before us and resolved by 51 votes to 46 that they should not. On the other hand a number of other municipalities, in addition to those that have actually promoted bills, have expressed themselves in favour of the establishment of Municipal Savings Banks, and some of these no doubt would have sought powers to establish such banks if they had seen any prospect of obtaining them.

SECTION 2.-THE BIRMINGHAM MUNICIPAL BANK.

21. The case advanced for the general establishment of Municipal Savings Banks is based largely upon the actual results obtained by the Birmingham Bank and, while we have given some account of its origin in the preceding section of this report, we think it fully worth while to devote a separate section to the examination of its organisation, experience and present position, and to supplement this section with two statistical appendices, the first setting forth the progress of the Bank and the second comparing certain of its results with those attained by other Savings agencies. The authorities of the Bank were most ready to supply us with full information as to its activities and results, and we should like to express our thanks to them for their assistance.

22. We divide this section into three parts, dealing respectively with the constitution (as embodied in the statute and the regulations), the administration and the present position of the Bank.

(a) Constitution.

23. The Act of 1919, under which the Bank operates, does not prescribe in any great detail how it is to be carried on. We have already mentioned, but it may be convenient to repeat here, that it simply authorises the establishment of a Savings Bank, guaranteed by the rates, to be carried on "in accordance with such regulations as the Treasury or the Corporation with the approval of the Treasury may prescribe," special provision being made for keeping the accounts of the Bank separate from other accounts of the Corporation and for a Housing department of the Bank. It is by the regulations that the Bank's operations are in fact mainly governed.

24. A large part of the regulations substantially reproduces the general regulations applicable to Savings Banks, with the addition of regulations governing the operations of the Housing department which somewhat resembles a Building Society. The effect of the regulations, omitting the technical details common to savings bank and building society organisations, is broadly as follows:

(1) The investments of the Bank are limited to:-
(a) advances for the purchase of houses;

(b) deposits with the Corporation at call;

(c) securities approved by the Treasury (Government securities maturing within five years).

(2) The rate of interest payable to depositors, which is subject to the approval of the Treasury, is at present 3 per cent. on every complete pound and may not be varied except on three months' notice.

(3) Not more than £500 may be deposited by one depositor in one year (with certain exceptions) but there is no limit on total deposits.

(4) Depositors are not, as in the Post Office and Trustee Banks, prohibited from opening more than one account, nor need they be resident in the City of Birmingham. The Bank has power to refuse deposits.

(5) Depositors are not, as a matter of right, entitled to repayment of any sum whatever without giving such notice as may be prescribed, but in practice repayment, which can only take place at the office at which the account is kept, is made on demand up to £30 at the Head Office and £5 at the Branch Offices in any one week, one week's notice being required for larger withdrawals.

(6) Repayment may be made to third parties if authorised by power of attorney or by a letter or order in the prescribed form, and through the post at the risk and expense of the depositor on a written request in the prescribed form.

(7) Housing advances are only to be made to depositors and not for more than 80 per cent. of the valuation, or for a longer period than 20 years, except in special cases.

(8) Repayments of housing advances in excess of the minimum instalments may be made at any time.

(9) Audit regulations are prescribed similar to those in force in the large Trustee Banks.

(b) Administration.

25. The following points in the administrative policy of the Bank deserve notice :

(1) The Head Office and most of the branches are open daily from 10 a.m. to 2.30 p.m. (12 noon on Thursdays and 1.0 p.m. on Saturdays), and also from 6 p.m. to 8 p.m. on Saturdays and Mondays. The smaller branches are open once or twice a week, usually in the evenings.

(2) A considerable balance is kept with the Joint Stock Banks, in respect of which the Bank receives interest varying with Bank rate.

(3) While the regulations impose no specific limit to the proportion of the Bank's funds which may be advanced for the purchase of houses, we understand that the Bank Committee themselves laid down a limit of one-third of the deposits and that the amount outstanding (including a

not inconsiderable amount for which the Bank is indemnified by the Finance Committee under the special arrangement described in sub-section 12 of this paragraph) has never appreciably exceeded one-fifth.

(4) The rate of interest charged on housing advances is at present 5 per cent.

(5) The remaining funds are invested with the Corporation at call. The Corporation allows interest at an average rate of apparently about 4 per cent.; we understand that the rate is discussed and agreed upon by the Bank and Finance Committees from time to time, and that, while it is naturally variable and dependent on circumstances, it has always been below the rate which the City Treasurer is prepared to pay for mortgage money or outside borrowing.

(6) No Government securities are held directly by the Bank, but it appears to be the policy of the Corporation to hold available to meet their call liability to the Bank 50 per cent. of the amount in Trustee securities, though most at any rate of the securities held would not fulfil the conditions required by the Treasury if they were directly held by the Bank itself. These securities are not, so far as we are aware, specifically earmarked to the Corporation's liability to the Bank in the published accounts of the Corporation or the Bank, but we gather that they are in fact retained in view of it.

