The results obtained by the Birmingham Municipal Bank 29-37 ... 29-35 The effect of Banks on existing savings institutions, and its Reactions on Municipal finance Reactions on credit generally reaction on national finance... APPENDIX 2. Note on the effect of the Birmingham Municipal Bank 54-55 APPENDIX 3. Birmingham Municipal Bank. Statistics of progress... The expenses incurred in preparing this Report are estimated at £94 7s. 10d., of which £64 18s. 6d. represents the estimated cost of printing and publication. 63597 A 2 COMMITTEE ON MUNICIPAL SAVINGS BANKS. MINUTE OF APPOINTMENT. TREASURY MINUTE DATED 28TH SEPTEMBER, 1926. The Chancellor of the Exchequer proposes to the Board that the following Committee should be appointed to consider whether it is desirable to permit a further extension of Municipal Savings Banks and, if so, within what limits and subject to what conditions, statutory or otherwise. The Right Hon. Lord Bradbury, G.C.B., Chairman. Sir Laurence Halsey, K.B.E. Sir Harry Haward. Colonel the Hon. Sidney Peel, D.S.O. Sir William Schooling, K.B.E. With Mr. H. E. C. Gatliff of the Treasury as My Lords concur. REPORT OF THE COMMITTEE ON MUNICIPAL SAVINGS BANKS. TO THE LORDS COMMISSIONERS OF HIS MAJESTY'S TREASURY. MY LORDS, 1. We have now completed our examination of the question referred to us by Treasury Minute of the 28th September, 1926, and have the honour to submit our Report. 2. We have held 21 meetings, and have heard 38 witnesses of whom 17 appeared alone, and 21 jointly on behalf of nine authorities and associations. A complete list of the witnesses is given in Appendix 1 to the Report. 3. While it would be misleading to divide our witnesses into groups since many of them dealt with several aspects of the questions involved, the evidence submitted to us represented four broadly distinct interests, national finance, the municipalities, the existing savings organisations and general banking. We received full and comprehensive evidence from all these points of view and we are greatly indebted to the various witnesses who gave their time to come before us, and in particular to those who at our request supplemented their general evidence with much statistical and other detailed information. Many of the statistics proved of great value and threw light upon questions which must otherwise have remained obscure. 4. Our report falls into two main parts, descriptive and critical. In the first part we summarise the history and present position of the question of Municipal Savings Banks, and in particular of the Birmingham Municipal Bank, and give some account of existing facilities for the encouragement of thrift. In the second part we consider the inferences to be drawn from the facts; we examine the principles involved in the establishment of Municipal Savings Banks, the advantages claimed for them, the risks to which they may be exposed and the reactions which they may be expected to produce upon the credit structure. Finally, we deal with certain subsidiary questions which arose out of our enquiry. 63597 A 3 PART I. DESCRIPTIVE. SECTION 1.-HISTORICAL. The Municipal Savings Banks Act, 1916. 5. Before the war Savings Banks in this country fell into two main classes, those guaranteed by the State and those not guaranteed by any public authority. The establishment of an intermediate class, guaranteed by a public authority other than the State, appears to have been first seriously mooted at the beginning of 1916. Early in that year several local authorities were contemplating schemes designed to stimulate local savings for the purposes of war finance by some form of local savings bank. The only scheme which matured was that of Birmingham which, after considerable revision, was taken as the model for a general enabling Bill. The Joint Stock Banks, however, took exception to the provisions of this Bill, and it was not found possible to proceed with it. A revised scheme was then prepared to meet their objections and incorporated in a second Bill. The Bankers' Clearing House Committee informed the Treasury that, in view of the fact that this Bill had evidently been drawn by the Government with the view of meeting the objections raised by the Bankers to the original Bill, they had decided not to oppose its introduction, and in spite of some further criticism it passed into law as the Municipal Savings Banks (War Loan Investment) Act, 1916. 6. The Act authorised the establishment of Municipal Savings Banks, guaranteed by the rates, subject to the following conditions : (1) It should apply only to Municipal Boroughs with a population not less than 250,000. (2) Deposits should only be received from employees through their employers. (3) No depositor should be allowed to deposit more than £200 in all. (4) The Bank should cease to operate three months after the end of the war. (5) All investment should be through the National Debt Commissioners in Treasury Bills or advances to the Treasury. (6) The rate of interest paid by the National Debt Commissioners to the Bank should be determined, and the rate paid by the Bank to the depositors approved, by the Treasury. (7) The accounts and funds of the Bank should be kept separate from all other accounts and funds of the council. |