§ Order for Second Reading read.
§ MR. AYRTON, in moving that the Bill be now read a second time, said, it was now about fourteen years since that House undertook to relieve the Government and the metropolis from the great difficulties and embarrassments into which both had fallen in consequence of the policy, for a long time pursued, of declining to establish in the metropolis such municipal institutions as it had been thought necessary to form in other parts of the country. That policy no doubt originated in the old idea that the increase of the metropolis would be dangerous to the State, and that the best course was to keep it in a state of subjection, if not confusion. The result was, that at last the Government found itself unable to cope with many great questions, such as the state of the drainage and the promotion of those improvements which the changing circumstances of the metropolis rendered necessary. In order to grapple with these matters the Metropolitan Board of Works was instituted, and that body applied themselves with great ability and industry to the solution of the difficulties which pressed on their attention. In the first place, they dealt with the great question 327 of drainage. Parliament declared that the sewage should no longer flow into the Thames. The Metropolitan Board of Works prepared a scheme in reference to that matter, and saved the metropolis from being plunged into an expenditure of £10,000,000, by reducing the plan of drainage within reasonable limits, so that the expenditure to be incurred was brought down to £3,000,000. The project, however, extended itself, and in course of time the expenditure was considerably increased. In the first place, the Metropolitan Board of Works had to grapple with the difficulty of providing funds to carry out the limited plan, estimated to cost £3,000,000, for the main drainage. The Government of the Earl of Derby took a liberal view of the matter, and came forward with a public guarantee to enable the Metropolitan Board of Works to raise the necessary funds; but in carrying out that arrangement sufficient regard, perhaps, was not had to the enormous future before the Metropolitan Board of Works. The arrangement made was, consequently, of a very limited character, and the Board of Works, without attempting to found a system of finance commensurate with the future requirements of the metropolis, only thought of getting the money requisite at the moment on the best terms they could. The money was obtained on securities wholly unmarketable —namely, on bonds having such conditions attached to them that no private individuals would have thought of taking them. The Board of Works therefore had to submit to the terms which persons wishing to borrow money on unmarketable securities must be content to put up with. After the main drainage, other great works came to be considered, and the Board of Works were led by the Government to embark upon the undertaking of the Thames Embankment on the north side of the Thames. The Bill for that object was not promoted by the Metropolitan Board of Works, and, consequently, had not the advantage, in the arrangement of its provisions, of that good sense which a body like the Metropolitan Board of Works were likely to bring to the consideration of the subject. The result was that the scheme was encumbered with a number of conditions, which impaired its efficiency, and added to the expense. The estimate, which induced the House to sanction the scheme, amounted to £1,000,000, but when the 328 duty of constructing the work devolved on the Metropolitan Board of Works, they found that it would cost, not £1,000,000, but nearly £2,000,000. They were also induced by the Government of the day to embark upon the construction of the embankment on the south side of the Thames, which they were led to believe would cost £480,000, but they found afterwards that the cost would be £900,000. The Metropolitan Board of Works undertook a number of minor improvements, such as the enlarging of streets, and inherited all the duties arising out of previous transactions. Parliament had likewise imposed upon the Board of Works the important duty of protecting the metropolis against the contingency of fire, and the Board had in consequence been obliged to incur a very considerable expense in the construction of fire-engine stations in all parts of the metropolis, and in the maintenance of an efficient fire brigade. All these operations continued to increase from year to year, and for these purposes the Board had gone on borrowing money "from hand to mouth," upon no settled system, and upon securities not generally negotiable or marketable. At length the Metropolitan Board of Works reached a stage of indebtedness of considerable amount. The funds which they had available to secure their loans had been, in the first place, a rate of 3d. in the pound, known as the main drainage rate. They also had at their disposal funds produced by the coal and wine duties. Besides this they had the power to levy a rate of ½d. in the pound for the purpose of fire engines. The amount produced by the rates had gone on increasing, in consequence of the improvement in the rateable value of the metropolis, which had reached £18,450,000; and the produce of the coal and wine duties had likewise augmented, in consequence of increased consumption. Nevertheless, the Metropolitan Board of Works found themselves embarrassed to raise the necessary funds to carry on the works, the duty of completing which had been imposed on them by Parliament. This might be ascribed to the fact that the future of the Metropolitan Board was not foreseen; and, in fact, it appeared to be in much the same kind of financial condition