§ (Mr. Dodson, Mr. Chancellor of the Exchequer, Lord Naas, Mr. Hunt.)
§ [BILL 220.] COMMITTEE.
§ Order for Committee read.
§ Motion made, and Question proposed, "That Mr. Speaker do now leave the Chair."
MR. HENLEYsaid, he trusted that, before the House went into Committee upon this Bill, some Member, either of the late or the present Government, would give a clear explanation in reference to this subject, which was of a very exceptional, 1626 if not of a questionable, character. The only information that had been given to the House in connection with this subject was contained in the small paper he held in his hand, which appeared to be a copy of a Treasury Minute. The purport of that Minute was to the effect that some Irish railway companies had found it impossible to obtain money for the construction of their works upon reasonable terms, that they were called upon to repay large sums which had been advanced for the purpose of enabling them to proceed with the construction of their works, and that the difficulty arose in consequence of the present state of the money-market; it was further stated, that if some measures were not adopted to relieve this state of things, great embarrassment and widespread distress would ensue throughout the greater part of Ireland. The proposal contained in the Bill now before the House was, if he correctly understood it, that the sum of £500,000 should be advanced to some one or other, but to whom was not stated. Now, it was possible that the difference in the rate of interest on the £500,000 to be so advanced, and the rate of interest which the railway companies would have to pay if they borrowed that sum in the open market, might amount to £25,000. But could it be supposed for a single moment that a grant of so small a sum as £25,000—for that was the practical result of the measure proposed£would prevent the threatened widespread distress and embarrassment throughout the whole of Ireland? It was somewhat curious that the Bill contained a stipulation that the money should be advanced only in cases where the Public Works Loan Commissioners were satisfied of the sufficiency of the security offered. But if the security were good, money could be got in the open market, although, perhaps, at a higher rate of interest than the Government would charge. The great question, however, was what special circumstances were there which justified this loan. He trusted that statements would be made by Members of both the late and the present Governments which would prevent the House from being dragged into transactions of this kind in future. He was far from saying that, under no circumstances, should such an advance be made; but he urged upon the House that loans of this nature should be made only under certain special circumstances, which should 1627 be clearly defined, in order that no precedent should be established by which Administrations less scrupulous than were the late and the present Governments might consider themselves justified in dealing improperly with so questionable a subject. In the present instance the House was not informed upon whom this great boon was to be conferred, or who were to be the first to rush in and secure this large sum. The Bill certainly provided that the Treasury was not to advance money to meet acceptances, and of that restriction he highly approved. He should be glad to bear the exact circumstances under which the money was to be advanced, who was to have it, who was to come in for, and who was to be shut out from, the benefits of this boon.
§ MR. CHILDERSthought it would have been more convenient to have replied to the right hon. Gentleman's question in Committee, but he had no objection to explain at that moment the circumstances under which the Bill in question was introduced. The railways of Ireland differed from those of England in this respect—namely, that in the former country they had been to a considerable extent constructed by means of loans from the Public Works Loan Commissioners—it had been part of the policy of the Government to make such loans, and sums had been lent by the Commissioners to the extent of several millions. In England, on the other hand, there was hardly a single instance in which a railway had been assisted by advances of public money. The money so borrowed by the Irish companies was to be repaid by means of a sinking fund extending over a certain number of years, and the companies were frequently obliged to re-borrow in the open market, either on debentures or more directly on acceptances, the sums they repaid year by year to the Commissioners. In this manner considerable sums had been borrowed of individuals by the companies, and the position of the latter at the present moment was this—the persons who had lent them money had insisted upon being repaid the amount of their advances, and the companies had found it utterly impossible to reborrow, even at high rates of interest and upon ample security, the sums necessary to meet the demands upon them. The late Government, believing that the pressure upon the companies was due to an exceptional and temporary state of things, and that it was quite irrespective of the general condition of the Irish railways 1628 had introduced for their relief the measure now before the House, which had been adopted by the present Government. In reply to the questions of the right hon. Gentleman (Mr. Henley), he might state that the Public Works Loan Commissioners would be the persons to judge as to the value of the security offered; secondly, that the money would be lent to replace money which the companies had had to repay upon debentures which had been purchased for bonâ fide investment, and not, as had been asserted the other night, upon debentures which had been handed to the contractors; thirdly, that the securities which the Public Works Loan Commissioners were to accept were to be the original debentures issued in accordance with the Acts of the various companies, and not upon Lloyds' bonds or similar engagements, and that the rate of interest was not to be less than the company had paid upon the debentures which they had had to discharge, except in certain instances where a Treasury Minute allowing of a less rate of interest being taken was laid upon the table of the House.
