HC Deb 26 July 1866 vol 184 cc1544-51

said, he rose to move that an humble Address be presented to Her Majesty praying for a Royal Commission to inquire into the condition of the Railways of this country as regard their ability to fulfil their engagements to the public, having due regard to the interests of all parties concerned. Railway companies were bound to take measures to secure the public safety; but it was well known, and it had been stated on the authority of the Board of Trade, that on even some of the best lines the permanent way had been allowed to get into a condition which rendered it dangerous to travel upon. So long as a railway was under the direction of a Board of Directors some responsibility existed for its proper maintenance, although the Board of Trade, when once a line had been opened, could not enforce any penalties for improper management; but a very unexpected contingency had, however, arisen, for one of the chief lines had been placed under the control of a receiver appointed by the Court of Chancery, and the control of the revenue was thus taken from the Board of Directors. It was clear that with a railway in that position there existed no power which could oblige the Court of Chancery to expend a portion of the revenue on the permanent way, so as to keep it in good order. He believed a proposal had been made to protect rolling stock from seizure, so that the traffic might not be liable to suspension, but in that case there was the more need of securing the safety of the passengers. If the Board of Trade had already sufficient power to enforce this, he should be perfectly satisfied; but if, as he believed, they had not, he hoped the right hon. Baronet (Sir Stafford Northcote) would agree to the appointment of a Commission to investigate the matter, whereby he would obtain the necessary information without rendering it necessary to give too much publicity to the monetary affairs of the company. As was well known, a line of railway could not be opened without the certificate of the Board of Trade; but after this the Board of Trade took no notice of the line till an accident happened, and then they sent down an inspector, whose duty it was to report, but the Board had no power to enforce the recommendation of the report. When a line fell into the hands of the Court of Chancery, and a receiver was appointed, no money could be expended without an order of the Court. The consequence was that the order of the Master of the Rolls or a Vice Chancellor had to be obtained before any money could be expended on a line so circumstanced. But the Master of the Rolls or the Vice Chancellor could be no judge of the condition of the permanent way; and if they were, there were strong doubts whether, when a receiver was appointed on the part of debenture shareholders, they could pay any portion of the receipts in repairing the permanent way. In such a case what was there to carry on the line? At any rate, he thought that, considering the financial difficulties of some of the principal lines, the House ought not to separate for the recess without hearing the opinion of the right hon. Baronet on the subject.

Amendment proposed, To leave out from the first word "That" to the end of the Question, in order to add the words "an humble Address be presented to Her Majesty, praying that She will be graciously pleased to issue a Royal Commission to inquire into the condition of the Railways of this country, as regards their ability to fulfil their engagements to the public, having due regard to the interests of all parties concerned,"—(Major Jervis,)

—instead thereof

Question proposed, "That the words proposed to be left out stand part of the Question."


said, he desired to urge on the right hon. Baronet, whose attention had already been directed to the matter, the importance of considering before next Session what could be done. In Ireland a railway company could be wound up, and this he believed had been done in some cases, but in England no such provision existed; consequently all the stores and rolling stock of a company were liable to seizure by the sheriff, and a receiver might be appointed in the interest of the bondholders, leaving the public to look out for themselves. The origin of the difficulty he believed to be this — that when railways were originally established the idea was that they were to be highways, as it were, upon which everybody was to take his own engines and carriages, paying a certain toll to the companies. Indeed, all railway Acts still contained a schedule of tolls to be paid by private persons. This was the theory; but, as a matter of fact, the traffic was entirely in the hands of the companies, subject to certain regulations by the Board of Trade, and it would be ridiculous for any person to put in practice the right to which he was theoretically entitled. Legislation, however, being based on this assumption, there was no guarantee for repairing the permanent way or for keeping up the proper supply of rolling stock. He was aware that one of the Vice Chancellors had placed the line of a particular railway company in the possession of a receiver, who had power to pay the necessary working expenses out of the gross receipts, and to apply the balance in liquidation of the company's debts; but it was disputed whether it was ever intended that a power so to deal with a railway company should be vested in the Court of Chancery. The question had become so serious that the President of the Board of Trade would be justified in considering whether some measures might not be taken for preserving at once the rights of creditors and the interests of the public. Even if he should not think the appointment of a Commission desirable, he trusted that the right hon. Gentleman would take up the matter himself, and that early next Session he would bring in a measure for taking a railway out of the hands of a company that was involved in permanent financial difficulties, and for protecting the interests of those who had claims upon it.