as the Chancellors of the Exchequer at the beginning of the last century, before the present system of 329 finance was established, who had to go down into the City and make the best bargains they could for the money they wanted. He would state generally the position at which the metropolis had arrived by the operations he had described. After deducting what had been re-paid by the surplus of monies received out of particular funds appropriated to these debts, they had now a debt secured in various ways amounting to £7,996,256 or, in round numbers, £8,000,000 sterling. That was the debt already created, not what would enable the Board to complete the operations in which it was engaged. It had power to levy further loans to a very considerable extent; and the immediate difficulty was to obtain those loans at such a rate as the security they could give would justify them in expecting. The further loans sanctioned amounted to £760,000, For the great street between Blackfriars Bridge and the Mansion House there was the sum of £300,000; for Park Lane improvements, £135,000; for a small embankment at Chelsea, £285,000; and for the Stingo Lane improvement, £40,000, making the total he had stated. But there were also works which must be carried on, and the monies for them not sanctioned it was absolutely necessary should be raised, and Parliament must give the necessary sanction for obtaining them. The main drainage had been carried out to a very great extent, yet there was a portion necessary to connect the Embankment works with the pumping station at Abbey Mills, and there were tributary sewers it was necessary to complete to give the inhabitants generally the benefit of the enormous expense that had been incurred. The funds required to complete the system of drainage amounted to £907,000. There was also a sum requisite for permanent works, connected with the fire brigade, amounting to £50,000; and there were other minor improvements which the Metropolitan Board was engaged in, which would require £80,000; and other smaller sums, amounting to £70,000; making in all £1,107,000. Putting all these sums together they had a capital required for the purposes of the Metropolitan Board of £9,863,000. That was the sum with which they had to deal if they would place the finance of the Metropolitan Board on a solid foundation. They were now dealing with things immediately present, in fact sanc- 330 tioned; but they could not but suppose the Metropolitan Board had yet a great deal to do, and therefore it was most important they should not go on with the system they had hitherto pursued, but that they should, if possible, place the financial condition of the Board on a solid basis, so that it might obtain its funds on conditions commensurate with the security at their disposal. He could not conceive why a loan properly raised by the metropolis should not, for all purposes of investment, be almost as good as one raised by Her Majesty's Government. The metropolis must stand or fall with the nation, and the credit of the metropolis must necessarily be as good as the credit of the nation, provided the metropolitan loans are not greater relatively to property and rateable value chargeable than those of the nation to the national resources. The Metropolitan Board had power to charge property rated at £17,000,000, besides an indirect taxation of £195,000. Could it be doubted, if the finances of the metropolis were properly managed, that was a security so ample and available as to enable the Metropolitan Board to raise the requisite money in the open market? The Bill on the table would effect several very important objects. In order to bolster up the present unhealthy system the Government were called upon to give the security of the State to the metropolis, which was of evil example to other towns in the kingdom. It was therefore better for the House to review what had been already done, and, if it could, retrace its steps, and say it would neither guarantee loans for the metropolis nor for any other particular section of the community. The first result would therefore be to free the National Treasury from all immediate connection with the local treasury of the metropolis. It was proposed by the Bill that all the existing loans raised by the metropolis should, with the assent of those who had advanced the money, be converted into one consolidated debt, precisely of the same character as regarded its incidents to the public creditor as the National Debt—to be treated as terminable annuities, and negotiable in the same way, the only distinction being that the one would be charged on the Consolidated Fund of the nation, the other on the consolidated fund of the metropolis. They would thus sweep away all the complications which had occurred within 331 the last few years, and bring the existing liabilities of the metropolis to a comprehensive and solid basis. They had not only, however, to deal with the debt which already existed, but with the sum which it would be necessary for the Metropolitan Board to borrow in order to meet the immediate requirements of the metropolis. That new debt would be placed upon precisely the same footing as the other. The debt would, in fact, be extended to the amount necessary to cover the various sums he had stated, and the whole would be raised upon identically the same terms. The Bill further made provision for the raising of all future loans which might be required by the Board in the same way. The Bill would thus establish a complete system of finance which would meet the past, present, and prospective wants of the metropolis. While this was the aspect of the loan as regarded the public, it would be necessary to make provision, for the