§ MR. BLAKE
said, he rose to call attention to the Act of last Session intituled "The Railway Companies (Ireland) Temporary Advances Act, 1866," and to move that it is the opinion of this House that, with a view of affording to Irish Railways the full relief contemplated by the said Act, it is expedient, under existing circumstances, that the Lords Commissioners of Her Majesty's Treasury should exorcise the powers conferred on them under the fourth Section, by directing that the period within which temporary advances should be made be extended to the maximum period allowed by the Act. He felt it was rather a novel proceeding to ask the House to express its opinion that an important public Department should do its duty by carrying into effect the manifest intention of both Houses of Legislature as expressed in an Act of Parliament. He would not have troubled the House with this matter only that he had exhausted every means to try and induce the Treasury to do what he considered they ought in conformity with the spirit of the Act referred to. He came before the House on behalf and at the express desire of very large railway interests in Ireland to ask that what was determined on by Parliament last year should be carried into the full effect intended. Towards the close of last Session, in consequence of the very strong 1938 representations made of tie difficulties in which several Irish railway companies were placed, owing to the general money panic, but more particularly to the want of confidence in all Irish securities in consequence of the Fenian conspiracy, the late Administration resolved to bring in a Bill to temporarily assist Irish lines in their emergency to the extent of £500,000. The 4th clause would explain the terms on which the loans were granted—1. Every Loan shall be made either for the Purpose of discharging the Principal of Money temporarily borrowed and actually applied within Three Calendar Months before the passing of this Act in discharging Principal Money secured by any Debentures or other Securities of the Company duly issued before the passing of this Act pursuant to the Acts relating to the Company, or for the Purpose of discharging the Principal Money secured on any such Debentures or other Securities due at the Time of the passing of this Act, or falling due within Three Calendar Months afterwards, or within such further Period not exceeding Twelve Calendar Months from the passing of this Act as the Commissioners of Her Majesty's Treasury may from Time to Time direct.This Act was subsequently passed by the present Government. By the 4th clause the Public Works Loan Commissioners, at whose disposal the money was placed, were authorized on their own responsibility to advance loans due on debentures falling due within three months after the passing of the Act. All debentures due at periods beyond that time could not be liquidated by Government advances unless by the express sanction of the Treasury. The Loan Commissioners made advances when they deemed the security satisfactory to the full extent allowed them, but the whole sum lent by them for bonds falling due within three months after the passing of the Act was, he believed, under £200,000. Therefore, fully £300,000 of the sum voted by Parliament remained undisposed of, the greater portion of the debenture debt being due at periods beyond the three months. Under these circumstances, the Treasury was applied to to exercise the powers vested in it to grant loans for debts falling due beyond the period within which the Loan Commissioners were empowered to act. To the surprise, however, of the applicants, the Treasury refused to exercise their powers for the purpose. He (Mr. Blake) had some interviews with the Secretary to remonstrate against this decision, but without effect. The reasons assigned by the right hon. Gentleman (and which, he supposed, would be again advanced that night as he had resolved to oppose the 1939 Motion) were, that the chief reason Government recommended Parliament to grant the aid to Irish railways was in consequence of the high rate of interest at the time the Act was passed, fully 10 per cent, but that, as it was now down to 2½ per cent, railway companies, if their security was good, ought to go to the money-market to supply their wants; and that the fact of being now willing to give the Government 4 or 5 per cent went far to prove that the security offered was not unexceptionable. He (Mr. Blake) denied altogether the accuracy of the assertion of the Secretary to the Treasury that the high rate of interest was the chief reason why Government recommended aid to be given to Irish railways, and would refer to the hon. Gentleman's own speech when the subject was under discussion, to show that it was not the principal plea which Government put forward to induce the House to comply with their recommendation. He would now endeavour to show that, in a strictly financial point of view, railways were not in a better position at present than they were when the Bill was passed to obtain loans on debenture bonds. These securities partook very much of the character of investments, and in the height of the money panic the interest on