At a meeting of the Sub-Committee held today the various amendments put forward on behalf of the Treasury were considered in conjunction with the letters received from Sir John Bradbury and Mr Niemeyer on behalf of the Treasury.

The Sub-Committee reluctantly acquiesced in the suggestions but there is one upon which they feel very strongly, and which they wish the Treasury to reconsider. The Regulation referred to is No 11 (4c) which authorises the Bank to receive deposits from Trade Unions and which has been struck out by the Treasury. The Establishment of Municipal Banks has for some time been one of the planks of the Trade Unionists platforms, and Trade Unionists have taken a considerable part in the propaganda work in connection with the existing Bank. The development of the proposed Bank in no small degree depends upon the goodwill and co-operation of Trade Unions and of their members, and if these organisations are specially excluded from the privileges which are allowed other bodies, namely, of having deposit accounts with the Municipal Savings Bank, dissatisfaction is sure to be caused which will affect the Bank. The reason given by the Treasury is that in the event of a strike in the City, the financial position of the Bank might be prejudiced by the consequent withdrawal of the deposits of Trade Unions as well as those of their members. The Regulations amended limit the amount which any Depositors may have in the Bank to £500 and I suggest that the danger anticipated by the Treasury might readily be guarded against by placing in the Regulations a restriction upon the amount which could be withdrawn by any Corporation or Body at £2,000. I suggest it very inadvisable to single out the Trade Unions as different from any Friendly Society or other Body who might become Depositors at the Bank.

I shall be glad if you will forward this letter to Messrs Sharpe Pritchard & Co, and ask them to take up the point with the Treasury again, as it involves a most important policy. I have written to Alderman Neville Chamberlain, MP, on the matter.

Following the presentation of the Rules to the City Council on August 8th 1919, it was moved by Councillor Appleby, seconded by Alderman Clayton, and

Resolved (24,495): That the Rules of the Birmingham Municipal Bank, as now submitted, be made and adopted, and that, upon the approval of the Chief Registrar of Friendly Societies, or such other person or department as may be prescribed, the Acting Town Clerk be authorised to attach the Corporation Seal thereto, or to such modification or variation thereof as may be required prior to such approval being given.

The case as stated in Councillor Appleby's letter was successful as the Acting Town Clerk (F H C Wiltshire) reported on August 29th 1919:

I beg to report that the Birmingham Corporation Act 1919 received the Royal Assent on the 15th instant, and the provisions contained in that Act enabling the Corporation to establish the Birmingham Municipal Bank, having now full legal effect.

The regulations are not now contained in a schedule to the Act, owing to the intervention of the Treasury, but have been approved by them as a separate document, which is now submitted to the Committee. Few important alterations have been made. The Corporation have been successful in retaining the exemption from stamp duty, although it has been necessary for them to submit to the limitation of £500, as the maximum deposit except in the case of Trades Unions, where the maximum deposit is £2,000. The maximum will be increased to a higher maximum at any time extant in any Savings Bank; and if the limitation is removed from any other Savings Bank, the limitation will also disappear in the case of the Birmingham Municipal Bank. Perhaps the most important concession which it has been necessary to make is that contained in regulation 16, which requires the Bank's investments (other than by way of advances for the purchase of houses) to be subject to the approval of the Treasury.

I have also, during the last few days, succeeded in obtaining the approval of the Treasury and Chief Registrar of Friendly Societies to the Rules. As these approvals have now been obtained (although the formal approval of the Treasury has not at this moment been received) the last obstacle is removed to the opening of the Bank upon the 1st September. Considerable additions, chiefly at the instance of the Chief Registrar of Friendly Societies, have been made to the rules in the form which they were submitted to the Council, these additions consisting of extracts from the Birmingham Municipal Bank regulations and the Trustee Savings Bank regulations of 1900. The object of these additions is to enlighten depositors more fully on their position, and to assist in inspiring confidence in the Bank, and I do not think there is anything in them which can be regarded as prejudicial to the interests of the Bank. The Treasury asked for a provision to be inserted which would enable them, if they desired, to alter or rescind any of the rules, although this power was in the original draft reserved to the Corporation only. As your Committee are aware, it is in the rules that the rate of interest is specified, and the suggestion of the Treasury was accordingly strongly resisted, and has now been waived by them. It is now accordingly approved that the rules may only be altered or rescinded by the Corporation, although the approval of  the Chief Registrar of Friendly Societies and the Treasury will, of course, be required to such alteration or rescission.