sake of the rate-payers, that the capital of the loan should be gradually reduced and ultimately extinguished. That would be done by directing that a certain sum should be paid out of the rates calculated to redeem the capital of the debt in the course of sixty years. The consolidated fund would be composed of the rates, the coal and wine duties, and all the monies which the Board would receive on capital account, from the sale of properties which might come into their hands in the course of public improvements. In case the estimate should prove insufficient, power would be given to the Treasury to direct that a further rate should be levied, so that there could be no question that the principle would be carried out. The consolidated fund would be applied first to pay the interest of the debt, and then to liquidate the capital, either by purchasing stock in the open market or by applying it in the way of a sinking fund, as might be desirable, and in that way the debt would be extinguished. The House would see that, as the conversion of the existing debt could only be effected with the consent of the creditors, no injustice would be done to them. A further provision of the Bill would be to give facilities to all persons to invest in this stock. The House had already on several occasions considered this question, and had thought it right when stocks were established of a character which might rank: in estimation with the national stock that facili- 332 ties should be given to trustees and others to invest in them. Parliament had, indeed, gone very much further, because it had extended the power of investing money to stocks which were not at all comparable to that which was now about to be created by this Bill, such as East India Stock and that of the Bank of England. This stock would have all the attributes of the public funds. It had been said that Parliament was now asked to give greater power to the Metropolitan Board. That was an entire misapprehension, for the Bill would diminish their powers and place a restraint upon them which was highly desirable at the present time, while it was justified by the past. When the question of the finance of the municipal bodies of the country came under consideration, it was enacted that all transactions affecting the capital funds of those bodies should be subject to the sanction of the Treasury. The present Bill would also compel the Metropolitan Board to submit an accurate statement of their obligations before contracting any further obligations. The Treasury had already given the guarantee of the public to certain loans which the Metropolitan Board had raised, and they would, therefore, take care that nothing should be done for the future to affect the security which they already possessed. This was, he hoped, a sufficient guarantee that no abuse was likely to occur under this Bill. Hon. Members might wish to know what, after all, would be the general result of the measure. It would be this—that, if they passed no Bill at all they would leave the Board to flounder on and to raise money at high rates of interest to pay for the works in which they were now engaged. There would, consequently, be a great increase of the metropolitan rates, and the amount of those rates would grow with the difficulties which the Board might have to encounter in borrowing money. Instead of that, if this Bill were carried out, not only would the present requirements of the Board be met, but the rates on the metropolis would be reduced. It was a matter of speculation at what rate of interest the metropolitan consolidated loan could be raised. He had taken it for the purpose of estimate at 3½ per cent, and if so, the result would be that to pay the interest and re-pay the capital in sixty years would require, in addition to all 333 the other resources of the consolidated fund, an annual contribution of 2 per cent on the capital sum. That contribution, taken on the capital of, in round numbers, £10,000,000, would be £200,000; more accurately, it would be £197,000 a year for sixty years. A rate of 1d. in the pound on the metropolitan area produced. £76,875, so that a rate of about 2½d. in the pound would be required to provide for these terminable annuities. The main drainage required a rate at present of 3d. in the pound, so that instead of increasing the rate, they would be paying off all the debt and the capital expenditure, and would at the same time diminish the rate to 2½d. on account of the capital account. It would then be necessary to provide for the current expenditure, which might be estimated at £120,000. That would require a rate of a little more than 1½d. in the pound, so that a rate of somewhat more than 4d. would be sufficient, if this Bill passed, to meet the requirements of the Metropolitan Board; whereas, if nothing was done, there would be a prospect of their drifting into a rate of something like 8d. in the pound. That was not a pleasant prospect, and the Bill would avoid the necessity of imposing so heavy a burden upon the rate-payers of the metropolis. The improvements made by the Metropolitan Board of Works in the main drainage of the metropolis were of the most permanent character, and would endure as long as the houses now built. It was, therefore, desirable and reasonable that the charge for exigencies, which had been accumulating for several centuries, and now fell upon the present generation, should be spread over a considerable term of years. If the Bill were carried into effect in its entirety, it would relieve the inhabitants of the metropolis from a great and pressing burden, and provide for the revenues which its necessities from day to day required. He moved that the Bill be now read a second time.