good investments was not beyond what it was now. But Irish railways, in common with similar securities in England, even if no political causes had existed at all to depreciate the value of the former, were in a much worse position to raise money than they were six months ago. The decision of Baron Cairns respecting debenture bonds had so reduced their value as a security that nearly every one having them, except in very prosperous lines, were trying to realize often at a very large loss, and few would be induced to touch them. In this respect Irish lines suffered in common with those of England; but in addition companies in Ireland had their property depreciated in consequence of the Fenian disturbances, and in that respect were much worse than when the Bill passed. If the existence of Fenianism was a good reason when the Bill passed for making concessions to Irish railways, it could now be advanced with additional force as an argument for giving full effect to the spirit of the Act, which the Treasury resolutely refused to do. The Fenian threatenings in 1866 had culminated in actual outbreak in 1867, and had made matters, with regard to Irish securities, especially railway property, much worse— 1940 and in consequence the companies found it quite impossible to get their debenture bonds taken up at interest they could offer; it was not a question of interest but of confidence, and there was an absence of that to an extent that left many companies unable to meet their liabilities. [The hon. MEMBER having read portions of the debate of last Session to show that Fenianism was a chief ground of the Bill then introduced, proceeded to say.] He supposed they were now satisfied that the rate at which Fenianism was going on in June last, and not the rate of interest, was the main reason for the introduction and passing of the Act. Now, what was the pie-sent position of matters? True discounts had gone down, but cetainly Fenianism had gone up. The gracious Speech of Her Majesty at the opening of Parliament announced that Ireland had become so tranquil that the Suspension of the Habeas Corpus Act would be removed. In little more than a week there was open rebellion in Kerry. That was suppressed, and half-a-dozen, or perhaps a dozen, similar demonstrations took place in different parts of Ireland, which surprised every one, and, he believed, none more than the Government, as they evidently did not expect so practical a denial of their statement, that Ireland had become tranquil and well affected. The effect on money-lenders was such as might be expected—they closed their coffers so far as Ireland was concerned, wisely remarking that when Government were so much out in their calculations about Ireland they would not venture their money there. The most sensitive of all sensitive things was capital, and on the present occasion it shrank from coming in contact with Fenianism. The directors of many of those lines had pledged their own personal security for large amounts to sustain their companies—in one instance to the extent of £60,000; but there must be a limit somewhere to men involving themselves personally for matters in which they were only interested as shareholders, probably to an extent far below the heavy liabilities they undertook, to save from destruction the undertakings in their charge. They had, through him, appealed to the Treasury to help them through their difficulties by simply carrying out the Act of last Session, but had been refused; and he seriously warned the House and Government that, if the application then made failed, the consequences would probably prove most disastrous to the 1941 country, and even to the Government itself, as some of the lines applying for aid were in the centre of the scene of the Fenian disturbances. The Secretary of the Treasury told him that without a vote of the House the Treasury would not relax their determination; and he (Mr. Blake) confidently appealed to the House, for the sake of the important interests involved, to confirm the wise and previous decision they came to last Session with regard to sustaining Irish railways in their struggle with difficulties caused by the exceptional circumstances in which they were unfortunately placed by difficulties for which neither proprietors or directors were accountable.
§ MR. POLLARD-URQUHART
seconded the Motion. He wished to guard himself against the supposition that he was suing for the Irish railways in formâ pauperis. There were peculiar circumstances which existed now which did not exist at the commencement of this undertaking. Great part of the hostility of the malcontents seemed to be directed against railways, and therefore the value of railway property was peculiarly affected by this unfortunate conspiracy. Then another thing which had depreciated the value of railway property was the recent decision of Lord Justice Cairns. He contended that; these two reasons were quite sufficient to justify himself and his friends in asking that the Act of last Session should be carried out in no niggard spirit. In conclusion, he would express the hope that the Government would give a favourable consideration to the Motion which had been made.
