RESTRICTIONS UPON RAILWAY SPECULATION.

HC Deb 14 May 1847 vol 92 cc821-54

MR. HUME

rose to move the following Resolution:— That in every Bill to enable a Railroad Company which, by any Act or Acts of Parliament, is now authorized to construct, purchase, or take on lease any Line or Lines of Railroad to raise additional capital by shares, loan, or mortgage, for the completion or extension of such Line or Lines of Railroads, or for the purchase, or taking on lease, or amalgamation with any other Railroad or Canal, a Clause shall be introduced, providing that the Company shall not raise such capital until it has realized the whole of the capital which by existing Acts it is authorized to raise, or so much thereof as is sufficient for the completion of the works, or for other objects sanctioned by Parliament. This Motion he proposed with a view to putting an end to the practices commonly adopted by railway companies, who, having obtained power to raise capital, what- ever the amount might be, ought not to be at liberty to apply for a second credit to raise additional money until the first credit was exhausted. He wished to compel every railway company to call up the whole of its first credit before it attempted to raise additional capital by other means. Speculation in railways was now extending itself to such a degree as to place in danger all the institutions of the country. He could not have believed, indeed, that railway speculation could have been carried out in so reckless a manner as it had been. There was no correct account of the amount sanctioned by Parliament to be raised within the last two years. A return, however, made to an order of the House of Lords, gave an account of the capital stock authorized to be raised during that period; and, although the aggregate of this amount was enormous, yet he found that the London and North Western, the Manchester and Leeds, the Midland, the Manchester and Bolton, the North Wales, and several other railways, made no return, and their names did not appear in the tables before him. Within the last two years the aggregate amount authorized by Parliament to be raised as capital stock was 124,586,054l. The total amount actually paid up was 28,320,023l., and the amount left to be paid was 96,266,031l. The amount authorized to be borrowed under these Acts was 40,305,093l. It was impossible to say what amount would be laid out in railways this year and next under the Acts passed; but an estimate had been made by an intelligent man, who said that all the capital sanctioned under the Acts passed during the last two Sessions ought to be laid out by the end of 1849 or the middle of 1850. The expenditure on account of railways could not be much less than the immense amount of 1,250,000?. per week. A return, No. 168, of the present Session, signed by Frederick Bruce, Secretary to the Railway Commission, placed the amount of capital proposed to be raised by Railway Bills introduced during the present Session at 82,553,150l., which with 41,000,000l. authorized to be borrowed, made a total of 123,867,259?. proposed to be expended on railways by Bills brought in during the present Session. This sum, added to the 164,000,000? authorized to be raised and borrowed by the Bills of the last two Sessions, made an aggregate sum which it was frightful to look at. No doubt a good many of the Bills lodged with the Railway Board at the be- ginning of the present Session had since been thrown out. But still, looking at the immense amount which remained, the danger which threatened the manufacturing interest, and the reckless manner in which the money was proposed to be raised, he did not believe that the country would be able, if these railways were constructed, to borrow money to carry on any of the ordinary operations of commerce. A large portion of the capital of this country was based on credit, which had been so shaken, that it would be almost an act of self-preservation to put an end to any further advances on account of railways. It was, at any rate, the duty of the House to put as strong a check upon this expenditure as possible. If they allowed it to proceed, it would endanger the credit of the Exchequer itself, for the Chancellor of the Exchequer could not flatter himself that the returns for the next October and December quarters would be equal to those of the last two quarters, and then his right hon. Friend would be compelled to have recourse to extraordinary means. It was not right for the Government to depend upon any bank for money wherewith to pay the public dividends. At this moment they were liable to have an expenditure of about 300,000,000l. during the present year on account of railways—an amount perfectly terrific. The country was now placed under peculiar circumstances, in consequence of the famine in Ireland, and the abstraction of capital to the amount of 10,000,000l. for food. Taken in connexion with the high price of corn, he did not believe that all the accumulated power of the country would be able, at the end of the year, to realize capital to warrant so large an investment as he had mentioned. It would have been better if the House had interfered last year; but it was bound under the present circumstances of the country to lose no time in averting the evil. It was said that gold was returning to this country; but the House could not calculate that any large amount would be placed to the credit of this country. The irregularities committed by the directors of many railways deserved notice. He had in his hand a Liverpool share list, dated May 6, from which might be seen the complicated manner in which the affairs of railways were kept by the creation of various kinds of shares. Many of the railways had from six to twelve different descriptions of shares, and it was utterly impossible to understand what ought to be intelligible to every one. He, from practice, could look into accounts as well as most of his neighbours; but he confessed that the railways quite beat him. If a railway were estimated to cost 1,000,000l., and half the sum were paid up, the company had liberty to borrow one-third of the amount, or 33 per cent, wherewith to complete it. If they were desirous to extend their line, and they wanted another million for that purpose, he was anxious that the company should be compelled to call up the balance of the first million before they proceeded to raise money for the second undertaking. In the same manner he proposed that no company should be allowed to lease or sell any other line until the whole capital should be subscribed and one-half paid up. The South Eastern Company, besides their first capital and their bond debt of one-third, had four supplementary capitals, numbered in the share lists as Nos. 1, 2, 3, 4. Each capital was represented by shares of varying amounts, so that No. 1 was a share of 32l., which, when paid up, would reckon as a 50l. share; No. 2 was a share of 33l. 6s. 8d., to be reckoned as 50l.; No. 3 was a share of 30l., to be reckoned as 50l.; and No. 4 was a 15l. share, to form a half 50l. share when paid up. On No. 1, 20l. was paid; on No. 2, 12l.; on No. 3, 15l.; and, on No. 4, 5l.;. was paid up. The London and North Western had also three or four capitals of a supplementary description, and the London and South Western had two or three; but these latter were now called up. Why should Parliament allow all this complication of shares and capitals to take place? Why did not the companies, before they called a second loan, pay up all the first? In the share list to which he had alluded, he found that the London and North Western Railway had ten different descriptions of capitals, and the Midland no less than twelve. In a report of the Commissioners on Railway Bills, they stated with regard to the South Eastern Company, that, by twenty Acts of Parliament passed since 1836, that company received power to raise a capital of 6,415,033l., and to borrow 2,218,710l., making finally a capital stock of 8,633,743l., The South Eastern Company applied for eight additional Bills in the present Session, which, if passed, would give them power to raise additional capital to the extent of 3,025,750l., and to borrow 1,007,810l. Before this power was given, why should not the balance upon their former shares be called up? The bor- rowing transactions of this company had amounted to 2,014,177.; of which 1,348,844l. had been obtained on mortgage, and 665,333l. on loan notes. For the capital required for six of the Bills, viz., 1,990,000l., subscription contracts to the amount of three-fourths of the different sums, each signed by eight directors, had been deposited, each director having thus signed to the amount of about 186,000?. Now, Parliament clearly intended to have the security of bonâ fide men; but it was clearly understood that these directors had only signed on behalf of the company, and this was a manifest evasion of the rules of the House. What Parliament wanted was, not paper men, but bullion men. The deposit of 10 per cent, which the House required, had, it appeared, been paid out of the funds of the company; and the directors were not to be called upon for the sums for which they appeared as liable under their contract deeds. The report of the Railway Commissioners stated that the Glasgow, Paisley, Kilmarnock, and Ayr Railway had, in a similar manner, evaded the intention of the Legislature. They were authorized to raise 1,916,500l. of capital, and to borrow 638,066l. They had issued 86,557 shares of 50l., 40l., 12l., 10l., and 25l., by which means 1,222,487l. had been already raised, and there remained 1,332,062l. to be raised. The company had borrowed 622,365l. upon loan, and they had paid off in part 304,290l. Under the Act 9 and 10 Victoria, the Kilmarnock and Troon Railway was leased to the Glasgow, Paisley, Kilmarnock, and Ayr Railway Company for 999 years; and the Glasgow, Dumfries, and Carlisle Railway Company, and the Glasgow and Belfast Union Railway Company, were also incorporated with the Glasgow, Paisley, Kilmarnock, and Ayr Company. The Glasgow and Ayr Company had subscribed 96,929l. to the Glasgow, Dumfries, and Carlisle Railway, 4,911l. to the Paisley and Renfrew Railway, and 7,900l. to the Paisley, Barrhead, and Hurlet Railway; and the subscription contracts deposited by the former company, in compliance with the Standing Orders of that House, for seven of the Bills promoted by that company, had been signed by ten directors and one officer of the company for 2,300,000l. in sums