to deal with the Treasury opposition, or lack of opposition, to this proposal. In 1926, the Bristol Corporation promoted a Bill which included powers for the establishment of municipal banks. I will not be tempted into a discussion of their reasons for asking for those powers, although there is a very good explanation. What I am concerned with is the response of the Treasury to this proposal. The Treasury addressed a letter to the Bristol Corporation, on the 18th February, 1926, in these terms:
I am directed by the Lords Commissioners of His Majesty's Treasury to inform you that they must request the omission of Part XVI of this Bill, which contains proposals for the establishment by the Corporation of a Municipal Bank.…Similar provisions were omitted from the Swansea Corporation Bills of 1920 and 1922, and were disallowed by Parliament in the Wigan Corporation Bill of 1921 and the Stoke-on-Trent Corporation Bill of 1923. My Lords would conceive that it was the intention of Parliament, while recognising the existing Birmingham Bank, not to encourage further Municipal Savings Banks. The primary object of the Bank would appear to be to take deposits withdrawable on demand and apply them to housing and other fixed capital expenditure. There are very obvious dangers in borrowing short and lending long in this fashion, and these dangers are much more considerable when the risk is concentrated in one place.…My Lords would therefore find it necessary to oppose the Bill if the Clauses in question are proceeded with.
What has altered the Treasury view in this very short space of time? [Interruption.] Is it because there has been a change of Government? Is it that political pressure has been put upon the Treasury? If so, that is a very serious state of affairs. Less than three years ago the Treasury expressed the decided view that an extension of facilities for municipal banking would be inimical to the public interest. To-day, with a Socialist Government in power, are we to assume that political pressure has been brought to bear on the Treasury to withhold their opposition? I am reminded rather of the charge which the Chancellor of the Exchequer brought against
my right hon. Friend the Member for Epping (Mr. Churchill), whom he accused of manipulating the Bank rate, of exercising influence upon the Bank of England to prevent a rise in the Bank rate. It is quite true that the right hon. Gentleman, as many Socialists do, completely contradicted himself only a few months later, when he told the Trades Union Congress that the Government had no influence whatsoever upon the Bank of England; but he did state, when it was convenient to him, that my right hon. Friend the Member for Epping had put pressure upon the Bank of England. I would ask the Financial Secretary whether that has taken place in this case—whether political pressure has been brought to bear on the Treasury officials—because what we fear in the case of municipal banks is that political pressure will be brought to bear upon those who run these banks. We are quite aware that the policy of hon. Members opposite is to socialise the banks, to nationalise the banks of this country, and one can quite understand that from their point of view the municipalisation of banking would be a step in the right direction. There is one further argument, and that is that already municipal Government is over-burdened with duties. Local councils are overburdened with the duties which this House thrusts upon them. I am a councillor of the City of Bristol, and I know perfectly well—
I know how extraordinarily difficult it is to obtain the right type of men for municipal Government, and to obtain the whole-time services of those who are prepared to serve their city; and for that reason alone I think it would be a mistake to thrust new duties upon the Corporation. I do not believe that hon. Members opposite are in any way concerned with the encouragement of thrift. Their whole idea is to provide cheap money for the State or the municipality to spend. They are exactly like the Soviet Government, which encourages the private trader one day to make profits, and, as soon as he is doing well, comes down and takes his profits away, and spends them upon the State. We should be the first to support a municipal bank if we thought that it was desirable in the national interest, because we think that every man should be a capitalist. We do not want to stamp out thrift and kill capitalism, and, therefore, it is in no spirit of antagonism towards thrift that I support the deletion of these Clauses. If hon. Members opposite would turn their energy and enthusiasm to propaganda on behalf of the existing institutions which are to be found in our great cities, they would be doing much more service in the cause of thrift, and of the municipalities which they represent, than by advocating the establishment of new and unnecessary institutions which are undesirable in the public interest.
Mr. A. HENDERSON, Junr.:
The hon. Member who has just spoken wound up his speech with a very violent attack upon Members on these benches, alleging, among other things, that we were seeking to cheapen money at the expense of thrift. [Interruption.] May I put it in this way? He suggested that the object of these Clauses was to enable municipalities to obtain cheap money, presumably for municipal purposes. He seemed to suggest that that was something peculiar to those who are what he calls Socialists, but these Clauses have been approved by, and have received the support of, the whole Cardiff Corporation, and he may not know that that corporation includes members of the party to which he himself belongs. The hon. Gentleman who spoke first criticised the Bill and, in doing so, relied upon the Report of the Bradbury Committee. He apparently based his criticism on the finding of that Committee to the effect that the establishment of municipal banks throughout the country might lead to the embarrassment of our national finances. The amazing thing about that argument is that there has been only one municipal hank in operation in the country.
Perhaps I may be allowed to join the speech of the last speaker with that of the hon. Gentleman himself. The hon. Gentleman stated that the Report of the Bradbury Committee was adverse to the establishment
of municipal banks. The last speaker elaborated that by quoting from the Report that it would have an embarrassing effect on the national financial position. Any deduction that the Committee made as to the establishment of municipal banks could only have been based on the existence of the Birmingham scheme. If I were able to show the House that the Birmingham Municipal Bank has been a success, which it has, we are entitled to say that, however eminent the members of that Committee are in their respective spheres, whether as bankers or accountants, at any rate as bankers, they are not unprejudiced when dealing with a banking system which will compete with their own. We have had a criticism of the Bill from the hon. Gentleman who was the Financial Secretary in the last Government, and a very eminent financial authority, but sitting next to him is an even greater financial authority, one who has occupied the position of Chancellor of the Exchequer, and I am going to quote what the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain) thinks with regard to municipal banks. I have here a book written by Mr. Hilton, the general manager of the Birmingham Municipal Bank, to which the right hon. Gentleman contributed a preface. In his opinion
The municipal bank is possessed of some unusual, inherent, vital principle not to be found in other comparable institutions, however enterprising and well managed they may be. I believe this unique principle is to be found in the fact that it is a municipal bank. In a great provincial city—
Cardiff is a great provincial city. It is the metropolis of Wales.
