At a meeting of the Birmingham Corporation Savings Bank's (BCSB's) Consultative Sub-Committee on July 11th 1918, the Bank's Manager (J P Hilton) reported on the various limitations of the Regulations that had hindered the temporary Bank's progress. These limitations included the disinclination of depositors to save through the medium of their employers (the Coupon System); the lack of co-operation of some employers; the need for depositors to complete a form to give seven days' notice for withdrawals over £1; and the limitation of savings to £200. The Manager attributed an increase in the closure of accounts to these factors.
The Legislation and Regulations that governed the BCSB's activities were:
The Sub-Committee resolved that the Town Clerk be requested, for the information of the Corporation Savings Bank Committee to consider the present rules and regulations, to examine the working of the Bank under its existing constitution and to advise as to a scheme designed to establish the Bank on a permanent basis after the end of the First World War. The Town Clerk's attention was particularly called to the constitution and working of the Yorkshire Penny Bank (a previous employer of J P Hilton).
Consequently, the question of continuing the operation of Birmingham Corporation Savings Bank after the end of the War appears to have been formally considered for the first time at a meeting of the Savings Bank Committee on September 27th 1918, about six weeks prior to the cessation of hostilities. The Bank's Consultative Sub-Committee reporting as follows:
Your Sub-Committee have had under consideration the desirability or otherwise of continuing the Bank after the War, possibly somewhat on the lines of the existing Yorkshire Penny Bank. They have requested the Town Clerk, for their guidance, to consider the existing rules and regulations, to examine into the working of the Bank under its present constitution, and to report to them generally on the subject. This matter is receiving the consideration of the Town Clerk. Your Sub-Committee understand that the Housing (Financial Assistance) Committee of the Ministry of Reconstruction are seeking for information as to the success or otherwise of the Savings Bank. Your Sub-Committee have requested the City Treasurer in conference with the Manager to prepare, for the information of your Sub-Committee, a report with regard to the question of the adaption of the Savings Bank as a House Purchase Bank.
(The Ministry of Reconstruction was originally established by the Lloyd George government of 1917 and covered a wide range of political and social areas, including:
It was led by the Health Minister Christopher Addison and was "charged with overseeing the task of rebuilding 'the national life on a better and more durable foundation' once the War was over.)
With the knowledge that the City Council was planning to promote a Private Bill in Parliament, a Special Meeting of the Savings Bank Committee was held on October 17th 1918 - present were Alderman Neville Chamberlain and Councillors Appleby and Hallas.
The meeting commenced by receiving details of a resolution passed by the City's Housing and Finance Sub-Committee:
That this Sub-Committee request the Savings Bank Committee to submit clauses (for inclusion in the private Bill now being promoted) providing for the establishment of a Housing Section of the Municipal Bank.
This resolution seems to be the first reference to the proposed new Bank being called the 'Municipal Bank'.
Messrs Chamberlain, Appleby, and Hallas then considered the following report of the City Treasurer (Arthur Collins):
The Treasurer reports that he has had under further consideration the question of the adaption of the Savings Bank as a House Purchase Bank, and had been proceeding deliberately on the assumption that in due course the Sub-Committee of the Reconstruction Committee of the Government would be ready to receive a statement on behalf of the Savings Bank. In view, however, of the decision of the Corporation to promote a private Bill, and in the belief that the Savings Bank Committee might desire to include therein the provision of powers to enable them to undertake House Purchase business as a part of the Bank's operations, the Treasurer has requested the Manager to prepare a draft of the working rules by which the Bank could be carried on, so as to perform not only the functions of a Savings Bank but of a House Purchase Bank.
The preparation is therefore proceeding concurrently for the purpose of the Corporation Bill and of the requirements of the Reconstruction Committee, and the Treasurer hopes to be in a position to furnish the Committee with a draft of his recommendations jointly with the Manager.
The Treasurer is of opinion that if the Committee authorise the preparation of clauses for the private Bill this course should only be regarded as provisional and subject to the production of a satisfactory working scheme dealing with all the details of management.
The Treasurer therefore hopes that at a further meeting of the Savings Bank Committee, at a earliest possible date, his statement of draft clauses and the draft working scheme might be considered.
The Committee discussed the question of applying for Parliamentary powers to establish a Savings and House Purchase Bank. They then resolved that the Town Clerk be requested to prepare clauses for a proposed Private Bill, the Clauses to be under the following heads:
1. Power to establish a Municipal Savings and Housing Bank.
2. Power to invest deposits with the Corporation.
3. Power to make advances to depositors upon security of a dwelling house.
4. Power to borrow money.
5. Power to receive deposits.
6. Bank to be carried on under regulations to be prescribed by the Local Government Board.
7. Separate Accounts to be kept and audited under regulations.
8. Power to guarantee interest and repayment of deposits.
9. Power to charge such rate or fund out of which any of the expenses of the Council are payable as may be prescribed by regulations to meet payment of interest or on repayment of deposits.
