HC Deb 23 February 1847 vol 90 cc393-404
MR. ELLICE

, in rising to bring forward the Motion of which he had given notice, relative to referring all Railway Bills to the Railway Commissioners, observed, that the necessity for it was so self-evident, from the magnitude of railway transactions, and their connexion with the financial interests of the country, and indeed on every other account, that it would not be necessary for him to detain the House long with any detailed facts, or comments upon them. When he had mentioned the matter before, he was led to infer, from the information which had been furnished him, that the amount of capital to be raised for the construction of railways in the present Session, would be about 40,000,000l. sterling. He had moved for an accurate return, but there had not been time as yet to make it. However, as far as he could ascertain the fact, it appeared that, instead of 40,000,000l., the amount would be in reality 120,000,000l., of which 80,000,000l. were capital, and 40,000,000l. borrowed money. He had moved at the same time for another return, which he could have wished was before the House, before moving his proposed resolution—namely, the actual amount of capital raised under former Acts—of the extent of power still remaining to be exercised, to raise further capital and loans—and of the amount of loan notes, debentures, or money borrowed in other ways, still outstanding. The complicated and difficult character of that return necessarily caused delay; and it was not yet, he regretted to say, in a condition to be laid before the House. The only course left him in the case, therefore, was to endeavour to give an idea of the nature and extent of the enormous monetary operations of these undertakings, by stating the condition of some of the companies, as represented in published proceedings, at the meetings of their shareholders. The first he should take was the North Western, late the London and Birmingham Railway. That company had raised 10,000,000l. of capital, and 6,000,000l. of loan; they had, moreover, a power to raise a sum equal to 10,000,000l. more of both; thus extending their engagements to 28,000,000l. The Great Western had raised 4,800,000l. capital, with 4,500,000l. of loan, and was represented as involved in engagements for leases, amalgamations, and unfinished undertakings, to an extent exceeding 30,000,000l. The Eastern Counties, which succeeded in his list, had raised a capital of 4,200,000l., and 3,400,000l. on terminable annuities and preferential stock, part of which was represented by fictitious stock, under the title of bonus. That company had also a further power of raising money, but he did not exactly know the sum. The Manchester and Leeds, which followed, raised 2,000,000l. capital, and 1,800,000l. by loan; and they had a power in their Act to increase it to 10,000,000l. The fifth and last he should refer to, was the Midland Railway, with their connexions of the North Junction, the engagements of which he could not accurately state to the House; but if the Bills on the Table were to be all passed, he believed that the hon. Gentleman opposite (Mr. Hudson), would be placed at the head of railway concerns with a capital of 30,000,000l. In these cases, there were various powers, most of them very anomalous, given to raise capital and to contract loans—powers, which, if not of an absolutely conflicting nature, were founded on different principles in every case. He found, besides this, that the North Western Company had last year been authorized to raise 5,700,000l. exclusively by loan, and that they had now Bills to raise further capital, in guarantees to other companies, or in subscribing capital to these companies. That being the extent of the existing transactions of a few of these companies, he deemed it necessary to call the attention of the House to the numberless Bills then lying on the Table, principally promoted by old companies, for the purpose of obtaining powers to raise additional capital; some for new branches, others for amalgamations, more for leases, many for purchase of other lines, several for guaranteeing profits from railways in cases where there were no returns, and not a few for various and anomalous arrangements for raising money, converting loans into shares, and paying interest on capital yielding no return. To show the House how various were the provisions of the Bills brought before it, he had in his hand half a dozen, which he believed offered a tolerable illustration of the general description. The first was a Bill for making a Cheltenham and Oxford Railway, giving power to the Great Western Company to raise 1,000,000l. of capital, and 330,000l. loan for that object. It enabled the company to subscribe to the undertaking an amount not exceeding the whole amount of the capital authorized to be raised, by the creation of new shares, or guaranteeing interest at the rate of 5 per cent, and undertaking the responsibility of the work. Now, it was very advisable that an inquiry should be made with respect to these provisions; if the Great Western Company were to be undertakers, and there were to be no new subscribers, it was advisable that an inquiry should take place as to the means at the