In a great provincial city, with its strong sense of civic pride, its traditions of public service and its highly trained and efficient officers—
All of which applies to the City of Cardiff—
a savings bank which is part of the local administrative machine inspires general confidence, and even a sort of affection.
Later on the right hon. Gentleman waxes most eloquent in his eulogium with regard to this form of banking. He says:
Have we indeed reached the limit of what municipal enterprise should be allowed to attempt if we confine it to a single town? For my part I would as soon endeavour to imprison a volcano.
For once I endorse and adopt the views expressed by the right hon. Gentleman
in dealing with municipal banks, and I hope the House will follow not only the unanimous wish of the Cardiff Corporation but also, for once, the lead of the right hon. Gentleman.
I have listened very carefully to the speeches of the opener and the seconder and I have also studied very carefully the Bradbury Report. The opener quoted very considerable portions of the Bradbury Report but I think it is not unfair to say he intended to pick out the portions that were unfavourable to municipal banking. I think he suggested that the Birmingham bank did not provide cheaper money than Birmingham could get otherwise. If he will refer to page 14, he will find the statement that the remaining funds of the bank are invested with the Corporation at an average rate of 4½ per cent.
The rate has always been below the rate which the City Treasurer is prepared to pay for mortgage money or outside borrowing.
So that according to the report, the only municipal bank that we have provides cheaper money than can be found in other ways. That is a point of some considerable importance. The second point is that, although the right hon. Gentleman admitted that the bank was a success, he did not quote the words of the Bradbury Report on the matter. If he looks at page 16 he will find:
The results achieved by the bank are very remarkable and have considerably exceeded anticipations. The bank has achieved a success of which Birmingham is justly proud.
That is the report of the committee on which the right hon. Gentleman is mainly relying in asking us to reject this Bill. There can be no question that the Birmingham bank has been a remarkable success. Only two objections have been raised to it. One, quoted by the hon. Gentleman, is that there may be a certain financial risk, if they borrow short and lend long. That is true, and I quite agree with him that there must be some regulation to prevent an undue risk, and I see in Clause 136 that,
The bank shall be carried on in accordance with such regulations as the Treasury, or the Corporation with the approval of the Treasury, may prescribe.
Those are the same words as are in the Birmingham Act. It seems to me that we are safe in trusting the Treasury to
prescribe regulations to prevent that risk and I hope such regulations will be prescribed.
There is only one other risk, which was referred to by the seconder, that borrowing by a large number of municipalities may affect the national credit. There may be some risk of that. A good deal of stress was laid on that in the Bradbury Report and, as the result of that, one of their recommendations is:
The general establishment of such banks within the next 10 years would cause serious embarrassment to national finance.
Not a general establishment at any time, but a general establishment within the next 10 years. They do not say that it is undesirable to establish a certain number of them. What they say is—it is a very strictly limited recommendation—that they object to a general establishment of such banks within the next 10 years. The way in which our great municipalities develop is always the same. One or two municipalities get powers under a private Bill. If they are successful, others follow, and ultimately an enabling Bill is passed. Here we have a municipal experiment which has been admitted and a great success, and so far no other corporation, although half a dozen corporations have tried, has been allowed to follow. Now Cardiff has come again to this House to obtain a decision whether or not it should follow Birmingham. We have either to turn it down and say that, although the experiment has been a success, we will not permit municipal banking, or else say we will proceed by introducing an enabling Bill.
There is no intention at the moment of introducing a general enabling Bill. The Bradbury Report is against it, and the Governors of the Bank of England are against it on the ground that it is inappropriate. If we cannot proceed by a general enabling Bill, surely the only thing is to help a certain number of leading municipalities to establish banks. The information that we have got from Birmingham is, after all, limited—it is a very enterprising, successful and well-governed city—and I think that it is desirable, before passing a general enabling Act, that a certain number of other municipalities should have banks, so that we could get further information. That is why I, personally, welcome the application of Cardiff. I hope that the House will enable Cardiff and, possibly, a few other cities, to establish these banks. I think that Cardiff ought to be congratulated on its enterprise, and, taking everything into consideration, I sincerely hope that the House will enable Cardiff to do what it is asking to be allowed to do.
It was inevitable that in discussing a proposal by a corporation to establish another municipal savings bank, the example of the Birmingham Savings Bank should be made the subject of discussion. Perhaps the House will not be surprised if I address a few words to it upon a subject in which I have taken a very deep interest. My hon. Friend the Member for West Bristol (Mr. Culverwell), alluded to certain of the witnesses who appeared before the Committee on Local Legislation. He said that it was not surprising that the general manager and the chairman of the committee which managed the Birmingham Savings Bank should be in favour of municipal savings banks. No doubt he will agree that it is not surprising either that the man principally responsible for the establishment of that bank should also be in favour of municipal savings banks. I venture to suggest that the fact that those who have had most to do with the only bank which exists in the country should be enthusiastic about its success and desire to see some other town act similarly is hardly an argument against their evidence.
