§ The CHANCELLOR of THE EXCHEQUER
rose, pursuant to notice, to move for leave to bring in a Bill to extend the time for the purchase of land and completion of the works by railway companies. He said: If the debate on the first night of the Session had taken that direction which I expected it would in all probability have taken, it would have been my duty then not only to have stated to the House the reasons which induced the Government to take the course they have done, but also to have stated the view which they have formed of the causes of the commercial pressure. Among those causes I certainly should have included the great absorption of capital by the demands of railway companies. In stating this, I do not mean to say that that has been the only, or, perhaps, the principal cause. I do not wish on the present occasion to ask any person to give up his opinion as to other causes to which he may attribute the pressure; but it always is a great mistake to attribute any great result to one single cause; and 229 all I ask of hon. Gentlemen who may entertain opinions different from mine is, that for this night they should admit nothing more than that the absorption of capital by railway companies is one of those causes which have contributed to deprive the commercial world of the amount of accommodation which it previously enjoyed. It would have been more satisfactory to me if I had been enabled to state to the House the whole case at once; but, inasmuch as it is desirable that no time should be lost in introducing this Bill into Parliament, it is not a matter of choice, but of necessity, that I take this portion of the case independently and separately, The point to which I wish to call the attention of hon. Gentlemen is the inconvenience sustained by persons in commerce, by the abstraction of an amount of capital which, in my opinion, has been too rapidly converted from floating capital into fixed capital. I do not know that any Gentleman will deny that the floating capital of the country is employed mainly in carrying on the ordinary operations of agriculture and commerce. The surplus and available capital is employed in the further development of agriculture and commerce, in the erection of buildings required from one end of the country to the other, and in the construction of permanent works, including docks and railways, contributing ultimately to the wealth and improvement of the country. But if floating capital is too rapidly converted into fixed capital, pressure must arise on those who before enjoyed the advantage of the floating capital. I am so far from entertaining any feelings hostile to railways, that probably no one conceives a higher idea than myself of the advantage they will ultimately prove to the country; but, in saying that the floating capital which is constantly turned over from time to time is employed in reproduction, and that that which is sunk in the promotion of permanent works, docks, or railroads, however ultimately beneficial such application of money may prove, for some time only pays an annual interest, and does not immediately contribute to reproduction, and that, in the meantime, a great absorption of money for these purposes causes a pressure on the available capital of the country—I am stating nothing but what I believe common consent allows. I will illustrate the point by a familiar example: Suppose a large farmer, in conducting his farming operations, em- 230 ploys 10,000l. on his farm, such sum being necessary for the payment of labour and for the purchase of the means of carrying on his farm, and, having a surplus of l,000l. beyond, employs that sum in draining or in some permanent improvement. So long as he employs in the latter way that which he has above what is necessary for carrying on the ordinary purposes of his farm, all prospers; but if he abstracts that which is necessary to carry on the ordinary concerns of the farm, then, however beneficial the drainage of his farm may ultimately be, no one can deny that during the process the ordinary operations of the farm will be crippled. It is the same case with the manufacturer. He may have a certain amount of capital necessary to carry on his trade, for the purchase of raw material, and for the payment of labour; but if he finds it necessary to introduce improved machinery, and if, for that purpose, he abstracts from the capital necessary to carry on the ordinary operations of his concern, then, however beneficial the improved machinery may be in the end, no one can deny that during the time of the temporary abstraction of capital great inconvenience may be experienced. Now, I apprehend that which is true of individuals is equally true of the whole community; and if the whole community chooses to convert floating capital into fixed capital with too great rapidity, it must follow that the capital available for general mercantile and manufacturing purposes will be diminished for a time; and during the period of this diminution persons who are engaged in mercantile and manufacturing pursuits must, so to speak, be pinched in the means for carrying on their operations. I apprehend that, for some time past, this process has been going on to a greater or less extent in this country. So long as the demand for capital for the construction of railways was not heavy, adequate means were available for carrying on the ordinary commercial operations of the country—a fair amount being vested annually in the construction of railways; but, after a time, the demand for capital for the purpose of forming railroads became too large, and the natural consequence was—as we have seen—that for the last year and a half there has been a considerable rise in the rate of interest. When parties were competing with each other—when railroad companies, on the one hand, were borrowing money to a 231 large extent, and the commercial world, on the other hand, required more capital than they possessed, the effect of this competition was to raise the rate of interest, and the supply of capital was not equal to the demand. I do not know that I can state the effect of such a state of things better than in the words of a very able article which appeared in the Economist last Saturday. If the noble Lord the Member for Lynn think the statement not correct, he will probably