varying from 30,000l.. to 267,000l.. The whole subscription of the company was only 1,500,000l., and yet here were eleven persons subscribing 2,300,000l. in sums of from 30,000l. to 260,000l. Now, although his countrymen were said to have some brass about them, this exceeded all he had ever heard of them. The Glasgow, Dumfries, and Carlisle Railway Company was incorporated in 1836, and was authorized to raise a capital of 1,300,000l., and to borrow 433,000l., making together 1,733,000l. The subscription capital was created by the issue of 52,000 shares of 25l. each, upon which a call of 5l. a share had been made, and 243,000l. received, 17,000l. remaining to be paid on the calls. The subscription contracts for three of the Bills promoted by the Glasgow and Carlisle Company had been signed on behalf of the company by eight directors and the secretary; the directors having each signed for 174,000l., and the secretary for 168,000l., The paid-up capital of the Glasgow, Paisley, Kilmarnock, and Ayr Company, amounted at present to 1,222,487l.; that of the Glasgow, Dumfries, and Carlisle Company, 243,000l.; making together the sum of 1,465,487l. The amount proposed to be raised by capital and loans under the Bills of this Session was, in the case of the first of these companies, 3,532,500l., and in that of the other, 2,866,600l.; being together, 6,399,100l.; and the only guarantee offered for this large increase of capital was the subscription of the directors to the contract deed on behalf of the company. He was sorry to find that the nefarious proceedings—for he could apply no other term to them—of these companies had been assisted by some of the chartered banks of Scotland. When that House required a deposit of 10 per cent on the amount of the subscription contract from all English and Scotch railways, it was thought by some persons that it was very hard upon the Scotch people to compel them to send their deposits to London; and it was therefore enacted, that in Scotland the deposits should be paid into the Court of Exchequer, or into any chartered bank, in the name of the Queen's Remembrancer. The Commissioners observed, that it had been stated that the Parliamentary deposits had not, in these cases, been paid out of the funds of the companies, but that they had been paid by the directors themselves; and on inquiry they found that— The funds out of which the deposit was made were raised by the individual subscribers, and were advanced on their personal responsibility by the National Bank, to whom they granted bills for the amount. This, then, it appeared, was the mode in which the public were deceived. On this subject the Commissioners made the following remark:— Whatever may be the precise state of the facts in this case, it has occurred to the Commissioners, in considering the transaction, that there is some reason to fear that, under the present practice in Scotland, means might, in some cases, be found of evading the Standing Order which requires a deposit to be made of 10 per cent on the amount of the subscription contract. Since this opinion was given by the Commissioners, it had been stated as a fact that the chartered banks had, in some cases, transferred the amount required to the name of the Queen's Remembrancer, on the payment of a per centage. The Commissioners stated that in England the money was required to be deposited in the Bank of England, in the name of the Accountant General of the Court of Chancery; and he (Mr. Hume) did not think his hon. Friend near him (Mr. Pattison) would sanction a receipt being given for money by that Bank unless it had actually been paid. [Mr. PATTISON: Certainly not.] The Commissioners further stated— In Scotland it is required to be deposited with the Court of Exchequer, and may be paid into any chartered bank in the name of the Queen's Remembrancer. At the end of the Session, on the production of a certificate, either that the Bill has been passed, or that it has been rejected, the money is to be returned to the depositors. There can be no doubt that the Directors of the Bank of England usually require either the actual payment of the money, or the deposit of an equivalent Government security, as allowed by the Act. But, supposing that the directors of one of the chartered banks in Scotland—on the application of the promoters of a railway, and on the payment of a commission and the deposit of a bill, or otherwise—consent to place the required sum to the credit of such promoters in their books, and then to transfer it to the name of the Queen's Remembranber of the Court of Exchequer, it is evident by this means the object of the Standing Order would be evaded, as no money would be required to be raised. In fact, the whole transaction would be merely nominal, as the Bank would, from the first, have reason to be perfectly secure that the money could never be called for, and at the end of the Session they would return the Bill and close the account. There were some other matters connected with these companies to which he might think it his duty on some future occasion to call the attention of the House, but he would not enter into them at present. Here they had two companies, figuring not very creditably, from the mode in which they had attempted to evade the rules of that House; and he thought no one would defend the conduct of the National Bank of Scotland, which had en- abled them to effect that evasion. But he would now call the attention of the House to another report of the Commissioners of Railways with regard to several projected railways in the neighbourhood of Bury St. Edmund's. This case, he thought, was stronger than the one he had just mentioned, and the facts were these: the Ipswich and Bury St. Edmund's Railway Company sought to obtain six Bills, by which they proposed to obtain power to increase their capital to 2,150,000l., and to borrow 716,664l., making their total capital upwards of 2,800,000l. Now, he would ask the House to consider in what condition that company was to apply for these six Bills? By the Acts of 1845 and 1846 the company was authorized to raise 950,000l., and to borrow 316,666l. making together 1,266,666l. The share capital had been created by the issue of 16,000 shares of 25l. each, under the Act of 1845; and by the issue of 22,000 shares of the same value under the Act of last Session. On those first issued, calls to the extent of 14l. per share, or for 224,000l.,. had been made, and 204,305l. received; and on the shares last issued, 5l. per share, or 110,000l., had been called for, and 91,700l. had been received. The whole capital called up, therefore, was 334,000l. No money had been borrowed under the Act of 1846. The power of borrowing had been exercised under the Act of 1845. The company had at present power to call up 616,000l. on the shares, and to borrow 183,333l. The subscription contracts for these Bills, deposited in compliance with the Standing Orders, had no signatures attached except those of thirteen directors of the company. The amount of those subscription contracts was 1,612,500l., so that each director had on an average signed for 124,000l. It is admitted," observed the Commissioners, "that those directors have not signed on their own account, but only on behalf of the company, and with a distinct understanding among themselves that they are never to be called upon for any portion of their subscriptions, and that the proposed new works are not to proceed unless the funds can be procured from other sources. It is also stated that the deposits required by the Standing Orders were paid for out of the funds of the company. The Commissioners then went on to say— Under these circumstances, they seek powers from Parliament in the present Session to raise an additional capital of 2,150,000l., and loans to the amount of 716,600l.; making together 2,866,664l., a sum little short of ten times the amount of capital which the shareholders have at present contributed towards the hitherto in- complete undertaking authorized by their former Acts. Now, he (Mr. Hume) would ask the House whether such a state of things as this ought to be permitted to exist? He would be extremely sorry if any resolution adopted by the House on this subject should subject any honest railway companies, which had real capital, to inconvenience; but he considered that any measure taken by the House must be general in order to be effective. The Commissioners, alluding to the application of the company for powers to raise an additional capital of 2,150,000l., observed, at the conclusion of their report— In addition to the important considerations regarding the interests of the public which are suggested by such a proposal, the interests of the present creditors of the company appear to be very materially concerned in it. They have lent their money under the sanction of an Act of Parliament, on the security of a comparatively limited undertaking; but by the present proposal they evidently would find that security involved with undertakings of a much more extensive character, which, of course, could not have been contemplated by them at the time when they lent their money on the credit of the original works. He might adduce other examples of the same kind, but he thought those which he had mentioned would at least induce the House to pause before they passed any other Railway Bills. This step might seem harsh towards some companies; but it appeared to him most important that some measure should be taken to cheek the system he had referred to. He thought, under the melancholy circumstances in which Ireland was now placed, and considering also the high price of food in this country, and the difficulty manufacturers experienced in carrying on the manufactures which employed vast numbers of the people, that utter ruin must ensue if they allowed men to indulge in these wild speculations after the statements made by the Commissioners. He could scarcely have believed that such transactions as he had detailed could have been carried on so openly as they had been. He was not acquainted with any of the persons engaged in those transactions, but he strongly condemned the system; he considered Parliament most blameable for permitting its existence; and if they allowed its continuance they would be responsible for the consequences. He considered that the proposition he was submitting to the House was so fair and moderate, that no serious objection could be raised to it. The hon. Gentleman concluded by moving his resolution.