I do not consider this to be, in any way, a party subject. It has really nothing to do with Socialism or anything else. It is merely a question of what is prudent and wise in the interests of municipal and national finance, and has a very definite bearing on the question of national thrift. I think all of us feel that when a great municipality like Cardiff comes forward with proposals which have been unanimously approved by its responsible representatives, we should not lightly turn them down. We should give most careful consideration to its views, and if, indeed, we find that we must differ from them, it should only be upon the strongest and weightiest evidence to the contrary. I would go further than that and say, that if any corporation should be allowed to repeat the experiment made by Birmingham in 1919, one surely would not exclude a town such as Cardiff, which has the highest possible reputation for its financial stability, and for the efficiency with which its municipal affairs are carried on. But it must be recognised, as my hon. Friend beside me has pointed out to the House, that we are in the presence of a report of a very well qualified and weighty Committee appointed in 1926 which definitely recommended that no further extension of municipal banks should take place at least for 10 years. [An HON. MEMBER: "General."] I do not think that they used the word "general." If hon. Members will refer to the paragraph, I think that they will see that no such word is included.
I would refer the hon. Member to paragraph 131, in which they say:
After very careful consideration of the whole position in all its bearings, we have come to the definite conclusion that in view of the definite position of national finance the extension of municipal savings banks within the next 10 years would not be in the interest of the community as a whole.
It will be seen that there is no use of the word "general." Nevertheless, I agree that so far the whole argument on this document is on the assumption that they do not want to see the possibility of a number of municipal savings banks. I am bound to say that I do not now agree and never have agreed, with the conclusions of that committee. I think that they very seriously underrated the advantages of municipal savings banks, and that they exaggerated the risks. While I do not for a moment question their financial authority—every member of the committee was a man of distinction in his calling—at the same time, I think they were at a disadvantage. They had not had an opportunity, as I had, of watching the actual working of this bank from its very foundation. I do not think it is possible for anyone who is not intimately acquainted with municipal life to realise the enormous confidence that the citizens of a big town such as Birmingham or Cardiff have in the stability of an institution like the municipal savings bank.
I remember very well when the first bank was founded—I mean the bank which preceded the present bank, the one founded under the original Act passed during the War—persons then came forward with sums of money which they had hoarded in drawers and in secret places for years, and which they had never sufficient confidence to invest in any kind of saving whatever. Some of them wanted actually to invest larger sums than we were at the time permitted to take under the constitution of the bank. We pointed out to them that they could have them invested in Government securities and they said, "No thank you; the Government might commandeer them." It never entered their heads that it was possible that the Government might commandeer savings invested in a municipal savings bank. That was, perhaps, over-confidence. At any rate, it indicates the remarkable feeling that the citizen of a big town has in the stability of the institution with which he is familiar and which he is certain will never fail him in his need.
In the report of the committee, a considerable amount of space is devoted to the question as to how far a municipal savings bank robs other savings institutions, and the estimate is made that no more than 25 per cent. of the funds deposited with the municipal savings bank can be considered as new money, or as money which would not have been saved, if the bank had not existed, by some other form of saving. That, really, is a matter of speculation. It is not a matter susceptible of proof. I think that if one looks at the appendix to the report, there is very little that will bear out with any confidence the estimates made in the memorandum. An hon. Member, for instance, quoted the fact that Post Office savings deposits in Birmingham in 1925 were only 82 per cent. of those in 1919, and he went on to quote figures to show that in his own town they were 125 per cent. It is not at all safe to suppose that if there had been no municipal bank in Birmingham the Post Office savings in 1925 would have been 125 per cent. of what they were in 1919. The very table to which he referred shows that. The high figure which he quoted in the case of Norwich is the highest in the whole table, and it conies down very much lower in some of the other cases. Take the town nearest Birmingham—Coventry. There it had gone down to 87 per cent. I do not deny for a moment that the municipal savings bank is a competitor of the Post Office and of Vile National Savings Certificates, but I very much doubt, and indeed I strongly disbelieve in, the accuracy of the estimates made by this committee as to the amount of money taken from those institutions.
Again, take the figures given in the memorandum with regard to National Savings Certificates. In Birmingham, in 1920, the sales per 1,000 of the population were £1,094, and in 1926–27 they had gone down to £598. It is not safe to assume that that is all due to the municipal banks. Take the case of Leeds. In 1920, the savings per 1,000 of the population were £1,100 as compared with £1,094 in Birmingham—practically the some figure. In 1926–27, whereas Birmingham had gone down to £598, Leeds had gone down to £515, and there is no municipal bank in Leeds. You can prove almost anything with figures. I venture to suggest that the conclusion which the committee drew from the figures which they themselves have published in the report are not justified when one comes to examine them.
There is another point to which attention is drawn in the committee's report, and which, I think, is of very great importance when you are contemplating what the effect of a municipal savings bank may be upon the thrift and savings of the people. We are here dealing with the poorer classes of the community—not with the rich investors, but with people who deal entirely in small sums. In paragraph 78, after pointing out that it is doubtful whether the new savings that the municipal bank has caused to be made exceed £1,000,000 they say:
It is difficult to reconcile this conclusion with the very definite belief of several of our witnesses that the Birmingham municipal bank has induced a vast number of persons to save who would otherwise not have saved at all. The explanation is, perhaps, to be found in the fact that there, as in any savings bank, four-fifths or more of the total deposits are in one-fifth of the accounts. Making ample allowance for duplication of accounts between the municipal bank and the Post Office, we find the total number of accounts in the two together in Birmingham is remarkably high, and a very considerable proportion of the depositors in the municipal bank may well be persons who would never have had a savings bank account at all if there had been no municipal bank.