be able to show the House in what respect it is inaccurate. I certainly cannot express my views better than in the language of this article, and I shall therefore take the liberty of reading it to the House. The writer states that a certain document might be obtained, which would show—"that a large portion of the capital which was disposable for commercial purposes through bank credit at the former period, had in the mean time become absorbed in railways; that the country bankers, therefore, have not now the same enormous funds to dispose of; that the bill brokers are therefore without the same means to re-discount the bills of other country bankers, and are wholly unable to make advances on dock warrants or bills of lading; and that commerce is thus deprived of the means which were formerly at its disposal in consequence of the new distribution of the capital of the country.Certainly, from all the sources of information which have been at my command, I believe that to be a faithful account of the process that has been going on; and I also believe it to have been one of the causes which produced the distress under which the commercial world has lately been suffering. I may say further, that this is not an opinion which I formed after the commercial pressure arose. It is known to many hon. Gentlemen—certainly to the Members of the late Government—that Mr. Porter, who was formerly engaged in the Railway Department of the Board of Trade, but whom the present Government have had great pleasure in placing in a higher position, represented to the Government at the end of 1845 that the demands of the railway companies were increasing so rapidly that he believed they would abstract so large a portion of the capital required for commercial purposes, that considerable commercial pressure and distress must before long be produced. That opinion was expressed a year and a half before the pressure occurred; and I think it affords sufficient proof that those who were most conversant with the facts, and had ample means for forming their opinion before the pressure took place, concur in the views which 232 I have expressed. I believe I have given an accurate statement of the course of events; and I will now proceed to show, from such documents as I have in my possession, the extent to which the demand for capital for railway projects was carried. I will only premise that it is perfectly impossible to attain any very minute accuracy in the accounts of railway expenditure; for the accounts are so complicated, owing to the number of bills authorising the transfer of capital from one project to another, that it is impossible to make any accurate statement within 1,000,000l. or 2,000,000l. I believe, however, that the statements I am about to make are generally correct. It may be interesting to the House to know the amounts authorised by Parliament to be raised for the construction of railways, and the sums which have been actually expended. The first statement to which I shall call the attention of the House was drawn up by Mr. Porter, and gives an account of the sums to be raised, under the authority of Parliament, for the formation of railways. I believe that, previously to 1826, not more than a million and a half of money had been expended upon railways under the authority of Parliament. From 1826 to 1835 Parliament authorised the raising of about 19,000,000l. for the construction of railways; in 1836 and 1837, which were years of commercial prosperity, upwards of 36,000,000l. were authorised to be raised for the same purpose. The distress which occurred about that time seems to have had the effect of checking, to a considerable extent, the disposition to apply for Railroad Bills; and in the course of the next six years a comparatively small number of such Bills was passed. In 1844 and 1845 Parliament authorised the raising of 74,000,0002. for the construction of railways. The railway mania attained its height in 1845; and in 1846 no less than 800 plans for railways were submitted to the Railway Board, and in that year the amount of expenditure sanctioned by Bills which received the assent of Parliament was no less than 132,000,000l. The total expenditure authorised between 1826 and 1846, for the construction of railways, was 286,000,000l., by far the greater portion of which expenditure was sanctioned during the last three years. The amount authorised by Parliament to be expended upon railways in the Session of 1847 was upwards of 38,000,000l. The sums I have mentioned are those which Parliament authorised to be raised; and I do not mean 233 to say that they represent the amount actually expended upon the construction of railways. The noble Member for Lynn (Lord G. Bentinck) stated very truly the other night, that the money expended in the purchase of land and in Parliamentary expenses could not be considered as abstracted from the available capital of the country. Mr. Porter estimates one-fifth of the whole amount for the purchase of land and for Parliamentary expenses; but after allowing for these, there remained at the end of 1846, a future outlay of 145,000,000?., and to this is to be added the expenditure sanctioned in 1847, which I before stated at 38,000,000l. I hold in my hand a statement, drawn up by the Railway Board, showing, as nearly as can be ascertained, the expenditure authorised by Railway Bills which have received the sanction of Parliament in each year since 1840. The amounts are as follows:—In 1840, 4,000,000l..; 1841, 3,500,000l.; 1842, 6,000,000l.; 1843, 4,500,000l.; 1844,18,000,000l.; 1845, 59,000,000l.; 1846, 124,500,000l.; 1847, 38,300,000l.;. These are the sums authorised to be expended upon the purchase of land, the construction of works, and in Parliamentary expenses in each year, in addition to the expenditure sanctioned in former years. The noble Member for Lynn (Lord Gr. Bentinck), in his speech the other night, stated the amount which had been expended upon railways; but the conclusion drawn by the noble Lord was calculated to lead the House into grave error as to the years in which that expenditure took place, because, by dividing the whole amount by the number of years in which it had been raised, it was made to appear that there had been no considerable increase of expenditure in recent years, but