The meeting further agreed that the Consultative Sub-Committee give the matter further consideration and produce a report when the draft Clauses were available. In November, the following were appointed to the Consultative Sub-Committee:
The Lord Mayor; Aldermen Chamberlain and Lovsey; Councillors Appleby and Hallas.
That Sub-Committee produced the following report on December 2nd 1918 (ie shortly after the cessation of hostilities):
Permanent Establishment of the Bank.
Your Sub-Committee report that proposed draft clauses have been submitted to them by the Solicitor. Having regard to all the circumstances it was considered expedient that a Joint Parliamentary Sub-Committee consisting of representatives of the Committees affected, should be constituted with full power to take all necessary steps in relation to the obtaining of the required Parliamentary powers. Your Sub-Committee have requested the Chairman of the General Committee (Mr Alderman Chamberlain) and the Chairman of your Sub-Committee (Mr Councillor Appleby) to represent the Savings Bank Committee on the Parliamentary Sub-Committee, and they recommend that this action be confirmed.
On the following day (December 3rd 1918) Neville Chamberlain and Councillor Appleby attended a meeting of the Parliamentary Sub-Committee when a final draft of the proposed Corporation Bill was settled for submission to the City Council. The Council approved of the draft Bill and it was then deposited with both Houses of Parliament. A public meeting was held in the Town Hall on January 9th 1919.
The purpose of the Bill was to enlarge the powers of the City, mainly in relation to the provision of housing accommodation and the acquisition of lands, and to authorise the establishment of a "savings and housing bank".
The Sections of the Bill were:
Part I - Preliminary (short title; interpretation; incorporation of parts of the 1883 Act)
Part II - Lands and Housing (the acquisition, retention, development, sale etc of land and houses)
Part III - Savings and Housing Bank
Part IV - Financial Provisions (power to borrow; expenses; audit)
Part V - Miscellaneous Provisions
The Preamble to the Bill requesting that it be enacted stated:
WHEREAS owing largely to the cessation of building during the war further housing accommodation is urgently required in the city of Birmingham and it is expedient to confer further powers upon the Lord Mayor Aldermen and Citizens of that city for providing and for encouraging and assisting in the provision of such accommodation;
And whereas it is expedient to enlarge the powers of the Corporation relative to the acquisition and disposal of lands;
And whereas it is expedient to empower the Corporation subject to the provisions contained in this Act to establish and maintain a savings bank together with a housing department of such bank.
Thus the city sought by this Bill to not only establish the Birmingham Municipal Bank (by Part III) but to obtain certain powers that would coincidentally impact the Bank's operations:
- expand the city to a size that would eventually require the Bank to establish an extensive branch network;
- encourage home ownership, thus providing the Bank with potential borrowers.
The section of the Bill (PART III - SAVINGS AND HOUSING BANK) agreed by the Council was quite short. After the input of the Treasury, and presumably after receiving legal advice, the proposed legislation was amended and expanded as shown in red below:
The Corporation may establish and maintain a savings bank and may receive at that bank deposits and may guarantee the payment of interest on and the repayment of such deposits subject however to the following conditions:
11--(1) The accounts of the bank shall be kept separate from all other accounts of the Corporation.
(2) The bank shall be carried on
subject to the regulations contained
in the schedule to this Act or such other regulations as may be made as therein provided in accordance with such regulations as the
Treasury or the Corporation with the approval of the Treasury may prescribe. The regulations to be prescribed under this section may
apply with or without modification any of the provisions (including penal provisions and any provisions granting exemption from stamp
duty in respect of instruments and documents) contained in the enactments relating to savings banks but save as applied by the regulations
those enactments shall not apply to the bank.
12--(1) The Corporation may establish a housing department of the bank and may make advances upon the security of freehold copyhold or leasehold estate by way of mortgage to any depositor in the bank desiring to purchase or acquire a dwelling-house or dwelling-houses within the city or any interest therein and for this purpose shall have power to hold land with the right of foreclosure subject however to the conditions prescribed in sub-section (3) of the section of this Act whereof the marginal note is "Assistance in providing housing accommodation."
(2) The Corporation for the purposes of this section may utilise and invest the funds of the bank.
The sub-section (3) referred to above is as follows:
(3) May make advances upon the security of freehold copyhold or leasehold estate by way of mortgage to any person society or body undertaking to build purchase or acquire a dwelling-house or dwelling-houses within the city or any interest therein and for this purpose shall have power to hold land with the right of foreclosure subject however to the following conditions:
(a) The Corporation shall be satisfied that the value of the premises is sufficient and that the title thereto is one which an ordinary mortgagee would be willing to accept;
(b) The repayment of the advance with interest within such period not exceeding thirty years as shall be agreed shall be secured by an instrument vesting the ownership in the Corporation subject to the right of redemption by the mortgagor;
(c) The provisions of section 42 of the Building Societies Act, 1874 with the necessary modifications shall extend to and apply for the purposes of this section:
The 'schedule to this Act' that was deleted from the Bill consisted of 27 Clauses under the heading "Regulations". This Schedule formed the basis of the 28 Clauses in the Bank's first set of Regulations.
