EASTERN UNION RAILWAY BILL. (Hansard, 28 July 1853)

§ SIR GEORGE PECHELL
moved, according to notice, that the Bill be read a third time that day three months. He said, that on the last occasion when the matter was brought under the notice of the House the Bill was re-committed on the ground that the first Committee had decided in favour of it without having obtained the assent of the majority of the shareholders. No less than 300,000l. stock was dissentient, and the House had been petitioned by merchants, bankers, and stockbrokers, who had prayed that the Bill might not pass into law, as if it were carried it would tend to shake the public confidence in all preference shares and property of that description. The petition had been signed by Messrs. Gurney, Dimsdale, Robarts, Stone, Martin and Co., and a great number of leading merchants, bankers, and brokers, including the Government broker, Mr. Mullins. The object of the Bill was to deprive the preference shareholders of their guaranteed interest of 6 per cent, and to give them instead 4 per cent, and a bonus of 9l. per share. He was sure that Parliament would not confiscate, as was proposed by the Bill now under discussion, the property of persons who had lent their money in a moment of great difficulty to this railway company.

§ MR. WISE
seconded the Amendment, he said, that he was in the happy and independent position of a person who had never held a railway share in his life. He was influenced in the course he was adopt- 886 ing simply from a view to see justice done to a class of persons who had their interests protected by two or three Acts of Parliament. Was it possible that persons would lend their money to railway undertakings, or make provision for their families by the purchase of such stock, if Parliament was to interfere and to do that which the law would not allow private individuals to do to each other? He had looked through the list of the petitioners against this Bill, and he was gratified to find that it contained the names of the most respectable and influential bankers and merchants in the metropolis. Those parties had stated that this proposition would inflict a serious blow upon the confidence reposed in Parliamentary guarantees, and be seriously detrimental to the value of preference shares in future.

§ MR. CARDWELL
said, he should, perhaps, save the time of the House by stating his views upon this Bill. It came to them recommended by the unanimous vote of a Committee formed of Gentlemen most competent for such an investigation, and it was with pain he differed from the unanimous finding of that Committee, but he felt it impossible to give his vote in favour of the third reading of the Bill. The Bill was promoted by the shareholders of the Company, and not by any creditors, and therefore the point to be considered was whether the preference shareholders had consented to an abrogation of their statutory rights. In consequence of negotiations with the preference shareholders, a Bill was introduced in 1852, and the Select Committee required to know if the preference shareholders consented to the creation of a stock having preference to theirs. The preference shareholders had a meeting, and said they would not agree to anything which affected their property in regard to claims posterior to their own, but they would agree to affecting their property in favour of claims anterior to theirs. The Act of 1852 accordingly passed, authorising the raising of preference stock, overriding the preference shareholders, for the purpose of liquidating the debts of the Company. The creditors were not paid off, and this year this Bill was introduced again to alter the standing of the preference shareholders. It was important to ascertain 887 if they consented to such an arrangement; and whatever might be said of any loose decision, by a majority of preference shareholders at a public meeting, he was bound to say, looking at the evidence, that there was no dry legal proof to satisfy the House that they did so consent. There was about 360,000l. of preference stock, about half of which was registered, and the secretary of the Company stated before the Committee that shareholders representing no less than 56,000l. of this stock recorded their dissent to this Bill. It might be a good or it might be a bad arrangement; but the question was, whether the facts were such as to justify Parliament depriving those who resisted it of certain rights which by preceding Acts of Parliament they had acquired.

MR. CORRY
said, that as Chairman of the Committee he could state that, although this was not strictly speaking a creditors' Bill, the creditors had the deepest possible interest in it, because they would not consent to waive a great portion of their claim, or to capitalise their debt, unless the preference shareholders consented to the passing of this Bill. The Eastern Union Railway Company was now absolutely insolvent, while at the same time it was exposed to a ruinous competition. Mr. Brassey and the other creditors had no faith in their present security, for they knew that unless some arrangement could be come to for the working of the line with one of the powerful companies, and for an understanding with the preference shareholders, it was worth nothing. He believed that this Bill would very much improve the property of the preference shareholders, and he strongly recommended the House to read it a third time.