§ MR. W. ORMSBY GOREsaid, there was no doubt that the measure was a highly exceptional one, but he thought the statement of the hon. Gentleman gave a sufficient justification for its introduction. At the same time, he thought the late Government had missed a good opportunity for acquiring the Irish railways upon favourable terms. Lowering the rates for the conveyance of passengers and goods on Irish railways would tend towards increasing the prosperity of the railway companies as well as that of the country. The Irish railways were now in a transition state, but after a time he thought their financial condition would be greatly improved.
MR. GLADSTONEsaid, he thought the hon. Gentleman (Mr. W. Ormsby Gore) was premature in stating that the late Government had missed the opportunity which offered itself for securing the Irish railways. It was impossible to deal with the subject of so much importance as that of placing the control of the Irish railways in the hands of the Government in Committee. That question could only be considered by a body appointed for that purpose. Such a body was now sitting; but they had not yet made their Report on the subject. It was quite clear that if it should prove to be practical and expedient to deal with the Irish railways in the manner suggested by the hon. Gentleman, any operation of that kind 1629 would be facilitated by the present measure. He had little to add to what had been said by the hon. Member for Pontefract; but he must thank the right hon. Member for Oxfordshire (Mr. Henley) for the fairness with which he had stated the case and the vigilance with which he watched over matters of this kind. It was certainly desirable that a subject like this should not be passed over as a matter of course, but that it should be well understood by both the House and the public. He had only one qualification to make to the statement of the right hon. Gentleman. But, perhaps, he ought here to state that this was not an arrangement made at the last moment of the existence of the late Government, but that it was substantially made about three months ago, at a time when a sharp pressure, almost amounting to a panic, had come upon the money-market. The right hon. Gentleman had said that as the security was to be accepted only after investigation by the Public Works Loan Commissioners it must be assumed that it would be good, and that therefore the whole amount of benefit which would accrue to these parties would be £25,000 a year. Now, the first of these propositions was perfectly well-founded, for there could be no doubt that the security would be good if it had been examined by the Loan Commissioners. But he did not think it was correct to say that the benefit to the parties would be £25,000. In dealing with this subject there were two things to be taken into consideration. One was that at periods of monetary crisis not only was the rate of interest raised, but the area of transactions was contracted and people were indisposed to enter into engagements which were supposed to be of a secondary or inferior order. That view would be taken with regard to many of the Irish railways, which would labour under a prejudice that would prevent them from obtaining advances at all at such a moment. Then in most of these cases, besides obligations on debentures, there were likewise obligations on the private acceptances of Directors. Though he did not wish to speak of those debentures as if any discredit attached to them, he might remark that it was the want of a margin in the available returns that rendered it difficult to renew such acceptances at low rates of interest. With regard to these acceptances, the present measure might have a beneficial effect, by enabling the Directors to renew acceptances which they might otherwise have to take up. After what had 1630 been said by his hon. Friend (Mr. Childers), the right hon. Gentleman would probably be able to appreciate the amount of innovation introduced by this Bill. There need not, at all events, be any apprehension that, in consequence of this measure, a standing-ground would be given to English railway companies to make application to the Government for advances. In the present instance the distinction was that these advances were not made for the purpose of any construction of new railways. That was by the amount of innovation proposed by the late and approved by the present Government. He thought the right hon. Gentleman opposite would be disposed to agree that that was a justifiable proceeding. The right hon. Gentleman was aware that there was not the slightest apprehension on the ground of the sufficiency of the security; while, on the ground of precedent, he for one could not see how any argument could be drawn from the present proceeding in any other circumstances which were likely to arise.