disposal of the Great Western Company, beyond the means required for the accomplishment of their present objects. The next Bill was the Dundee and Newtyle Railway Bill. This Bill authorized the parties to raise a certain additional capital, in addition to the sum authorized to be borrowed by the former Acts, or any further sum which they may be authorized to borrow by any other Act to be passed in this Session. These two Bills might get before different Committees, one not knowing what the other was about, with reference to the extent of money to be raised on the whole by these undertakings. He took next—and he only mentioned this and other Bills as an illustration of his whole case—the Eastern Union Bill. The capital of the company was to be 1,866,000l. of which a certain proportion was to be distributed among the shareholders of the Eastern Counties Railway. He held also in his hand a paper circulated by persons opposing a Bill now on the Table, but which, notwithstanding, appeared on the face of it to be a very accurate statement of what the Bill purported to be, and which proved the necessity of previous inquiry. It referred to the Sheffield, Rotherham, and Doncaster Railway. The parties opposing this Bill stated that upon examination of the subscription contract, it appeared that three solicitors, two engineers, and twelve directors of the company promoting this Bill, subscribed 192,000l. to the capital, and the public subscribed 30,000l. This Bill proceeded to give to the promoters a power to sell the proposed railroad to five different companies, or to any other company or companies, person or persons, who might be willing to purchase. It was evident that a Bill of this kind should be referred to some previous examination before it was sent to a Committee of that House, otherwise they might subject parties who wished to oppose it to enormous expense for no purpose. He would not fatigue the House with more illustrations of the case he wished to lay before it. It appeared to him that it would be most desirable that a previous examination and report by the Railroad Commissioners should take place, first of all, with respect to the Amalgamation Bills. He saw in those Bills, again, many and different principles laid down, and the same thing with respect to leasing. There were some leases on which old companies guaranteed a stated amount of interest to new companies; there were others on which they were made upon a division of profits. He did not intend to offer any comment of his own on any of these principles or details. In many, power was taken to pay interest to the adventurers on capital, previous to the railroad producing any return; in some Bills there was no such provision; in others there was a provision that they should be paid four per cent, in others that they should be paid five per cent. He was no friend to imposing more restrictions than was politic on any of those undertakings; but surely the House should endeavour to arrive at some uniform principle on that subject. With respect to fictitious additions to capital, his attention was first drawn to the subject by being ordered last year to sit on a Committee on a monstrous case of that description. So far from thinking that he, or the Committee, was competent to go into the grounds on which that proposal was made, they thought it much better to report the facts, and leave them to the decision of the House. The House took no notice of the report, and the Bill passed; and it was for the purpose of preventing such Bills from passing easily, that he had ventured to submit this resolution, requir- ing a previous examination and report by the Railroad Commissioners. Ought interest to be paid on fictitious capital by the public, taxed already to pay 10 per cent profit on the money actually invested in the construction of railroads? One company borrowed loans on mortgage, another on debentures. The terms of doing that, he was aware, were, in certain cases, prescribed by the Clauses Consolidation Act; but there were propositions at variance with them. One company created perpetual annuities, another capitalised its debt. In those cases, the public should be aware whether, when one company raised ten millions, and borrowed five millions, the guarantee of ten per cent on the ten millions, should also extend to the five millions. It was well that these things should be understood. In the case of the North Western Company, there were various Bills on the Table, under which the directors proposed to pledge their old capital for the purpose of carrying out branches and extensions. It was very desirable that some inquiry should be made how far such a proceeding on the part of the directors might be in accordance with the Standing Orders of the House. He had turned his attention, as he had already said, to the subject, in consequence of having been appointed chairman of a Committee last year. He had avoided expressing any opinion on the various points he had adverted to; but he believed that he spoke the opinion of a great number of Members when he said, that definite principles and a well-considered system should be laid down, under which Committees could perform their duties much more to their own satisfaction, and, he