MR. J. A. SMITH

rose to second the resolution, and said: Sir, I think the House is under great obligation to the hon. Member for drawing attention to this subject. It is not my intention to follow the hon. Gentleman through that long catalogue of errors, of mistakes, or of misconduct, which he has charged against sundry railway companies; but it appears to me that the hon. Member has shown that there is a state of things existing with regard to railway legislation at present which demands the most serious attention of the House. I think, also, that if the statements of the hon. Member for Montrose are correct, he has not gone far enough in his Motion; and, without intending to raise that question which has so lately and so justly received the attention of the House, as to the cause of the existing monetary distress, I think no one will deny that a strain upon the capital of the country, occasioned by the necessary payments upon railroads, must form a most important subject for consideration at the present moment. I therefore hope that the resolution proposed by the hon. Member for Montrose may elicit from the House and from the Government some opinion as to the propriety of proceeding with the Railway Bills now before Parliament. It does not appear necessary with this view that I should go into the question of the misconduct of the railways to which the hon. Member for Montrose has adverted, or of that misconduct which the hon. Member has, or rather the Commissioners of Railways have, charged against some of them. It is enough for me to bear in mind, that the amount of capital still to be paid in respect to railways, under Acts of Parliament passed during the last Session, exceeds 96,000,000l., and that, in the present Session, powers have been asked by Bills before Parliament to raise capital the amount of which exceeds 47,000,000l. [An Hon. MEMBER: 82,000,000l.] Well, 82,000,000l.; I thought it had been 47,000,000l. In the present state of the country, with the vast calls necessarily made upon us for the supply of food for the population, and with the uncertainty which must attend the future, it is most seriously deserving the attention of the House and the Government whether it is not now time to stop. No person, I hope, will charge me with being unfavourable to railways, or with being insensible to the vast social benefits accruing from them. Still less am I unaware of the vast saving they produce in the commercial transactions of the country. Nothing is further from my intention in anything I may state than placing any obstacles in the way of the reasonable, rational, and proper progress of the railway system. But I conscientiously fear that the capital of this country, in the present state of affairs, cannot bear any such extreme and excessive strain as that to which it is now exposed; and I do most earnestly hope that, without perhaps extending to all railway projects an entire stoppage this year—making, I mean, such exceptions as the public wants and requirements in certain cases may justify—yet, I repeat, I earnestly hope that the House will consider whether, with the reservation I have mentioned, the Railway Bills now before Parliament ought not to be suspended for this Session. I do not think I should be justified in saying more on the present occasion; but I hope that the few words which I have spoken will answer the purpose— the only purpose—I have in view, which is to draw from other hon. Members an expression of opinion on this important subject, and to induce also the Government to state what their feelings, opinions, and intentions are, on a point which concerns not only the welfare of the public at large, but the real and well-considered interests of the railways themselves.

COLONEL SIBTHORP

was always consistent in the course which he had taken with regard to railways, and would therefore support the Motion. He was quite aware of the nefarious transactions which had been carried on by railways; and he would ask why it was that the hon. Member for Montrose had not come forward earlier and joined him in his efforts to restrain the tide of railway corruption? He had always foretold what would happen—but even at the eleventh hour let them attempt at all events to render the system fair and aboveboard.

MR. HUDSON

was not about to follow the hon. Gentleman the Member for Montrose through all the details which he had offered to the House on the effect of railways upon the currency of this country. During the course of the evening there would be a more fitting opportunity for the discussion of that question. Still, he was anxious to say a few words on the Motion which had been submitted to the House. During the speech of the hon. Gentleman opposite, he certainly had sat under some fear and trembling, that, considering the large amount of capital, and the great extent of railway mileage, entrusted to his (Mr. Hudson's) care, the hon. Gentleman might have pointed out some extensive errors and faults in his system of management. He had, however, been relieved to find that nothing of the sort was attempted. He would, then, simply address himself to the general principle of the measure. The object of the hon. Gentleman's Motion was to stop the outlay of capital upon railroads—[Mr. HUME: No, no!] Or to put some limitation upon it. [Several MEMBERS: No, no!] That, surely, was the object of the seconder of the Motion.

MR. J. A. SMITH

explained, that he had not said one word as regarded the outlay on railways now established, or empowered by law to be constructed. His observations had reference to the expediency or inexpediency of granting at the present moment fresh powers by law for the raising of capital for that purpose.

MR. HUDSON

Or, in other words, to allow those districts which had obtained railway communication to continue to enjoy a monopoly, and to doom those districts which were now ready with their money for the construction of railways, to remain under the disadvantages which now pressed upon them in consequence of the want of those means of communication. That was the object of the Motion. The money of the railways was expended on the labour and the property of the country; and if Parliament were to interfere in the matter, it ought in consistency to carry out the principle. Might it not just as well interfere in other branches of industry, and say, "You shan't construct a certain number of houses in London—you shall not embark your capital in new iron works, collieries, or other similar undertakings?" Why, by pursuing such a course, they would put a stop to the trade of the country altogether, and throw multitudes now enjoying a comfortable competency into a state of hopeless poverty and distress. He contended that the people of this country had a right to dispose of their capital as they pleased. He might lay out his in one way—his neighbour might dispose of his in another. But what was the result of employing capital on railroads? Why, the fact was, that the railroads of the country employed a greater number of people than the manufacturing districts did. From a return which he held in his hand, it appeared that there were upwards of 50,000 men employed upon the lines over which he had the honour to preside—50,000 men receiving good wages. If hon. Members meant to say that money should not be applied in that way, let them declare so by a direct vote; but let them not by a side-wind, like the present Motion, endeavour to obstruct the flow of capital in respect to the construction of railways. He thought that the proposed resolution was open to many grave and serious objections, though it would not affect any company with which he was connected. In reference to different classes of shares, he stated that in the course of operations those different classes were necessarily called into existence, and were afterwards consolidated into stock; and he thought that there was no difficulty in keeping an account of that kind. The hon. Member for Montrose had made some strong observations on the course which certain railway companies had pursued; and he (Mr. Hudson) confessed that he had seen with some alarm the mode of proceeding adopted by some incipient companies with no funds. But that was the fault of Parliament in enabling those companies so to act. It was not the fault of the railway system, and Parliament had perfect power to check such proceedings. He had seen Committees passing Bills which perfectly astonished him; but he might have been told, for any remonstrance which he might have made, that he was an interested party—that he was connected with other lines—and that it was his interest to prevent competition. But there was a higher interest than a merely personal one, and he trusted that he had kept that in view—namely, the desire to place those undertakings on a solid foundation, and to induce people to invest money in this country rather than in any foreign schemes. The fault was, that Parliament had not properly looked to the financial condition of the different parties applying to them. He thought the proposed resolution required a great deal of consideration as to whether it should be adopted or not; and at a future period he trusted to be able to convince the House that the employment resulting from the railway system enabled people to live better. It then became a serious consideration whether or not they would stop legitimate undertakings. Consider what an amount of saving had been effected by the railway system in favour of the manufacturers, the poor, the farmers, and all classes of society. Railways could not be constructed unless money were collected for the purpose; and why should this money be deposited in banks, rather than expended in useful undertakings? If there had not been railways, the money of the people might have been expended in wild schemes, or invested in some profitless South American bonds, instead of being expended in this country; the amount laid out on railways during the last two years being 40,000,000l. The monetary difficulty of the country was not owing to the railway system, but to bad harvests; and if there had been good harvests for the last two years, he believed that there would be now no monetary difficulty.

