NORTH BRITISH RAILWAY (CARLISLE DEVIATION) BILL.—CONSIDERATION. (Hansard, 30 May 1867)

§ MR. HADFIELD
said, he rose to move that the consideration of this Report be referred to a Select Committee. This was a case of great hardship to the shareholders of the Edinburgh and Glasgow Company. Not long ago they were induced to amalgamate with the North British Company, and they did so believing that it was a company of undoubted respectability. They, however, soon found out their mistake; and instead of receiving the benefits and security which they anticipated by the amalgamation, they were placed in the worst possible position. They discovered that the dividends which had been paid in former years by the North British Company were fictitious dividends, and that false accounts had been kept by them. The North British Company were now in such difficulties that they came to Parliament to ask them to grant power to raise no less a sum than £1,875,625, which was to be pre-preference stock; and thus to have preference over all the preference and other shareholders existing at the present time. If this proposal had not been an injury to the preference shareholders, possibly no objection might have been raised to it; but the fact was that the arrangement was of such a character that the shareholders of the Edinburgh and Glasgow Company were actually placed at the bottom of the list, and they would not receive a dividend until the claims of everybody else had been satisfied. He contended that this was a case of the greatest possible hardship, and that it was the duty of Parliament to appoint a Committee of Inquiry to report upon the whole circumstances of the matter. In his opinion a fraud had been perpetrated upon the shareholders of the Edinburgh and Glasgow by getting them to join such a concern as that of the North British. No doubt, had the Chairman and Directors of the Edinburgh and Glasgow Company had the slightest idea of the condition of the North British Company, no such amalgamation would ever have been permitted. No doubt the Chairman of Ways and Means had acted upon the representa- 1286 tions which had been made to him in this matter; but really, at present, he had only heard an ex parte statement, and the dissenting shareholders of the Edinburgh and Glasgow had a right to be heard. It was on these grounds that he begged to move the Resolution.

§ MR. ELLICE
said, the amalgamation of the Edinburgh and Glasgow Company with the North British Railway no doubt took place under circumstances which gave the Edinburgh and Glasgow Company very much the worst of the bargain. But both parties had agreed to that amalgamation, and they must abide by it. It was doubtless a case of diamond cut diamond, and the North British Company proved to be the hardest diamond of the two. Whatever the circumstances of that amalgamation were, however, they were not now before the House. The Bill they had before them was for the purpose of raising money upon pre-preference stock to enable the Company to pay off debts which actually at the present time had a preference over existing preference shares. The money when raised would go to satisfy the claims of creditors who, if they liked, could at the present moment step in and seize the plant, and thus put a stop to the operations of the railway altogether. He was himself a preference shareholder in the line, and he was one of those who had refused to give his consent one way or the other to the Bill, because he did not wish to fetter his action in Parliament. At the same time, looking at the case impartially, he was bound to say that he considered it would be for the interests of all parties concerned that this money should be raised, 1287 in order to pay off debts which must be got rid of before the ordinary preference shareholders could receive one penny. And nothing, in his opinion, would be more calamitous to this railway than that the present Bill should be postponed. The Directors had no other means of satisfying the creditors of the Company, and unless these creditors were satisfied by means of the powers proposed in this Bill, the interests of preference and all other classes of shareholders would be thrown into inscrutable confusion without the slightest prospect of coming out of it.

§ MR. DODSON
said, this Bill, like the great North of Scotland Bill, which was discussed yesterday, was one of a very peculiar character. It related to the internal affairs of a company which had gained considerable notoriety — namely, the North British Company. Now the position of that company was briefly this:—In round numbers their ordinary stock was £4,200,000, and over that there were £9,000,000 preference shares, and £5,000,000 of debenture stock. It had, moreover, power to raise by preference stock a further sum of £2,600,000, and by mortgages £1,000,000; but in the state of the company's affairs these resources were hardly available. Over and above all that, according to a committee of investigation appointed by the shareholder?, there appeared to be liabilities to the amount of £1,900,000, which was a first charge on the company. Now they had no means of meeting the payment of this £1,900,000, and therefore, under these circumstances of extreme difficulty, it was proposed to give them power to raise a sufficient sum of pre-preference stock to enable them to discharge this liability. As long as that sum of £1,900,000 was hanging over the company, it was quite clear they would have to pay interest on it, and they were liable to have their rolling stock and plant seized and swept away. Out of the existing preference shareholders, 78¼ per cent in amount had given their consent to this Bill, and only 3¼ in value were dissentients. The hon. Member for Sheffield had objected to the Bill on the ground of the treatment which the shareholders of the Edinburgh and Glasgow had received from the North British. The amalgamation between these two companies took place not long ago, and he thought it was very possible, as the hon. Gentleman had stated, that the North British got the 1288 best of the bargain; but that was not a question involved in the Bill now before the House. The Edinburgh and Glasgow shareholders, when they were amalgamated with the North British, became preference shareholders of different kinds in that company, and they had accordingly been asked to give their consent to the present Bill, and it would be found that a very large majority in value of them did consent to it. Under these circumstances, the Committee on the Bill had to consider very carefully what was to be done; and, on the whole, they came to the conclusion that, there being a choice of difficulties, it would be best to adopt the course proposed by the present Bill—they therefore reported in its favour. Now, as regarded the shareholders of the Edinburgh and Glasgow Company, who complained that they had no means of being heard against this Bill, let him remind them that if those shareholders had any distinct and separate interest from the North British they might have opposed this Bill. He was told by the promoters of the Bill that the Edinburgh and Glasgow shareholders had such a distinct interest, yet they did not come forward and oppose it, and the Bill when upstairs was unopposed, and as such it had been dealt with. But all these shareholders would have an opportunity of being heard, because after it passed this House it had to go to the Wharncliffe meeting, and the shareholders could there express their opinion of it. It had also to go to the House of Lords, where there was no Standing Order about separate interest. He quite admitted that this Bill was one of an unusual character, and he hoped that it was an exceptional one; but they believed they had done the best they could under the circumstances, and it now remained for the House to express its opinion.

§ MR. SAMUDA
was in favour of an inquiry in this case, because he thought it had been proved the shareholders of the Edinburgh and Glasgow had suffered great hardship. He should also be in favour of a general inquiry into all cases of this nature.

§ MR. CRUM-EWING
, having carefully considered the case, had arrived at the conclusion that it would be best for the interests of the Edinburgh and Glasgow shareholders, as well as those of the North British, that this Bill should be allowed to pass.