was sure, much more for the public benefit, as well as for the interest of railroad companies themselves. He did not know whether it was absolutely necessary that the same principle should prevail in all cases; but if they wished their proceedings to be beneficial to the public, and at the same time creditable to the House, it would be desirable that they should be guided by some authority having access to information which might enable them to form right decisions, and whose opinions could be maintained before the Committee. He could assure Gentlemen connected with railroads—for himself he had no interest in them—that he took up this subject rather with a view to their benefit, than from the least desire to check this meritorious exertion of enterprise. He was as desirous as they could be to see the success of these undertakings; but he was quite sure it was for their own interest that the undertakings should proceed on grounds not open to suspicion; and even if delay should take place, it would be amply compensated for by their proceeding on settled and satisfactory principles; and he should be very much surprised, in the event of the House adopting the resolution he proposed, if they did not feel an obligation to him for having brought it forward. He thought it of the greatest importance that another subject should be taken up by the Commissioners of Railways. Cases had come before Committees in which that much-contested question of the gauge had to be decided. That on which he sat supported him in declining to hear evidence as to the superiority of one gauge over the other. They thought themselves perfectly incompetent to decide the question, and it was referred to the Board of Trade for its opinion. That opinion was, that it was better not to change one gauge into the other, but that both could be used on the same line. The Committee unanimously came to the resolution, that they did not think that consistent with the public safety. A Bill had, indeed, been passed, which was intended to settle this affair of the gauges; but which, as he was informed by parties very conversant with the subject out of doors, would put it in some respects as much at sea as ever. Questions would arise before the Committees connected with the gauges, and he believed they would have again brought before them that Session the question of the two gauges on the same line. If three or four Committees were formed, the probability was, that one half would be for one plan, and the other half for the other. It would be very desirable if, before this question of the gauges were referred to the Committees, the Railroad Commissioners, after examining the whole question, should report their opinion. He only stated this with the view to save enormous expense. He might mention the fact, that the proceedings before one of the Committees of last Session cost one of the parties before the House 150,000l. That party carried their Bill through that House, and probably the other side spent almost the same money. The Bill went up to the House of Lords, where it was thrown out. These facts were scandalous to the reputation of that House; and imputations of every description were cast by the public on the Committees both of that House and the other House of Parliament. It was absolutely necessary they should shelter the reputation of that House from such imputations. He had not included this subject in the resolution he intended to propose; but he hoped his right hon. Friend the Commissioner of Railroads would see the necessity of undertaking this duty, or that the House would impose it on the board, and that at all events they would have these matters either recommended to the House, or decided upon by authorities responsible for their decision to the public. The right hon. Gentleman concluded by moving the first of the following resolutions:— 1. That all Railway Bills in the present Session be referred to the Railway Commissioners, for their Report to this House upon the following points, previously to such Bills being considered in Committees of this House:— 2. That every Report so to be made upon each Bill shall state the amount of the capital proposed to be raised, and of the loans proposed to be authorized by the Bill; and if, under the provisions of such Bill, any powers are to be given to any Company already incorporated of raising further capital or loans, or of making alterations, branches, or extensions of their existing Lines, or of purchasing or leasing any other Lines made or to be made, or of subscribing to the capital, or guaranteeing the capital of, or amalgamating with, other Companies; such Report shall also state the powers granted by any former Act or Acts to such Companies already incorporated for any of the above purposes, and of the manner in which, and extent to which, such powers have been exercised; and the Report shall further state the opinion of the Commissioners thereon, and also their opinion as to any special provisions with which it may in any case be expedient to accompany the grant of any powers for any of the abovementioned purposes. 3. That every such Report be referred to the Committee of this House appointed to consider the Bill to which the same may relate.