§ Motion made, and Question proposed, "That the Bill be now read a second time."—(Mr. Ayrton.)
§ MR. HUNT
said, it was obvious that this was a most important Bill and one which this House ought not to pass without very careful examination. It was unfortunate, therefore, that it should not have been brought on for discussion 334 till the 20th of July, and without any financial statement, so far as he was aware, of the Metropolitan Board for this year having been laid upon the table. He was not prepared to say that the Government were in fault in not having introduced this Bill earlier; but this he would say, that before this Bill was pushed through all its stages there ought to be laid on the table a very full statement of the indebtedness of the Metropolitan Board and of the means it possessed to meet its liabilities. It was well known that for some time past the Metropolitan Board had exhausted its powers of raising money. The hon. Gentleman (the Secretary to the Treasury) said the Board had unlimited power of raising the rates, and that the property on which they could levy their impost was £17,000,000. There was no doubt that in law they had that power, but in fact they had gone to the end of their tether. If they attempted more the people would rise in arms against them; and the Board knew well that it was one thing to make a rate and another thing to collect a rate. Under these circumstances they came to the Secretary of the Treasury and asked power from Parliament to raise loans in a different manner. The hon. Gentleman said, and said truly, that the securities which the Metropolitan Board had to offer were of a kind that few people would accept. Their last securities were unmarketable. A few of them had found their way into the hands of the Bank of England; some were held by the Commissioners of the National Debt on behalf of the Savings Banks; but there were few others disposed of. It was now proposed to grant them power to create stock, and he had no doubt that if that power were given them the result would be that their securities would be more marketable. Neither did he see how on principle the House could refuse that power. They were now told that the Board wanted to increase its capital by the amount of £2,000,000, having power at present to raise £760,000. But he did not find in the Bill any limit whatever to the creation of stock, except in so far as it might be necessary to obtain the assent of the Treasury. He also understood the hon. Gentleman to say that the Treasury would have a voice with respect to the raising of fresh rates, but he did not find any such provision in the Bill. [Mr. AYRTON here pointed out a clause in the Bill.] Well, that clause 335 was not very intelligibly worded, and he was not sure that it would suit its purpose. There were certainly one or two provisions in this Bill that he would like to see removed. One of these was that trustees might invest their trust funds in this stock, and another was that the money of the Savings Banks might be invested in it. He hoped the time might come when, as the hon. Gentleman anticipated, this metropolitan stock might be equal to the national stock; but he certainly would not at present advise trustees to invest in it. He might further observe, that if the Savings Banks were allowed to invest their funds in this stock then, in spite of the professions of the Bill, the Government would be giving a guarantee equal to the amount of the Savings Bank money so invested; for if the money were not forthcoming when wanted the Government must make it good. It was somewhat strange, too, that if the security were to be so good as the hon. Gentleman would lead the House to suppose, it was found necessary by the 36th clause to provide that, if the dividends were not paid by a certain time, a person entitled to them might go before two justices of the peace of the metropolis and have a receiver appointed. He was not, however, as he had. already intimated, disposed to offer any objection to the principle of the Bill; but, seeing that it contained so many provisions, couched for the most part in very technical language, it would be well, he thought, that it should, if possible, be sifted by a small Select Committee. The adoption of such a course would, he believed, tend rather to facilitate than delay its progress through the House. The Session was now late, and much time would be occupied by an examination of the Bill in a Committee of the Whole House. He would certainly offer his most strenuous opposition to the two clauses which allowed of the investment of trust funds and the money of Savings Banks in the stock. He presumed that the Bill would not empower the Metropolitan Board to raise money, even with the assent of the Treasury, for the purpose of carrying out any works the expediency of constructing which was not in the first instance submitted to Parliament. If there was not a provision of that kind already in the Bill, it was absolutely necessary that it should be introduced.