Although the rules have been made by the Council subject to such variation or modification as might be required, it will, I think in view of the considerable additions which have been made be desirable to report their amplification to the Council at the next Meeting. Copies of the rules are, however, now being printed for use in the Bank, during the first few weeks of its opening, this course being not only desirable but necessary in view of the requirements made by the Chief Registrar, that a copy of rules should be furnished to every depositor upon making his first deposit with his passbook, at an inclusive charge not exceeding 6d.

I submit a copy of the approved rules with this report, and I ask the Committee to confirm what I have done.

It will be desirable for your Committee to prescribe at this point certain matters which are left to them under the rules as approved:

a. The price at which the rules will be sold

(i) inclusive of the pass book and

(ii) to the public generally.

b. The period of notice of withdrawal in certain cases.

The rule relating to notice of withdrawal requires one week's notice for amounts exceeding £30 at Head Office, and exceeding £5 at a Branch Office. It is, however, further approved that "no depositor shall, as a matter of right, be entitled to repayment of any sum whatever, without giving notice of intended withdrawal, which may be prescribed from time to time by the Committee of Management". I am reminded by your Department that in the case of withdrawals from branches of the Bank open in the evenings, considerable difficulty would be experienced in the provision of the necessary funds, at an hour when the Joint Stock Banks will be closed, unless there is some knowledge beforehand of how much money will be withdrawn.

Your Committee will accordingly wish, no doubt, to consider whether they will prescribe that the certain period of notice shall be required in the case of evening withdrawals, and the length of that period.

I understand that a question has arisen as to whether the coupon system should be continued in connection with the Bank.

It will be remembered that this coupon system was, in the first instance, adopted in order that employers deducting monies from employees' wages might be able to give a receipt for such deducted monies to employees in the form of coupons. This consideration would not appear to obtain in the new Bank, and I certainly do not think that the use of coupons according to practice in the existing Bank (viz general distribution through employers or Banks and fixing upon cards in accordance with the system which has hitherto prevailed) would be possible in view of the rules which have been recommended to the Council by your Committee, and have been made by them. According to the regulations, the operations of the Bank must be in accordance with the rules, and as no mention of coupons is made in the rules I do not think they can now be employed. At the same time, it might be possible to distribute coupons which will be accepted as cash by the Bank on personal application by the depositors in order to enable agents of the Bank to clinch the effect of their propagandist activities, but I suggest that the Committee consider whether such a course might not be undesirable as tending to produce a certain confusion of thought and practice on the part of intending depositors, who would be inclined to think that the issue of coupons is a continuance of the principle of the existing Savings Bank, of deposits of employees through their employers.

Your Committee will, of course, appreciate that the Corporation Savings Bank will not come to an end with the opening of the new Bank on the 1st September. It will be necessary for the Council to pass a formal resolution regarding this Bank to be wound up, as of course, the period for the statutory expiration of the activities of the Savings Bank will not terminate until three months after the end of the War. Your Committee may wish to recommend the Council to pass such a resolution at their next meeting in October, and until that time the two Banks will run concurrently, which is I understand, contemplated as likely to facilitate the transfer of deposits, as depositors in the Savings Bank will not feel that their hand has been forced by the termination of the Bank with which they have become familiar at the very moment of the commencement of the operation of the new Bank.

If your Committee desire to affect a winding up of the Savings Bank and the transfer of deposits therein at the earliest available moment, it will be desirable for notice to be given as soon as possible to the National Debt Commissioners, in order that the investments of the Savings Bank may be liquidated by the Commissioners, so as to facilitate repayment and transfer of deposits.

I accordingly ask for instructions upon this point.

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