To Birmingham belongs the credit of establishing what is, perhaps, the most outstanding civic enterprise of modern times, namely, a municipal savings bank. That a city renowned for its municipal government, and the pioneer of many enterprises, should be the first to try such an experiment, is not remarkable; nor is it surprising that the idea of setting up such a bank should emanate from the then Lord Mayor, Alderman Neville Chamberlain, whose distinguished father had been mainly responsible for other municipal ventures and reforms.
The history of the Birmingham Municipal Bank dates back to the late days of 1915, when the country was in the throes of a great war, and when money was urgently needed by the State for purposes connected with the war.
Many schemes were inaugurated with the object of inducing the public to subscribe, but in the opinion of the Lord Mayor there was none which could be regarded as being attractive to the workers, who were then receiving substantial wages, and were really in a position to make some contribution to the common cause. Further reflection convinced Mr. Chamberlain that the most convenient and popular channel for collecting small savings would be a bank working under the aegis of the municipality, and with that idea in mind he convened a meeting of trade union leaders, to whom he explained his views. The idea of a municipal savings bank appealed to them, and after further conferences the late Eldred Hallas undertook to prepare a scheme, based on the Lord Mayor's suggestions, whereby coupons, paid as part of wages, could be accepted as deposits in a municipal savings bank.
This proposal was accepted by Mr. Chamberlain, and examined by experts, and after suitable necessary amendments, was adopted by the City Council on the 4th April, 1916, and a small committee, with the Lord Mayor at its head, was appointed for its inauguration.
Reporting on the scheme, the Finance Committee pointed out that statutory powers would have to be obtained, and that, although a bank such as was proposed would be of a temporary character, it might be possible to preserve the bank as a permanent part of the municipal administration. The opinion was expressed that such an institution would be a driving force which could not be realised through any other agency, and that people would be more likely to support a bank governed by the municipality than any other type.
The Lord Mayor unfolded the proposal to the then Financial Secretary to the Treasury, and obtained his support, together with that of the then Chancellor of the Exchequer. A Bill was drafted on the lines of the scheme, and presented to the House of Commons on the 11th April, 1916. The joint stock banks immediately took fright, and so effective was their opposition to the Bill that it was dropped.
Disappointed, but not altogether discouraged, Mr. Chamberlain interviewed leading bankers with a view to arriving at an agreement in order that another Bill might be produced, and, meeting with success, he was able to tell the Treasury that the difficulties had been overcome. The Treasury then introduced a second Bill into the House of Commons, on the 12th July, 1916, which passed through the various stages, and received the Royal Assent on the 23rd August, 1916.
It is interesting to note some of the restrictive conditions of this new Act, intutled "The Municipal Savings Banks (War Loan Investment) Act, 1916."
(1) The Act was limited to local authorities having a population of 250,000 or over;
(2) The life of the bank was limited to a period of three months after the termination of the war;
(3) Deposits could be accepted only from employed persons by deduction from wages, or some similar arrangement;
(4) The maximum amount which could be accumulated by a depositor was fixed at £200;
(5) Control of investments was in the hands of the National Debt Commissioners;
(6) Withdrawals on demand were limited to £1.
It was not surprising to find Birmingham the only municipality prepared to put into operation an Act so full of restrictions and limitations, but in fairness to other municipalities it should be admitted that Birmingham was peculiarly suited for the experiment. There was no trustee savings bank or similar thrift organisation in the city, only the Post Office Savings Bank being available to the citizens. But having decided on establishing a municipal savings bank, there could be no going back - the bank had to be a success. In that spirit the bank began its career.
Rules and regulations were drafted and adopted; literature, books, etc. obtained, and office accommodation provided in a small portion of the water department at the Council House.
The bank, under its title of "Birmingham Corporation Savings Bank," opened its doors for the first time on 29th September, 1916.
A vigorous publicity campaign was undertaken, in factory, workshop, office, club-room, etc.; meetings were arranged, and the scheme explained to the workers by members of the City Council, and other prominent citizens. Over 1,000 meetings were held in the space of six months, with the inevitable result that the bank became "the talk of the town." Tribute should be paid to the employers throughout the city, who readily granted permission for the meetings to take place, and who often assisted at such gatherings; to the joint stock banks, who heartily co-operated in the distribution and sale of coupons to employers; and to prominent private citizens and many employers who offered monetary prizes as inducements to the workers to take part in the scheme.