said, he did not see how the appointment of a Commission to consider this question could render insolvent companies solvent. He had often called the attention of the House to the necessity of imposing some stricter conditions upon the Railway Bills passed by Parliament. The root of the present evil was, that Bills were obtained first, and companies founded afterwards; whereas the companies ought to be first of all in existence before the Bills were sanctioned.


said, it was a matter much to be regretted that nothing had been done to carry out the recommendations of a Committee of that House, which had been drawn up after consultation with the noble Lord the Chairman of Committees in the other House, and with the hon. Member for North Lancashire (Colonel Wilson Patten). The root of the evil complained of lay deeper than was usually supposed, and the persons affected by it were not so much the creditors of these companies as the landowners through whose property the line passed, and who were often unable to obtain payment for the land taken from them. In the Court of Chancery that day, no less than five orders had been made against railway companies for payment for land taken for the purposes of their lines. Every case was undefended, the plea of the companies being merely that time might be granted to them to meet the claims, the correctness of which they admitted. In former days, it was required that persons taking compulsorily other people's land should possess the means of accomplishing the project they had in view; whereas, under the present system of merely requiring a deposit from the promoters of a Bill, the money was borrowed for the purpose of complying with the Standing Orders, and a Bill was passed authorizing the construction of vast works by a company that had neither shareholders nor money. It appeared from the evidence taken before the Committee to which reference had been made, that it was usual for a stipulation to be inserted in the contract between the parties promoting the Bill and the bank or the insurance company that advanced the money for the deposit, that the Bill, after it had been read three times by both Houses of Parliament, should not receive the Royal assent without the consent of such bank or insurance company was first obtained. So that a fourth authority had been introduced in those matters, with whom rested the power to withdraw a Bill which both Houses of the Legislature had, by passing, declared to be a wise and proper measure. In point of fact, the companies that promoted new lines consisted too often, in the first instance, of nothing more than a lawyer, a contractor, and an engineer. They obtained from a compliant Parliament privileges which enabled them to exercise compulsory powers over other people's lands. They made their profits out of the scheme, and the loss fell upon the public. He thought that if, instead of appointing a Royal Com- mission, the President of the Board of Trade would only bring into force the Resolutions of the Committee to which he had referred, a speedy and effectual remedy would be applied, and the object of the present Motion fully met.


