The Town Clerk submitted the letters and amended draft scheme to the Bank Committee on October 19th, but informed the members that
it was unlikely that a General Powers Bill would be promoted by the Corporation in the ensuing Session of Parliament, and it was resolved
that the matter be referred to the General Purposes Sub-Committee to continue negotiations with Smethwick and West Bromwich with the
object of agreeing a complete scheme in readiness to apply for the necessary powers when a suitable opportunity arose.
It was
not until 1929 that the Bank obtained the legislation to extend its powers to adjoining areas when the Birmingham Corporation (General
Powers) Act was passed. Section 57 (1) of the Act included:
With the consent of the local authority of an area adjoining the city ....
the Corporation may establish and maintain in such area a branch savings bank with or without a housing department.
However,
by this date, it appears that both the Boroughs of Smethwick and West Bromwich had ceased to actively pursue the interest that they
showed some five years earlier, although (together with Oldbury) they had attended at the House of Commons in order to give evidence
in favour of the relevant clause. Instead, it was just Oldbury Urban District Council who formally contacted the Bank.
On April
14th 1930, the General Manager reported to the General Purposes Sub-Committee regarding a letter that had been received from the Clerk
to the Oldbury Urban District Council. This letter stated that the Finance Committee of that Council had directed him to enquire whether
the Bank would be prepared to consider the establishment of a Municipal Bank, or Banks, in the area of the Urban District Council,
and if so, what provisional terms and conditions would apply. In order that consideration of the question might be expedited, it was
suggested that a small deputation from Oldbury should meet representatives of the Bank Committee.
The General Manager reminded
the Sub-Committee of the meetings held with Smethwick and West Bromwich in 1924 and 1925, and that at the time it was intended to
include a clause in a Corporation Bill, but the General Powers Bill being dropped for the time being no further action took place
in the matter. At that stage the Oldbury Council had not been invited to take part in the proceedings, and there had been no communication
with them regarding the branch in their area.
However, between 1925 and 1929, enquiries were received from time to time from
depositors, as to the possibility of the Bank assisting Oldbury residents to buy their houses, and to have banking facilities. The
inability of the Bank to make house purchase loans to Oldbury residents became more frustrating after Quinton branch was opened -
the bulk of housing development in the area taking place outside the City boundary.
The letter from Oldbury's Clerk to the Council
appears to have been the natural sequel to the Bank having secured the relevant powers. Consequently, the General Manager consulted
with the Town Clerk and City Treasurer regarding the application from Oldbury. The joint conclusion was that the draft 1924 scheme
was not the solution, but that the much simpler arrangement of the branch being carried on in exactly the same way as a branch within
the City boundary was preferable.
The Sub-Committee, having heard the views of the Town Clerk, City Treasurer and General Manager,
agreed that the draft scheme considered in 1924 was inapplicable to the existing conditions having regard to the new powers of the
Bank, and consequently that negotiations with any of the local authorities concerned should be commenced anew, it being understood
that until approached by other authorities such negotiations be confined to Oldbury.
With regard to the possibility of representation
on the Bank Committee being desired, the Sub-Committee considered that as any loss incurred by the Bank would have to be borne
by the Corporation and not by the adjacent local authority it would be necessary for the Bank Committee to retain the sole management
and control of any branches established outside the City and that no representatives of outside districts should be co-opted upon
the Committee.
On May 28th 1930 a conference was held between representatives of Birmingham Corporation and the Oldbury Urban
District Council and a Memorandum of Proceedings was produced:
Establishing a branch or branches of the Municipal Bank in Oldbury.
PRESENT:
|
Birmingham Representatives |
Alderman Sir Percival Bower, MBE, JP, Chairman Councillor Gelling, JP, Member of the Bank Committee Mr J R Johnson, City
Treasurer Mr J P Hilton, General Manager Mr F C Minshull, Deputy Town Clerk Mr A Everall, Clerk to the Bank Committee |
|
Oldbury Representatives |
Mr Frank Wallace, Chairman, Finance Committee |
|
Mr A Culwick, Clerk and Solicitor | |
|
Mr John Campbell, Treasurer |
Alderman Sir Percival Bower, who was elected to the Chair, welcomed the Oldbury Representatives and opened the discussion by referring to the extended powers of the Birmingham Bank under the Birmingham Corporation (General Powers) Act, 1929, and pointed out that the present meeting had been convened as a result of negotiations which had taken place between the Birmingham and Oldbury Councils, with the object of considering whether a scheme could be adopted to establish a branch or branches of the Bank in the area of the Oldbury Urban District Council.
The Chairman having invited the Oldbury Representatives to express their views as to a scheme which would be acceptable to the Oldbury Council, the Chairman of the Oldbury Finance Committee stated that his Council was desirous for branches of the Municipal Bank to be established in Oldbury on terms to be mutually agreed, as it was felt that such a project would be beneficial to the inhabitants and to the Oldbury Council. The Oldbury Representatives would accordingly be glad to be informed what conditions it was proposed to apply in matter such as rates of interest to depositors, the question of providing premises, the likelihood of the Oldbury Council borrowing money from the Bank in a similar way to the moneys placed with the Birmingham Corporation and the facilities for house purchase to be provided for the inhabitants.
