§ Order for Second Reading road.
§ MR. MITCHELLsaid, he wished to make a few observations on the reasons which induced him in the first instance to bring forward this Bill, and on those which now induced him to withdraw it. In the first place, he must observe, that supposing a check on political favouritism towards contractors to be required, he did not think the check which he had proposed to repeal was the proper one; he held that the proper check was the constitutional responsibility of both Ministers and Members, and not a system of penalties. The existing check was notoriously evaded, and any man having a contract with the Government who desired to obtain a seat in Parliament might with the utmost facility get over the difficulty by transferring the contract to persons with whom he was connected. A case in point was that of the late Mr. Soames, who being one of the largest shipping contractors in the country, 1431 and being anxious to enter Parliament, transferred his contracts to his nephew. Another reason why he proposed this Bill was, that he considered the present prohibition very unjust towards the mercantile body. He did not see why a Member of Parliament should be excluded from the field of fair competition. The third and main ground was, that he thought the present system detrimental to the public service, inasmuch as it narrowed the field of competition as regarded articles required by the Government. Entertaining those opinions, however, he withdrew the Bill—first, because he found that there was a strong prejudice in the House against it, and because he thought that, by pressing it forward at that moment, he would prejudge the question. He hoped that when the House had bestowed further consideration on the subject, and when the question was brought forward, as he trusted it would be, by some one of greater weight than himself, the attempt at legislation would be attended with a different result. His second ground for withdrawing the Bill was, that his hon. Friend the Member for Stoke-on-Trent (Mr. J. L. Ricardo) had given notice of his intention to move for a Committee of Inquiry into the whole system of contracts. He would only say, in conclusion, that having watched the proceedings of the Admiralty for about twenty years, he had never seen in them the slightest trace of political favouritism. He should therefore move that the order for the second reading be discharged.
§ MR. T. DUNCOMBEsaid, he would second the Motion for the discharge of the order with the utmost cordiality. He had intended, if the Bill had been brought forward, to have moved that it be read a second time that day six months. It afforded him great pleasure to find that the Bill was to be withdrawn. So long as it was got rid of, it did not matter how or what was the reason given. The Bill it proposed to repeal had been passed in 1783, after a great struggle; it had been passed by an unreformed Parliament, and if a reformed Parliament thought proper to repeal it, he, for one, should prefer the unreformed Parliament. It had been passed at a time when Fox, Whitbread, and other great men of the day had stood forward as the champions of the measure. The same Parliament which passed the Contractors Bill passed also the Bill for the disqualification of revenue officers. Yet that was in days when the landed interest 1432 was in the ascendant; when the great commercial interests, the great commercial towns of Birmingham, Manchester, and Sheffield, were not represented in Parliament. The case, however, at the present time was altered, and, of the two, the commercial interest was in the ascendant in Parliament. Now he thought, that though they might be a free-trade Parliament, they ought not to be a free jobbing Parliament. But where the counting-house was in the ascendant, it struck him that speculation would not be in abeyance; and surely, if it was not in abeyance, it would be much assisted and fostered by the recognition and countenance of Government. For the sake, then, of the public, and for the sake of Government themselves, he would deprecate any change in the law. Men holding contracts, if in Parliament, who might be unable to finish their contracts by a specified day, would come to the Government, demanding only a few days' delay, and if that request was refused them, they would tell the Government—"Here we are, dragged through the mire, night after night, in your service, and yet you refuse us the smallest favour."
MR. WALPOLEsaid, he quite concurred in the observations of the hon. Gentleman who had just sat down. It would never do for that House, while it was endeavouring to solve the difficult question of getting rid of the corrupt influences exercised upon electors, to enact a law abolishing a check upon corrupt influences that might be exercised upon the elected. Unless the House of Commons kept itself perfectly free, not only from corruption, but from every suspicion of corruption, it would sacrifice its independence and in a great measure lose its utility. There was one point, however, to which he wished to call the attention of the Government. The subject had been brought forward in consequence of what took place last Session, in reference to a particular species of Government contracts—namely, loan contracts. The hon. Member for Finsbury (Mr. T. Duncombe) was a member of that Committee, which arrived, although not unanimously, at the conclusion that engagements for loans to the Government did not come within the statute of George III. The Government, however, would remember that their own Attorney General, and, he believed, his hon. and learned Friend the Member for Stamford (Sir F. Thesiger) took a different view of the subject, and as the Government were now actually con- 1433 tracting a new loan, he thought it would be right and proper for the Chancellor of the Exchequer to bring in a declaratory and enacting Bill to decide the doubt, by providing that contracts for loans made to Government were not, while open to public competition, within the provisions of the statute of George III. He was as eager as the hon. Member for Finsbury that the law with respect to all other species of contracts should remain in its present condition, but he would beg to press upon the Government the expediency of introducing a measure such as he had suggested with regard to that particular species of contracts.