§ MR. LOCKE
said, he thought the 336 suggestion of his right hon. Friend opposite (Mr. Hunt) ought to be adopted. The metropolis generally knew nothing whatever of the Bill. It appeared to him that there was no limit to the power of rating in this Bill, and no limit to any course the Metropolitan Board might adopt, except that they must obtain the sanction of the Secretary of the Treasury. But, as the Government refused to be answerable in any way for the money that was to be raised, the Secretary of the Treasury would have no deep interest in keeping a watch over the proceedings of the Board. He had heard nothing of the rate of interest at which the Board proposed to borrow the money, or in what way they intended to borrow it. The City for many years past had raised their loans on bonds which were always transferable, and this plan had been found to work extremely well. If the fund now raised by the Board were to be the only sum applicable to paying the interest of the stock, he could not see how this Bill would place them in a better position than that in which they now stood. They had now come to a stand-still, and could levy no further rate, and the question was whether hereafter they could increase the amount of the rate. There were difficulties in almost every clause of the Bill, and he thought the rate-payers ought to have a full opportunity of expressing their opinion with respect to it. He trusted the suggestion which had been thrown out by the right hon. Gentleman opposite would be adopted.
§ MR. CRAWFORD
said, he did not wish to offer any opposition to the second reading, though he thought the Bill would require amendment. The principal object of the Bill was said to te to enable the Metropolitan Board to obtain advances of money more readily and at a lower rate of interest without any guarantee from the Treasury, and to release the Government guarantee. To that there could be no objection, but there were many parts of the Bill which required serious consideration, and he therefore approved of the proposition for referring the measure to a Select Committee, by which improvements might be introduced more effectually than in the House. His hon. Friend (Mr. Ayrton) had spoken of the unfavourable terms on which money had been raised by the Metropolitan Board; but he did 337 not agree with his hon. Friend on this point. The greater portion had been raised under the sanction of the Treasury at 3¾ per cent, and the remainder, but not a large portion, at 4 per cent. He did not consider that a high rate of interest. The money which was not-covered by the guarantee had been raised at 4½ per cent, and this also was a fair market rate for the money. No doubt if the Secretary to the Treasury by consolidating the debt could make it more marketable, and could open the investment to the community at large, he would be doing a great public service. But the success of the scheme must depend on the present holders of bonds. Some wore payable in 1882, and others in 1888; the payment of the interest was secured by the Act of last year; £185,000 a year was set aside for the payment of interest to the bondholders and the redemption of the money until 1882. Whether the holders of these bonds would be content to exchange that security for a security not guaranteed by the Government he was unable to say; but so far as the success of the proposition depended upon their assent, it must not be assumed by anyone that the security offered under this Bill was a security which the present creditors would accept in exchange. He regretted that the House was not in possession of any detailed statement of the liabilities of the Metropolitan Board, or of its available resources. The whole of the debts of the Board, including £2,000,000 which they now required, would amount to £10,000,000. There was a sinking fund, to which £200,000 were appropriated. The interest, payable at 3½ per cent, amounted to £350,000, making together £550,000. There was a deduction of £195,000 on account of the coal and wine duties. With regard to the Bill itself there was no limitation as to the securities in which the money was to be invested. He thought that and some other points were fair matters of consideration by a Select Committee. He did not, however, regard with great jealousy the power proposed to be given to the Metropolitan Board of Works, for he did not conceive that that Board could enter on works with the consent of the Treasury alone, but they would also need the authority of Parliament for the purpose.
§ SIR WILLIAM TITE
said, the Bill 338 was brought forward entirely in the interest of the rate-payers. Up to a certain point the loans had been guaranteed by the Government, but last year an intimation was given that the guarantees had gone far enough. The Metropolitan Board had endeavoured to borrow money for the purpose of continuing the Embankment up to Battersea Bridge. They advertised for a loan and received offers at 4¼ per cent, but the parties were unable to carry out their offers. They eventually succeeded in effecting a loan in small sums at 4½ per cent to the extent of £150,000. Considering the great improvements which the Metropolitan Board were called on to carry out, he thought that when the Board were placed in this difficulty Parliament ought to do something to assist them.