That seems to me of the very first importance. It indicates that, quite apart from the question of the actual amount of new money which has been saved owing to the activities of the municipal bank, a very large number of people have been induced to save who would, perhaps, not otherwise have had any savings. That is a point which has always impressed itself very vividly on any mind in watching the operations of this bank. Here you have an institution which does not wait for the people to come to it, but goes itself to the people and thrusts itself on the public notice. It has unequalled opportunities for advertising its facilities. It has the approval of all parties in the town, and it has its branches opened by the Lord Mayor and always a local councillor, to whichever party he belongs, speaking in favour of the bank on every possible occasion. It has the support of all the teachers in the town, and gets an amount of publicity which no private institution could possibly have. It is the effect of this tremendous amount of propaganda which a municipal bank is enabled to get which does induce a very large number of poor people, who, perhaps, otherwise would never have thought of saving, to put by a little money in an institution in which they have every confidence.
Therefore, I differ particularly from the conclusion drawn by the members of the committee as to the effect upon thrift of the municipal savings bank. I believe that it does induce a great number of people to save who would not otherwise do so, and a very large number of these accounts are new money. Then what about the risks? We are not now dealing with a proposal to extend the system of municipal savings banks to a large number of municipalities. Nevertheless, I do not think it can be left out of account that what is done in this particular case may probably be used as a precedent. I do not imagine for a moment that Cardiff is the only town which is likely to put forward a claim for a municipal bank if these Clauses go through tonight. Therefore, in considering the risks, we must bear in mind that this will probably be followed by other applications, and it may be that some of them will not be quite so unexceptionable as this. We must, therefore, take into account the question of risks. I confess that the risks in the case of an individual corporation, provided that certain securities are given, are very little indeed.
What are the circumstances in which one can imagine a run on a municipal bank? The people who put their money in know the rates are behind the bank, and that they have the security of the rates at the back of them. The only question is whether there is likely to be a sudden call for cash to such an extent that the bank is unable to meet the call out of its liquid resources. I think that is a very remote risk in these cases, but I agree that it is a risk, and one which ought to be dealt with by the Regulations under which the bank is governed. I know it is provided for in the Bill that the bank is to be subject to Regulations, but there is no statement in either of these Clauses as to what those Regulations are to contain. No doubt the Financial Secretary will be speaking later in the Debate, and, perhaps, he will tell us what is contemplated. But I say at once that the manuscript Amendment which I have handed in is designed not merely to give directions to the Treasury as to what they should put in the Regulations, but to insert statutory Regulations in the Bill itself, so that whatever these limitations upon the powers of the bank to deal with its investments may be, they shall not be hidden away among Treasury Regulations, which are not, perhaps, generally in the mind or attention of the general public, but should form part of the Bill itself, so that everybody will know of them. If I am in order in doing so, I should like to read the terms of the manuscript Amendment which I have handed in, because, as I am making my speech now, I should not, of course, propose to make a further speech on that Amendment.
I fully understand that. I was not intending to propose it, but merely to read it so that the House may understand its purpose. The Amendment which I suggest would be—In Clause 136, page 94, line 10, at end, insert the words
And such regulations"—
that is, Treasury regulations
shall provide inter alia that the bank shall keep in cash and at its bankers a balance of 5 per cent. of its deposits, and that 45 per cent. shall be placed with the National Debt Commissioners for investment in short-term securities.
Those words are taken from the report of the Bradbury Committee. In paragraph 138, speaking of the Birmingham Bank, and after considering the question as to whether they should recommend any alteration in the conditions under which that bank was being carried on they say:
Had we been dealing with the question entirely afresh, we should have been disposed to recommend that the bank should keep in cash and at its bankers a balance of 5 per cent. of its deposits, and that 40 or 45 per cent. should be placed with the National Debt Commissioners, who would invest the money in short-term securities.
It will be seen that the regulation which I desire to insert in the Bill was recommended by the Committee as being such as they would have recommended if they had been starting afresh with the Birmingham Bank. I have been asked whether these regulations are applicable to the Birmingham Bank. No, they are not. The Birmingham Bank was the first of its kind; it was the pioneer. It started off without any such limitation as that in question, although it was subject to Treasury regulations. The Committee no doubt felt that it would be difficult, in the absence of any fault to find with the working of the Birmingham Bank, to ask that it should be subject to regulations to which it had not been subject during the 10 years of its existence; but if we are going to extend the system and to bring in other towns, and if there are to be numbers of applications for the establishment of municipal banks, it is desirable that some such regulations should be applied. If I could be assured that regulations to that effect will be inserted in the Bill, I should be quite prepared to vote for the Second Reading, and I hope that my hon. Friends would agree that that would be sufficient safeguard for the views which they have put forward.
