Press Cuttings
Press Cutting:
"The Municipal Bank, An Example to the Nation"
In 1938, the 'Birmingham Gazette' produced a
'Centenary Celebration Supplement' recording
100 years since the City received its Charter of Incorporation.
That Supplement included the following article by the
Bank's Chairman: Harrison Barrow

In the year 1916 Alderman Neville Chamberlain, as he then was, conceived the idea of a Savings Bank, largely with the idea of helping to carry on the war. The scheme was reported on by the Finance Committee to the City Council of Birmingham on April 4th, 1916, and was approved. The idea of the scheme was that co-operation should be arranged with the employers and employees, and that a certain amount should be deducted from wages every week and handed over to the Savings Bank. It was proposed that 80 per cent of the money should be invested in Government Securities.


Mr Neville Chamberlain had an interview with Mr Montague, the Financial Secretary of the Treasury, and it was arranged that a clause should be incorporated in a Local Government Emergency Provisions Bill which was coming before House of Commons, but finally this idea was dropped, and the Special Bill was drafted and brought before the House of Commons on 11 April, 1916. This Bill gave powers to all local authorities with a population over 50,000 to start Savings Banks. The Joint Stock Banks strongly objected to this Bill, and the Government was compelled to withdraw it.


A second Bill was brought before the House of Commons on 12 July, 1916, and became law, but it only applied to towns with a population of over 250,000, and there was a limit of deposit of 200. The money was to be invested with the National Debt commissioners, who only allowed interest at the rate of 4 per cent up to 30 June, 1917; 4 per cent up to 31 December, 1917; 4 per cent up to March 1918; and 3 per cent afterwards. As the general rate of interest was over 5 per cent, the rates referred to were absurdly low, and a serious handicap to the Bank.


The Bank came into operation and was, on the whole, a success, though, owing to the low rate of interest given by the National Debt Commissioners, there was a deficit which was made up by the Corporation of Birmingham, but afterwards refunded by the Bank.


Owing to the comparative success of this Bank, which, it should be stated, was, under the Act of 1916, compelled to be wound up three months after the termination of war, the Birmingham Corporation determined to have a permanent one of their own and, in a General Powers Bill, a clause was inserted, giving power to the Corporation to run a Savings Bank. This clause was passed on 15 August, 1919. The new Bank, with a head office and 17 branches, was opened on 1 September, and depositors in the old bank were asked to transfer their deposits to the new bank.


There were 24,411 accounts in the old bank, and 22,592 transferred to the new bank.


The coupon system which had been adopted in the old bank was abandoned, and practically the new bank was simply a Savings bank, with powers to advance money on the mortgage of houses.


The money is invested with the Corporation, who put about 50 per cent into gilt-edged securities and use the remainder for purposes connected with the Corporation.


At the present moment there are 61 daily branches and four evening branches, in addition to the head office.


The daily branches are open on Mondays, Tuesdays, Wednesdays and Fridays 10am to 2:30pm; Thursdays 10am to 12 noon; Saturdays 10am to 1pm. They are also open from 6 - 8pm, on Mondays and Fridays.


The evening branches are only open on Mondays and Fridays from 6 - 8pm.


The bulk of the business is done on the Mondays and Fridays. The growth of the undertaking has been amazing. When begun in 1919 there were, as stated, about 20,000 depositors. In 1925 there were 166,000, and on 31 March last there were 450,000. The total amount of deposits in 1919 was a few hundred thousand pounds, and on 31 March, 1938, 27 million pounds.


There are about 8,000 mortgages in force, with an amount outstanding of 2,000,000.


The Bank collected during the last complete year 608,000 Corporation accounts, amounting to 1,169,437.


It must be remembered that the amount of money deposited and withdrawn every month comes to a very large figure. For instance, in August last 508,000 was withdrawn and 667,000 deposited. In other months the amount withdrawn is not so large, but there is always an enormous number of in and out transactions. These short-time deposits are very useful, being spent on boots, clothes, or holidays, whereas if the Bank were not in existence they would not have anything like the advantages of the comparatively more permanent purchases.


It is also an amazing thing that more than one-third of the population - men, women and children - should have accounts with the Bank, the number of depositors being now 450,000.


The main reasons for the popularity of the Bank are:


           That branches have been opened in every district.


            That the arrangements for deposit and withdrawal are extremely simple. (30 can be      withdrawn on demand - larger amounts, a short notice has to be given).


            That deposits are taken as low as 1d., and may go up to 500 in any one year.


The interest used to be 3 per cent, but had to be reduced to 3 per cent, a short time ago, owing to the great reduction in the interest on investments.


The Bank has branches outside Birmingham in Sutton Coldfield, Oldbury, and Solihull, and is at the present moment making arrangements to open a branch in Smethwick, so that the Bank is offering to the inhabitants of these districts the same facilities as the City of Birmingham now enjoys. Birmingham is, of course, grateful to the authorities for giving the Bank leave to open branches in these areas.


The new head offices contain the latest type of safe deposit, where the depositors can keep their deeds, documents, and private papers in separate safes for a very moderate annual rental.


The Bank is an institution which handles three million transactions per annum, and has branches all over the City. It is, therefore, naturally an important factor in the lives of the citizens to whom it belongs. There is no doubt that the fact of the Bank being a possession of the citizens of Birmingham, contributes to its continued popularity. It must be remembered that the Bank has not cost the citizens of Birmingham one single penny, either for the purchase of land and buildings or for equipment or management expenses.