§ MR. W. M. TORRENS
said, that many rate-payers regarded the provisions of the present Bill with jealousy. The reason why the Metropolitan Board were unable to raise money was that they did not command the confidence of the public, either with regard to their expenditure, or their mode of rating. Under all former Acts to enable that Board to raise money a limit had been fixed as to rating, but now it was proposed to consolidate the different Acts and omit the limitation. The power of unlimited rating ought not to be allowed. The check of the Treasury might be sufficient as regarded national expenditure, but he doubted if it would be sufficient in the case of a comparatively small community. The Bill had been framed regardless of that distinction, and also of a rule which ought not to have been overlooked. One of the recommendations of a Select Committee, over which the Secretary for the Treasury presided, was that in all future contracts for money the owners and occupiers should be rateably taxed. He wished to know why that principle had not been imported into the present Bill?
THE CHANCELLOR OF THE EXCHE-QUER
said, he was glad to find that the general feeling of the House was in favour of the second reading of this Bill. He thought its general principle must be admitted to be beneficial. It would enable the Metropolitan Board to borrow with greater facility, by putting the loan in the most available form, and make the best terms with the lender. It also relieved the Government from guaran- 339 teeing the loans of the Metropolitan Board, and although he did not think there was any risk in that guarantee, it certainly formed a bad precedent which might be liable to inconvenience if it were not put an end to. So far as it had any effect it would enable the Metropolitan Board to borrow on easier terms than they now did, and so far it would relieve the rate-payers. As to limitations, the Bill was limited to such a sum as, together with the revenues derived from different resources, would enable the Metropolitan Board to pay interest on £10,000,000, and to provide a sinking fund to pay off the whole in sixty years. If they attempted to limit the rates, that would, of course, interfere with the security, and so far increase the charge to the rate-payer. All this seemed to him, and he hoped to the House, very reasonable; but the proposal made by his hon. Friend the Member for Southwark (Mr. Locke), the right hon. Gentleman the Member for Northamptonshire (Mr. Hunt), and others was also reasonable—namely, that the Bill should be referred to a Select Committee. The Bill was technical in its language, the subject was intricate, and the state of Public Business had not enabled them to lay it before the House till the present advanced period of the Session. It might therefore be well to refer the Bill to the consideration of a Select Committee. The security of the metropolis, limited as it was in amount by this Bill, was continually increasing by the mere increase of building. It was a very good security, and he saw no objection to allow trustees to invest their funds in it. But he thought it a perfectly reasonable request that the matter should be looked into. It should therefore be referred to a Select Committee of seven Members, and his hon. Friend (the Secretary of the Treasury) would give notice of their names, so as to lose as little time as possible in proceeding with it.
§ MR. SCLATER-BOOTH
said, he was glad that the right hon. Gentleman (the Chancellor of the Exchequer) would refer the Bill to a Select Committee, as many of its provisions required attentive consideration. It had been said that the Bill was limited to a sum of £10,000,000, but that did not appear on the face of the measure. The hon. Member for Bath (Sir William Tite) was in error 340 when he stated that up to a certain time Treasury guarantees had been the rule with the Metropolitan Board. The powers of the Board were contained in statutes, and it was only when the Thames Embankment came before Parliament that any question of a Treasury guarantee arose, and a guarantee was then given by the Chancellor of the Exchequer, who was now the First Minister of the Crown. So far as he knew that was the only Treasury guarantee which had been given. The present Bill proposed to take that guarantee away, and in that case what would be the inducements which the public would have to subscribe to a new loan? There were two—one that the period of re-payment would be extended, and the other that the stocks would be consolidated. He should offer no opposition to the second reading of the Bill, but he objected to the assumption contained in the clauses that the measure would be a great success. It was assumed that the stocks created would be admirable investments, and that they must command the confidence of the public, and therefore it was provided that trustees should invest trust money in them. It would be time enough for that, however, when the stock had been before the world some time, and when it had really earned the confidence of the public. The investment suggested under the 9th clause was open to great objection, as it seemed to him to be an indirect interference by the Treasury with the Metropolitan Board of Works, which would give a moral if not an actual guarantee to investors, and the same objection applied to the provision under which the Commissioners of the National Debt were authorized to lend their money. He thought if the actual guarantee of the Treasury were withdrawn it would be better to let the stock find its own way in the market, and commend itself on its merits to the confidence of the public.