that it had been equally distributed over the whole period. That, however, is very far from having been the case. The noble Lord stated that the total amount of expenditure, divided by the number of years, had not exceeded 12,500,000l. a year; but that statement does not afford the slightest notion of the actual expenditure in each year. The House will see, from the statement I am about to make, and which has been drawn up with great care, that the expenditure has very considerably increased within the last two years; and that it has recently borne most heavily upon the resources of the country, and latterly with a gradually increasing pressure. The statement I am about to make is, to a certain degree, an 234 estimate formed upon the average expenditure, so far as it can be ascertained; but I have every reason to believe that it is generally accurate. It appears from this statement, that the railway expenditure in 1841 was 1,470,000l.; in 1842, 2,980,000l.; in 1843, 4,435,000l.; in 1844, 6,105,000l.; in the first half-year of 1845, 3,510,000l.; in the second half-year of 1845, 10,625,000l.; in the first half-year of 1846, 9,815,000l.; in the second half-year of 1846, 26,670,000l.; and in the first half-year of 1847, 25,770,000l. Now I wish to show the House some grounds for thinking that this statement is pretty nearly accurate. The noble Member for Lynn stated the other night, that the amount expended upon railways between 1841 and 1846, including both those years, had been 50,000,000l. Now, the amount estimated by the Railway Board to have been expended in the same period is 65,000,000l.; including the purchase of land and Parliamentary expenses; and, deducting one-fifth of this amount for Parliamentary expenses and the purchase of land, the annual expenditure appears to be about 52,000,000l. This statement, therefore, very nearly corresponds with that of the noble Lord. With regard to the last eighteen months, the estimate of the Railway Board gives a little above 62,000,000l. as the amount expended from January, 1846, to the last autumn; and I find from the half-yearly statements made by the different railway companies that their expenditure appears to be a few hundred thousand pounds above 62,000,000l. I think I have shown, then, that, on these two points, the calculation made by the Railway Board is by no means excessive; and, from this circumstance, I conceive it may be inferred that the statement is generally accurate. I have shown that of late years the expenditure upon railways has gone on increasing in a most extraordinary manner; and that, whereas for a considerable time the demands of railway companies were not excessive, from the midsummer of 1846 those demands did become excessive, and increased in a most extraordinary degree, and that from that time to this they have been pressing in a most unexampled manner upon the available capital of the country. With regard to the last half-year of 1847, the case is somewhat different, because I believe it has not been quite so easy to borrow money or to extract the calls from the pockets of 235 the shareholders. But an estimate of the expenditure, which has gradually increased from 1841 to 1846, has been made up to the year 1850; and it appears, that if the expenditure had gone on in the same ratio, it would have amounted, upon Acts already passed, to 64,000,000l. this year, of which 38,000,000l. would have been in the last half of the year; in l848 to70,000,000l. in l849 to47,000,000l.; and in l850to 10,000,000l. By that time, judging from the speed at which railway works have hitherto been constructed, the whole of the works already in progress would have been completed. It must be remembered, that this drain of capital was contemporaneous with a scarcity of corn. I do not wish now to enter into this part of the question, because I shall have to do so on an early occasion; but I may observe that the demand for the available capital of the country has rapidly increased, within the last two or three years, to an extent out of all proportion to what it had been in former years; and that, even supposing no other causes than those I have mentioned had been in operation, they are amply sufficient to account for a very considerable pressure upon the commercial world. That pressure has been strongly represented to me from many parts of the kingdom, and especially from the manufacturing districts, as most prejudicial to their interests; and I think the House will agree with me that, if it is possible to diminish that pressure by retarding the completion of railway works, or spreading their construction over a longer period of time, we shall confer great benefit upon the country. Some of the representations which have been made to me indicated a much stronger course than I have thought it advisable to pursue. No sooner had I come to town, than letters were addressed to my noble Friend (Lord J. Russell) and myself, urging the adoption of some measure for putting an instant stop to railway works altogether. They recommended that an Order in Council should be issued; that Parliament should be called together; indeed, there was scarcely any measure, however strong, which we were not recommended to take. I need hardly say that we did not think it advisable to adopt any of these courses; and, on the best consideration we could give to the subject, we were of opinion that we ought not to recommend any compulsory measures. The Bill, therefore, which I am now about to propose, is not of a compulsory nature. When we came to 236 consider the number of contracts existing, the number of labourers employed by the contractors, the engagements which have been entered into with manufacturers of various kinds, and the number of persons whose employment depends in one way or other on the progress of railway works, we arrived at the conclusion that it would be exceedingly injudicious to propose any compulsory measures. The object, therefore, of the Bill which I am about to propose to the House is to give to the railway companies an extension of time for the purchase of land and the completion of their works. Railway Acts generally require that the land shall be purchased within a certain time, and the companies are therefore compelled to raise a considerable portion of their capital as fast as