In addition to discharging the onerous duties of Lord Mayor, Alderman Neville Chamberlain took a very prominent part in the publicity campaign, addressing many gatherings of workers during meal-times, and in the evenings. The brunt of the campaign fell upon the late Eldred Hallas, but others who rendered yeoman service were Aldermen Lovsey and Gelling, the late Councillor Appleby, Councillor Fryer, and Mr. John Beard.
Enthusiasm of speakers is one thing, but what of the audience? At the beginning of the publicity campaign, their attitude might correctly be described as suspicious; later, doubtful; then thoughtful; and finally, enthusiastic. Once again, Birmingham citizens had risen to the city's motto - "Forward."
Deposits in the bank were made by means of coupons paid to the workers as part wages, or purchased from employers. These coupons, with gummed backs, were placed on a card until the value of one pound or over was represented, when the card was brought to the head office of the bank, and the value entered as a deposit in a bank book. At first, coupons of the value of one shilling only were available, but to meet the demands of depositors, coupons of other denominations were subsequently introduced, and ultimately coupons could be obtained in denominations of 6d., 1/-, 2/6, 5/- and £1. Many firms found it more convenient to sell the coupons to their workers rather than to adopt the general policy of substituting coupons for cash in the wages envelopes.
The steady growth of the bank caused the committee to consider how the pressure on the limited head office accommodation might be relieved, and resulted in arrangements being made for a number of branch banks to be set up in large works in the city, an experiment which proved very useful when the permanent bank, with a number of branch banks in different parts of the city, came into existence.
At the beginning of the year 1917, Mr. Chamberlain's activities in connection with the bank were interrupted by his acceptance of the post of Director-General of National Service, an office which the then Prime Minister had urged him to take. This involved his resigning the Mayoralty, as well as chairmanship of the bank. The new Lord Mayor (the late Alderman Sir David Brooks), realising how vital it was at that stage to maintain the principle of the Lord Mayor being at the head, took over the chairmanship until June, 1918, when Mr. Chamberlain returned and again became Chairman.
Being satisfied with the progress of the bank, and convinced of the need for such an institution in Birmingham, Mr. Chamberlain applied himself immediately to the task of establishing the bank on a permanent basis, and widening its scope so that advances might be made to enable depositors to purchase their houses. Clauses were drafted which were suitable for embodiment in a General Powers Bill then contemplated by the Corporation, and were ultimately submitted to Parliament.
The Government had set up a committee to advise on the practicability of assisting persons to build dwellings for the working classes by means of loans, grants, subsidies, or through the agency of state or municipal banks. Mr. Chamberlain seized on this opportunity to give evidence before the committee, and explain the clauses proposed for insertion in the Birmingham Corporation Bill. So impressed were they with his evidence, that in their final report the committee recommended that the larger municipalities should be empowered to establish municipal savings banks, and that The Municipal Savings Banks (War Loan Investment) Act, 1916, should be continued, and its scope widened on the lines advocated by Mr. Chamberlain. Such a recommendation, coming from an important committee set up by the Government, proved helpful when the parliamentary proceedings commenced.
On the 25th June, 1919, the Birmingham Corporation Bill, containing clauses to set up a permanent bank with wider powers, came before the Local Legislation Committee of the House of Commons. The principal witness for the bank clauses was Mr. Chamberlain, who made out a convincing case for the powers sought by the Bill. At the conclusion of his evidence, the chairman announced that the evidence submitted was so definite and so strong that it was unnecessary to go to the full extent of adducing further reasons for the granting of the required powers. Other clauses in the Bill, not affecting the bank, provoked some opposition, but eventually, on the 15th August, 1919, the Bill received the Royal Assent.
The Treasury lost no time in issuing the regulations prescribed by the Act, and the Chief Registrar of Friendly Societies dealt promptly with the rules, and gave his approval. It is appropriate that testimony should be paid to the Treasury Officials and to the Chief Registrar for their enthusiastic co-operation.