§ MR. GRANTsaid, he was not altogether convinced of the wisdom of the policy laid down by the right hon. Gentleman the Member for South Lancashire (Mr. Gladstone). The right hon. Member for Oxfordshire had raised a large question on what seemed at first to be a very small one. Indeed, the whole subject of legislation respecting railways generally, and also the subject of the raising of their capital by railway companies, were involved in it. The acceptances referred to by the right hon. Gentleman existed only in the case of those railways which were technically known as "contractors' lines," and he had never known any line, the capital of which had beets subscribed by the public, for which the acceptances of the Directors had been given at all. He understood that this measure was intended as a boon to Ireland. If the House was of opinion that public money should be sent to Ireland to re-pay to private capitalists debts which the railway companies were unable to meet he had no more to say; but he feared that, unless some exceptional principle of legislation was to be adopted for Ireland, the example would soon be extended to England, where already there was more than one company and one set of creditors who were in a condition to set up the demand. Indeed, the Bill, though brought forward with the apparent object of benefiting Ireland, in reality only conferred a benefit on private capitalists. If it were pretended that these loans. of money were 1631 to be advanced for the construction or completion of new lines of railways in Ireland, and thereby giving occasion for the employment of labour, there might be some apparent argument in favour of a measure like the present. As it was, however, he agreed with the right hon. Gentleman the Member for Oxfordshire that the Bill which authorized the loan of public money for the good of private individuals would establish a very dangerous precedent.
THE CHANCELLOR OF THE EXCHEQUERwished to state the chief reason which induced Her Majesty's present Government to take up this measure which had been introduced by their predecessors, because that reason had not been mentioned by the right hon. Gentleman opposite. It was shown to Her Majesty's Government that the rolling stock of many of the railways in Ireland would be seized by creditors, and the general communication of the country seriously embarrassed unless some measure were passed in order to prevent such a state of things. The fact that this was a great question of public convenience mainly influenced the Government in their decision; but there was also another, though a secondary consideration. The Bill having been sanctioned by the late Government, the persons who were to be relieved had, of course, counted upon the arrangement as one which would certainly be carried out, and they had refrained, in consequence, from making engagements which otherwise might have been entered into. It was quite clear, therefore, that under the circumstances great injustice would be done if the Bill were not proceeded with. Therefore, first, on the broad ground of public policy—for that was the main ground; and secondly, as a matter of justice to individuals—which he thought ought to have some weight in the case—the Government had adopted the plan which had been proposed by their predecessors.
§ MR. WHALLEYthought that in this matter the Government ought to wait for the opinion of the Railway Commission that was now sitting on the subject of Irish Railways. There was a tendency on the part of all railway companies to keep their fares higher than was for the benefit of the companies themselves. There was also a tendency among them to establish a monopoly which was not only adverse to the interests of the public, but adverse also to the interests of the monopolists themselves. If this system of advances 1632 were established there were many railways, especially in Wales, that would be as ready to claim assistance from the Government as the Irish railways were. But he admitted that as the Government had already advanced money to Irish railways, this advance might be considered as protecting their own property.
§ MR. MONSELLwished to point out that this temporary advance had nothing to do with the general inquiry into the state of Irish railways which he had had the honour to bring forward in the course of last Session. The object of this Bill was purely temporary; it was to lend money for three months, which might be extended to twelve; and the necessity for it arose not only from the financial crisis, but also from the political state of the country. He had made inquiries of a gentleman who was thoroughly conversant with the state of Ireland, who told him that since the occurrence of the Fenian disturbances it had become impossible to get the bills renewed; and if the Government now refused this temporary advance the effect would be, as the Chancellor of the Exchequer had truly said, to stop the railways altogether. It was not, therefore, a matter of convenience for private individuals; it was distinctly for a public object of great importance to the country, and it had nothing to do with the general question of railway management.