they can. I think it would be exceedingly wise to release them from that obligation. But there is another class of railroads with regard to which I think we may take stronger measures. I propose, with reference to those railways which are in course of construction, to do no more than to relieve the companies from the obligation of buying the land, or completing the Works, within the time prescribed. I propose to give the landowners a claim to compensation for any additional injury they may sustain in consequence of the delay in the purchase of their land. The postponement of purchase is to be a voluntary act off the part of the companies, and we shall provide that the landlords shall not be injured by such postponement. [Lord Gr. BENTINCK: In what way are the damages to be assessed?] In precisely the same Way in which damages are now assessed in any case of damage sustained by parties entitled to compensation. But with regard to those railways where the Works have not been commenced, stronger measures may be taken, though still to be of the nature of voluntary proceedings. I propose to extend in their case the period for the purchase of land and the completion of the works; but I propose also that the directors shall not be authorised to commence the construction of works without the consent of a certain proportion of the shareholders. They are the persons by whom the calls are to be paid, and I think it very desirable to give them a more effective control over the directors. I propose, therefore, to enact that the directors of any company whose works have not been commenced on the day when this Bill is introduced, shall not be empowered to pro- 237 ceed with the construction of the works without the previous consent of a certain proportion of the shareholders. These are the only provisions in the Bill I propose to introduce. I may as well, however, here state the object which I have in view in the Motion of which I have given notice, for a Committee on Railway Bills of this Session. I propose that a Committee should be appointed with regard to those Railway Bills which were suspended last Session, and those which may be introduced in this Session; my object is, that all such Bills should be referred either to a Committee of this House or to the Railway Board—I myself think it should be a Committee of this House—to consider which of those Bills should be allowed to go on. It is obvious that there may be many of those Bills which propose only deviations or the construction of small extensions, greatly for the convenience of the public, but not calling for a great amount of capital, and involving no material additional drain upon the resources of the country, and it may be extremely desirable that these should be passed into laws; but I must say I think the House will exercise a sound discretion in determining that no Bills should be passed this Session involving a very large outlay of capital. I think we have perhaps all of us to take some blame to ourselves for the amount of Bills that have been passed; I have never said a single syllable throwing the whole blame, or more than their due share, upon the railroad companies or the railroad directors; we are all to blame; we have been "art and part" in the matter. But hon. Gentlemen will remember that in earlier years it was no easy matter to persuade the House to adopt any course of this kind. It was proposed to the House in 1846 by the then Government to subject Railway Bills to some such inquiry or investigation as I am proposing, and a Committee was appointed to consider the mode in which the House should deal with them. I had not the honour of being a member of that Committee; but to the best of my belief no feasible plan was even suggested then; and the Government found it so difficult—or perhaps utterly impossible—that they were obliged to give up the design they entertained of checking the disposition to pass more Bills. I confess that at that time I did not myself see my way, and could not say how it was to be done; and I found that other Gentlemen experienced the same difficulty; but I believe now that 238 men's opinions are entirely changed. I believe that, so far from having to fear opposition from railway directors in the course I have to propose, I shall receive from many of them, at least, a cordial co-operation. I have communicated with several chairmen of railway boards, and I have found them most anxious to co-operate in checking the demand for the construction of new works; and I hope to receive a pretty general support from the directors of railway companies. I have been applied to to introduce some Bill for facilitating the dissolution of companies; but upon further inquiry I have found only one company pressing an application of that kind; and I have felt that when an Act has been passed, and the railroad company entered into engagements, you have no right to release them from that liability, at least without the consent of the parties concerned. That may be a very fair subject for the consideration of a Committee, but it is not one with which I am prepared to deal by Bill. [Mr. DIVETT: What extension of time do you propose?] That will perhaps be more properly discussed in the Committee; my own disposition is to give two or three years beyond the time limited in the Acts, either for the purchase of land or the completion of works. I propose, whatever may be the time within which a company is bound to purchase land or complete the works, to extend that time for two or three years. I cannot say I have myself a very strong opinion which period it should be; but as I have said, it can be discussed in Committee. In like manner, as to the proportion of shareholders whose consent should be obtained—whether it should be two-thirds or three-fourths, it is difficult to say why it should be one rather than the other; but that also may be left to the Committee. I now beg leave to move for leave to bring in a Bill for carrying into effect the two propositions I have stated—namely, that there should be an extension of time granted to all those railway companies whose works have been already begun, and a prohibition for a limited period in the case of companies whose works have not been commenced, unless they obtain the consent of a certain number of shareholders.