[NOTE: the full text of Part III of the Act (as above) was subsequently reproduced in the small booklets issued periodically by the Bank to list the current Regulations. However, in the Appendix to J P Hilton's book Britain's First Municipal Savings Bank (Library Edition) the original draft of the Bill was published as if it was the Act.)
Prior to the passing of the Act, the Parliamentary Sub-Committee reported on the progress of the Bill through Parliament. In March 1919, they reported that:
this Bill has now been read twice and stands referred to a Committee of the House under the Chairmanship of Sir William Middlebrook, MP. It is not expected that the Committee stage will be reached until after Easter.
A copy of the Bill with the Lord Chairman's remarks thereon had been submitted to the Parliamentary Sub-Committee. So far as Clauses 11 and 12 and the Schedule (which relate to the proposed Bank) are concerned, such remarks are as follows:
Clause 11 and 12.
"Another Savings Bank cannot surely be wanted. The object apparently is to have a fund, the deposits, out of which the advances can be made under Clause 12.
"These provisions will require careful consideration."
Consider with Clause 11.
"Are these Regulations drawn according to precedent."
A communication has also been received from the Board of Inland Revenue stating that before they can report to the Treasury that its provisions are free from Revenue objection, they must request that Clause 7 (3) (c) under which the Corporation would be authorised to vacate the mortgage by a receipt the Board are advised that such a receipt having regard to the language of Section 42 of the Building Societies Act, 1874, would be a reconveyance for the purpose of Stamp Duty, and if the Corporation accept this view and are prepared to act on it the Board will not press their objection to that part of the clause relating to the Building Societies Act, 1874. The objection to the extension of Section 5 of the Small Dwellings Acquisition Act, 1899 arises from the fact that the provisions of this section would be made applicable to cases where the value of property could be vested in the Corporation without a conveyance or foreclosure order thereby involving loss of duty to the Revenue. If it is desired to retain the extension of Section 6 of the Act of 1899 no objection would be offered by this Department. The Board ask for an assurance that their requirements will be met.
The Parliamentary Sub-Committee are of opinion that consideration of the objections of the Board of Inland Revenue should be deferred until they are aware of the nature of the general opposition to the Bill, and particularly until the reports of the Treasury and the Local Government Board are forthcoming.
The Parliamentary Committee recommended that the Corporation Savings Bank Committee should select witnesses to prove the clauses of the Bill. The suggested names were:
Chamberlain, MP Mr Hallas, MP Councillor Appleby Captain Davis (B.S.A.) Mr Collins Mr Hilton Alderman Lovsey Mr W J Davis Councillor Beard Mr
P Farnworth (Treasurer, Bolton) Sir Edward Holden (if necessary)
Alderman Chamberlain, MP
Mr Hallas, MP
Captain Davis (B.S.A.)
Mr W J Davis
Mr P Farnworth
Sir Edward Holden
The Corporation Savings Bank Committee subsequently selected Neville Chamberlain, Eldred Hallas, Charles T Appleby, Capt Davis, and Arthur Collins, together with an outside depositor, and if necessary Sir Edward Holden and Mr P Farnworth.
At its next meeting, on March 24th 1919, the Committee considered a draft of a Scheme for the establishment of the Birmingham Municipal Bank after the passing of the Act. No details of "the draft Scheme" were given, but it is likely that this was a reference to the proposed Rules. The Committee resolved that the draft Scheme be referred to a Sub-Committee consisting of Alderman Lovsey, and Councillor Appleby, to consider and report upon. After a visit to the Manchester & Salford Savings Bank, and based on the experiences of the temporary Bank, it was decided that the Special Sub-Committee should prepare draft rules for the new Bank on the lines of the draft scheme previously drawn up jointly by the City Treasurer and J P Hilton.
On June 2nd 1919, the Special Sub-Committee presented a set of draft Rules for the new Bank, although these had not yet been formally submitted to the Town Clerk. The Committee made some amendments prior to submitting them to the Acting Town Clerk to check for legality and they were then to be submitted to the Chief Registrar of Friendly Societies, as soon as the Bill before Parliament was passed.
The source of this initial set of draft Regulations and Rules seems therefore to have been a combination of the existing regulations for the Birmingham Corporation Savings Bank; the current Savings Bank legislation; the rules of the Yorkshire Penny Bank and the Manchester & Salford Savings Bank; plus the input of the City's Town Clerk, the City Treasurer, and J P Hilton.