MR. HUME
said, he had read with great regret the long details which had been handed round to hon. Members. But he would ask, whether the power of Parliament ought to be thus appealed to? He did not think Parliament ought to be appealed to in order to interfere with previous arrangements. He was himself a considerable holder, and he did not think that the present Bill would tend to do justice to all parties. It would be one of the greatest calamities that could happen if that House once admitted that Parliament could be unjust. He admitted that injustice had taken place, but he had always protested against such acts. He hoped this House would not agree to anything unfair; and 888 he supported this view, even though he quite agreed with the statement that the preference creditors would fare better under this Bill.

§ MR. CAYLEY
said, that as a director of the Company, he was anxious to answer the objections made by the right hon. Gentleman the President of the Board of Trade, and those of the hon. Gentleman the Member for Montrose. He denied that the object of this Bill was repudiation. It was because he disapproved of repudiation that he was in favour of this Bill, and he sincerely believed that if the right hon. Gentleman the President of the Board of Trade had been one of the Committee, he would also vote for the third reading. The facts of the case were these. Mr. Sturge, a very wealthy preference shareholder, made a communication to the directors, and implored them to intercede with the creditors not to press their claims; as, if so, the line would be stopped altogether, and nobody would get anything. These negotiations lasted for five months, and Mr. Brassey, having given up 15,000l. worth of arrears, signed an agreement, on the understanding that Mr. Sturge, and those whom he represented, would consent to take a lower rate of interest. The gripe of the judgment creditors having been thus taken off the throats of the preference shareholders, they repudiated their proposition; and the result was, that the shares rose in the market from 9l. to 21l., the present price. Talk of repudiation after that! Why, it was the preference shareholders who had repudiated, and nobody else; and this they did no less than three times. This was substantially a creditors' Bill; but it was impossible, by the forms of that House, to introduce a Bill in that shape, unless as a shareholders' Bill. There were now over-due debentures to the amount of 250,000l. with no means of paying them, and therefore it was impossible to deny that the Bill was not a creditors' Bill. After the passing of the Act of 1852, a committee of shareholders was appointed to negotiate with the preference shareholders, and another meeting was called in December, 1852, when a third proposition was made to carry out the very object of the present Bill. Mr. Brassey, who was a holder of 30,000l. worth of common stock, and of 30,000l. preference stock, and was also a creditor of the Company to the amount of 165,000l., attended that meeting, and said he would guarantee the shareholders 100l. or par for the money 889 they had advanced, and three years' arrears of interest, at three per cent, making 109l. The object of the present Bill was to enable Mr. Brassey to do this; and surely it could not be said that, after such an arrangement agreed to by the preference shareholders, they could talk of repudiation. He called upon the House to look at this matter, not in a nisi prius point of view, but as the great court of moral equity, bound to do justice between the parties. He denied that the majority of the preference shareholders were opposed to this Bill; because, if they would look at the propositions, they would find that five-sixths of the proprietors of registered stock were in favour of the Bill, against 30,000l. dissentient. He would earnestly call upon the House, while it abjured repudiation, and anything approaching to confiscation, to pass a Bill, which, so far from repudiating, actually proposed to pay the preference shareholders 109l. for every 100l. they had advanced; and he could only hope that every person who had to deal with repudiators might meet with the same kind of repudiation.

§ MR. AGLIONBY
said, he intended to have moved for an inquiry into the allegations of the petition of Mr. Rigby Wason, and, therefore, wished the Bill to be recommitted, that investigation might be made into the charges of a petition so important, which alleged that the directors of the said railroad company, as promoters of the Bill now before Parliament, although, as trustees for all classess of shareholders, they are bound to act justly towards the six per cent preference shareholders, did improperly suppress part of a chain of evidence, for the purpose of inducing the Committee on the said Bill to arrive at an unjust decision, and to disturb an agreement which the said directors clandestinely concealed from the said Committee, entered into between the directors and the six per cent preference sharholders, by which, in consideration of the latter assenting to the retention of certain provisions in the said Bill affecting their legal rights, the directors agreed not to lower their preferential share. He thought that those interested should themselves be the most anxious for an inquiry, and that under all the circumstances the Bill ought not to pass this Session. If there was even a suspicion that any evidence had been concealed from the Committee, the House ought not to pass the Bill.

§ MR. GOOLD
said, that as a Member of the Committee to which the Bill was referred, be was quite prepared to defend the decision to which they had arrived. 890 He had no doubt in his own mind that a jury of twelve intelligent men would have arrived at the same conclusion, and would have agreed in thinking that the interests of all parties were consulted for by the present Bill.