§ COLONEL SIBTHORP
did not rise to oppose the Motion; but the right hon. Gentleman had talked of allowing compensation for land that had been seized—for a seizure it was, an unjustifiable inroad 239 upon private property, an attack upon the poor man's cottage, and the little man's land. Talk of compensation!—why not take back the money, and give back the land? This railway system should not be called English law; it was more like Algerine law, or Russian power exercised in this dominion. God forbid that he should set himself against any improvements! he was not chargeable, in any act of his life, with opposing anything that would contribute to the benefit of the country: but had railways done so? Why, it was stated that our unprecedented commercial distress originated in a great measure with these projects: was that beneficial to the country? How many unfortunate beings, who used to obtain their livelihood by industry, had they thrown adrift or sent into the workhouse? The Chancellor of the Exchequer should bring in a Bill to extend the time for the payment of his salary, or give the money to the poor men who would now be suddenly thrown out of employ. The right hon. Gentleman came down to the House and said, "We have all been to blame:" what right had the right hon. Gentleman to charge him with doing what he had never done, and trusted in God he never should do? He denied that he ever sanctioned the system. But, as to this plan of restricting the companies, the effect would be that a man would be carried half way to his destination, and then set down with no further railroad and no carriages. At all events, the land that had been taken ought to be paid for at once, or within a limited time, or else given up. It ought to be remembered that it was taken from the proprietor contrary to his wishes.
did not rise to offer the least opposition to the Bill, nor to complain that the measure, as far as it was proposed to go, was not the most suitable under present circumstances. On the contrary, he thought that had the right hon. Gentleman gone further, he would have found great difficulty, and he had exactly met one part of the evil by proposing to give companies the power of spreading their expenditure over a larger portion of time. Neither did he rise to find fault with the past proceedings of the present Government, or of that which preceded it; but he did not wish to be included in the list of those who, foreseeing, as all the House did, the enormous evils likely to flow, not from the system—for it was excellent, and the country had derived the greatest possible benefits from it—but from the abuse of the system, 240 omitted to suggest any practicable remedy for a part of the mischief. He was the more inclined to make that statement, because he did expect from the right hon. Gentleman the Chancellor of the Exchequer some observations upon other parts of the existing system beyond those with which he proposed to deal by his Bill. One of the most serious evils under which we now suffered was the power given to these enormous corporations to borrow money under their Acts. He did propose to the right hon. Baronet opposite (Sir E. Peel), when he was in office, that if the speculation and competition could not be arrested, at all events it might be considered whether Parliament, in giving these companies the power to raise capital for their undertakings, should not have limited the power, and not given the right introduced of late into all Bills of this description for forming canals, turnpike-roads, docks, and so on, to borrow to the extent of one-third of the capital subscribed. That might be a very good thing carried to some extent; with the enormous mass of floating capital in this country, and the temptation to send it abroad, it might be politic, to a reasonable extent, to enable the possessors of it to invest it upon the security of works of this description; but what might be expedient to a certain extent was quite otherwise when carried to the enormous extent to which it was proposed to raise capital for railroads. When Parliament had a host of demands for powers to raise, not 10,000l., 20,000l., or 30,000l., but hundreds of thousands, it was time for those authorities that had charge of the financial affairs of the country to consider whether it was not politic to check the practice. He proposed to the right hon. Baronet (Sir R. Peel), as one of the limitations that might have been most justly applied to the then mania, that a limit should be put upon the power of borrowing money under these Railway Acts. Enormous as the speculation had been, it had been only one cause of our difficulties. It was a symptom of the abuse of credit, very much like what we saw before in the case of the South American mines and the North American speculations—a symptom of which, under any circumstances, we must look for the repetition; at least, he had heard no remedy proposed that was very likely to put a stop to it. But see the difficulties to which individual traders were exposed by the competition they were obliged to encounter with the bonds and 241 debentures of these railroad companies. The competition was not so great when capital was being raised for the railroad, though a man who subscribed towards such an undertaking went to the extent of his means, or his expected means. When these great corporations had the power of borrowing, they went into the money market with bonds, and debentures, and mortgages of all descriptions, and with a better security—a