The name of the permanent bank presented some difficulty, owing to the feeling that the title of "The Birmingham Corporation Savings Bank" should be retained, and suitably enlarged to cover the power of advancing money for the purchase of houses. Such a lengthy title as "The Birmingham Corporation Savings and Housing Bank" would have been too cumbersome, and finally the wise selection of the shorter title of "The Birmingham Municipal Bank" was made.
Although the title has been abbreviated to "The Birmingham Municipal Bank," it is essentially a savings bank. Its main object is the encouragement of thrift; its funds are not used for financing commercial operations, but are invested so as to secure a satisfactory return consistent with safety and availability to meet its obligations. The section of its functions concerned with granting advances for house purchase is a corollary of its principal object; and the fact that the bank is of assistance to the Corporation is an incidental, but not an essential, feature of its existence.
In view of the probability of powers being granted to establish a permanent bank, steps had been taken to rent premises which would serve the purpose of branch banks, and, as a result, the Birmingham Municipal Bank was able to commence business on the 1st September, 1919, with a head office at the Council House and seventeen branches in various parts of the city.
The Committee adopted the cautious policy of renting premises with the object of testing an area or district; there was no intention, at that time, of purchasing premises or erecting buildings on acquired land. Thus, at Sparkbrook, evidence of the premises having been used as a butcher's shop could be observed up to the time of reconstruction in 1921; at Duddeston, the brass rails and the windows indicated that the de-licensed "Highland Laddie" inn had now been put to a better use; at Handsworth, a small room at the old council house served the purpose, and at Small Heath, a ticket office at the public baths sufficed. To meet the position in Saltley, a disused firemen's shelter or hut was put on vacant land, and became a branch bank.
The formal winding-up of the temporary bank did not take place until the 17th November, 1919, so that for a short period the temporary and permanent banks were running side by side. Every depositor was given the option of receiving his deposits in cash or transferring his account to the permanent bank. Out of 24,411 accounts, 22,592 were transferred, giving the permanent bank a substantial clientele.
During its short existence, the Birmingham Corporation Savings Bank had received in deposits £600,000, and £295,000 had been withdrawn.
Although, judged from the standpoint of depositorship and accumulated funds, the Birmingham Corporation Savings Bank had been a success, the financial results of running it were not so satisfactory. When the bank was established in 1916, the Corporation undertook to allow interest to depositors at the rate of 3½%, naturally assuming that as a war loan investment (which the title of the Act implied), there would be a yield of 5% on funds invested. The view taken by the Treasury and the National Debt Commissioners was that the bank moneys could be invested only in Treasury Bills, Ways and Means Advances, etc., and accordingly the yield on investments fell from 3¾% [*1], which applied until June, 1917; 4½% up to December, 1917; 4¼% up to March, 1918; down to 3½%, which applied from April, 1918. The Treasury urged the bank committee to reduce the rate of interest allowed to depositors, but the committee, backed by the City Council, preferred to shoulder any loss there might be rather than break faith with depositors. The result was that the bank closed with a deficiency of £7,149, which was met, for the time being, by the borough fund. The progress of the permanent bank, however, was such that in 1921 the committee was able to reimburse the borough fund the full amount of the deficiency.
The Birmingham Municipal Bank commenced under much better conditions than its predecessor. There was greater freedom in making deposits; greater elasticity in effecting withdrawals; and a wider avenue of investment.
Feeling satisfied that the coupon system of saving had served its purpose, the committee wisely decided to adopt the ordinary method of receiving and paying cash across the counter, which immediately found favour with old and new depositors.
It was also felt desirable that the bank should have a registered design or motto which would become widely known, and a prize was offered to students of the School of Art for the best design. A large number of excellent designs were submitted, and eventually the key design, incorporating the words "security with interest" was accepted and registered.
Mr. Chamberlain, having ceased to be a member of the City Council, felt it desirable that the chairmanship of the bank should be held by a member of the Council, and consequently, on the 10th November, 1919, Councillor C. T. Appleby was appointed to that office.
Mr. Appleby, by his professional experience as a chartered accountant, was admirably fitted to be chairman. To his wise counsel and leadership, from 1919 to his lamented death in May, 1926, the bank is greatly indebted. He transmitted his keen enthusiasm to those with whom he came in contact; he was always looking for further opportunities of developing the activities of the bank.