THE CHANCELLOR OF THE EXCHEQUERSir, I am glad that my hon. Friend the Member for Bridport has, in the exercise of his discretion, withdrawn the Bill, as I came down to the House prepared to vote against the second reading in the event of its being pressed to a division. I quite concur with my right hon. Friend opposite (Mr. Walpole) in the opinion that it is not desirable to make any alteration in the existing law with regard to contracts between public departments and contractors for the supply of goods, or the rendering of different sorts of services to the Government. Those contracts are entered into by the simple authority of the different departments, such as the Admiralty, the War Department, or the Stationery Office; no Resolutions with respect to them are submitted to Parliament, and the departments have power to vary their terms after they have been entered into, and to grant indulgences to the contractors while they are pending. The departments have, therefore, the unquestionable power, if they are disposed to use it, of influencing the conduct of the contractors—and I think that Parliament, in 1783, exercised a wise discretion in passing a measure imposing that disability upon contractors which the hon. Gentleman, by his Bill, proposed to repeal. The provisions of the Act of 1783 are liable to two objections—one is, that the law is often rendered inoperative by being evaded by persons who, although they are Members of this House, hold contracts, but execute them in the name of a partner or some other individual; the other is, that a person sometimes inadvertently enters into a contract while a Member of this House without considering the effect it will have, and forfeits his seat unknowingly. I admit that each of these objections has a 1434 certain degree of force; nevertheless, they apply equally to almost all penal Acts. Almost all those Acts admit of evasions, and are occasionally applied to persons who are not aware of their existence; but if objections of this sort were allowed to prevail against them, our criminal code would be reduced to a very small shred. It does not, therefore, appear to me that there are any sufficient reasons for overthrowing the policy with regard to the disqualification of contractors which has been adhered to since 1783. My right hon. Friend (Mr. Walpole) adverted to that part of the Act which relates to loan contracts. Now the Committee which sat last Session investigated very fully the law of that subject and its history, but not its policy, and I confess that anything more perplexing than the history of that law it never fell to my lot to examine. The proceedings that took place when the Act was under discussion, and the manner in which it has been acted upon, render it extremely difficult to arrive at the intention of the Legislature with respect to loan contractors; but one thing, however, is undoubted—the subject received great attention at the time, as it was taken up by the Whigs as a sort of party trial at the end of the American war. The Act has been well known to Parliament, to the Executive Government, and to all persons likely to take contracts for loans; and, from the date of its passing to the present time, it is well known that Members of Parliament have entered into engagements in a variety of loans, without any attempt being made to apply it to them. No one until last Session ever raised the question of its applicability. The conclusion to be derived from all this appears to me, although not particularly obvious, to be very simple. It was seen from the beginning that a contract for a loan was of a totally different nature, both as respects the law of the case and the character and essence of the contract, from a contract entered into for the supply of articles or the rendering of services to a public department. A loan contractor is merely a go-between, not a contractor, in respect of the nation represented by Parliament on the one hand, and certain persons who wish to purchase perpetual annuities on the other. The national faith with regard to perpetual annuities is engaged by the Act of Parliament, but Parliament delegates no power of pledging it to the Executive Government. Nevertheless, it is impossible for Parliament to make 1435 a contract with the public for a loan without a preliminary proceeding. A proposition by an individual Member of this House to make a loan must end in nothing, for he would be unable to say, "I am in a condition to prove that there are persons who will enter into the contract with you upon certain terms." In order, therefore, that there may be some basis upon which to found the action of Parliament, it is necessary that a preliminary proceeding should take place, and Parliament wisely—I may almost say, necessarily—has intrusted the Executive Government with the power of entering into preliminary negotiations for the purpose of ascertaining that there are persons ready to lend a large sum of money to the public upon certain terms. Now, this is, in effect, nearly all that is done at the meeting at the Treasury between the First Lord and the Chancellor of the Exchequer and certain capitalists from the city. The parties agree upon certain terms, which are then submitted to Parliament for approbation and ratification; if Parliament think that this preliminary engagement, made with certain contractors, representing a large number of subscribers, consists of terms favourable to the public, they ratify it, while if, on the other hand, they think the terms are unfavourable, they repudiate it. This is the nature of the transaction which is laid before the House in the shape of Resolutions. If the House agree to those Resolutions a Bill founded on them is introduced, defining in precise terms the engagement into which the public enters, and to which subscribers to the loan bind themselves. Thus, the contract entered into upon the public and national faith is embodied in an Act of Parliament, and the Executive Government have no power of varying the terms of that contract. They can grant no favour to any individual subscriber; they cannot place one person in a more favourable position than another. They are as much bound by the terms of the Act as any one of the public, and, therefore, with regard to contracts of this class, no question of corruption can arise. As far as I am able to understand the subject, the decision of the Committee of last Session is well founded in point of law, but, admitting that there is a doubt as to the interpretation of the words of the Act, which are not very clear, there can be no doubt as to the question of policy, or as to the entire distinction in essence and in character between contracts for loans and 1436 contracts for the supply of coal, timber, and other articles to public departments. My right hon. Friend opposite suggested that, as the question of law is not quite clear, it might be desirable to bring in a Bill declaring and enacting that loan contractors are not subject to the penalties of the Act of 1783. It appears to me, however, that the decision of the Committee of last Session is founded upon very strong reasons, and I should be much inclined to allow the case to rest on that decision, and not to attempt further legislation. But, looking at the authority of the advice of my right hon. Friend, who presided over the Committee, and who is a thorough master of the subject, the question shall receive my most careful consideration, although I hope he will excuse me from giving him a definite answer with respect to it at present. I have only to add that the opinion I have now expressed agrees exactly with that which has been expressed by my hon. and learned Friend the Solicitor General, who was also a Member of the Committee.