It will be convenient if I make a short speech now with regard to the Bill. My remarks will be few because the ground has been very largely covered. I am sure that it is the wish of the House that this matter should be disposed of to-night and that we should take the vote for or against, so that the matter need not go over to another day. From those who oppose this Clause in the Bill we have heard a great deal of theory. From the right hon. Member for Edgbaston (Mr. Chamberlain) we have heard facts. The right hon. Gentleman knows his facts because he has been in very close touch with one of the outstanding instances of municipal banking. Where this House has to decide between fact and theory it comes down every time in favour of fact and against the imaginary dangers of which theorists may dream. The one argument against the municipal bank is an extraordinary one, and here I think the right hon. Member for Edgbaston will share my amazement. The one argument which is seriously put forward against municipal banks is that they will be injurious to saving and national credit.
It is alleged that the municipal banks divert the savings of the people from useful and national interests into questionable and doubtful ones. Anyone who looks into the matter is bound to come to an exactly opposite conclusion from that. The fact is, knowing the one illustration which we have in existence, the Birmingham bank, that something like £1,000,000 of additional money every year are being deposited in the Birmingham bank. Opinions may differ as to how much of that is new money. The right hon. Gentleman put forward his view, with which I am in substantial agreement, that the Bradbury Committee greatly underestimated the proportion of that £1,000,000 which represents new money. But even the Bradbury Committee estimated that 25 per cent. is new money. If we allow that estimate to be true and that only 25 per cent. of the £1,000,000 is new money, it means that every year £250,000 is paid into the Birmingham bank which would not otherwise be saved. Even therefore if we take that conservative estimate, it would represent a very substantial sum if it be multiplied in other parts of the country, and it would be a very great addition to the savings of the people. It is perfectly clear that, granted the saving of this additional money and granted proper regulations for the use of the money, the municipal bank can do nothing but good, not only to the particular towns with which it is concerned and to the nation and national credit as a whole. But of course we should make sure that the money is not frittered away in useless ways and that it really is available for the credit which the country requires. That brings me to the regulations and principles which the Treasury will adopt in regard to the whole question of municipal banks. The hon. Member who seconded the Amendment put forward a principle and doctrine which is wholly improper and wholly unconstitutional. He claimed that the Treasury had an existence independent of the Government of which it was one of the Departments. I am quite aware that that was one of the doctrines which the late Chancellor of the Exchequer, the right hon. Member for Epping (Mr. Churchill) was fond of putting forward. It is an entirely unconstitutional doctrine. The right hon. Member for Epping used to argue in this way: the Treasury take a certain stand and the Treasury is a Department to itself. In that respect, the right hon. Gentleman shared the vicious and unconstitutional view of the hon. Member for West Bristol (Mr. Culverwell), who put forward the Treasury as something outside the Government. I claim that that view is wholly false and improper.
Take the Ministry of Health. It has no existence independent of the Minister. The Home Office has no independent existence apart from the Home Secretary. The Treasury has no independent existence other than that of the right hon. Gentleman the Chancellor of the Exchequer and the financial Members of the Government. The reason is this: The Treasury has no independent means of stating its view; it can state them only through Ministers. Ministers are responsible to the Crown and to this House for the advice that they give, and the permanent officials of any Department, whether the Ministry of Health or the Home Office or the Treasury, are represented only through Ministers, and they have no means of stating their opinions or of correcting any misstatement of their opinion which Ministers can put into their mouths.
Do we understand that the Financial Secretary ignores the considered opinions of the permanent officials? I ask that because the letter that I read, addressed to the Bristol Corporation, was signed by Sir Otto Niemeyer. I understand that his views are not changed because there is a new Financial Secretary?
The hon. Member is making his error worse by his argument. The constitutional position is this: That the Treasury is the mouthpiece of the Ministers who are at the head of the Treasury at a particular time. If Sir Otto Niemeyer writes a certain letter in 1926, that is the decision of the Government of the day. I challenge any hon. Member who has ever been a member of any Government to deny that constitutional position.
If the Financial Secretary looks at page 46 of the Bradbury Committee's report he will see "The Treasury can only view with the greatest apprehension," and so on. Are we to understand that that is the view of the Government of the day or the view of the officials who gave evidence before the Bradbury Committee?
I am stating the constitutional position and there is not the smallest doubt that I am stating it correctly. The decision of the Treasury at any time is the decision of the Government. It has no more independent position of the Treasury Ministers than the Ministry of Health or the Home Office or any other Department has of its Ministers. No one who has any knowledge of constitutional practice in this country will deny that statement. [Interruption.] I allowed one hon. Member to interrupt me when I was dealing with his case, but I cannot give way again. After all, what I have said is only an answer to an entirely false point that he endeavoured to put forward. Having stated the case so far, it is important that I should come to the Treasury regulations with regard to this matter. In the first place because the Treasury take no objection to the application of Cardiff for a municipal bank, it must not be supposed that any municipality of any size would be allowed to come forward and claim a municipal bank. It is the view of the Treasury that 150,000 population should be the minimum size to entitle a municipality to apply for a municipal bank. That, of course, does not refer to Metropolitan boroughs, but to municipalities in the Provinces.
A local authority with 150,000 population should be entitled to apply, and below that the Treasury—[Interruption.] I think it would be better, in order that the Treasury view may be clearly understood, that there should be no interruption. If I made a mistake in my statement it might very well give a wrong impression. In the second place the Treasury proposal is to impose a 5 per cent. cash balance upon any municipal bank, that is to say it must hold either in cash or at a joint stock bank 5 per cent. of its total deposits. That is, I believe, the proportion adopted by the Birmingham Municipal Bank, and if the House extends municipal banks to other places like Birmingham, the Treasury would impose that as part of the regulations which it would enforce. Then as to the use of the remainder of the funds, the method adopted by the municipal bank of Birmingham is that the bank lends all its available money, apart from the 5 per cent., to the corporation, and that the corporation has decided that not less than 50 per cent. shall be in Government securities.