To leave out from the word "That" to the end of the Question, in order to add the words "it is the opinion of this House that, with a view to affording to Irish Railways the full relief contemplated by the Act of last Session, intituled, The Railway Companies (Ireland) Temporary Advances Act, 1866 it is expedient, under existing circumstances, that the Lords Commissioners of Her Majesty's Treasury should exercise the powers conferred on them under the fourth Section, by directing that the period within which temporary advances should be made be extended to the maximum period allowed by the Act,"—(Mr. Blake,)
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ MR. HUNT
said, that the Act, the operation of which the hon. Gentleman asked the Government to extend, was 1942 one of a very exceptionable and peculiar nature, it being an Act to enable the Government to advance money to Irish railway companies to pay off debt. Previously to its passing he was not aware of any case in which public money had been advanced, except for the execution of works. The policy of successive Governments in late years had been to lend money at a low rate of interest to promote public improvements; but he believed that the Act he had just referred to was the first instance where public money had been advanced to pay off debts. It was regarded with jealousy when introduced, and the right hon. Member for Oxfordshire (Mr. Henley) observed at the time that the measure required to be watched, or it would form a dangerous precedent. The circumstances under which the late Government undertook to introduce the measure were set forth in two Treasury Minutes laid on the table of the House last year. The first Minute was dated May 24, and it began with a statement that a deputation consisting of gentlemen largely interested in Irish railways waited on Earl Russell and the Chancellor of the Exchequer, and represented that, in consequence of the then existing monetary derangement, it was not only impossible for these railway companies generally to obtain money for the works in progress on reasonable terms, but that many of them were called upon to repay at a short notice large sums borrowed on mortgage and other security for the prosecution of their works; that Earl Russell and Mr. Gladstone found difficulty in adopting any scheme of a permanent nature affecting railways in Ireland until the Royal Commission on Railways should have made their Report; but that this objection would not apply with equal force to temporary measures taken in view especially of the existing derangement of the money-market; and they recommend that the Public Works Loan Commissioners should be authorized to advance during the next three months on the security of debentures already issued, and being overdue or falling due within that time, sums not exceeding in the whole £500,000 for one year at a rate of interest not less than 4 per cent, upon being satisfied as to the sufficiency of the security offered. Before the expiration of the three months, it was likewise stated in the Minute, it would be open for consideration whether circumstances might render any further extension of the period advisable. He wished the 1943 House to observe that the reason stated for the advance was the existence of derangement in the money-market—the Bank rate of discount, he believed, being 10 per cent when the Minute was framed, and when the Bill was brought in by the present Chancellor of the Exchequer and himself the Bank rate of discount was still at that figure. With respect to the question whether the period in which the debentures falling due were to be paid by money raised under the Act should be extended, there was a second Treasury Minute, dated June 15, which stated that another deputation had been to the Treasury and urged that the power of the Public Works Loan Commissioners to lend money should be continued by the Act for a period of three years, so as to enable any debenture falling due during that time to be taken up. The Minute went on to state that Mr. Childers said that should circumstances hereafter require an extension of the period, during which the lending and borrowing powers were to be exercised, it would seem the more proper course to seek from Parliament in a future Session an extension of the powers. When the Bill was introduced the Chancellor of the Exchequer rested the case for it, as the first Treasury Minute did, on the derangement of the money market. The hon. Gentleman opposite (Mr. Blake) had said that he (Mr. Hunt) alluded to the Fenian disturbances. It was true that he did allude to them as aggravating the difficulties, but he did not rest the case solely on that ground—as he had said the main consideration was the state of the money-market. Now, what had taken place under the Act? The Public Works Loan Commissioners were solely to be the judges of the security, and had power to make advances without reference to the Treasury in all cases within the meaning of the Act, with this single exception—that they could not extend the time without Treasury sanction. £500,000 were destined for the purpose of the Act, and there had been applications for the loan to the extent of £926,089. Of that amount there had been refused on account of insufficiency of security applications for £226,992, and applications for £244,865 had been refused on account of not coming within the limit of the Act. Sums to the amount of £123,796 had been advanced, and loans which had been agreed to be advanced to the amount of £10,700 had not been taken up. In addition, one company had withdrawn their application. 