Note 101 — Chapter V

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