§ MR. BLAKEsaid, there was one circumstance that entitled Irish railways to peculiar consideration which seemed to be overlooked by every speaker except the right hon. Member for Limerick (Mr. Monsell). It was not only the monetary panic, it was the unfortunate insurrectionary movement that had caused the difficulty. The unfortunate Fenian movement had raised such a distrust in the minds of the bondholders that they had insisted on the payment of the bonds as they became due. The Directors, in many instances, had given their own private security to cover the demands. Had they not done so the rolling stock of their lines would have been seized.
§ MR. SYNANdenied the allegations that had been put forward by the hon. Member for Kidderminster (Mr. Grant.) The Bill was not intended to make advances to private individuals, it was not intended to cover private securities, but it was to advance money to public companies, to cover public securities, and to prevent the railway lines from being altogether stopped. Advances of money had been made to India for railways, 1633 on the plea that those were reproductive works; and was Ireland, an integral part of the Empire, to be treated worse than India? He could not conceive anything more injurious to the connection between the two countries than to talk of this measure as one of jobbing and intended for the benefit of private individuals.
§ MR. ALDERMAN LUSKsaid, he did not mean to oppose the Bill, but he considered that it was not in consonance either with mercantile principles or with the principles of political economy. The excuse was put forward which was used by every man who paid only 10s. in the pound—the bad times. The House was told that the bonds were refused to be renewed. And why? Because the securities were not good. As a rule he believed that the more companies of this description were assisted the worse they got, and the greater ruin they produced at last. As he said, he did not mean to oppose the present Bill, but he hoped the Government would not go any further in this line.
§ Bill considered in Committee.
§ (In the Committee.)
§ Clauses 1 to 3 agreed to.
§ Clause 4 (Advances of Money to Railway Companies in Ireland).
MR. HENLEYasked the late Secretary to the Treasury how, if the money granted was not enough for all, the priority of the parties applying was to be settled? Was "first come first served" to be the rule, or what was?
§ MR. CHILDERSsaid, advances could be made only to replace certain debentures falling due, not to replace the whole of the debentures of the companies. The limited number of debentures falling due within a period of three months, or even twelve months after the passing of the Act, would not in all exceed the £500,000 voted for the purpose.
§ Clause agreed to.
§ Clause 5 agreed to.
§ Clause 6 (In default of Payment for Twelve Months Undertaking vested in Secretary of Public Works Loan Commissioners.)
MR. HENLEYwished to know whether the Treasury would stand in the same position in regard to priority as the debenture holders that had been paid off. The clause left the point in doubt.
THE ATTORNEY GENERALsaid, the point was worthy of consideration. As the clause stood he apprehended that 1634 the mortgages given to the Loan Commissioners were in the nature of salvage mortgages, and would take priority over other securities. The point should be considered before the Report was brought up.
§ MR. CHILDERSsaid, the intention was that the Treasury should stand in the position of the creditors whose bonds had been paid off.
§ MR. GOLDNEYsaid, that as the clause stood if the money advanced by the Commissioners was not repaid in a twelvemonth they would stand in the position of first mortgagees, and the whole of the undertakings would vest in them.
THE ATTORNEY GENERALproposed, with the view of removing any doubt, to insert the words providing that the priority proposed to be given to the Commissioners should not exist as against the holders of other debentures or securities.
§ Remaining clauses agreed to.
§ On Motion that the Bill be reported,
MR. HENLEYsaid, it was not to be supposed that in assenting to this Bill he would be committed to anything which had been stated by the right hon. Gentleman the Member for Limerick (Mr. Monsell) with regard to the future amalgamation of Irish railways or the future lowering of fares. He had not formed any opinion on the point, and consequently could not have expressed any.
§ Amendment made.
§ Clause, as amended, agreed to.
§ MR. MONSELLsaid, the two things were entirely separate.
§ MR. CHILDERSsaid, the distinction between the two subjects would be clearly shown by the second and longer Treasury Minute dealing with the whole subject of Irish railways, which the Government, he supposed, would not object to produce.
§ Motion agreed to.
§ House resumed.
§ Bill reported; as amended, to be considered upon Monday next.