The Select Committee of the House of Commons appointed to
inquire into Savings Bank Funds have advised that the rate of interest allowed them by the State should be reduced by one-eighth per cent., that is, from £2 10s. per cent. to £2 7s. 6d. per cent. These funds are of very large amount, £51,950,000 being deposited in Trustee Savings Banks, and £142,942,000 in Post Office Savings Banks. There has always been some loss in investing them in State securities, and when on April 5th, 1903, the interest on Consols is automati- cally reduced to 2t per cent. the total loss will exceed £322,000 a year. The interest must therefore be re- duced, or the Commissioners must be authorised to invest in other than State stocks. The alternative, however, is too dangerous, for, besides depressing Consols, it might in a year of panic render it impossible to obtain great sums of money at short notice. The reduction, which will, there is no doubt, be authorised by Parliament—a refusal involving, in fact, a fresh tax on the taxpayer—is to commence in the case of the trustee banks on November 20th, 1902; and in that of the Post Office banks on April 1st, 1903.
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