(7) The Bank as such pays income tax only on its profits. Interest is paid to depositors without deduction of tax. It is, however, liable to tax in the hands of the depositor and under section 24 of the Finance Act 1924 a list of all sums, exceeding £15 paid or credited to any depositor by way of interest has to be rendered annually to the Inland Revenue Department.

(8) The original temporary bank made a loss, and the present bank also during its first seven months, but there has been a profit each year since. The profit was devoted in the first place to paying off the loss on the temporary bank; subsequent annual profits, and a special profit on realisation of investments, have been placed to reserve, being in effect employed largely in acquiring and building premises.

(9) The Bank takes deposits from one penny upwards. It also issues a large number of home safes. It co-operates with, and acts as banker to, the School Savings Bank which works under the Education Committee. In all these ways it provides for the very smallest savings.

(10) Facilities are provided for the collection of Corporation accounts, both from depositors and others, a contribution being made by the departments concerned to the Bank's expenses.

(11) Housing advances are limited to £1,000 and are, we understand, usually made only to persons who intend to occupy the houses purchased, though an advance is sometimes made to cover three (but not more) houses if it is necessary to buy so many to obtain possession of one.

(12) To purchasers of Corporation houses advances are made up to 95 per cent. of the purchase price, and to purchasers who are already tenants of such houses, up to 99 per cent., these special terms being granted in pursuance of a general policy of encouraging occupiers of Corporation houses to become owners rather than tenants; the excess over 80 per cent. of the Bank's valuation is as a matter of convenience advanced out of the Bank's funds, but the Bank is indemnified for this excess by the Finance Committee, acting as agents of the Corporation in the exercise of the powers conferred upon them by Section 7 (3) of the Birmingham Corporation Act 1919.

(13) The accounts of the Bank are audited from day to day by a firm of Chartered Accountants, and valuations are made by a practising Valuer, in both cases independently of the ordinary municipal organisation.

(14) Much attention has been given to propaganda and publicity. Opportunity is taken to bring the bank before the public by lectures, by addresses at works in the dinner hour, by the formal opening of new branches with some ceremony and in other similar ways. Judicious use is made of advertisement through the press and picture houses, by the issue of calendars with special designs, and through various corporation publications, and the existence of the Bank is brought prominently before the citizens by the display in the tramcars and elsewhere of its registered design a key with the words "security with interest." This design is also fixed outside the Head Office and the branches, and is illuminated at night; in addition a particular building design has been adopted which makes the branches readily recognisable. As the London County Council report observes, the Bank is "worked on the principle that it has to come to the people and not wait for the people to come to it."

(c) Progress and results.

26. Appendices 3 and 4 contain progressive figures of the Bank's operations and comparisons with certain other Savings agencies. To a large extent the appendices explain themselves. We think it only fair, however, to remark that while the expenses of the Bank appear somewhat high expressed as a percentage of the total funds, the rate is in part attributable to the large number of transactions in relation to the total funds and in part also to the inclusion of special non-recurrent expenditure on the

adaptation of buildings and other development work. Subject to this point we limit ourselves here to a statement of the present position.

27. At 31st March, 1927, deposits amounted to £7,800,221 in 225,760 accounts (average £34 11s. per account), and the reserve fund to £99,993. Assets included cash (in hand and with Joint Stock Banks) £736,155, money with the Corporation at call £5,464,754, advances for house purchase £1,567,358 (5,380 advances averaging £291 6s. 7d.) and premises and equipment £96,088. There were open in addition to the Head Office 39 branches, since increased to 44.

28. During the year 1926-27 the total amount due to depositors increased by £1,000,710. New deposits amounted to £3,732,292 (923,441 transactions of an average amount of £4 Os. 10d.) and withdrawals to £2,968,117 (388,275 transactions of an average amount of £7 12s. 11d.). Interest earned was £316,363 and interest allowed £236,517, ordinary expenses £43,194, non-recurrent expenses, depreciation and income tax £23,603 and net profit £15,301. The number of new accounts opened was 50,022, and the total number of depositors increased by 26,155. The total number of transactions, including 52,345 in connection with house purchase, was 1,364,061, showing an average cost per transaction (excluding depreciation, non-recurrent expenditure and interest on capital spent on premises) of 7.60d. 1,841 house purchase advances were made, amounting in all to £673,727, and 63,524 gas, water and electricity accounts, to the value of £96,670, were collected on behalf of the Corporation.

29. The results achieved by the Bank are very remarkable and have considerably exceeded anticipations. While it will appear from the later part of our report that care must be exercised in drawing inferences from these results, there can be no doubt. that, thanks to the enthusiasm and efficiency of its direction and to the sentiment of civic pride to which it has appealed, the Bank has achieved a success of which Birmingham is justly proud.

SECTION 3.-EXISTING FACILITIES FOR THRIFT.

30. It is essential that the case for the general establishment of Municipal Savings Banks should be examined in relation to the existing facilities for the encouragement of thrift. The purpose of this section is to review briefly the existing facilities. These facilities are many and varied. Most important perhaps are the National Savings Movement and Savings Certificates, the Post Office Savings Bank, and the Trustee Savings Banks, in connection with which should be mentioned the Special Investment