Satisfied with the progress made at most of the branch banks, the committee turned their attention to providing permanent branches with more suitable accommodation. Where it was possible to purchase temporary premises and carry through a satisfactory alteration, such purchases were made. In other cases, fresh premises, suitable for conversion into branch banks, were purchased, or vacant sites were obtained and new buildings erected. The first reconstructed premises, at Sparkbrook, were formally opened on the 25th July, 1921, and adaptations of other premises have been undertaken from time to time. The first newly erected branch bank, at Handsworth, was opened on the 17th May, 1924, and several new buildings have since been erected in other parts of the city.
The various bank premises have been erected or reconstructed, and equipped, without cost to the ratepayers, and the purchases of land and buildings have been met out of the surplus income of the Bank.
In connection with the erection or reconstruction of several of the branch banks, there has been most cordial co-operation between the bank and other departments of the Corporation. For example, the gas department joined in the reconstruction of premises at Acocks Green, resulting in a bank and showroom being made available; at Handsworth, the electric supply department shared in the erection of a bank and showroom [*2]; at Bearwood, the tramways and omnibus department co-operated in developing a site and providing a bank, and a loading station for omnibuses; at Billesley, the estates department joined in the erection of a bank and retail shops; and at Erdington, an important road-widening scheme was carried out by the public works department, and the first gyratory traffic system in the city set in operation, at the same time as imposing bank premises were erected.
In May, 1922, at the instigation of the late Eldred Hallas, a scheme of saving by means of home safes was introduced, with a view to encouraging children, and even adults, to accumulate in these receptacles small sums until it was convenient to pay a visit to the bank. The scheme was an experiment, and consequently the committee moved cautiously in the matter. Several Birmingham firms were invited to quote for the supply of 2,500 safes, but an order for so small a quantity did not appear sufficiently attractive, especially as no guarantee could be given of repeat orders. Ultimately, however, one firm decided to put down machinery and make the necessary tools, and face the risk of further orders not being forthcoming. The home safe immediately met with a favourable reception, and has maintained its popularity to the extent indicated by the figures on page 79. [*3] It is astonishing that through this method of saving spare coins the depositors have passed over bank counters the sum of £1,094,900. The home safe in use is a strongly-made steel receptacle with a slot at one end through which coins are passed, and the mechanism is so arranged that the coin cannot be extracted through the slot. It is issued in a locked condition, and as the key belonging to the safe is kept at the bank, the depositor is protected against the temptation to obtain the coins without visiting the bank. On their visits to the British Industries Fair, H.R.H. The Prince of Wales and H.R.H. The Duke of York took a keen interest in the model home safe exhibited on the bank stand and the results achieved by this method of saving.
The passing of Eldred Hallas, the strong advocate for home safes, and the man who greatly contributed to the successful establishment of the bank, was a serious loss. Those who passed through the critical days of 1916-1917 with him can appreciate the measure of the responsibility he undertook in connection with that publicity campaign. His fertile brain was always devising schemes for furthering the interests of the bank, and his pride in its success was manifest whenever he spoke on the subject.
The power to grant advances to depositors desiring to purchase their houses has been a boon to thousands of citizens. In fact, it can safely be stated that had it not been for the existence of the bank many who are to-day house-owners would not have been in that enviable position. The success of the house purchase scheme can be attributed to the attractive terms offered, and the advantages gained by the mortgagor as a result of the procedure adopted. The Town Clerk examines with meticulous care the title deeds, and prepares the mortgage deed, without any charge to the mortgagor.
The ability of the bank to make advances has been particularly useful to the Corporation in the sale of municipal houses, and the proceeds have been devoted towards the erection of additional houses. In this way 3292 municipal houses have been sold.
The figures on page 81 [*3] demonstrate the activities of the house purchase department, and when these figures are supported by the statement that the bank has not lost a single penny in these transactions, it will be appreciated that careful attention has been given to the supervision maintained during the period of the loan has been efficient.
With the co-operation of the education department direct contact is established between the bank and scholars in the elementary schools through school savings banks. The weekly contributions of the scholars are received by the teachers, and when the sum of one pound has been accumulated it is transferred to an account in the municipal bank. This ensures touch being kept with the scholar when he leaves school, a most desirable arrangement at this period of adolescence.