more convertible security, at all events—than the trader had it in his power to offer for the money which was essential for conducting his business. That was one of the greatest evils under which the country now suffered. That was an enormous injury to the trader who was obliged to discount his bills, and which bills were founded upon some actual transaction in which the productive industry of the country was immediately and directly concerned. He had always thought that a limitation of that power on the part of the railway companies was a check which it was competent for the Government to apply to undue speculation; and he had always regretted that such a practical remedy had not been adopted. There was another point to which he was anxious to call the attention of his right hon. Friend, because he considered it was one with which it was competent for the Government to deal. Parliament had given the railway companies power to realise 10 per cent upon their capital. He did not consider this too much. Where men embarked their money in such great undertakings, they were entitled to reap a just profit, and he did not think 10 per cent more than was reasonable and fair. But there were transactions connected with these railways in which not only 10 per cent profit was made, but even so much as 100 per cent, and this with the sanction of Parliament. He did not so much complain of the 100 per cent profit as he did of the encouragement which was given by the Government to these proceedings, by which temptations were held out to poor people to risk their little property in transactions with the nature of which they were very little acquainted. He was chairman of a Committee that made a report to the House recommending that some principle should be laid down upon which capital, by way of loans, should be raised for these great undertakings. That report was submitted to his right hon. Friend (Sir G. Clerk), who was Vice-President of the Board of Trade in the late Government; but it was taken no notice 242 of. When his own friends came into office, he sent the report to them, and pointed out the abuse, and urged upon them the necessity of immediate interference. But neither Government took the least notice of it, and now there were great difficulties. The measure now proposed by his right hon. Friend seemed to be the only one which it was competent for him to call upon the House to adopt. It was impossible they could pass any compulsory measure affecting undertakings in which a number of persons had invested two-thirds of their capital. It would be too much to say to them—"You must stop where you are." After having granted them these extensive powers, by which they were induced to invest their capital, that would be a most unjust and violent act. He quite agreed with his right hon. Friend, that the only course they could adopt was to allow the expenditure of the money which the companies were empowered to raise to be extended over a larger portion of time. But he did hope that they would have some inquiry instituted, or some proposition made by Government, with a view to a limitation of the powers to be given to joint-stock companies to raise capital by borrowing money in the market. The community were now suffering under the greatest possible difficulty from their inability to raise money, and were calling on the Legislature to afford them some protection against the competition to which they were exposed by the powers given to these great companies. The right hon. Gentleman the Member for Sunderland (Mr. Hudson) sometimes found fault with him because he wished (as the right hon. Gentleman alleged) to interfere with the transactions of these companies, who, the right hon. Gentleman contended, had a full and unrestricted right to manage their own concerns. To this he had always replied—that if persons would come and ask of the Legislature for extraordinary powers to be exercised by them as an incorporated body, it was not only within the competence of that Legislature, but it was its especial duty, to limit the powers so asked for in such a way and to such a degree as that they should not interfere with or injure the common transactions of the people. It was upon that ground that he asked the House to interpose its authority. He did not call for any interference with the right hon. Gentleman in carrying on his own affairs; but when that right hon. Gentleman came to the House and asked 243 for a monopoly, and when that monopoly gave to the right hon. Gentleman powers that would come into injurious competition with the merchants and tradesmen of the country, it was then fit that the House should protect, as far as it could, the exercise of individual industry against such monopolising powers. After a great deal of difficulty a measure was passed in the last Parliament (but almost too late to be of any real benefit), by which an end was put to the practice which these companies had adopted of paying interest upon "calls." He certainly had endeavoured to accomplish much more; but it was almost impossible for any individual, without the assistance of Government to carry any measure against the strong party who were for unlimited power in managing these vast speculations, and therefore he was obliged to be content with what he did obtain. He hoped the country would take a lesson for the future from the past, and regulate this power of borrowing money with reference to the means which the country possessed of furnishing the capital sought to be raised.