LORD HARRY VANE

explained that neither the hon. Member for Montrose nor the honourable seconder of the Motion had objected to continuing the operations on railroads already constructed; neither did they wish to put any barriers in the way of the legitimate flow of capital towards railroad enterprise. The hon. Member for Sunderland admitted that he wished to see none but legitimate undertakings receive the sanction of Parliament; and it was with this view also that the hon. Member for Montrose had proposed his resolution. For his own part, he did think that some restraint over and above those already applied, was necessary. The amount of capital proposed this year to be raised by several of these railway companies was of a most startling kind. With respect to the tribunals to which the Bills were submitted, he thought it impossible that any one of the various Committees should be able to decide on the question of capital, inasmuch as these different proposed lines were placed in different groups. These Committees might be left to judge of the merits of the different schemes, and the question of capital might be referred to a Special Committee, to report whether the undertakings were within the intentions of Parliament. The question to be decided was, whether Parliament would allow companies without any direct funds, by means of their directors, to sign for large sums to be raised nobody knew how, in order to get possession of certain districts of country. Some such regulation as that now proposed was absolutely necessary in the financial state of the country; but perhaps this regulation would hardly be sufficient. It was a most objectionable thing that the House sanctioned, when it allowed interest to be paid upon calls. It might be impossible to alter the system with respect to schemes already passed; but with respect to all now before Parliament it would be highly desirable that it should be declared, that the parties would not be allowed to take interest on the calls proposed to be made. That would be a legitimate mode of interposing.

MR. ELLICE

felt that the statement just made by the noble Lord, corroborated all that he had endeavoured hitherto to impress upon the House. This great question of the construction of railways, and the investment of enormous capital in them, had been abandoned by the authority which ought to have controlled it—the Government of the country—and thrown loose upon the discretion of Committees consisting of a few Members of the House, differing in opinion with respect to the principles upon which they should make their report. All the subjects now under discussion were considered by the Committee of which he was chairman last year; but they felt it quite impossible—a Committee of five—to decide upon important questions involving interests which affected large classes of the people. The Committee reported distinctly to the House, however, the facts which had come before them; facts perfectly astounding; transactions which he could not individually have sanctioned; and the Committee reported their recommendation that some general rules and principles should be adopted for the guidance of Committees, which recommendation remained a dead letter upon the Table of the House, and was utterly neglected by the late Administration, and he was afraid he must add by the present. He took especial pains, when that report was laid on the Table, to call the attention of the right hon. Gentleman opposite, the then Vice-President of the Board of Trade (Sir G. Clerk) to the subject, by sending him a copy of the report, and expressing to him an opinion that it ought not to be laid on the Table, and the Bills to which it related read a third time, without some opinion being expressed by the Government upon the matter; but no notice whatever was taken of that communication, and no opinion was expressed upon the report. After the accession of the present Government, the attention of the President of the Board of Trade, under that Government, was called by him to these Bills, which had then gone up to the House of Lords; but he believed a communication was received from the Chairman of Committees in the House of Lords, to the effect that the Bills had then passed so far that it was too late to interfere. Surely, however, there were sufficient grounds laid in that report for some general recommendation to have been given to Parliament upon the subject this year. The report stated that it was impossible for any Committee to come to a decision upon questions affecting capital, and affecting the manner of raising money under these Bills, which questions might be decided by a different Committee in another way. In the beginning of this Session he thought it his duty, seeing that the system begun in the last and preceding Sessions was about to be persevered in, to call the attention of the House to the subject again; and as it was impossible, so various as well as contradictory were the details of the different Bills introduced, to know exactly those details, he prevailed on the House to arrange that every such Bill should be referred to the Railway Commissioners, in order that a report should be laid before each Committee, containing an account of all the monetary concerns of any company applying for other powers, and the opinion of the Board, not only with respect to the propriety of granting those powers, but with respect to the manner in which powers formerly granted had been exercised by them. It had been said that impediments had been thrown in the way of the progress of these Bills, by the Railway Commissioners not preparing their reports with sufficient expedition. He (Mr. Ellice) could perfectly understand the difficulties which must have been in the way of his right hon. Friend in the examination of such intricate subjects, and had understood from him that while the companies complained that impediments had been thrown in their way, those impediments had been entirely and always owing to their own fault; that they had been backward in many instances in sending in their reports at all, and that many of the reports had been found deficient upon inspection, and the Board had been obliged to send them back for correction; and, at last, when the Commissioners were able to make their reports, it was discovered that in almost every case there were certain transactions, which not only justified the House in remitting this subject to them for examination, but which absolutely required the Government to interpose, by laying down some general principle upon which the monetary con- cerns of these companies should be regulated. As yet, however, the House had seen no such regulation. There was one subject which, whatever course might be taken with respect to other points, it was impossible to enforce too strongly upon the attention of the House. In almost every one of these cases—he believed, indeed, the exception was where an attempt had been made bonâ, fide to comply with the Standing Orders with respect to capital—the general rule had been for the parties applying in this Session for extensions of their existing powers, or for powers to construct new railroads, to evade openly the Standing Orders of the House with respect to capital. Scarcely in any case had a subscription contract, signed by the parties, and binding them and their heirs and executors, according to the Standing Orders, been submitted to a Committee. Now, whatever course might be taken with respect to the Railroad Bills now before the House, whether those resolutions of the hon. Member were to be carried, or whether the Government desired to have an opportunity of reflecting upon what passed in the House that night—and it was a subject requiring reflection before any determination was taken—at all events, one decision ought to be come to by the House, that the spirit and intention of that Standing Order should not be evaded, and that no Bill should pass the House in future where there was not a subscription contract signed bonâ fide by shareholders having paid a deposit, binding their heirs and assigns to fulfil that contract; and that the House would no longer submit to directors nominally signing contracts, and taking money out of funds appropriated to other purposes, fictitiously to create a deposit for the purpose of new Bills. The case to which the hon. Member (Mr. Hume) called the attention of the House, with respect to the Scotch banks, had escaped his (Mr. Ellice's) attention; but anything so disgraceful or so monstrous he should have thought could not have been resorted to. With regard to the statement of the right hon. Gentleman opposite (Mr. Hudson), he entirely agreed in the great advantage of these stupendous undertakings to the country, and had never expressed an opinion unfavourable to them; there was no encouragement which he was not willing to give them, consistent with common prudence, and with the principles upon which such undertakings could alone proceed with security. And the hon. Gentle- man who seconded this Motion must not be misrepresented; he did not propose to take any measure which should stop the progress of the works on any railway; and if it should so happen, unfortunately, that in consequence of the indiscretion of any companies and of excess of speculation, their means should fall short, and parties should be thrown out of employment, that must not be attributed to anything suggested by the hon. Member. The right hon. Gentleman had asked why we should obstruct or endeavour to regulate the application of capital to this pursuit any more than to others; and, on the general principle, he quite agreed with him, and indeed was an advocate for entire free trade, which he feared was more than the right hon. Gentleman was. But the right hon. Gentleman and his Friends came to Parliament for incorporation and for great powers to borrow money; and an individual could not come to Parliament to borrow money upon limited responsibility—that was given as a great act of favour, and an especial indulgence to these companies; and it was rightly given, in the first instance, to encourage these undertakings in the outset; but it was a very different question when the railroad undertaking had succeeded, and when it was no longer doubtful whether it would be a profitable investment for capital, whether Parliament should be so liberal in giving powers to these corporations to borrow money. He had been of opinion—and he was not sure whether he did not mention it to the right hon. Gentleman last year—that the proper check then would have been, while allowing these companies to raise as much capital as they liked, to carry into operation their great undertakings, to put a limitation upon their power to borrow money; and certainly a stop should be put to the practice, most injurious both to the subscribers and the public, of giving them power to pay interest out of capital. If those two restrictions had been made last year—if the power of borrowing money had been withheld, and the power of paying interest out of capital, before profit had been derived from the undertaking, a stop might have been put to nearly all that was an abuse in this system. The time had now arrived when the necessity of the case compelled the interference of the House; and that interference should take place as much as possible with the consent of the great railroad interests themselves. The right hon. Gentleman himself had admitted that he had arrived at a conviction that we could not go on with the system as at present pursued. [Mr. HUDSON: I spoke only of the abuses of it.] A railroad system properly conducted must be allowed to be one of the most advantageous undertakings ever begun in this country; the only quarrel was with its abuses. The right hon. Gentleman admitted there were such. The Government must be aware that it was no longer possible to let this great affair loose upon Committees without some regulation to guide them; and the time was probably not far distant when the right hon. Gentleman himself would thank the Government for interfering. What he (Mr. Ellice) should recommend would be, that this debate should be adjourned, to give time for consideration as to the course to be pursued. The companies themselves were understood to be quite of opinion that something should be done with respect to the progress of the Bills this Session; and, after communication with the Government, some settlement of the question might surely be arrived at, which might give security to the shareholders and to the creditors of railways, that, going on at the present rate, would require such security, and which might also give some assurance to the public that these transactions would no longer be permitted so to interfere with the monetary condition of the country, as at all events to aggravate its difficulties at such times as the present.