In reply the Oldbury Representatives were informed that the Bank Committee
would be prepared to favourably consider the adoption of a scheme based on the following principles:
1. The establishment of
a branch or branches in Oldbury on the understanding that such branches should be integrally and for all purposes branches of the
Municipal Bank, who would acquire the necessary site or sites and provide or erect the necessary premises. Further, the whole of the
advantages enjoyed by depositors at the existing branches in Birmingham would similarly be available for the depositors in Oldbury.
2.
As to the conditions under which the Oldbury Council would derive some benefit in connection with the deposits placed in the Oldbury
Bank, the Chairman pointed out that the Bank's powers precluded such moneys being placed at call with an Authority other than the
Birmingham Corporation, but consideration had been given to the manner in which some advantage in the direction of borrowing from
the Birmingham Corporation at a favourable rate of interest could be granted to the Oldbury Council. The conclusion has been arrived
at that the only method would be to arrange ordinary mortgage loans, from the Birmingham Corporation through their Finance Committee
to the Oldbury Council, from time to time at a favourable rate of interest compared with the current market rate, and to an amount
representing a proper proportion of the net deposits made at the branches of the Bank in the Oldbury area, after deduction of the
proportion which would be necessary to hold as liquid assets, the percentage to be allocated to house purchase, cash in hand at the
Joint Stock Banks, management expenses, etc.
The Oldbury representatives enquired whether their Council would participate in
any profits gained by the Bank, either by earmarking a proportion of the reserve or calculated on the basis of the percentage of the
business transacted at the Oldbury branches. In reply the Chairman pointed out that as the Oldbury Council would not be called upon
to bear any loss that might accrue in respect of the branches or house purchase loans, the whole of the responsibility for which would
be borne by the Birmingham Corporation, it naturally followed that the Birmingham Corporation would also be entirely responsible for
the disposal of any profits made by the Bank; in fact any branch established in Oldbury would be for all purposes an ordinary branch
of the Birmingham Municipal Bank entirely controlled and administered by the Birmingham Corporation through its Committee of Management.
The
Oldbury representatives also raised the question as to some provision being made in the event of Parliament granting general powers
for establishment of branches by Authorities of a sufficient population or to combined areas, whereby any branches established in
Oldbury could be taken over should the Oldbury Council obtain the requisite powers and so desire. In this connection the opinion of
the Birmingham representatives was sought as to the desirability of entering into some agreement under which the Oldbury Council could
take over the branches at the expiration of say, five or ten years on reasonable notice being given. The Oldbury representatives were
informed that the latter arrangement could not be contemplated having regard to the possibility of loss being incurred during the
first few years of operation, which loss would be spread over the whole undertaking; also it would not be reasonable to expect the
Corporation to establish Branches without security of tenure, and in any case no change could be made without the consent of the depositors.
Furthermore it was pointed out that in the event of Oldbury, either alone or in conjunction with another Authority, obtaining powers
and deciding to establish a Bank, it would not seem to be possible to take over the Branches as a going concern but it might be necessary
to close such branches and to make the necessary adjustments with the Birmingham Municipal Bank so that the Oldbury Municipal Bank
(if established) would commence de novo. In any event in granting any powers as suggested, the Government would undoubtedly make provision
in their enactment for dealing with such a position as would arise between Birmingham and Oldbury and more especially for protecting
the interests of the existing depositors. Therefore it was considered unnecessary to make any provision beforehand for such a contingency
arising.
The Oldbury Representatives having acquiesced in the views above expressed and having reiterated their desire that any
branches in Oldbury should form an integral part of the Birmingham Municipal Bank, expressed their intention of reporting to their
Finance Committee with a view to the Oldbury Council being recommended to approve a scheme for the establishment of a branch or branches
in Oldbury on the lines indicated.
The Chairman then summarised the conclusions arrived at by the Conference as follows:
1.
That in the event of the Oldbury Council desiring that the Birmingham Corporation should exercise their powers to establish a branch
or branches of the Birmingham Municipal Bank in Oldbury, and on the understanding that such branches should form an integral part
of the Birmingham Municipal Bank with the same advantages and facilities to depositors in every respect and be under the complete
control of the Birmingham Corporation through its Committee of Management, it is proposed that steps should be taken to prepare a
suitable scheme on these lines.
2. That in the event of Oldbury at some future time obtaining powers for the establishment of
a Bank, the question of the arrangements to be made between Birmingham and Oldbury should be deferred until such time arises.
3.