§ MR. HUDSON
I can bear testimony to the truth of the gallant Colonel's assertion, that he has on all occasions given the moat strenuous opposition to railways, and all connected with them; but I cannot bear testimony to the same course having been pursued by the hon. Member for Coventry. That right hon. Gentleman has complained of the great number of Railway Bills that were passed during the last Session of Parliament, and has reminded us of the warnings which he gave as to the ruinous consequences that would follow the enactment of those Bills, and that he predicted they would involve the country (but which I totally deny) in that distress under which it is at this moment labouring. Now, I cannot forget that I had the honour of opposing the right hon. Gentleman in a project which he had for the formation of a railway connecting the town of Coventry with a little town called Southend. There was already a railway communication between these two places, and the proposed new line would only save three minutes in the transit; but the right hon. Gentleman was a most strenuous advocate for the formation of this new railway, and implored the House to pass the Bill. If any hon. Gentleman, therefore, is implicated in passing these measures more than another, I challenge the right hon. Gentleman as 244 being that man. We have always heard that example is better than precept. The right hon. Gentleman set the example, and his late hon. Colleague followed it, for he supported the Bill. The people of Coventry were not enamoured with the new line, and were not quite convinced that their other hon. Member was right in not following the course of his right hon. Colleague, as the result of the late election has proved. As to the powers given to these companies, I am not prepared to say whether they are too extensive or not. All those companies with which I am connected have confined themselves very much within the powers that have been given to them with regard to borrowing money. The right hon. Gentleman seems to imagine that the only parties whose interests were to be regarded were those who borrowed money, and he did not take into consideration the interests of those who lent it. Why should not the poor man who by industry had accumulated a few hundred pounds be at liberty to invest it at a high profit when the opportunity was afforded him? The right hon. Gentleman would have him, as now, lend his money at a low rate of interest to the tradesman, the tradesman to the banker, and the banker to the merchant; or he would have him deposit it with the bill broker, in order that he may sustain large mercantile houses, such as those that have broken down during the recent distressing panic. But what can be better than furnishing the people of this country with the means of a fair and legitimate investment of their money? Rely upon it, if you do not furnish it here, they will find it elsewhere. This is not the only country in which capital can be invested in railways. If men, having money, do not find opportunities for profitably investing it in this country, they will seek those opportunities abroad. When money is making only two and a half per cent in this country, is it not natural to find it embarked in foreign railways? You cannot prevent it. Men having capital will carry it to the best market; and when interest is low in the employment of capital in one direction, it will necessarily flow into other channels; and a great blessing it is that it has flown in the direction it has. Though I was one of those who felt largely the inconvenience arising from the number of lines Which were sanctioned by the House, yet, seeing the prospect of these undertakings, I believe there was no other course that the House could at that time take, though I 245 admit it has in some slight degree been the cause of the distress, by the power it has given of the increased consumption of the poor which has since ensued. But is it not enough to account for the distress that exists in this country to refer it to the large importations of food that have taken place, without endeavouring to ascribe it to the railways? The railways hare not taken the gold out of the country. Every article they consume is the produce of British labour, and of British growth. Do we not increase your imports? and are we not enabling the poor man to lire in greater affluence, and consume more largely the produce of this country? That is all the inconvenience we occasion you; and are these things evils, and to be deplored? The right hon. Gentleman the Chancellor of the Exchequer has said that the railways have absorbed the money which Would otherwise be employed in the ordinary channels of trade; but is that money unprofitably employed? Are not the railways giving employment to large numbers of men? Do they not increase the consumption of farming produce? Is there not a great additional expenditure on horses; and are not the poor-rates considerably reduced? Depend upon it, my countrymen are too far-sighted not to know whether it is to their own interest that they should promote the formation of railways. Yet, the manufacturers are urging us not to make calls, and are advising men of property not to invest their money in railways. It would be well if these gentlemen would take advice themselves, and not give accommodation bills to foreign merchants, or carry on a forced trade by fictitious credit, thereby deranging the exchanges and interfering with the due course of commerce by the facilities which those bills afford. Had they limited their acceptances, stopped the importation of sugar and other foreign produce, and thereby kept the gold at home, they would have done some good, and have greatly mitigated the panic that has occurred. But what is their counsel to us? That we are not to expend money on labour; for it is upon labour that we do expand it. The right hon. Gentleman talks of railways paying dividends by money raised on bonds. Where does this occur? I know not. It may have occurred in his own country—in Scotland; but, I ask the right hon. Gentleman, has any railway stopped payment? Has any railway applied to the Chancellor of