1944 Now what was the state of things when the time was about to expire? At that period the monetary derangement had entirely passed away, and the Bank rate of discount had fallen from 10 per cent to 4 or 4½ per cent. Therefore the monetary considerations which had induced the Government to introduce the Bill had entirely disappeared; and the view of the Government was, under the circumstances, that parties could go into the market for their money. He would mention a fact which confirmed the view of the Government on that point. A large sum of money was applied for by one of the companies in Ireland, and it was found on examination that a great part of the sum did not fall within the meaning of the Act. A certain portion, however—£34,000—did fall within the time, and the Commissioners offered to advance that sum on the same terms as they advanced money to other companies—namely, at £5 per cent. The company then, informed the Commissioners that in such case they declined the offer, as the public offered better terms. [An hon. MEMBER: What was the date?] The date of that transaction was the 30th of October; and this he contended was a confirmation of the propriety of the decision of the Government at the time that decision was taken. That being so, the House, he thought, would be of opinion that the Board were justified in the view they took that the exceptional state of things which induced the Government to bring in this Bill having passed away, they would not be justified in extending the time beyond the three mouths limited by the 4th clause. The Government took this view—that supposing the state of things existing now had existed when the measure was introduced, they would not have introduced it. The present Government would not, and he did not believe the late Government would have introduced it; and he might say the House would not, in his opinion, have assented to it, except under the exceptional circumstances then existing. The passing of the measure had, as many predicted, given rise to various applications for Government loans for various purposes; and this showed that his right hon. Friend (Mr. Henley) was quite right in saying that it would be a dangerous precedent. The other day a large and influential deputation waited on the Ministers of the Crown and applied for loans to pay off debts incurred in the construction of works of public utility; and they represented that 1945 they would be able by getting loans from the Government to save the high rate they were now paying for the money they had taken up in order to construct those works. Such a policy was pessimi exempli, and he heard of other applications about to be made, as if the Government were a great "Credit Company," bound to find money for all persons who could not get it elsewhere, or to lend at a lower than the current rate of interest in the market. He did not see any difference between Irish railways and certain English railways. It might be said the Fenian outbreak bad affected the question. No doubt it did to a certain extent. We bad no Fenian disturbance here, except at Chester, and that did not alarm us much; yet many railway companies in this country had great difficulty in taking up their debentures; and why should they mete one measure to Ireland and another to England? Supposing the House were of opinion that they ought to comply with the terms of the Motion, he confessed he did not see how they could resist applications from railway companies in this country. He thought the special circumstances attending the monetary crisis under which the Act was passed having entirely passed away, they would not have been justified in using the powers given under the Act, which were never intended for the state of things which now existed, but only applied to the contingency of the rate of interest keeping up during the Parliamentary recess. If they adopted this Resolution, he did not see how they could resist applications from other quarters of a similar nature, and be confessed the amount of such applications and the number of them would be perfectly appalling to any one filling the position he had the honour to do. He therefore hoped the House would not assent to the Motion, but leave the matter as it now stood on the decisions come to last October.
§ MR. LAWSON
said, what his hon. Friend (Mr. Blake) asked was not to extend the operation of the Act, but to pass a Resolution that it is expedient that the Commissioners of the Treasury should act on powers already given by the Act of Parliament. The Secretary of the Treasury had spoken of applications from other companies; but he seemed entirely to forget that the English Companies had no Act of Parliament. The Legislature last Session passed an Act placing at the disposal of Irish railways, 1946 under certain conditions, a sum of £500,000 for taking up debentures falling due within three months after the passing of the Act, without application to the Treasury, and debentures falling due in twelvemonths subject to the approval of the Commissioners; and the only thing asked was that the Commissioners of the Treasury should exercise their discretion of granting these loans, although the debentures had fallen due at a longer period than three months after the passing of the Act. There was no possible danger to the public revenue in this, for the Loan Commissioners were directed not to make loans unless the security were both sufficient and proper. The necessity for such loans was just as great now as when the Act passed. The Legislature meant that the whole £500,000 should be appropriated for that purpose if proper security were given for it, and the other conditions mentioned in the Act complied with; but of this sum only £144,000 had been advanced; and therefore, he contended, there was no reason, either connected with the state of Ireland or the public funds, why the extension proposed should not be granted. Nothing but common justice was asked; and he could not but contrast the grudging and niggard spirit in which these loans were administered with what they had heard from deputations to the Viceroy and otherwise about the generous and enlightened policy the Government were prepared to pursue towards the sister country, pledging their belief, and almost their assurance, that very great aid would be given to Irish railways. He trusted the Secretary of the Treasury would re-consider the matter.