The Financial Secretary said that the Bank lent all the money to the Corporation, apart from the 5 per cent., but some of the money is used for making grants to persons who wish to buy their own houses.
The Treasury intend to put in a regulation which will give to the municipal bank an option. It will either take the form suggested by the right hon. Gentleman in his speech recently, namely, that 45 per cent. of the total should be invested in short-term Government securities, by which I mean securities maturing at a date not more than 20 years in advance; and the remainder can be lent to the municipality. But the Treasury will also be prepared to consider some different methods, more in accordance with the practice actually adopted by the Birmingham bank. Further than that, it is part of the intention of municipal banks to use their resources for the furtherance of housing, and one of the regulations of the Treasury would be that not more than 25 per cent. of the money which was deposited could be employed in that way.
Finally, I come to the question of the rate of interest. The Treasury has had before it two alternative methods of regulating the rate of interest. In Birmingham there is a flat rate of 3½ per cent. In trustee savings banks there is a different method. The flat rate applicable to all deposits is 2½ per cent., but depositors who have more than £50 in the bank can put the excess of £50 into a special deposit fund, in which case they can get sometimes 3½ per cent., and in some banks 4 per cent. The Treasury had to decide whether in the case of any future municipal bank it should adopt the principle actually in vogue in the Birmingham bank or bring the new banks into line with the trustees savings bank. After full consideration it has been decided that the rate applicable to new municipal banks should be along the lines of the trustee savings banks rather than along the lines adopted with regard to the Birmingham bank.
Perhaps my hon. Friends will allow me to proceed without interruption. Some explanation of this matter is required because the position to-day differs considerably from what it was when the Birmingham Bank was originally started. At the present time I would remind hon. Members behind me that depositors in the ordinary joint stock banks of this country can only get 1½ per cent. on their deposits and they have to give at least a week's notice of withdrawal. Assuming that the House accepts this Clause and that the Regulations which I have indicated are put into force, the depositor in the Cardiff Bank instead of getting 1½ per cent. as would the depositor in a joint stock bank, would get no less than 2½ per cent., and without the condition as to a week's notice. If he wanted a higher rate that would only apply to the excess above £50 and in that case he would be subject to a month's notice. In view of the great importance of this matter to the Cardiff Corporation, I hope the House will come to a speedy decision and perhaps the Mover of the Amendment will see his way to withdraw it.
The hon. Gentleman has not dealt with the point which I made regarding the pledge given by the Labour party that if they came into power they would increase the rate of interest granted by the present trustee savings banks and Post Office Savings Bank. I would like to know exactly where we are in regard to that matter in view of the fact that 3½ per cent. is likely to be given in this case, and, whatever the merits of this Bill otherwise may be, that will operate unfairly against the trustee savings banks.
I am the very last person to interrupt my hon. Friend unnecessarily, but before he leaves the matter with which he has just been dealing, and which has caused some concern on these benches, I wanted him to inform the House of the considerations which have induced the Treasury to impose this limitation of £50.
It is difficult to answer a number of questions all at the same time. I am quite prepared to answer any hon. Member who has a question to put, but I must deal with one question at a time. I may deal with the last question first and get it out of the way. There is no limit of £50 at all. As far as the rate of interest is concerned it is proposed that this bank, if it comes into existence, shall be in line with the practice at present existing in a large number of trustee savings banks up and down the country. That practice is that on the first £50, which can be withdrawn on demand, there shall be a rate of interest allowed up to 2½ per cent. Where the depositor has over £50—there is not a limit of £50 on the amount of the deposit—he can if he likes have the excess over £50 invested as a special deposit getting more than 2½ per cent. In some trustee savings banks at the present 3½ per cent. is allowed and in some others 4 per cent. is allowed, and it will probably be found necessary at the commencement, at any rate in this case, to allow 3½ per cent.
Let me now attempt to deal with the question put by the hon. Gentleman the Member for Farnham (Mr. A. M. Samuel). He asked me if it was our present intention to raise the rate of interest in trustee savings banks and the Post Office Savings Banks above 2½ per cent. The answer is "No." The situation at present is not one which justifies us in raising the rate above the 2½ per cent. maximum for deposits under £50, and for the present, at any rate, it must stay at that figure.
I understood the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain) to ask that the regulations of the Treasury should be very similar to those which I have actually announced, and probably those regulations will satisfy him generally. He went further, however, and asked that those regulations should be embodied in the text of the Bill. I have consulted with the Chancellor of the Exchequer on that point. We have only had a few minutes in which to consider the matter, but my right hon. Friend is not prepared, on behalf of the Treasury, to accept that suggestion and to put these regulations or part of them definitely into the Bill. He thinks that the Treasury ought to be left free in regard to imposing these regulations, but I think I can assure the right hon. Gentleman that the regulations which I have announced are those which the Treasury for the time being propose to adopt in the case of Cardiff and any other municipal bank that comes forward. I think it would not be in accordance with the usual practice, or that it would be desirable to pin down the Treasury in these matters.
With regard to the 150,000 population, would that govern a county council who desired to establish a county council bank with branches in separate villages?