MR. R. HODGSON

considered that it would be very unjust if Parliament by a resolution at this period of the Session were to interfere with the progress of Bills which had complied with the Standing Orders. Let the House, if it pleased, communicate its sentiments to the various Committees, and induce them to throw out the Bills one by one upon their merits, if they could, but not put a wholesale stop to them without investigation. He should suggest to the hon. Member for Montrose the expediency of withdrawing the resolution. The impression of the hon. Gentleman in regard to railway companies was not consistent with fact; as in the instance of the Glasgow and Ayr Company, of which he (Mr. Hodgson) was himself a shareholder. The whole amount which that company was allowed to raise was 1,275,000l., out of which 1,250,000l. had been paid. Did the hon. Member for Montrose mean to say that, a small balance yet remaining unpaid, that company should be precluded from applying to Parliament for power to extend its operations by the construction of branch lines?

MR. MANGLES

thought it would be well to refer the question involved in the Motion to the consideration of a Committee before adopting any decided step regarding it. The object of every Member of that House must be to remove abuse, without interposing any check to legitimate enterprise. He thought there was some misunderstanding in the House with respect to the position of railway companies. The noble Lord the Member for South Durham had spoken of the difficulties which such companies had to contend with; but he was not aware that, generally speaking, there were any peculiar difficulties in existence. The noble Lord had spoken of the South Western Railway Company, and he was glad to see the chairman of that company (Mr. Chaplin) present in the House. That Gentleman was much better acquainted with the affairs of the South Western Company than he was; but this he could say, that, so far as the pecuniary affairs of that company were concerned, they were in the hands of the ablest financial men that he was acquainted with. He did not think that the right hon. Gentleman the Member for Coventry, in recommending that a limitation should be placed on the power to borrow money hitherto accorded to railway companies, had looked at the question in all its bearings. He must know that as regarded financial matters there were two classes quite distinct from each other. There were the capitalists who became shareholders, and who ran all the risks of the undertaking; and there were those who ran no risk, but who invested their money because they received from railway companies a higher interest than they could otherwise realize. He would ask what right the right hon. Member for Coventry or the House had to interfere with the free action of the parties possessed of capital, and who laid it out at interest with railway companies? Had the House heard any complaint from those parties of having been overreached or defrauded? He trusted the House would pause and consider well before adopting any such resolution as that now proposed?

MR. CHAPLIN

begged, as one of the culprits arraigned on the present occasion, to express his conviction that their position, were it more intimately known, ought to secure for them the favourable consideration of hon. Gentlemen, rather than expose them to a vote of censure. There was nothing, indeed, which he could desire more heartily than that hon. Members should have a twelvemonth's "spell" of duty as chairmen of boards of railway directors. Those concerned in the management were in a position which "patient merit" could scarcely bear. With regard to the South Western, they had at the outset to raise their capital at a very large discount, and they did not feel themselves justified in launching forth into now schemes like other more prosperous companies. When the hon. Member for Guild-ford invited them to form a branch line, they resolved to wait a year; but a separate company started the Richmond Railway, which they then purchased. The atmospheric line projected to Epsom was started under noble auspices, under the auspices of Earl Grey. And what had been the result? The papers were at this moment teeming with advertisements that it was now to be opened with locomotives. The company with which he was connected had from the commencement always evinced a desire to execute a line towards Exeter; but Lord Dalhousie's Railway Board thought, after due investigation, that the route might be dispensed with. In consequence of their report, the company withdrew their application, and resolved to delay till greater necessity for the line should be shown. What was the result? The inhabitants filled the place of the company, came forward with subscriptions, and commenced a project which the company would have had to take off the hands of its projectors. Again, with regard to a line from Richmond to Windsor, though they had been charged with going too fast, what was the real state of the case? Last year an atmospheric scheme was started, and also another scheme; and though both fell to the ground, it would be seen how circumstances tended to force a company into applications which, if left to itself, it would be disposed to delay. The South Western company had waited patiently, but were driven into the adoption of the line. There were many difficulties which railway companies had to encounter, for which, not the Government, but the Legislature might be blamed. Schemes and plans were produced, and the companies never from one day to another knew to what they might be subjected. There was one subject on which they did agree, and that was in hailing the prospect of grouse shooting; when hon. Gentlemen left their Committee-rooms and railway directors saw their backs the latter had some hope of repose. The hon. Member for Chichester (Mr. J. A. Smith) said he had not been concerned in railways; but it might he asked, whether he had taken part in the late loan? The Railways Bill of the hon. Member for Derby (Mr. Strutt) had not yet been disposed of; but it was most desirable that the House should come to a satisfactory understanding as to what should be done with regard to the Bills proposed this Session; for the want of some definite arrangement on the subject only weakened the confidence of the public in railway enterprise at a time when public credit was so much shaken. In conclusion the hon. Gentleman was understood to state that the effect of such a Motion as the present, if adopted, might be to jeopardize the whole railway interest; but he had no confidence while that House was sitting that measures having such a tendency would not be adopted.

