In November 1926, the Chancellor of the Exchequer
appointed a committee (the 'Bradbury Committee') to consider whether it was desirable
to permit a further extension of Municipal Savings Banks, and if so, within what limits and subject to what conditions, statutory
or otherwise. In January 1928, the Report of this Departmental Committee on Municipal Savings Banks was issued. Detailed comments
on the report were produced by the Bank's Committee and presented to the City Council on June 12th 1928. Those comments were as follows:
An
outstanding feature of the year has been the issue, in January last, of the report of the Committee on Municipal Savings Banks set
up by the Chancellor of the Exchequer, to which reference was made in the last Annual Report of the Bank. It is gratifying to find
in the Report that after a searching examination into the constitution, working and achievements of the Bank, such eloquent testimony
is paid as the following:
Paragraph 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.
Paragraph 133
The question arises whether any alterations
ought to be made in the present position of the Birmingham Municipal Bank. It is clear from what we have said above that we should
view with serious misgivings the multiplication throughout the country of Banks organised on the lines of the existing Birmingham
Bank, and if the question of establishing such a Bank, either in Birmingham or elsewhere, were now being raised for the first time,
we should recommend against the granting of Parliamentary powers on broad grounds of general banking and financial policy. But the
Birmingham Bank is undoubtedly rendering very real service to thrift in an area in which the pre-existing facilities were less fully
developed than in other parts of the country. Moreover it is now a living institution with a vigorous individuality of its own; within
a few years, thanks to the energy and ability devoted to its service, it has come to hold a high place in the minds of a great number
of the citizens. Such an institution claims respect for itself, and even though we are not in agreement with the general policy which
brought it into being, we should be reluctant to contemplate its disturbance unless we felt that there were real risk of embarrassment
arising.
The Departmental Committee have not thought it desirable to make any specific recommendations in regard to the Bank
in the direction of either curtailing or controlling its operations, but they draw attention to certain points as follows:
1
The regulations "appear to permit of certain operations which might possibly lead to something analogous to a cheque system."
This
observation is apparently directed to Regulation No. 49, which deals with the authority for payment of moneys to a third party. The
use to which this Regulation is put in Birmingham is to enable depositors who are prevented from attending at the Bank personally,
owing to illness or other causes, to authorise another party to withdraw money for them on production of the pass book. This is a
very useful provision, which is common to all savings banks, and your Committee do not consider that any importance attaches to the
observation of the Departmental Committee on this point.
2 The regulations "do not expressly prevent depositors from opening
more than one account."
While this may be so, your Committee have no knowledge of depositors having two accounts in the Bank.
The Post Office and the Trustee Savings Banks require depositors to make a declaration on enrolment that they are not already depositors
in one or other of the Banks concerned, but it has never been the practice of the Municipal Bank to question prospective depositors
in this manner. Moreover, the requirement of such a declaration cannot act as an incentive to thrift, but rather tends to operate
adversely. The class of depositors for whom the Municipal Bank caters would be unlikely to open one account at a branch near to their
place of residence and another account at a more distant branch. The Report admits that the business of the Birmingham Municipal Bank
is "a genuine savings bank business," and this should be a convincing answer to those who assert that the Bank has encroached upon
the preserves of the commercial banks.
3 The Report draws attention to the amount of money placed with the Corporation at call,
but it is admitted that "the theoretical objection to this course" has been met, to a large extent, by the Corporation holding a considerable
amount of Government securities, and the Departmental Committee do not suggest that the arrangements need be disturbed. The hope is
expressed that the Corporation will retain the investments already held, and from time to time will acquire further readily marketable
Government securities.
This question of investing the funds is one which the Bank and Finance Committee have constantly before
them, and considerable care is exercised in dealing with investments. The present arrangements are mutually satisfactory, and do not
call for any change in policy.
4 The Departmental Committee apparently incline to the view 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 for investment in short term securities, and that the Corporation should have the use of the rest of the money
for their own purpose or for housing advances.
The Council will remember the unsatisfactory experience in dealing with the National
Debt Commissioners in connection with the temporary war-time Bank, and your Committee feel they are interpreting the opinion of the
Council when they state that there can be no reversion to the practice of allowing the National Debt Commissioners to act for them
in the investment of Bank moneys. It must be recognised that the Corporation, and not the Government, guarantee the Bank, and it is
the responsibility of your Committee to see that the funds are wisely invested. The successful manner in which the investments have
hitherto been arranged is a complete answer to the observations of the Departmental Committee on this subject.
The Council will be
pleased to learn that the Report confirms the statement so often made by your Committee that the management expenses of the Bank are
below those of other Savings Banks, and the figures in the Report show that the average cost per transaction in the Birmingham Municipal
Bank is 7·60d. as against 7·25d. in the Glasgow Trustee Bank, 11·85d. in the Aberdeen Trustee Bank, 10·39d. in the Edinburgh Trustee
Bank, 11·30d. in the Manchester Trustee Bank, 13·67d. in the Preston Trustee Bank, 23·12d. in the Airdrie Trustee Bank. or 11·80d.
taking all the Trustee Savings Banks together. Some eighteen months ago certain newspapers gave much prominence to a widely circulated
memorandum prepared by the Actuaries of the Aberdeen Savings Bank, which sought to prove that the working expenses of a Municipal
Bank would be considerably higher than those of a Trustee Savings Bank. Your Committee felt it necessary to issue a reply to such
memorandum, and to emphasise the fact that the expenses of the Bank were below those of Trustee Savings Banks.