The idea of providing facilities for the public to pay their municipal accounts at bank counters occurred to the late Councillor Appleby, who was convinced that such facilities would be beneficial to the bank, the Corporation, and the public. The water department took advantage of the scheme in 1921, followed later by the electric supply department, the gas department, the salvage department, and rates department. The extent of the development of this service will be appreciated by a study of the figures on page 83. [*3]
The increasing growth of business produced a problem in the matter of head office accommodation. The water department had most generously granted extensions of space from time to time, but the limit of any further extension had been reached; consequently, it became necessary to look for premises elsewhere. Property in Edmund Street being in the market, steps were taken to acquire the same, and after reconstruction and enlargement these premises were opened as the head offices of the bank by Mr. Chamberlain on the 6th July, 1925. At the time these premises were acquired, it was anticipated that the adjoining property would be available at a later date. When the time arrived to consider extensions, negotiations were opened for the purchase of adjoining premises, but these proved abortive, and steps were taken to obtain a site in Broad Street, on which has been erected an imposing building.
In May, 1926, Alderman Sir Percival Bower became chairman of the bank, and brought into its affairs an enthusiasm well in keeping with the enthusiasm of those who had previously occupied that position. His vigorous advocacy of the benefits of the bank throughout his chairmanship had the effect of accelerating the bank's growth and development. During this period the famous Bradbury Committee conducted its investigations into the further extension of municipal savings banks. The fact that this committee of experts found no fault with the Birmingham Municipal Bank, but, on the contrary, eulogised its achievements, is a tribute to Sir Percival's skilful handling of the case when giving evidence before the Committee. It must also be conceded that the erection of new head offices on the Broad Street site is largely due to his determination to have a building worthy of the institution.
In the preparatory work of arranging a competition amongst British architects, and the detail planning of the building, Sir Percival rendered valuable services.
In 1929, the bank obtained powers to set up branches in adjoining areas with the consent of the local authority, and the Oldbury District Council was the first to take advantage of these new powers, a branch being opened on the 30th April, 1932. Solihull District Council is the second adjoining local authority to make similar arrangements, and branches are about to be set up in the area of that Council.
Power was also obtained in 1929 to make advances to enable allotment holders to purchase their allotments.
In 1931, Alderman R. R. Gelling was elected to the chairmanship of the bank, a fitting recognition by his colleagues of long and useful service. Alderman Gelling has had an unbroken connection with the bank up to the present time, and like his predecessors, possesses that degree of enthusiasm which has meant so much to the bank. He took over the chair when the head office scheme had just been launched, and at once applied himself energetically to the duties and responsibilities attendant upon the erection and equipment of the new building.
The phenomenal progress of the bank has been achieved by careful thought and attention on the part of those responsible for its management; by wise advice and guidance from the Town Clerk and City Treasurer; and by good team work on the part of the staff. All have contributed, through their keen interest and enthusiasm, to the establishment of an institution of which Birmingham citizens are justifiably proud. To be able to boast a membership representing more than one-third of the entire population of the city is something to be proud of, and to know that the bank is the safe custodian of over £16,000,000 of the savings of the depositors is a cause for great satisfaction. The bank, with its fifty-five branches, is a tribute to the foresight of those who conceived the idea, and persevered through the difficult period of 1916-1919, but never lost faith in its ultimate success.
The unique position which the bank occupies in being the first and only municipal savings bank in Great Britain, is the justification for seeking the honour which H.R.H. The Prince George has bestowed in opening the building. By so doing, he has set the hall-mark of Royal distinction on the earnest labours of many in the cause of thrift.
 This appears to have been a printing error in the original publication, the actual yields for the period being:
4¾% - September 29th 1916 to June 30th 1917
4½% - July 1st 1917 to December 31st 1917
4¼% - January 1st 1918 to March 31st 1918
3½% - April 1st 1918 to October 21st 1919
 Not Handsworth branch (which had no such arrangement); this presumably referred to the nearby Sandwell branch, which included an Electric Supply showroom
 The charts published in the booklet are reproduced at Broad Street Official Souvenir Booklet - Charts