LORD J. RUSSELL

I cannot think it would be wise in the hon. Member for Montrose to press his resolution in the present instance. It certainly appears to me upon any consideration I can give to that resolution, and so far as I can see the effects of it, that it would not be prudent for the House to come to a general resolution, expressed in strict terms, when the practical effects of such a measure cannot be before the House, and must in many instances be very inconvenient. I mean, inconvenient to the public at largo. I take a case which was put by an hon. Member. There may be a branch line about to be made, and yet the main line may not be in such a state of completion as, having regard to all its expenditure, to be entitled to make that branch. Is it requisite that the operations in regard to the branch line should be suspended until the whole expenditure on the main line has been exhausted, and that the power of making that branch line should be given only to another independent company? I own I think that there might be practical inconveniences—that whatever its advantages the resolution has counterbalancing disadvantages—that it will not meet those very evils which have been pointed out with so much force by the hon. Gentleman himself. It might be expedient that the House should come to some further resolution, especially after what has been stated by the hon. Member for Sunderland; yet, I do hope we shall not fall into error, that from being too lax in giving our sanction to railway speculation we shall suddenly take an opposite line; endeavouring to check a most advantageous and wholesome application of the capital of the country. I cannot agree with the hon. Member for Coventry (Mr. Ellice) if he says that a considerable time ago the House ought to have required measures to be taken for that purpose, and the late Government ought to have interposed and placed a greater control over railway enterprise. It appears to me that this is a speculation which requires the sanction of this House, and ought, therefore, to be the subject of debate and discussion in Committee; but the application of the capital of this country, the disposal of the surplus property of trade and commerce, is a matter entirely beyond the control of this House, and might take place quite independently of any resolution of this House. I remember the time, and it is not a great while ago, when I heard bankers complaining that they had a great quantity of money lying on their hands, for which they could not get two per cent. I remember also a further time, when there was a good deal of money sent to South America, when large sums were invested in the State stock of those not very honest and not very stable republics; that at other times great sums of money were invested in schemes for the improvement of certain harbours, canals, and various other public works in North America; and that, in some cases, our debtors in North America were not more prompt in answering the expectations of those who lent them money than in the South. If we had in the beginning interfered, and said we should put a check and a control upon railway enterprise, the consequence would have been, not that we should have prevented improvident speculation, but that improvident speculation would have taken another direction; and that some such wild and useless adventures as had been entered into in former times would have been entered into again—everybody lamenting that such improvident speculation should take place, but which, nevertheless, would have gone on without the sanction of this House being required. I do not agree in thinking that it should be a necessary consequence, that because a party comes before Parliament seeking its sanction to some enterprise, therefore Parliament should put a certain check upon the enterprise of that party. I think that that should be regulated by certain rules and regulations—for instance, no one will deny that in the case of a railway being proposed between Manchester and Liverpool, and it was evident that there was sufficient capital to execute it— no one would deny that such a railway should be made. There were other cases of less obvious importance, but still they might be such as to show that a railway ought to be made. But still it is possible there may be cases in which you may say that the capital of this country having been applied by Act of Parliament to a great amount to certain railway speculations, you are of opinion that certain other railway speculations should not be entered into, because the result would be that those speculations could not be carried into effect, and must end in the ruin of the persons who undertook them—that they could not be carried into effect without causing very great distress in the first instance, and probably would never be carried into effect at all. It appears to me that this course of argument should be listened to with great caution—that while you obviously cannot put a stop to other speculations, it is only with great doubt and caution you should listen to this argument for interfering with railway speculations. But cases have been put by the hon. Member for Montrose, and others by the right hon. Gentleman opposite (Mr. Hudson), both agreeing in the general statement, where this House and the other House of Parliament, by their laxity, have connived in some instances at the violation of the bonâ fide intentions of the Standing Orders of the two Houses—cases where in order to insure that only speculations of a bonâ fide character should be entered into, and that by persons who had capital to carry them into effect, certain conditions had been laid down—which conditions had frequently been evaded—that where 10 per cent has been required to be lodged in the Bank before applying to Parliament, there had not been I per cent so lodged. The right hon. Gentleman opposite mentioned a case where several millions had been engaged to be employed in a particular railway without the prospect of the parties having capital to the extent of so many thousands. Other cases had been mentioned where a guarantee had been given for the payment of interest on certain railways which had been undertaken; while at the same time they could not have paid 5s. per share. In cases of this kind it is fit that Parliament should be more strict and more careful than hitherto to put a check to such abuses. How that can most effectually be done, I do not wish to give any opinion at the present moment. I think it, however, a matter which deserves the utmost consideration. It is sufficiently obvious, from the experience we have had that the mere appointment of a Select Committee of five Members of this House is not a sufficient security. It may be that each Committee sitting independently may feel that the responsibility does not rest with them, but on Parliament; and that, on the other hand, Parliament may consider that they need not trouble themselves on the subject, as the Committee had no doubt considered the matter; and that, therefore, between the two no proper investigation may be made. It is right, therefore, that we should endeavour to see that we have greater security against abuses than we at present possess. I shall end by saying, that I hope my hon. Friend (Mr. Hume) will not press his resolution. I do see very considerable objections to it. I do not say that, after the consideration of another day or two, I might not give my consent to the resolution as it now stands. It may be proper that, either by means of inquiry by a Committee, or by a resolution, we should take some further security for the proper regulation of railway enterprise; but I would say, that when we take further security for the proper regulation of railway enterprise, it ought not to be taken in the direction of checking the application of capital to railways. For my own part, I believe that they are very advantageous to the country—that their advantages are so great that we do not know at present what their ultimate end may be. They are very likely to have been profitable to those who have undertaken them, if, as the right hon. Gentleman has stated, a capital of 80,000,000l. has produced a return of nearly 9,000,000l. a year; but it is not with a view of checking this kind of enterprise, which I think highly beneficial to the country, and in which the individuals engaged in them may likewise gain a fair and profitable reward for their exertions— it is not with that view, but with the view which was indicated by the right hon. Gentleman the Member for Coventry (Mr. Ellice), namely, of cutting off and pruning the abuses—of checking the inroad of a spirit of wild speculation which always attaches itself to schemes of commercial enterprise—it is with that view, and not with the view of checking enterprise itself, that I am disposed to enter into any regulations on the subject.

MR. W. R. COLLETT

was glad to hear the recommendation of the noble Lord that the resolution should not be pressed—the more so because it was not necessary at the present time. It appeared there were few new projects on foot this year in England, still less in Scotland, and none at all in Ireland. The House had interfered with this question a little too frequently, and there was no knowing from one year to another what they were going to do about railways. Last year they had decided the narrow gauge should not extend beyond a certain degree southwards; but now this decision was evaded with impunity. He hoped they would hear no more of the threatened Railway Bill. The country had its hands quite full enough of railways at present—the banks were sick of them. He hoped the House would look with great caution before they encouraged more railways, but at the same time he trusted the resolution then before them would not be pressed.

