52 .sx Under the general direction of these Committees , and their headquarters staff , assisted by some sixty officers responsible for particular areas , the detailed work is carried on through some 26,000 Local Savings Associations in schools , workshops , offices , clubs and so on .sx These Associations , which are managed by a great number of enthusiastic voluntary workers and sell Certificates outright or by small weekly amounts under various schemes , are perhaps the most important part of the whole organisation ; in addition practically the whole country is covered by local Savings Committees , of which the Mayor or the chief representative of the local authority is frequently the President .sx Numerous public meetings are also organised in connection with the Movement and annual conferences are held in each area .sx We have thought it desirable to give some general account of the Savings Movement in order to emphasise that it has been and is much more than a mere selling agency for Savings Certificates and is well qualified further to extend its efforts ha the future should this be advisable .sx We make reference to such fresh efforts in connection with the Post Office and Trustee Savings Banks ( paragraphs 141-147) .sx Savings Certificates , as mentioned above , were first introduced on the recommendation of the Montagu Committee of 1916 .sx They were specially designed to give the small saver freedom to withdraw his money in case of need , combined with a , strong incentive to leave it undisturbed for a considerable time .sx This result was secured by providing for repayment of the original purchase price on demand , with the addition of interest at a very moderate rate after one year , increasing considerably if the certificate were held for a number of years .sx The terms offered have from time to time been modified in the light of changing conditions , but the main principle remains unaffected .sx The purchaser of a 1 certificate of the current ( or third ) issue , in return for an initial payment of 16s .sx is entitled to receive 24s .sx after ten years , this amount being reached by the addition of 3d .sx after one year , and a further 3d .sx every four months thereafter , with a bonus of 1s .sx at the end of the tenth year .sx Certificates are generally not transferable ; the accumulated interest is exempt from income tax , but , in order to prevent abuse of this provision , the total number of 1 certificates that may be purchased by one person is limited to 500 .sx The effective annual rate of compound interest , free of Income Tax , is 1 11s .sx 3d .sx if the certificate is held for one year , 3 15s .sx 4d .sx if it is held for five years , and 4 2s .sx 9d .sx if it is held for ten years .sx The sale of certificates has continued on a large scale , though not at so great a rate as during the War , except during the last part of the year 1921-22 when the yield was high inrelation to the general rate of interest and notice had been given that the price of certificates would be raised after 31st March .sx Withdrawals have also , of course , increased as the total amount of certificates outstanding increased and especially as the earlier certificates reached maturity .sx The total number of certificates expressed in 1 units sold up to 31st March , 1927 ( including sales in Ireland up to 1921-22 ) was 805,796,584 , costing 630,247,017 , and the total amount outstanding in respect of principal at that date was 371,823,329 to which should be added approximately 121,000,000 in respect of accrued interest .sx It must , of course , be admitted that savings certificates have certain special attractions which no savings bank or other Government security possesses , and probably a considerable pro-portion is held by the investing classes .sx The Colwyn Committee on Taxation and the National Debt noted that the Montagu Committee of 1922 were only able to express the opinion that " at least half " of the total sold up to 31st March , 1922 , represented subscriptions by those classes whose needs the certificates were primarily intended to meet , and added that it was certain that a very large volume was held by classes outside those they were considering ( the working classes ) , but in the absence of statistics no very definite inferences could be drawn .sx At the same time it is clear that savings certificates and the National Savings Movement generally are among the most important agencies for the encouragement of thrift .sx Moreover , as General Seely , Chairman of the National Savings Committee , emphasised in evidence , what they encourage most of all is long range thrift , which is thrift of a particularly valuable kind .sx Our attention was particularly drawn to the arrangement under which Local Authorities are allowed to apply to the Public Works Loan Board ( without regard to the ordinary limitations ) for loans amounting to 50 per cent .sx of the gross sales of savings certificates in their areas during the preceding 12 months .sx During the year 1926-27 359 loans were thus granted , amounting in all to 3,302,554 , and the total amount of loans granted up to 31st March , 1927 , amounted to 12,808,445 .sx One of the objects of this arrangement is , of course , to enlist the support of local sentiment by giving Local Authorities a direct interest in the sale of certificates , and we refer to it again in the second part of this report .sx Building Societies .sx The primary object of building societies is to lend money for the purchase of houses , mainly for personal occupation .sx They began as small local associations whose members joined together to raise by periodical subscriptions a fund to assist each other in the purchase of houses , and were indeed closely related to Friendly Societies , but they have gradually come to perform .sx many of the functions of Housing Banks , and the savings and investment department of their business is now almost as important as the lending department .sx They still remain , however , in form , mutual associations under the control of the Registrar of Friendly Societies , reckoning among their members borrowers as well as investing shareholders ; unlike ordinary banks , they have no capital other than the funds placed with them , or more exactly , these funds for the most part actually are their capital , being in the form of shares .sx While these shares are strictly shares only and not comparable to banking deposits ( though many Societies accept as well a proportion of deposits proper ) , they can usually in practice be withdrawn on moderate notice and are largely used for small savings .sx Though the Societies make returns to , and their rules require the approval of , the Registrar , they are substantially independent and their practice as regards shares , rates of interest and other terms , both to lenders and borrowers , varies greatly .sx The general practice appears to be to offer a substantial rate of interest , usually 4 per cent .sx or 5 per cent .sx , upon share investments exceeding a minimum amount or accumulated by small regular instalments , and lower rates on deposits , which have a prior charge on assets over shares , and on small amounts generally , all rates being free of income tax .sx We were informed that the effective annual average rate in certain large groups of societies varied from 3 19s .sx 11d .sx to 4 13s .sx per cent .sx ( free of income tax) .sx The Societies' liabilities at 31st December , 1926 ( or the date of the last balance sheet preceding that date ) to shareholders and depositors ( the latter including a comparatively small proportion of other creditors ) amounted to 183,450,403 , and their assets to 193,856,034 , with total surpluses of 10,405,631 .sx As a result of the great demand for advances and the good terms offered to lenders , and with the assistance of a vigorous policy of advertisement , the Societies have made great progress in recent years .sx The average amount per account , which seems to be increasing yearly , is much higher than the average in the Savings Banks , and this suggests that the Societies obtain a much larger proportion of their funds from the investing classes , but the amount of small savings coming into their hands is undoubtedly substantial .sx Employers' Savings Banks .sx Many large employers of labour provide special savings banks or other facilities for the encouragement of thrift for their own workpeople .sx The largest of these special institutions are the Railway Savings Banks with 150,254 depositors and 15,239,331 deposits ( average 101 8s .sx 6d .sx per account) .sx There are also , of course , numerous pension funds and co-partnership schemes , prominent among the latter being the schemes of thevarious gas companies under which shares to the value of over 2,000,000 are held by employees .sx Joint Stock Banks .sx Several of the Joint Stock Banks have recently devoted considerable attention to attracting small savings and developing Savings Bank Departments , in some cases in conjunction with home safes .sx Both Mr. McKenna and Mr. Henry Bell in evidence before us attached importance to this development , but the movement is at present in a comparatively early stage , and in any case the business is so closely related to the general business of the Banks that separate statistics are not likely to be available .sx Other Savings Agencies .sx Of the other savings institutions by far the most notable is the Yorkshire Penny Bank .sx This Bank , which is now owned jointly by the large Joint Stock Banks , but continues to be run independently as a Savings Bank , has worked with great success in the Yorkshire area for many years .sx One of the most remark-able of its achievements has been the organisation of an effective system of School Savings Banks .sx Deposits at 30th June , 1927 , amounted to 27,534,000 , but have not much increased of recent years .sx In Scotland , as already mentioned , there are a number of Savings Banks which are similar in origin to Trustee Banks but continue to operate independently under an Act of 1819 .sx The most important of these are Airdrie , Greenock and Dumfries .sx Airdrie , with deposits of 3,403,181 , though it carries on an ordinary savings bank business and has a Penny Bank attached to it , in some respects resembles more closely a Special Investment Department of a Trustee Bank .sx It pays a higher rate of interest on sums left through the whole year than on sums deposited or withdrawn during the year ( the rates being 3 per cent .sx and 3 per cent .sx respectively ) , and it also pays a higher rate ( 4 per cent .sx ) on amounts deposited before 15th August , 1923 .sx Greenock divides its deposits ( amounting in all to 1,581,676 ) into current and deposit accounts , paying on the former 4 per cent .sx on accounts less than 100 and 3 per cent .sx on larger accounts and on the latter 3 per cent .sx Dumfries , with deposits of 681,370 , limits single deposits to 10 , deposits in any one year to 50 and total deposits to 500 , and pays 4 per cent .sx Reference should be made also to the Co-operative Societies which receive a certain amount of money by way of savings deposits and a much larger amount of small savings as shares .sx In Lancashire small savings are also largely invested in local industrial undertakings at short notice , and in many towns in the North of England and Scotland in small Municipal .sx Mortgages .sx Moreover , in addition to all these generally recognised methods of saving , there are of course numerous church , school and other thrift clubs , penny banks and other similar agencies .sx Conclusion .sx 66 .sx We consider in Part II of our report whether there is a sufficient case for the addition of Municipal Savings Banks to the agencies already existing for the encouragement of thrift , but this brief review of the position shows at any rate that a large number of agencies are at work all over the country , and that they have accumulated a great volume of small savings .sx We may add , however , that , while Savings Bank records give some information as to the distribution of depositors among different classes of the population , little information seems to be available as to the distribution of the total deposits among different classes , and in relation to the income and total capital resources of depositors .sx This question , though obviously difficult to elucidate , might well repay investigation .sx Part II .sx CRITICAL .sx 67 .sx The historical summary in Part I of this Report shows that the establishment of Municipal Savings Banks might be authorised either by a general enabling Act or by private Acts .sx