the Exchequer, asking for money? I believe 246 not. I know of none. But I do know that when railway stock has been at a premium, Exchequer-bills have been at a large discount. I know that when you could not sell Exchequer-bills, you could sell railway stock; and I beg to tell the right hon. Gentleman that the public are much wiser than he gives them credit for. I do think that all this abuse of, and all this ill-feeling against railway undertakings, arises from very mistaken views of the matter. On the very first opportunity I had of expressing my opinion on the subject, I said that we could not construct railways, and at the same time import corn to a large extent. As soon as you import corn the gold leaves the country, and this necessarily contracts the circulation, so that your railway undertakings cannot proceed. For this reason I have not entered upon any new works for the last six months; but I have continued carrying on the old works, because, finding that I could procure labour at a cheaper rate than I could some little time ago, I determined to press on the works at greater speed than before. But if legislation is to interfere with the transactions of men engaged in the trading and commercial speculations of this country, then, I say, you must begin with the foreign merchant. You must tell him not to accept bills be yond a certain amount. You must tell the merchants of Liverpool that they shall not import cotton beyond a certain amount, nor accept bills beyond a limited sum. We all recollect how, in the year 1836, the Liverpool merchants went about everywhere endeavouring to raise the means to take up their acceptances. But you tell us that our case is peculiarly one for the consideration of the Legislature, because we come to Parliament asking for powers to enable us to make our railways. But it is you who force us to do so. We could make railways without your consent. We only want the land; but you say to us, "You shall not take a rood, of land without our consent, on which we can legally exact tolls." And yet you allow others to do so. Many railways are constructed in the north of England upon what is called the way-leave principle, and these require no aid from Parliament. But why this prejudice against railways? We have the same interest and as strong a desire to promote the public welfare as any other class or interest in the country; and we are quite as much prepared to make any sacrifice that may be required of us for the benefit of the country. 1 cannot object to the Bill which the right hon. Gentleman the Chancellor 247 of the Exchequer proposes to introduce. For myself I do not want it, at the same time it may appease the angry feeling which now exists with respect to these undertakings. But I believe the best policy for this House to pursue is not to pass such Bills as the Coventry and Southend Bill, for a more absurd and ridiculous scheme was never proposed; and yet the right hon. Gentleman secured for it a majority, showing, at least, the powerful influence he possesses, and how high he stands in the estimation of the House. I won't go into the arguments which the right hon. Gentleman the Chancellor of the Exchequer read from the Economist newspaper. It was obvious from the beginning that the right hon. Gentleman was repeating the arguments of that publication; but it at length became so palpable, that he was obliged to read from the paper itself. The arguments appeared to me to be very fallacious; but it is of no use now to enter upon that question. I should like to learn from the Chancellor of the Exchequer what was the real situation of the Bank on the Saturday previous to the day when the right hon. Gentleman and the First Lord of the Treasury issued their joint letter. I should be glad to be informed what was the actual amount of the Bank reserve on that day. When some of my friends from the North waited upon the Chancellor of the Exchequer, he told them that good bills could be discounted, and that no person of good credit was refused accommodation. It so happened that I was in London on the Saturday before the letter was addressed by the noble Lord and the right hon. Gentleman to the Bank, and I had the honour of waiting upon the right hon. Gentleman, and told him that I had in my pocket some good things—some Exchequer-bills—but that they were of no use; for, though they were at a very low discount, yet I could not obtain any money on them. I told him that his own paper was undiscountable; and I believe that some of my undertakings must have stopped payment if the Government had not taken the course they did; for, although I had a large amount of Exchequer-bills, I could not get them discounted. I trust, when we come to discuss the Bank Charter Act, such changes will be made in it as will prevent the recurrence of such a crisis. The House will not do its duty to the public, nor meet the just expectations of the commercial world, if they do not make such provisions as shall in future render it impossible for any man to be destitute of the means of carrying on his 248 undertakings while he has in his possession a large amount of Exchequer-bills. With respect to the selection of the Railway Bills to be carried on, I think you will experience some difficulty in determining that point; nor am I sure that legislation is always the best way of solving these difficulties. The commercial interest has suffered by the Acts of the Legislature; for instance, the measures adopted with respect to sugar have been the means of bringing ruin upon some of the first commercial houses in the country. In conclusion, I have only to repeat what I have already stated, that I will not oppose the introduction of the right hon. Gentleman's Bill, because I believe it will appease the public mind, though it will be inoperative as far as the companies with which I am connected are concerned.
§ Leave given.
§ The CHANCELLOR OF THE EXCHEQUER
, in moving the appointment of a Committee on Railway Bills of this Session, stated that the Railway Bills suspended last Session would be included in the reference to the Committee.
§ Motion agreed to.
§ Committee to be nominated.