LORD G. BENTINCK

said, that his noble Friend (Lord J. Russell) had omitted one reason why they should not consent to this resolution, and that was, that its mover, the hon. Member for Montrose, and its seconder, the hon. Member for Chichester, both concurred in expressing great doubts whether the resolution was intelligible. He entirely concurred with them that it was totally unintelligible. He did not refer to the latter portion, which said that no railway company shall sell the line of any other railway company. He did not know that any company could propose to sell the line of another company. His remark referred to the main resolution itself. He understood that many other individuals did not understand the exact purport of that resolution; and he confessed, for one, that it was not intelligible to him. But he gathered from it that, for example, the line to Galway could not have been made unless the entire capital originally subscribed for the Midland and Great Western (Ireland) Railway had been paid up. The hon. Member had said something in his speech to the effect that no railway company should be permitted to enter upon a second credit until the first was exhausted. That was certainly a singular commercial proposition; for if a company had exhausted its credit, it would, he feared, find some difficulty in embarking in a fresh loan; and it was, therefore, somewhat unnecessary to provide for cases of this kind. The South Western Railway also would never have been completed if that resolution had formerly been enforced. He apprehended that that company got into great difficulties; and if they had not had the power of raising new shares, they could never have proceeded with the works. When his noble Friend spoke of speculations in North American and Mexican mines, he might also have remembered the remarkable speculation of the Greek loan, in which the hon. Member for Montrose, he believed, had some shares. He thought it far better that they should leave speculation to take its own course in this country in the construction of railway works, and in the improvement of communication at home, than in throwing obstructions in the way of such schemes, and encouraging English capital to embark either in Greek loans or Spanish loans, in which he had reason to know this country had lost 70,000,000l. within twenty-five years. It was sometimes charged against him that he was a monopolist; but he thought the parties who introduced this Motion were monopolists. He was for free trade at home; there was something like class interest lurking here. The hon. Member for Chichester did not like to see the scrip for the new loan depreciated. [Mr. J. A. SMITH: I have nothing to do with the loan in any shape whatever.] He confessed that he, for one, considered that this inroad upon the free employment of capital invested in railways, had, in point of fact, in it a great deal of the spirit of monopoly; he considered that the resolutions would be exceedingly mischievous if they should in any way have the effect of checking speculations in railways, and sending capital abroad. He believed that a large quantity of English capital had lately been embarked in the Paris and Rouen Railway; that though 20 per cent was required to be paid up, the capital had been subscribed fifteen times over, in fifteen different companies, and that one half the constituency of each company consisted of English capitalists. He thought it far better that English capital should be employed at home, than that it should be embarked in French or any other foreign railways. He felt certain, that if they insisted upon imposing restrictions upon the outlay of English capital, the effect would not be to prevent people from speculating who had money to lend; for, so long as the interest of money was at no more than 3 per cent, which it was in August last, they might depend upon it that people would not be content with the 3 per cent Consols, but would seek to employ it where they would meet with a greater return.

The CHANCELLOR OF THE EXCHEQUER

thought that the hon. Member for Montrose would do well to take the advice which had been given him to postpone the discussion. At the same time he thought the discussion which had taken place was likely to produce some benefit to the country, as well as to those who were interested in railways. From all parts of the House there had been a general concurrence of opinion, not only as to the advantages of railroads to this country, and as to the importance of investing capital at home in place of abroad, but there was also a general concurrence of opinion that, in the present system of railroad legislation, there were several abuses to which they ought to apply a remedy. The principal blame of these did not so much rest on railway directors as on Parliamentary Committees. Looking, then, at the question in the several aspects which it presented, he was sure that hon. Gentlemen generally would agree with him when he said that the House ought to turn its attention to the subject, with the view of devising some plan to obviate the difficulties which had furnished matter of complaint. It was true, that much consideration had already been bestowed upon the subject; but it was equally true that no practical good had yet resulted. Although he thought it would be exceedingly unwise to go to the full extent that some persons recommended, yet he could by no means omit to notice the attempts frequently made by many parties to evade the Standing Orders. There were two points before the House—one relating to the evasion of the Standing Orders, the other to the general principles of railway legislation; and he must take the liberty of saying that the manner in which some Committees had passed Railway Bills was exceedingly lax, especially when they so passed them in opposition to the reports of the Railway Commissioners. At the same time, he did not think it at all desirable that the Motion of his hon. Friend the Member for Montrose should be altogether abandoned; he did not desire to see it put an end to; he merely hoped that it would be postponed for some time. It must be regarded as most laudable, though at this moment it would, perhaps, not be expedient to press it. He, for one, would be quite willing at a future time to consider the proposition which the hon. Gentleman had made. In the meantime, he thought it would be very advantageous if hon. Gentlemen would communicate with each other and with the Government; and the Government would, no doubt, be perfectly willing to lend its aid in carrying into effect any plan which afforded the prospect of remedying the evils that had given rise to the just and natural complaints that the House had just heard. He thought it might be advantageous to appoint a small Committee, and refer the whole question to their consideration. The resolutions which the hon. Member for Montrose moved might also be referred to such a Committee; but whether they adopted that course or any other, he recommended that the present discussion be postponed, either by adjourning the debate or withdrawing the resolutions, for a time.

MR. HENLEY

defended the conduct of the Committees up stairs on the subject of those Scotch railways to which allusion had been made. The evasions of the Standing Orders had been allowed by the examiners, and not by the Committees; and the latter were quite justified in supposing, when those Bills came before them, that all the provisions of the Standing Orders had been duly complied with, or that they would have received a report to the contrary effect from the examiners.

MR. MORRISON

observed, it was quite manifest that for some time past there had been in this country very large sums withdrawn from the purposes to which capital was ordinarily devoted, for the purpose of carrying out the various railway schemes which within the last few years had been projected. The sum of 28,000,000l. was required for railways, to be drawn from the floating capital of the country. The last two years had been years of business and saving; but the present was one of the least prosperous which had occurred for a considerable period. It was quite absurd to talk of their being able to construct one-half of the lines for which Bills had been obtained from the House. Whether they passed Bills to the extent of 500,000,000l. or 50,000,000l., was now of no consequence. Vast sums of money had already been sunk, and the floating capital of the country had therefore been very greatly diminished. Unhappily, also, that capital yet remained unprofitable; and at the very time when that great amount of capital was withdrawn from the customary uses of trade and manufactures, a sudden and severe demand came upon the country to provide for the relief of Ireland; and he feared it would soon be necessary to make great sacrifices to relieve the people of England. No rational man doubted that the great extent of railways projected could never be executed. The thing was impossible, and at the same time absurd. Half the lines for which Bills had been passed could never be constructed. The House had chosen to confer certain privileges on certain railway companies, and the result was, that the employment of capital in those lines offered a larger amount of profit than the employment of the same capital in any other way; and if the parties engaged in railway schemes offered a greater interest than other speculators were willing to pay, it was obvious that money must rise in the market to a very high rate of interest, and then how were the manufacturers of the country to go on? The interest of the money employed as capital constituted the chief costs of manufactured articles—all small manufacturers carried on business by means of borrowed capital. He conceived that was a state of things which would soon demand from Parliament very decisive remedial measures; and it appeared to him that a remedy could only be found in preventing too great an increase in the sums paid for the use of capital; it would, therefore, he thought, be highly expedient to place such restrictions on future railways as would, by diminishing their profits, deprive them of all motive to pay large premiums for the use of capital. He rejoiced that the present Motion had been made; for he believed that the discussion would produce much good.

