Regulations
Birmingham Corporation Savings Bank
 

Legislation

 

In order to bring Neville Chamberlain’s idea of a municipal savings bank into fruition in 1916, a special Bill was introduced into the House of Commons on April 11th of that year. This bill authorised local authorities, with a population greater than 50,000, to establish a temporary bank that was to cease operations no later than the last repayment date of the wartime securities in which the depositors’ funds were invested. This Bill was worded as follows:

MUNICIPAL SAVINGS BANKS (WAR LOAN INVESTMENT) BILL

 

TO

 

Facilitate the Investment of Savings in Securities issued for the purposes of the present War by means of the establishment of Municipal Savings Banks.

 

Be it enacted by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:

 

1 – (1) For the purpose of facilitating the investment of savings in securities issued for the purposes of the present war, it shall be lawful for any council to which this section applies, with the consent of the Treasury after consultation with the Local Government Board, to establish and maintain a savings bank, and to receive at that bank deposits, and to guarantee the payment of interest on and the repayment of such deposits, and for that purpose to charge such rate or fund out of which any of the expenses of the council are payable as may be prescribed by regulations made under this section, subject, however, to the following conditions:

 

(a)  the bank shall not be carried on (otherwise than for the purpose of winding it up) after the last date fixed for the repayment of any securities in which the funds of the bank are authorised to be invested;

 

(b) all sums belonging to the bank, except such as are retained to meet current liabilities, shall be invested securities issued by the Treasury for the purposes of the present war and repayable within five years from the date of issue;

 

(c)  the accounts of the bank shall be kept separate from all other accounts of the council, and shall be audited in such manner as may be prescribed by regulations made under this section, and no money paid into the bank shall be used for any purpose of the council other than the bank;

 

(d) the rate of interest payable on deposit shall be subject to the approval of the Treasury;

 

(e)  the bank shall be carried on in accordance with such regulations as the Treasury, after consultations with the Local Government Board, may prescribe.

 

(2) Regulations made by the Treasury under this section may apply, with or without modification, any of the provisions (including penal provisions) contained in the enactments relating to savings banks, but, save as so applied, these enactments shall not apply to a savings bank established under this section.

 

(3) The councils to which this section applies are the councils of municipal boroughs and urban districts in England, and royal parliamentary and police burghs in Scotland, having a population, according to the census of nineteen hundred and eleven, of not less than fifty thousand, the councils of metropolitan boroughs and the common council of the city of London.

 

2 - This Act may be cited as the Municipal Savings Banks (War Loan Investment) Act, 1916.

 

* * * * * * * *

 

As described in The Birth of an Idea, opposition by the Joint Stock Banks led to the Government dropping the Bill. Persistence by Neville Chamberlain resulted in the opposition being overcome, subject to tighter restrictions being incorporated into the legislation. Consequently, a new Bill was introduced into the House of Commons on July 12th 1916. These new restrictions were:

 

(a)  only local authorities with populations over 250,000 were to participate;

 

(b)  depositors to be employed persons only;

 

(c) £200 maximum limit per depositor;

 

(d)  the National Debt Commissioners to control investment of funds;

 

(e)  the Treasury to control the earning capacity of invested funds;

 

(f)   withdrawals on demand limited to £1; and

 

(g) the Bank to be terminated no later than three months after the end of the War.

 

The following Act became law following the Royal Assent being given on August 23rd 1916:

 

MUNICIPAL SAVINGS BANKS (WAR LOAN INVESTMENT) ACT, 1916

 

 

An Act to facilitate the Investment of Savings in Securities issued for the purposes of the present War by means of the establishment of Municipal Savings Banks. (23rd August, 1916).

 

Be it enacted by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:

 

1 – (1) For the purpose of facilitating the investment of savings in securities issued for the purposes of the present war it shall be lawful for any council to which this section applies, with the consent of the Treasury, after consultation with the Local Government Board, or in the case of Scotland with the Secretary of Scotland, to establish and maintain a savings bank, and to receive at that bank deposits, and to guarantee the payment of interest on and the repayment of such deposits, and for that purpose to charge such rate or fund out of which any of the expenses of the council are payable as may be prescribed by regulations made under this section, subject, however, to the following conditions:

 

(a)  the bank shall not receive any deposits except from persons in the employment of some other person and made through their employees either by way of deductions from wages or otherwise, nor shall the bank receive any deposit which makes the sum standing in the name of any depositor in the bank exceed two hundred pounds;

 

(b)  the bank shall not be carried on (otherwise than for the purpose of winding it up), after the expiration of three months from the termination of the present war;

 

(c)  all sums belonging to the bank, except such as are required to meet current liabilities, shall be invested through the National Debt Commissioners in such of the following securities issued for the purposes of the present war as the Commissioners think fit, that is to say, either in Treasury bills or in advances to the Treasurer of sums which the Treasurer may borrow for the purpose of raising any sum which they are authorised to issue out of the Consolidated Fund under any Consolidated Fund Act or Appropriation Act;

 

(d)  interest shall be paid by the National Debt Commissioners to the bank on the balance from time to time standing to the credit of the bank at such rate as may from time to time be determined by the Treasury having regard to the interest earned on the sums so invested;

 

(e)  the accounts of the bank shall be kept separate from all other accounts of the council, and shall be audited in such manner as may be prescribed by regulations made under this section, and no money paid into the bank shall be used for any purpose of the council other than the bank;

 

(f)   the rate of interest payable on deposit shall be subject to the approval of the Treasury;

 

(g)  the aggregate amount of the sums which a depositor may withdraw in any period of seven days without giving seven days’ notice shall be limited to one pound;

 

(h)  the bank shall be carried on in accordance with such regulations as the Treasury, after consultations with the Local Government Board, or in the case of Scotland with the Secretary of Scotland, may prescribe.

 

(2) Regulations made by the Treasury under this section may apply, with or without modification, any of the provisions (including penal provisions) contained in the enactments relating to savings banks, but, save as so applied, these enactments shall not apply to a savings bank established under this section.

 

(3) The councils to which this section applies are the councils of municipal boroughs in England, and royal, parliamentary, and police burghs in Scotland, having a population, according to the census of nineteen hundred and eleven, of not less than two hundred and fifty thousand.

 

2 - This Act may be cited as the Municipal Savings Banks (War Loan Investment) Act, 1916.

 

Pursuant to this Act, the Lords Commissioners of His Majesty’s Treasury issued a set of Regulations on September 6th 1916:

 

Municipal Savings Banks Regulations, 1916

 

On September 18th 1916, the Chief Registrar of Building Societies approved a set of Rules for the new Birmingham Bank:

 

Birmingham Corporation Bank Rules, 1916

 

A published copy of the Rules (price 2d) also included an Extract of the Regulations.

 

The  Birmingham Corporation Savings Bank commenced on September 29th 1916. As required by the Act, depositors were required to be employed, and consequently completed an Authority for Part Payment of Wages by Coupon.

 
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