said, he was at a loss to understand in whose interest the hon. Gentleman who had just addressed the House had spoken. They could not be advocating the interests of the public, because persons who constructed a railway conferred a benefit upon the public; and Parliament might well leave it to those who lent money to the promoters of Railway Bills to take effectual means for protecting their own interests. He might, however, point to one grievance under which landowners suffered, which was that they were not permitted to make a line at their own expense over their own land to join that of a railway company without the sanction of the latter. The Report of the Committee of the House which sat in 1863, explained the reason of the diminished value of railway shares and securities—and, in fact, that Report fully accounted for the occurrence of the late panic in the money-market. The question raised by that Report was whether the House would retain within its own hands the administration of its rules or would intrust a competent tribunal to discharge duties which now pressed so heavily upon its members. Of the best authorities upon such a question in that House, six had voted in favour of transferring the consideration of Railway Bills to the Board of Trade, or some other competent tribunal, while seven had voted against the proposition. The Committee of 1863 decided that competition should not be a ground of opposition to a new line before a Parliamentary Committee; but this Resolution was rescinded through the influence of the great railway companies. There was no similar instance of such a Resolution having been rescinded by a Committee after it had agreed to one half of its Report, and this instance was suggestive of the power exercised by the existing companies to prevent the free flow of capital for the construction of new lines. As a consequence, the modern system of financing was resorted to, and it was to this the monetary panic was to be traced. If the Report of the Committee of 1863 were referred to it would afford some valuable practical information on the subject. The evidence before that Com- mittee very clearly established one thing —that many towns and districts too poor to construct a railway for themselves, although it was urgently required, had had it constructed for them by the enterprize of promoters of new companies, who, when they had obtained their Act, were able to raise money upon the paper it authorized them to issue. If the company succeeded they made a profit, and a loss if it failed. The House must remember the expense of getting a Bill. He knew of one case in which £75,000 was spent in obtaining a Bill for the construction of only eighteen miles of railway. He maintained that no persons were more entitled to the gratitude of the community than this class of persons—the lawyers, the engineers, and the contractors, who had been the means of making hundreds of miles of railway that but for them would never have been made at all. As much as £3,000,000 had passed through his own hands in this way, to the immense benefit of the district in which the railways, thus rendered possible, were constructed.


trusted that the House would not be led away by the discussion of our system of railways generally, or of the causes of the panic on the money-market, from the point really at issue, which was whether some means should not be taken to prevent a railway falling into the hands of its creditors, and the consequent stoppage of the traffic. The safety of the public was imperilled by the relations of some railway companies to each other. It was only the other day that an accident happened on a branch of the Great Northern because that and another railway company disputed each other's liability to repair the permanent way, which consequently fell into disrepair, and thus gave rise to the accident.


ventured to hope that his hon. and gallant Friend (Major Jervis) would withdraw the Motion, as he did not see that any real object was to be served by the issue of a Royal Commission. At this moment a Royal Commission was engaged in inquiring into the whole question of our railway system and the control that Government ought to exercise over it, in view of the impending expiration of the period fixed by the Act of 1845, which would place the House in a position to deal freely with the subject; and it was obviously desirable to wait for the Report of this Commission, which might be looked for in November or December. With respect to the powers of the Board of Trade, while the Board had not much power to compel railway companies to set right what was wrong, it had full power to make investigation and examination; and it would do so on receiving a representation from any one, or even of its own motion, if there were reason to suppose that a railway was in a dangerous condition. Thus, if the Board of Trade had reason to believe or was informed that any railway in this country was falling into a dangerous condition, its duty was to inquire how the facts stood; and he could undertake to say that if his hon. Friend knew of any such case, and would call his attention to it, an immediate investigation should be made into it. During the recess the Government would take into consideration the financial and legal position of railway companies, and the mode of dealing with them. At present, a Bill was passing through the House of Lords to meet the case of a possible seizure of rolling stock. That would only be meeting a small part of the subject, and he doubted whether it was expedient to pass such an Act, at all events without some accompanying legislation, because taken alone it would endorse a principle which dangerously affected the security of creditors. The Committee of the House of Lords had also recommended a winding-up Act for railways, and probably it would be desirable next Session to deal with railway companies in some general Act on the subject. It would not be possible at the end of a Session to enter upon the consideration of such a question, but he should make inquiries on the subject, and should be very much guided by the Report of the Royal Commission with respect to it. With regard to the particular line referred to by the hon. and gallant Member, he believed the difficulty had been met by the appointment of a receiver. He had been informed that the matter had not been settled altogether satisfactorily, but there was no such urgency in the case as to render it necessary for him to interfere. He fully admitted the great importance of the question, and he promised that the attention of the Government should be given to it.


thought that the Government should also consider those clauses of the Land Compensation Act with respect to compensation to persons whose property might be lessened in value by the operations of a railway.


said, that after the statement of the right hon. Baronet the President of the Board of Trade, he should withdraw his Motion.

Amendment, by leave, withdrawn.