MR. HORSMAN

observed, that the right hon. Member for Tamworth had, on a former occasion, urged the necessity of placing restrictions upon future railway companies; and every one knew that of late the demand for supplies of capital had become more pressing than ever. He understood that the Government were now about to take a course which he much regretted that they had not long ago adopted, and that was, to exercise an efficient superintendence over railway legislation. For the present, however, he thought that the hon. Member for Montrose could not do better than to withdraw his resolutions; at the same time, he thought that the discussion to which those resolutions gave rise, would prove advantageous to the House and the country.

MR. NEWDEGATE

was not in the least disposed to deny that the amount of money invested in railways was enormously large, but he rose to protest against the doctrine propounded by the hon. Member for Inverness (Mr. Morrison). He thought it monstrous for any Gentleman to declare that the House ought so to cripple the profits, the transactions, and the movements of existing as well as future companies as to drive the capital into other channels. He thought that would be a most monstrous proposition from any one; but for the hon. Member, who professed himself to be a free-trader, to assert such a principle as that was beyond everything he had ever heard. He thought no honest free-trader could have propounded such a doctrine.

MR. MORRISON

explained that he did not refer to Bills already passed, and was surprised that the hon. Gentleman should have supposed that he could have intended his remarks to apply to existing companies.

MR. NEWDEGATE

understood the hon. Member to say that the only way to prevent so much capital being diverted from the manufactures of the country was for the Legislature to diminish the attractions of railways by preventing them from realizing such large profits. If he misrepresented what the hon. Gentleman had said, he begged his pardon; but he protested most strongly against the principle of interfering with the national investment of capital.

MR. MORRISON

again explained. He had said that the profits on railway capital should not be larger than on capital employed in any other way.

MR. MITCHELL

thought the loss of 20,000,000l. by the failure of the crops was an unavoidable evil, but one which the resources of the country could easily have borne, and he was therefore of opinion that the cause of the present distress was extravagant and improvident railway speculations. The fact was, that with the exception of that spent by the labourers in exciseable articles, by which the revenue was benefited, all the money laid out in railways was sunk, or at least taken from the working resources of the country. The whole of the capital was sunk, for there was nothing available but the dividend when the line was finished. What was the real operation of this loss of capital? Why, that the manufacturer was obliged to decrease his imports of the raw material. When a manufacturer was giving his order for the raw material in ordinary times, he reckoned that a bill of a certain date would be available, and gave his orders accordingly; but now he said to himself, "We have had the dire calamity of a failure in the crops, we have the expenditure of a million a week in railways, and this will make it difficult to obtain discounts;" and instead of purchasing his usual quantity, he only ordered one half. This was what every prudent man would do; and it would be found at the end of the year, all the imports of the raw material, by the manufacture of which the people were to be maintained, and the foreign corn dealer paid, would be shorter than was ever before known. So much alarmed were the merchants of London and the manufacturers of the country, that the House might depend no more would be imported than they were certain of having cash to pay for; and the only thing left next year to send in payment for the raw material would be railway scrip. Would the hon. Member for Sunderland (Mr. Hudson), or the noble Lord opposite (Lord G. Bentinck), guarantee that the countries from which they had to look for supplies of the necessaries of life, would take railway scrip? If they could not do that, he could not see how the raw material or supplies of food could be procured.

MR. STUART

said, that the hon. Member for Inverness was of opinion that in consequence of railway speculation manufacturers with a small or borrowed capital must suffer, and that that state of things ought to be corrected. The mode in which the hon. Gentleman proposed to reduce this mischief—and the hon. Member for Warwickshire (Mr. Newdegate) was not at all mistaken in what he stated—was by the interference of the Legislature—to bring down the profits of railways to a certain level. Why, what was the ordinary notion of free trade? His notion was that every man was to be allowed to use his capital in the most advantageous manner; and that that capital should thus find its way into every description of profitable employment. Why then did the hon. Gentleman, who was a free-trader, wish to legislate to protect the interests of the cotton manufacturers at the expense of the railways? He always thought that hon. Gentlemen who voted for the Corn Bill did so with a view to direct the employment of capital in such a way as to suit themselves; and now the hon. Member for Inverness distinctly proposed legislative interference to prevent the employment of capital in a particular way, because it did not meet the interests of the cotton manufacturers. He could not see the consistency of this with the theory of free trade, neither could he agree with the argument of the hon. Member for Bridport that the employment of capital on railways did no more than pay the wages of the labourers, and fill the coffers of the Chancellor of the Exchequer by the consumption of exciseable articles. With regard to the Motion of the hon. Member for Montrose, he thought the wisest course would be to withdraw it.

MR. TRELAWNY

supported the views of the hon. Member for Bridport, that all the money used in the construction of railroads was so much extracted from the general capital of the country, and sunk.

MR. AINSWORTH

expressed the greatest surprise at hearing such a doctrine. Did not the hon. Members for Bridport (Mr. Mitchell) and Tavistock (Mr. Trelawny) say that the money laid out in railroads employed the people of their own country, the produce of their own country, and the capital of their own country? Indeed, the amount of indirect employment, such as in the coal and iron mines, was as great as that of constructing the roads and locomotives. He trusted no impediments would be thrown in the way of capital being laid out in railways on a fair and just principle.

MR. HUME

was not at all surprised at the speeches of the hon. Members for Bolton (Mr. Ainsworth) and of Newark (Mr. Stuart), for they did not appear to understand the question at all. He entirely agreed with the hon. Members for Bridport and Tavistock. The hon. Gentleman opposite did not understand what free trade was. He, as a free-trader, objected to privileges being given to any class; and if he could show that one single railway in this country, the proprietors of which had laid out 4,000,000l. in its construction, and who put into their pockets, besides 10 per cent interest on the outlay, bonuses to the amount of 3,900,000l., he thought no one would doubt that the railways enjoyed privileges. He knew that railroads were first established under great disadvantages; that they were opposed by the landowners, and that advances of capital were hard to be obtained; and he did not say a word against a proper return to these rail- ways. He never had done so, and on that ground he complained of the noble Lord the Member for Lynn perverting his argument. The noble Lord had been rather facetious on the subject of credit; but of course as the noble Lord had formerly been otherwise employed, he could not be expected to know much of credit. Thus the noble Lord picked out a word in the resolution which a school-boy would see was a misprint. He believed that the noble Lord knew nothing of the question. He should not take the advice of those who recommended the withdrawal of the Motion, but of the hon. Member for Sunderland (Mr. Hudson), who wished it to be postponed, as the great interests affected by it had not had time to consider the question. He would be the last man in the world to refuse to capital its fair and legitimate use; but there were great abuses of the powers given by Parliament. The hon. Member for Sunderland admitted that there were the greatest abuses. Then his hon. Friend the gallant Colonel asked why had he not taken moans to stop these abuses before? Nine years ago he had attempted to take the sense of the House on the subject, and to prevent dividends being paid out of capital; and on the assurance that Government would look to it, he had let the matter stand over. But Government never had attended to it—and they never would if the House did not take it up. This resolution was printed last year, and submitted to the House, and had now been printed and in the hands of the President of the Railway Board from the beginning of the present Session, and therefore he was not to blame for the delay. All he wanted was to stop abuses, and he was by no means satisfied with that discussion. The noble Lord at the head of the Government had made a speech which convinced him that nothing would be done till next year. He liked the speech of the Chancellor of the Exchequer better, and agreed with him that it might be necessary to go still further than the restriction mentioned in the resolution. He concluded by consenting to postpone, the discussion for a week.

Debate adjourned until Friday.