§ MR. M'KENNA
desired to make a few remarks in reference to the objection which had been urged to a compliance with the requests of Irish railways, where applications for loans were not made within the three months provided by the Act. The hon. Gentleman the Secretary of the Treasury had referred to the fact that at the time the Bill received the sanction of the House the rate of interest in the general market was 10 per cent per annum. This was doubtless true, and it constituted one ingredient in the conditions of pressure under which the railways then suffered; it could not, however, have operated as an inducement to Parliament to help them, for it rendered any help then given a cost and loss to the State. The pressure on the railway companies now arose from one cause only; but if that cause were adequate the 1947 Government were bound to use their powers to continue the operation of the Act, for the railways were not now asking any concession whatever at the expense of the State; the companies were prepared to secure to the country 5 per cent per annum, and this money would cost the country under 3½. The present pressure on the Irish railway companies mainly arose from the panic of investors consequent on the Fenian movements. No one could have less nervousness on the subject of that movement than he (Mr. M'Kenna.) But fears which were unwarranted and contemptible did prevail, and were sufficient to paralyse industry and injure credit. He hoped that these railway companies which were constituted of the best friends of order in Ireland would receive from the Government at this juncture that consideration which Parliament so lately sanctioned.
§ MR. CHILDERS
said, he did not wish to enter into the general question; but he understood the Secretary of the Treasury, in the remarks he had made, to intimate that the Bill of last year was likely to prove an inconvenient precedent. He had said that that Bill was pessimi exempli, and that if its principle was correct, what they had done for Ireland they might be called upon to do for England. But he (Mr. Childers) wished to point out that there was no need to fear that the railways of England would have a better title to the assistance of Parliament in consequence of the passing of the Act of last year. In reply to the same objection, which had been taken last year, he had explained that the railways of Ireland stood in a very different position from those of England. The English railways had been constructed entirely by private enterprize, whereas the Irish railways had been constructed to a great extent by means of loans from the Public Works Commissioners, which had to be repaid by yearly instalments. The Government, therefore, having lent the money for the construction of the lines, and having been repaid large sums, the re-payment of which, with the addition of the sinking fund, had compelled the companies to borrow on debentures; and those debentures having been, in the pressure of last year, unrenewable, it was not, he thought, unreasonable to allow them as a temporary loan a portion of the money that they had made in re-payments. He Loped that the hon. Member for Northamptonshire (Mr. Hunt) would not still maintain that the Act of last year would 1948 justify the English railway companies in asking for similar relief.
§ MR. SYNAN
said, that the influences that had deranged the finances of Irish railways last year were still in operation, and therefore the Government were bound to carry out the intention of the Act passed in the last Session. Good security and high interest were offered for the loan, and he could not see why Government should decline to carry out the intention of the Act. All that was asked was that they should examine the securities the railways had to offer, and if they were satisfied to advance the money.
SIR HENRY WINSTON-BARRON
reminded the House that the Act under which this application was made was passed at a time when the money-market was deranged by the rate for money varying from 10 to 12 per cent. Since then there had come the Fenian outbreak, and the consequence was that the money-market was more deranged than ever. It was more difficult now than it was last year to get money, either for the English or Irish railways. He wished to remind the House that the Government would really gain by this scheme, for they would be able to borrow money at 3 per cent, while they would lend it to the Irish railways at 5. As for the securities, there could be no doubt about their value, because, in fact, the Government would examine their value for themselves. If the loan were refused let Parliament depend upon it that the Irish people would not forget the circumstance.