MR. HUDSON

was not about to take the least objection to the proposition made by the right hon. Gentleman, nor was he about to go into all the details on which the right hon. Gentleman had entered; but he would make one or two observations with respect to the statement he had made; and first, as to the capital proposed to be raised for this year by Acts before the House. He believed that in the last Session of Parliament, the amount proposed to be raised under Bills introduced into the House, was something like 350,000,000l. He then stated to the House that the amount which would be ultimately granted or passed by Parliament, would not exceed 100,000,000l. In that he was perfectly right, for the total amount which received the sanction of Parliament, was something like 90,000,000l. He believed that in the present year, a very large amount would probably not receive the sanction of Parliament; and the time given for the execution of the works would, he thought, not cause inconvenience to the public in providing it. The right hon. Gentleman had referred to one or two companies over which he (Mr. Hudson) had the honour to preside; and had stated that he was unable, from the accounts, to make out what was the amount of their capital or engagements. If he (Mr. Hudson) had been aware that the right hon. Gentleman was going to bring the matter before the House, he would have been prepared to afford full explanations; but he thought he could, off-hand, give information which would be a guide to the House with respect to the real amount of the engagements of those companies. The right hon. Gentleman put the engagements of the Midland Company at something like 30,000,000l. He was quite sure the right hon. Gentleman would not mis-state anything, and he was most ready to acknowledge the kindness and candour with which the right hon. Gentleman had brought the subject forward; but he was in error in placing the engagements of the Midland Company at the sum stated. The original engagements of that company in paid-up capital, amounted to 5,000,000l.; they had afterwards obtained Acts of Parliament in 1845 for the execution of lines, the cost of which would amount to nearly 2,000,000l. They had created shares for the execution of some of those lines; some of them were already executed, and others were in progress. This made the amount of the shares 7,000,000l.; and last year they obtained the sanction of Parliament to projects involving an amount of something more than 2,000,000l. This amount was to be raised by shares, and it increased the capital 2,000,000l. A further provision for the creation of stock by loan, amounting to about 1,700,000l., made the total capital somewhere about 10,500,000l. As near as he could recollect, this was a correct statement of the capital of the Midland Company. There were several other lines in which the Midland Company was concerned—the Bristol and Gloucester, with a capital of 2,000,000l.; and the Leeds and Bradford, with a capital of 1,000,000l. But the Midland Company were not bound to find capital for these two companies, only to pay dividends to them. The Midland Company had no power, at least in the case of one of these companies, to raise the capital for the construction of the line. So far, therefore, from the amount being 30,000,000l., the Midland Company's capital was not more than 12,000,000l. or 14,000,000l. at the most. [Mr. ELLICE: Is that distinct from the Great Northern?] He could assure the right hon. Gentleman that they were perfectly independent and distinct companies in every respect. With respect to the mode of raising capital, that was done sometimes by creating shares, sometimes by borrowing money on guaranteed stock; the only object of the companies was to get the means of executing their works. When the money market assisted their object, they adopted one plan; when it did not, they adopted the other. He did not see any evil from using guaranteed stock. It was not advisable to debar parties who liked to embark in speculative undertakings, and he did not see why the public should not have the liberty of carrying out their projects in that way as well as in another. It was no doubt true that companies had guaranteed over and over again unfortunate investments of capital, just as Government had raised money at large discounts, because they had been obliged to do so. The right hon. Gentleman stated that he wished to introduce some fixed principle for the regulation of these undertakings; but he doubted whether the Railway Commissioners, or Parliament itself, could effect this. As to the means of raising capital, it must be left to the discretion of the company how to obtain it. He recollected that in an early stage of these undertakings, one of the companies with which he was, though only recently connected, had had the utmost difficulty in procuring money. The directors constantly and repeatedly put themselves to the greatest inconvenience to attain this object; and had they not done so, many of those works, from which the public were now deriving benefit and enjoyment, would have been stopped or suspended. When the late Government, by the then Vice President of the Board of Trade (Mr. Gladstone), introduced their former Railway Bill—which he had hoped was a settlement of a great question, but he was disappointed, and so were many hon. Gentlemen, for there was scarcely an hon. Gentleman in that House who did not think he had some plan from which he could benefit the public by interfering with railways in some manner or other—the question of loans to the companies was most ably and fairly discussed and considered in all its bearings; and the conclusion come to was that they ought to be limited to the means Parliament had given them to raise the money. There was scarcely a company which had not provided for the liquidation of its debts. He had taken an early opportunity, after the last Session, seeing that the prospects of the money market were not so good as they had been, of revising the whole of his debt connected with almost every company in which he was engaged; and shares had been issued, and the capital raised, to provide for the liquidation of those debts. He (Mr. Hudson) would not have the right hon. Gentleman alarm himself about the means of meeting those engagements. From a large experience, and from the calls he had been obliged to make on a large constituency, he found that the calls were never so well paid, or so punctually, as at present, since he had had any acquaintance with railway matters. He had had occasion to call for something like 3,000,000l. within the last two or three months, and he had never known the calls so punctually paid as they had been up to the last week. It was a serious responsibility on that House to see that the proposed lines were not merely speculative, that the public were protected, and that the shareholders had a sufficient remuneration for their capital: he hoped Government, having done this, would not interfere further, for the less Government interfered in railway matters, the better it would be for the public, for the House, and for the undertakings. The right hon. Gentleman objected to the guarantee fund; but he contended it was impossible to dispense with this power. In 1841 it was difficult, if not impossible, to borrow money: persons could not be induced to take shares in a railway, even though 6 per cent were offered to them from the date when they paid their money. He could speak to that fact, for he had to travel, as it were, from door to door to get parties to advance their money to go on with the railways. At that time 6 per cent was no inducement to capitalists, even though five or six principal companies were ready to guarantee the repayment. He merely stated the facts, for the purpose of showing the House the position in which those undertakings had been, and the difficulties they had had to contend with. If they were to be carried out, proper inducements must be held out to the capitalists of this country to embark their money in them; and he knew from experience that a great many parties were embarking money in them from a belief that they would be secure and profitable undertakings, thereby inducing money from foreign countries to come and assist in the execution of great works in this country. But if they discouraged the moneyed interest, they might rely on it that France was quite ready to find employment for it, and would guarantee any amount of capital from this country. He would therefore warn the House to be careful how they interfered with the private enterprise of this great country. Such interference would end in a way disastrous to the Government, injurious to the public, and destructive to the interests of the shareholders.

