May 19th 1920 - J P Hilton to Neville Chamberlain
My dear Mr Chamberlain,
At the last meriting of the Bank Committee it was decided to make application to the Treasury for the investment of a portion of the Bank funds in Treasury Bills which are, as you know, a very satisfactory investment at the present time; and the Town Clerk is making such application.
Another proposal was submitted to the meeting, but was referred back for further consideration, to raise the rate of interest on advances for House Purchase from 5% to 6¼%. The reason for this peculiar figure is to make the Rules easy of understanding . Instead of one penny per pound per month, it would then be a penny farthing per pound per month. From a financial point of view, I think it is necessary that the rate should be increased; and I do not think the proposal (which was strongly advocated by the City Treasurer) is unreasonable.
There is the question of policy, however, which is a matter entirely for the Committee. Some Members seemed to fear that considerable criticism would arise from putting up the rate, and that unless it was absolutely necessary we ought not to do so; but on the other hand, applications come rolling in, and there appears no prospect of their ceasing, and we shall, I fear, soon reach the limit to which we can go if we are to retain a reasonable margin of liquid cash.
Some little time ago the Committee decided to fix a limitation of £600 upon any house built previous to the War, and £800 in respect of a house built since that date; and these limitations are being enforced . They have also decided to charge the valuation fee of 10/6d, in all cases, so as to cover the cost of the Valuer's services.
I know you are keenly interested in this side of the Bank's operations, and I should like to hear what your views are upon the matters I have raised, so that if you are not able to be present at the next meeting of the Committee to express them yourself, I shall be able to tell the Committee what you think.
The transfer procedure in reference to the Bournville Works Savings Fund is proceeding department by department, with very satisfactory results. It has only been in operation for three weeks, and the transferred funds already amount to £12,000. The officials at Messrs Cadbury's Works feel confident that practically the entire Fund will be transferred, as the employees have taken it up enthusiastically.
The working of the Bank on the Savings Bank side for the month of April shows a decline, which was only to be expected having regard to the Easter Holidays coming at the beginning of the month, and the fact that the Birmingham Corporation Stock Issue and the Housing Bonds Campaign have also fallen in this period. The net result shows a gain of about £45,000. The figures are being got out, and will be ready in the course of a few days.
The audit is proceeding, and I am not yet in a position to submit the final figures relating to the Bank, but you will be interested to know that the amount standing to the credit of depositors at the end of March as shown by the extracted balances is well over £700,000.
J P Hilton
May 22nd 1920 - from Neville Chamberlain to J P Hilton
Dear Mr Hilton,
Many thanks for your letter of the 19th. I was beginning to feel that I was getting out of touch with the Bank and was therefore glad to hear from you.
With reference to the rate of interest I have no doubt that it should be raised to 6¼%, to keep it at 5% is in effect to give a subsidy to those who are facilities in the way of advances, and I do not think there is any justification for it.Last week I was told that the building societies in the north of England had raised their rates to 7%.
The limitation of £800 in respect of the houses built since the war means I understand that that is the limit of the advance. This would be equivalent to four fifths of the cost of a house of one thousand pounds and I should feel disposed to leave this where it is.
I have heard from the Birmingham Pioneer Housing Association Ltd. at 148 Edmund St. who propose to build 160 houses at Kings Heath and who desire to be associated in some way, not stated, with the Bank. No doubt they desire to use the Bank's resources to finance the building of the houses. I am referring them to either you or Councillor Appleby but I may say to you that I am against any extension of the functions of the Bank to the financing of building. There is ample field for all our resources, and more in the financing of the purchase of houses already built, and this is a side of our work I am convinced is of the utmost value. I shall be interested to hear the figures when they are complete. Meanwhile those you name in your letter are highly satisfactory.
Yours very truly,