MR. J. B. SMITH
had been disposed to object to this Motion, as he understood that it was an application for money to assist Irish railways, which he thought ought on principle not to be acceded to. But he found on examination that the application was only to carry into effect the provisions of an Act of Parliament which had been passed by universal consent last Session; it was not a new application for a loan to which he would have objected, and in the peculiar condition of affairs in Ireland he hoped the Government would accede to the renewal of the loan which Parliament had authorized.
§ THE CHANCELLOR OF THE EXCHEQUER
The matter now before us is one which, since we succeeded to office, has much engaged my attention. The position of the railways in Ireland had attracted the attention of our predecessors in office, and they had entered into arrangements and engagements, probably not to be vindicated by strict principles of political economy, but which yet might he defended on grounds of political justice. We accepted the position which was left to us by our predecessors, and it appeared to me one in which the State might interfere with very great advantage to Ireland, and, generally speaking, in a manner which could be defended on every principle of sound policy. What were the circumstances? They were laid before us by deputations headed by persons of great position in Ireland, and who sit in both Houses of Parliament. There was then a monetary panic of a peculiar character, which doubtless does not exist at the present moment, though its consequences remain, and naturally must remain, to some extent, in a country situated like Ireland. We found that the means of communication in that country were endangered, and it was possible circumstances might arise which would interrupt the public communications in a manner not merely injurious to the interests of Ireland, but of the Empire. We agreed to assist the Irish railways under certain conditions, which I think were well considered, and so conceived as to effect, not only the purposes which we desired, but to secure the public interest and to protect the public resources of this country. No doubt, the state of affairs in a monetary sense has changed. No one can say now that he is obliged to pay 10 per cent as the minimum rate of interest at the Bank; but, at the same time, the consequences, even in England, of the great anxieties of that period are seriously felt, and property of this kind has not yet recovered its proper and natural condition. But, in addition, the social condition of Ireland is different from that of England. In Ireland there are social circumstances of a very perplexing character which exercise a most injurious effect on its industry, on the employment of its capital, and, of course, on the employment of its labour. I do not want to intrude the Fenian invasion into this discussion, which is one relating purely to a matter of business; but, as that subject has been introduced, it is impossible to 1950 shut our eyes to the remarkable consequences of that almost unprecedented state of affairs. What the Fenian movement is I do not at this moment understand, although in the course of the day I receive several telegrams on the subject, and give them very anxious consideration. I believe it is rather to be accounted for by physical than political causes. I know that in the Middle Ages there was a "dancing mania," and whole nations fell into fits of I dancing, and passed the borders of contiguous countries till they accomplished a distance of 3,000 leagues. There is no doubt that there is an epileptic feeling which affects nations like individuals, and I can only account for the Fenian movement on the epileptic principle. There is no doubt that movement has affected the value and position of railway property in Ireland. Whether the Fenian invasion is as bad as a 10 per cent minimum rate it is very difficult to say; but there are many Members on both sides of the House who are no doubt competent to consider the proposition, and in due time to give us the result. I can only take a rough estimate. I look on the Irish railways now as being almost in the identical position which they were when we acceded to office, and succeeded to the policy of our predecessors. I wish to carry out that policy in its integrity. I do not want to change it. I do not propose to change it, and I will not sanction any change in it. If the Irish railways can come forward and give us good security it will be the duty of the Government, in compliance with the original arrangement, naming a period which has not yet been completed, candidly to consider their claims. They will be considered, I must fairly tell them, with the severity that becomes the office which I hold. If they can offer us ample and complete security, then I think the duty of the Government will be to give them that assistance which the legislation of last year approved and authorized us to afford.
§ MR. BRADY
expressed his satisfaction at the speech of the right hon. Gentleman, and said that had the reply of the Secretary of the Treasury been as explicit and straightforward, there would have been no occasion for entering upon the discussion. He was rejoiced at the course taken by the Government, being convinced that bad it not been adopted the most serious results would have taken place in regard to railway property in Ireland.
§ Amendment, by leave, withdrawn.