The time of the House in discussing this important question—and it is important—has been by no means wasted. We have heard with great interest the speech made by the right hon. Gentleman the Member for Edgbaston (Mr. Chamberlain) in connection with the solitary specimen of actual practice in that town which we have at present. Members on these benches certainly heard with relief the announcement of the Financial Secretary to the Treasury that the Regulations which he has read out were not to be incorporated in the Bill, because it is obvious that in a matter of such great import as this, for the House or the Treasury to lay down hard-and-fast lines would be impolitic. As to what has happened to-night, I gather that here is the second municipal bank, which will be followed almost certainly by other examples, and the Treasury say that in the light of present experience these are the regulations which it is wise and just to have. But they hold themselves free, as I understand the position, to expand or retract them as experience teaches them. My name appears on the back of this Bill, and, so far as I am concerned, I think that the Treasury have made through its Financial Secretary, a wise announcement. It is wise to move slowly in a fresh direction, and hon. Members below the Gangway have no reason to feel discouraged. It is a very wise move, and, so far as we in this part of the House are concerned, it will receive our approval.
As Chairman of the Committee which amended this Bill upstairs, and seeing that I have been brought somewhat prominently into this Debate, I think it is in order that I should say a few words about the Bill. First of all, the Mover of the Amendment started off by raising some petty objections to certain Clauses. I would assure him, on behalf of the Committee, that the next time dust-bins are being debated upstairs, we shall remember his words. With regard to the question of the casting vote, I want to say that I gave that vote conscientiously, and I have no apology to make for what I did. I gave it after hearing the evidence of two expert men in regard to municipal savings banks. Mr. Holden, manager of the Birmingham bank, gave evidence which, to my mind, was irrefutable, and he came out of his cross-examination scatheless. We had also the evidence of a gentleman who is chairman of the bank and an ex-Lord Mayor of Birmingham. I will not read what he said of the Bradbury Committee in reply to a question which was put to him, but, in the course of his evidence, he made it clear that the Bradbury Committee in his presence, threw bouquets at the municipal bank.
The hon. Member who seconded the Amendment is, I understand, a comparatively new Member of the House. It is apparent that he is not acquainted with the Standing Orders of various Committees, for he talked about no evidence having been given in opposition to the Bill. As chairman of that Committee, I cannot demand evidence other than what promoters or petitioners desire to bring forward. On certain committees and commissions they are empowered to call for papers or documents, but on the Local Legislation Committee we are not given those powers, and, therefore, the only witnesses before the Committee were the three witnesses submitted by the promoters. There was no opposition and no objections were taken. Further, I would remind the House that this Bill had gone through all the stages of the Borough Fund Act in the city before coming here. The council dealt with it, it was advertised in the local papers, and, finally, was dealt with at a ratepayers' meeting in the city, when no objections to the Bill were put forward from any source. There was tremendous opposition to other Clauses of the Bill, but no one raised any question on this matter.
Furthermore, the Seconder said that the Birmingham bank was inaugurated at a time when things were good. Let us take any year he likes. In 1920, the first year's records of deposits showed that they amounted to £873,705 9s. 9d. I will take 1926—that will be a favourite year with the ex-Chancellor of the Exchequer. In 1926, the deposits in Birmingham were £3,598,816 14s. 3d. If I take the 10 months to 31st January, 1930, the deposits amounted to £4,364,197 3s. 4d. I want to suggest to the House that the longer the Birmingham bank scheme is in operation the better it is so far as Birmingham is concerned. With regard to the evidence for Cardiff having the right, the ruling read out by the Seconder is absolutely correct, and I submit that in the circumstances I could give no other. We were not asked to decide on the general question of municipal banks, as to whether they were good or bad, but whether, on the evidence submitted, Cardiff had proved its case for a municipal savings bank. It is true that it was decided on my casting vote, and I am happy to think that I had a keen sense of anticipation. A week after the Local Legislation Committee upstairs had granted these powers to Cardiff, a Committee belonging to the other House unanimously—not by a casting vote—gave similar powers to Birkenhead in their Bill. Therefore, I feel somewhat flattered to think that the Lords followed my example. That having been done, this question will have to be debated again, in all probability.
I want to be frank and honest with the House and to say that when I gave that casting vote I did it in the honest belief that the same regulations would apply to Cardiff as applied to Birmingham, and in my opinion all the evidence of the three witnesses before the Committee proved conclusively that. Cardiff had made out a case for a municipal savings bank under no more stringent regulations than those governing the Birmingham bank at the present time. I feel sure that the House will believe me when I say that the evidence was not taken in a slipshod fashion and that it was not hurried through; and anybody who likes to read the minutes of the proceedings will find that 35 pages of that volume of 55 pages are taken up by evidence given in regard to this question. Therefore, no Member of this House can challenge the Committee with not having dealt adequately with the question. In conclusion, I feel sure that the House will stand by the decision of the Committee and give the Bill the Third Reading.
This is not a party question at all, and my right hon. Friend the Member for Edgbaston (Mr. Chamberlain) was quite frank in indicating his view of the fact that in the 11 years since 1919, when the municipality of Birmingham was empowered to institute a savings bank, the venture has proved to be successful, but that whereas in the meantime quite a number of other great boroughs, including Bristol, have been refused similar powers by Parliament, if we pass the Third Reading of this Bill with Clauses 136 and 137 in it, we shall be creating a fresh precedent, which will be followed by a vast number of other boroughs. The Financial Secretary to the Treasury has told us what the Treasury propose in the way of limitations on these applications, including that of a population not under 150,000. There are a great many boroughs in this country with a population of 150,000, and it would be invidious to draw comparisons between them, but recently there has been an application for funds for a great borough where 80 per cent. was left in the hands of the underwriters.