MR. NAPIERsaid, that as a Member of the Committee which sat last year on this subject, he had no hesitation in declaring that his opinion quite accorded with the decision of the majority, although, in consequence of his having to proceed to Dublin, he had been obliged to content himself with putting his views on paper. He held that the negotiation of the Government with the contractors was entirely a preliminary proceeding, as the whole thing, after the conclusion of the contract, came under the review of Parliament. There could, however, be no doubt that the opinions of highly competent persons did not coincide in that view; and, therefore, he thought the introduction of a declaratory Bill was highly desirable, as making that perfectly conclusive which seemed to him to accord with the spirit of the law.
§ MR. HADFIELDsaid, that there was another question, though of small character, which he considered required the attention of Her Majesty's Government. At present the Government often required sureties for certain individuals in its employment. Now, who would be surety in such a case? The moment any person became surety to the Crown, he was recorded in the public courts as a Crown debtor, and could no longer sell a yard of his land. Why not alter the law, so that persons might be security without being 1437 recorded as Crown debtors, and unable to sell their land? That state of the law prevented the Government, in many cases, from obtaining the best securities.
§ MR. HENLEYsaid, he was very glad the Bill had been withdrawn. He gathered from what had fallen from his right hon. Friend (Mr. Walpole) and the right hon. Baronet the Chancellor of the Exchequer that it was their opinion that persons contracting for a loan of money were exempted from the provisions of the present law relating to contractors, but at the same time it was also desirable to make the law on that point more clear. Whenever any Bill for such a purpose should be introduced the whole question would of course come under discussion, but in the meantime he must say that he did not recognise the distinction so elaborately drawn by the Chancellor of the Exchequer, who said that whatever took place between himself and the loan contractor was provisional and conditional on the assent of Parliament. That might be true technically, but in practice the Parliament invariably confirmed the bargain made by the Chancellor of the Exchequer. The right hon. Gentleman went on to draw distinctions of two kinds between the different cases. He laid down, with regard to ordinary contracts, that there might be variations in the making of a bargain, or in varying the conditions subsequently; while with regard to a loan such a condition was impossible, as all the terms were settled by Act of Parliament. But the right hon. Gentleman had not ventured to say that favouritism in issuing the bargain might not be possible. Now, it appeared to him, for instance, to involve quite as much corruption on the part of the Government to allow the minimum price of Consols which they were willing to offer to leak out previous to the contracting of a loan, as if they offered one contractor a higher price for his goods than another. He rose, therefore, to express a hope that, if the law was not to remain as it was, but was to be made more clear and intelligible, tthey should not be precluded on the occasion from sifting the whole principle at stake. He had some recollection of the old loans made in the days of the Goldsmids, and he well remembered how, upon the occasion of the terms of one loan proving unfortunate, that family was placed in a most painful position! through not being able for a long time to get discharged from their obligation by the Government of the day. With regard 1438 to the statement, that the arrangement between the Chancellor of the Exchequer and the loan contractor was only provisional, previous to its sanction by Parliament, he would observe that he was inclined to think that the persons making the bargain were responsible to the Crown for the whole loan.
§ MR. NEWDEGATEsaid, he was opposed to the introduction of a declaratory or enacting measure on this question, for he thought a special enactment would have the effect of diminishing the force of the precedent established by the decision of the Committee of last year. It seemed to him that the precedent, relating, as it did, to the privileges of the House and to its special functions, supplied a better safeguard than any declaratory Act of Parliament; for as soon as ever the law was issued disputes might arise as to its interpretation, besides which they would run the risk of having to enact in the case of each loan a separate declaratory Act for the regulation of that loan.
§ Order for Second Reading discharged; Bill withdrawn.