MR. ELLICE

assured the hon. Gentleman, that he did not intend to express any opinion on guarantees, or to place any restrictions on capital. His only object was, that the various propositions now before the House, based as they were on conflicting principles, should receive a good previous examination from some responsible board before they went to Committees of that House, in each of which there might be a different opinion.

SIR R. H. INGLIS

had fully understood, before the explanation of his right hon. Friend, that the question now before the House was not one of the solvency or insolvency of this or that company; but the great principle whether that House would or would not delegate part of its jurisdiction to a tribunal independent of itself. He apprehended that the resolution now before them proposed to attain in another form such a department as they had two years before in the Railway Department of the Board of Trade. It came to the same thing, though the individuals forming the Commission at present consisted of persons one of whom had a seat in that House, and who possessed means of giving effect to their recommendations. Practically, the House would receive from that board much such a report as they had two years ago from the Railway Department of the Board of Trade, containing certain statistics as to the amount of capital and other qualifications of the particular measure. He felt it his duty to take this opportunity of bearing his willing testimony to the merits of the Railway Department of the Board of Trade, which, he thought, were very much underrated. He saw no objection to the proposition; and his object in rising had been chiefly to bear his testimony to those who in a former Session had been unfairly undervalued.

LORD J. RUSSELL

could see no obstacle to the House adopting the proposition brought forward by the right hon. Gentleman. It might be found very useful if such a report as the right hon. Gentleman referred to were made to the Committees sitting on Railway Bills. As his right hon. Friend had stated, it was not proposed that any comparisons should be instituted between competing lines, but that a report should be made with regard to the general principle of borrowing money by way of loans, and that information on these and other matters should be brought under the attention of Committees by the Commissioners, so that the latter might be able to point out what they thought should be the general rule observed by the Committees in the discharge of their duties. He trusted that the adoption of the course now proposed, would not lead to the delay of any of those measures which were at present before the House. He thought it was of importance that Railway Bills should have full consideration before coming before the Committees of the House, and, as he did not see that any inconvenience would result from it, he agreed to the proposition of the right hon. Gentleman.

Resolutions agreed to, as were the two others.

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