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quantity constitutes a potential danger to the bank's stability, and this con- sideration applies even if no interest is paid on deposits above a specified limit, as is the practice in certain Colonies. Such money should therefore, we think, be excluded as far as possible by the imposition of both annual and aggregate limits to deposits. In the United Kingdom there is at present only an annual limit of £500, though before the War there was a limit of £50 a year and £200 in the aggregate. In the case of Colonial savings banks, with considerably smaller resources, fairly stringent limits are in our opinion advisable. In a number of Colonial savings banks deposits are already limited either by statute or by regula- tion; in some cases annual deposits only, in others aggregate deposits, and in others both annual and aggregate. The limits which it is advisable to prescribe must vary according to local circumstances, and it is undesirable to lay down any general standard, but, as an indication of what might be considered reason- able, we would suggest limits of £200 in any one year and £500 in the aggregate. It is the practice in certain Colonies, and it appears to us a practice to which no exception can be taken, to allow higher limits for depositors such as Friendly Societies and the like. We also consider that it would be reasonable to fix higher limits in such Colonies as the Falkland Islands, the Seychelles, and St. Helena, in which there are no commercial banks, than in Colonies in which In savings banks other facilities are available to the larger investor. which allow a depositor to open more than one account, the limits should apply to the depositor and not to the account. In order to allow some elasticity, we think that the limits should not be fixed by Ordinance but should be prescribed, and, if necessary, altered from time to time in rules made by the Governor-in-Council (see Section 14 (2) (a) of the model Ordinance attached to this report).
THRIFT PROPAGANDA.
33. We have referred in the preceding paragraph to the importance of excluding "uneasy money as far as possible. At the risk of straying somewhat outside our terms of reference, we should like, on the other hand, to stress the desirability, from the standpoint of the community, of attracting the maximum amount of deposits of the class for which the savings bank is intended. We have already expressed our opinion that the rate of interest paid plays but little part in attracting deposits; familiarity with all the facilities the savings bank has to offer and with the procedure of making and withdrawing deposits is a far more important factor in drawing out hoarded savings or initiating the practice of thrift. The United Kingdom Post Office Savings Bank has in recent years conducted an extensive and successful propaganda campaign by poster and pamphlet to familiarize the public with the services provided. Both posters and pamphlets are displayed in post offices, and pamphlets are also distributed by post. A selection of such material is attached to this report. We suggest that Colonial Governments might, in a similar manner, disseminate information about savings bank facilities among those classes of the population which the bank exists to serve. Reasonable expenditure on such purposes should be re- garded as a legitimate charge against savings bank funds, and the provisions of the model Ordinance attached to the report have been so drafted as to permit this (see sections 4 and 10). Colonial Governments will no doubt consider whether it would be desirable to provide such additional facilities for thrift in the way of home safes and savings stamps as are available in the United Kingdom.
PRECAUTION AGAINST FRAUD.
34. We understand that, in the experience of the Colonial Audit Depart- ment, one of the main opportunities for fraud and error is afforded by the neglect of depositors to forward their deposit books periodically to the bank for com- parison with their accounts in the bank's books. The same difficulty is met with in the United Kingdom; the regulations of the Post Office Savings Bank pre- scribe that deposit books shall be forwarded to the Controller annually on the anniversary of the date on which the account was opened, but this regulation is ignored by a large number of depositors. The regulation is, however, supple- mented by the arrangement by which the deposit book has to be forwarded to the Controller on every occasion on which a withdrawal on demand" is made, as
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well as by the practice of communicating from time to time with depositors whose books have not been transmitted to the Head Office for some time. We regard it as important that every effort should be made to secure this periodic check, and we have, therefore, in the model Ordinance, made specific mention of it as one of the points in connection with which the Governor may make rules (Section 14 (2) (2)). Apart from the occasions when deposit books are submitted for com- parison with the accounts, it is, as will be realized, highly undesirable that they should be left in the custody of any officer of the bank. We think that this point should be covered by instruction given by the officer in charge of the savings bank.
35.
are:-
SUMMARY OF RECOMMENDATIONS.
We now summarize the recommendations contained in the report. They
(1) That the Ordinance establishing a savings bank should contain a clear statement of ultimate Government liability. (Paragraph 3.)
(2) That savings bank accounts should be kept distinct from the accounts of any Government department. (Paragraphs 4 and 5.)
(3) That all expenses incurred on savings bank business should be charged against savings bank funds. (Paragraphs 6-8.)
(4) That savings bank accounts should be laid annually before the Legislature and published in the Government Gazette. (Paragraph 9.)
(5) That the control of savings bank funds should rest with the Colonial Treasurer or with a committee of public officers under his chair- manship. (Paragraph 11.)
(6) That, after allowing for a reasonable working balance, all savings bank funds should be invested; that the bulk of the investments should be held by the Crown Agents in London; that investment in London should be subject to the directions of the Secretary of State, and local investment subject to the approval of the Governor-in-Council; and that the propor- tion invested in a Colony's own securities should not exceed one-third. (Paragraphs 12-15.)
(7) That the rate of interest payable on deposits should be based on the earning power of investments assessed over a long period, with a de- duction for administrative expenses, and should be varied as infrequently as possible. (Paragraphs 18-21.)
(8) That, as a general rule, a uniform rate should be paid on all deposits in any individual bank. (Paragraph 22.)
(9) That the relations between savings bank funds and the public revenues should be such as to preserve a reasonable balance between the immediate interests of the taxpayer and his ultimate liabilty for the security of the bank's financial position. A suggested method of achieving this result is described. (Paragraphs 23-30.)
(10) That there should be annual and aggregate limits on deposits. (Paragraph 32.)
(11) That it is desirable that Colonial Governments should conduct thrift propaganda. (Paragraph 33.)
(12) That steps should be taken to secure the periodic comparison of depositors' books with their accounts in the savings bank. (Paragraph 34.)
MODEL ORDINANCE.
36. In accordance with our terms of reference we have drawn up a model Savings Bank Ordinance, which is appended to this report (Appendix A). We have omitted from the model many provisions which are contained in various existing Ordinances but which appear to us to be more suitably embodied in regulations made by the Governor-in-Council, and have included only such pro- visions as appear to us to be essential. Details which will vary in individual cases have been enclosed in square brackets.
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