That the Conference consider that provision should be made in the scheme whereby arrangements can be made for loans by way of mortgage
to be granted to the Oldbury Council by the Birmingham Corporation from time to time, representing the proper proportion of the amount
standing to the credit of depositors at the Oldbury branches, it being understood that such loans would be on favourable terms to
be agreed upon between the Finance Committee of the Birmingham Corporation and the Oldbury Council.
The Deputy Town Clerk of
Birmingham was directed to incorporate the principles agreed upon in a suitable letter to be transmitted to the Oldbury Council with
the object of a definite agreement being concluded.
The Oldbury Representatives thanked the Chairman (Alderman Sir Percival
Bower) for presiding at the Conference, and after expressing their appreciation of the courteous and helpful manner in which their
views had been received by the Birmingham Representatives, the proceedings terminated.
At the General Purposes Sub-Committee held on July 14th 1930, the General Manager reported that he had been supplied with a plan of the Oldbury area and had inspected shop premises to which his attention had been drawn. He found these to be unsuitable for the Bank's requirements and suggested that a tour of the district should be made with a representative of Oldbury. The meeting agreed that a tour of the Oldbury district should be made by Councillor Hume, Councillor Wallace of Oldbury, the Bank's Valuer (Frank Wilde) and the General Manager.
The scheme as amended (in red) by the Boroughs was as follows:
BIRMINGHAM MUNICIPAL BANK
Scheme for the Establishment of Branch
Banks in Smethwick, West Bromwich and
neighbouring areas Areas contiguous
to the City of Birmingham
____________
1. The Corporations of Smethwick, West Bromwich, and any other neighbouring consenting Local
Authorities contiguous to the City of Birmingham to invite the Corporation of Birmingham to apply to Parliament for powers to establish
branches of the Municipal Bank in their respective areas. The area branches to be opened by and carried on under the control of the
Birmingham Municipal Bank Committee, the Corporation of the City to co-opt a representative of each area Authority on the Bank Committee.
2. The
accounts at the Branch Banks in each area to be kept separately, and any deficiency arising in such area through the income of the
Bank being insufficient to meet the expenditure, or through loss on advances made to purchase houses, to be met by the Authority of
the respective area. Any excess of income over expenditure to be placed to Reserve Funds out of which the moneys spent in acquiring
and fitting Banks in the area of the respective Authorities would be repaid.
3. The deposits received in each area to be dealt
with as follows:
(a) 20% of the amount received on deposit in each area, until the accumulations amount to £
to be kept in an
account at the a Local Joint Stock Bank (nominated by the Local Authority) as a floating balance to meet withdrawals. etc.,
(b)
Not more than 33.1/3% of the total sum standing to the credit of depositors in the respective areas to be advanced for the purpose
of purchasing houses on the terms set out in the Regulations of the Birmingham Municipal Bank.
(c) Any excess of deposits, after
providing for (a) and (b), to be invested in Government Securities paying, if possible, 5% until the income of the Banks in the respective
areas is sufficient to cover the expenses.
(d) Any excess of deposits after providing for (a) (b) and (c), to be advanced "at
call" to the Authority in the respective area at the same rate of interest charged from time to time upon advances "at call" by the
Bank to the Birmingham Corporation per centum per annum. The Authority to invest one-half of this money in Government Securities so
that they may be in a position to meet any "run" there might be on their Banks. The balance to be used at the discretion of the Authority.
4.
The rate of interest payable on the deposits in each area shall be the same as that paid on deposits in Birmingham.
5. In the
event of any Local Authority desiring to abandon the Scheme after a period of not less than three years, such Local Authority shall
give not less than six months notice to the Birmingham Corporation, and the Scheme shall terminate at the end of that period, and
all necessary financial adjustments shall be made between the respective Authorities.
6. In the event of Parliamentary powers
to establish a Municipal Bank being given to any of the Authorities in whose area the Birmingham Municipal Bank have opened a Branch
or Branches, a the Authority to be at liberty to take over the Branches established within its area, together with all the assets
and liabilities. If at any time after the establishment of a Scheme within the area of a Local Authority such Local Authority shall
seek to obtain Municipal Banking powers, the Birmingham Corporation undertake not to offer any opposition thereto.
7. Should
a Branch of the Birmingham Municipal Bank be opened in the neighbourhood of the existing Branch in Sandon Road, the business of the
latter Branch to be transferred to the one in Smethwick, and any expenses in connection with the transfer or loss incurred by the
Birmingham Corporation on the closing of the Sandon Road Branch, to be borne by the Smethwick Corporation.
8. Any advances made
by the Bank towards house purchase to customers of the Branches within the area of a Local Authority should, before such advances
are made, be approved by the Local Authority concerned.
9. Advances shall be made to customers of the Branches of the Bank within
any such area, for the purchase or erection of houses, either within or beyond the boundaries of the Local Authority of that area.
QUERIES.
Are
the present Bank premises vested in the Birmingham Corporation, and in which Local Authority would any premises acquired in any of
the extended areas be vested.
Is the Municipal Bank a legal body having powers to enter into Contracts etc in its own Name?