We must proceed either on the lines of the creation of a large number of municipal banks, or of strengthening the national savings system through the Post Office Savings Bank. In order to do that, it is quite clear that we must make the terms offered by the Post Office Savings Bank much more attractive. I will quote two of the reasons which were given in support of these Clauses by the Cardiff Corporation. They say that it was shown that the existence of the Post Office Savings Bank did not meet the needs of any person for whom the Municipal Bank would provide. If that be so, is that an argument for setting up municipal banks all over the country in competition with the Post Office Savings Bank, or is it an argument for making the Post Office Savings Bank an effective national means for collecting the savings of the people?
It is an amazing thing that hon. and right hon. Gentlemen opposite should be advocating, as I understand they are—although I believe that there is a, certain amount of opposition—the setting up of these municipal banks in competition with the national system of the Post Office Savings Bank. I should have thought that their view would have been exactly the opposite. The paper which has been sent round in support of the Cardiff Corporation says:
The comparatively ineffective appeal made by the national savings organisation and trustee savings banks were contrasted
with the result obtained by the Birmingham Municipal Bank.
It is clear that the two things are in competition, and what we are asked to decide to-night is whether we are to proceed, by giving to the Cardiff Corporation power to set up a municipal savings bank, in the direction of having an almost infinite number of competing enterprises for the savings of the people, with regulations propounded by the Treasury which are supposed to be appropriate to the individual needs of the case; or do what I hope and believe that we shall do some day, really improve the Post Office Savings Bank system to such an extent that it will not only have an office in every post office, as it has now, but will have branches in every municipality in the country, offering terms with which there can be no competition, because they would be the best terms, with Government security, which is the best possible security for the savings of the people. Are we to assume that the Post Office Savings Bank is a "washout" and has been knocked on the head by the setting up of rivals which can offer far better conditions when they are run by municipalities.
Surely the House is asked to decide a very large question. I do not think that this is the proper occasion to decide it against the Post Office Savings Bank. We have heard nothing from the Postmaster-General; surely he ought to defend the institution of which he is in charge. If we are to make this departure, we should not make it after a three hours' Debate on a private Bill promoted by Cardiff. Bristol and other great municipalities have been refused these facilities, and we should not grant them because Cardiff happens to apply and there has been a change of Government, and consequently a change of Treasury view upon this question. We should not therefore decide the question once and for all upon a Measure which means practically the abolition of a national system for the collection of the thrift of the people. I have always thought it was one of the meanest of our institutions. We offer to the poorest of the people the poorest rate of interest for their savings, a rate which would not be accepted by anyone with substantial sums to save.
The decision we are asked to take means going away from a national system of savings banks altogether. We have never tried to reform it, never tried to make it attractive for the savings of the people. Eleven years ago we allowed one municipality at Birmingham to set up an opposition shop, and we are now going to say that because the State's effort is such a "washout" and such a fraud from the point of view of poor people another municipal bank shall be opened at Cardiff. It would not matter if there were to be only two, but the right hon. Member for Edgbaston (Mr. Chamberlain) said, and the Financial Secretary agreed with him, that this means opening the gates for every municipality in the country to have its savings banks. We are going to take the investment of the money of the great mass of the people out of the control of this House and pass it over to various municipalities, saying, "We hand it over to you because you can make a decent job of what we have not been able to do ourselves." Is the Postmaster-General satisfied with that state of affairs? To-night we are deciding that his Department is a failure, and that his national system of savings banks is a failure; that the only thing to be done is to let Cardiff and every other borough in the country which has more than a certain population try to manage banks and, with local influence and local patriotism, make a success of that work in which State management has absolutely failed. In the circumstances I am opposed to these two Clauses being in the Bill. It is far too great an issue to be decided after so short a debate, and without the great questions which are before the House having been answered by the Financial Secretary. The real question which he ought to have answered is, "Is a State savings bank a good thing, or is a municipal savings bank a good thing?" [HON. MEMBERS: "Both!"] One or the other, but not both. According to the argument of Cardiff municipal savings banks are going to wipe the floor with the national savings bank and obliterate it. If that is the direction in which we are going, I, for one, should want to hear a great deal more—something from the Postmaster-General at any rate—before deciding so grave an issue.
I understood from the Financial Secretary that he gave an undertaking that the Treasury would lay down Regulations governing this Cardiff Municipal Bank, which closely approximated to the suggestion I made at the close of my speech. That being so I think some of our objections have been to a considerable degree met. Safeguards will now be laid down of such a kind that those acting with me will accept the Government's offer, and for that reason I do not propose to move the Amendments which stand in my name. I am very sorry and very much surprised, however, that the Government do not intend to carry out their pledge to the Trustee Savings Bank. We know very well that a pledge was given. The hon. Gentleman the Financial Secretary to the Treasury was present during the consideration of the Trustee Savings Banks Bill. He also knows that an undertaking was given that steps should be taken to meet the wishes of the Trustee Savings Bank. If municipal banks are allowed to compete with a rate of interest at 3½ per cent., it will be most unfair to the Trustee Savings Bank. That is a broken pledge, and I make my protest.