§ MR. JESSEL
said, he entirely agreed with the general object of the Bill, but he must protest against the 8th clause, which proposed to authorize trustees to lend trust money to the Metropolitan Board of Works, upon the securities offered by the Bill. The effect of that would be to authorize trustees to lend trust money on a security on which they were not authorized to lend by their 341 trust, or, in other words, it would allow a man's contract to be altered without his consent. The trustees would thus be empowered to commit what would otherwise be a breach of trust, simply because the trainers of this Bill thought it might be beneficial. No doubt there were precedents for such a course, but they were very bad ones. He thought that the policy of the Act passed at the instance of Lord St. Leonards, which empowered trustees to invest funds in Bank of England and East India Stock was highly objectionable; but that Act, at all events, dealt with stocks which had been long created and with the market value of which Parliament was well acquainted. But the present Bill proposed to allow trustees to invest in stock of which nothing was at present known, and the very nature and conditions of which had yet to be settled between the Metropolitan Board of Works and the Treasury. They were told that there would be ample security provided for the invester, but on examination that security turned out to be of a very illusory character. By the 36th clause provision was made for the appointment of a receiver, and he was to be appointed by two metropolitan justices, on the application of a creditor of £1,000, to look after £17,000,000. But that receiver was to have no salary, to give no security, and if there were any defalcations under his management, the loss was to fall on the person or persons who had applied to have the receiver appointed. Anything so absurd as these provisions he had never seen. It was an insult to a man's common sense to call that a security for anything. He hoped when the Bill went before a Select Committee reasonable provision would be made for the appointment of a receiver by the Court of Chancery under the usual regulations made in such cases. The 43rd clause provided that the Metropolitan Board might create terminable annuities. Looking at the 8th section, he did not find that it imposed on the investments which might be made by trustees under its operation any of those limitations as to the consents to be obtained which existed in the case of other investments of trust funds, and the result would be that trustees might invest their money in annuities which would give over to the tenant for life the whole of the property. He hoped 342 the House would pause before it proceeded any further in a career which, if persevered in, would, he believed, end in disaster to the owners of settled property.
§ MR. ALDERMAN SALOMONS
said, it seemed to him that the Bill endeavoured to accomplish, in a very roundabout way, what might be effected in a direct manner. In his opinion, if they wished to assist the metropolis to clear off its debt, the best and the easiest mode to attain that end would be to give a Parliamentary guarantee; and considering the magnitude of the metropolitan property, he did not think that any danger or inconvenience could arise from such an operation. Unless the stock which it was proposed by the Bill to create were made thoroughly marketable by means of a Parliamentary guarantee, it would utterly fail in securing the object which it was intended to promote. Instead of being a security scarcely less substantial than Consols, it would be brought into competition with the various secondary securities, such as the new East India Railway Stock, in whose case a comparatively high rate of interest had to be paid, and the metropolis would not be benefited by being enabled to raise loans at a low rate of interest, to the extent which the Government seemed to expect.
MR. ALDEBMAN W. LAWRENCE
said, he was of opinion that the speech in. which the Bill had been introduced to the notice of the House by the Secretary to the Treasury was even more alarming than the Bill itself, involving as it did the question whether the principle of funding debt—that last resource of persons in difficulties—was to be brought to bear in every case of local expenditure throughout the country. It was incumbent on the House to see that by a Bill of this kind the rate-payers in the metropolis were not saddled with an expenditure towards which they could not fairly be called on to contribute. There was to be a transfer office and a sinking fund; the Board were to have power to create terminable annuities and buy stock. It would be a copy on a small scale of the Imperial Treasury, and a Chancellor of the Exchequer would be necessary in the Metropolitan Board to explain these complicated financial arrangements. The Secretary of State for the Home Department had stated that he hoped, in the year after next, to in- 343 troduce a measure for the general government of the metropolis. That being so, was this a time for the creation of this amount of consolidated stock merely for the sake of raising the £750,000, which, according to the Secretary to the Treasury, was the immediate want? The Chancellor of the Exchequer seemed to have been bribed into acquiescence by the prospect of getting rid of the Government guarantee; and that was the reason he had supported the Bill. In his (Mr. Alderman Lawrence's) opinion, however, the measure was, in every point of view, crude and unsatisfactory, and he was glad that it was to be referred to a Select Committee. He must express his surprise that such a measure should be brought in at so late a period of the Session.
§ COLONEL SYKES
said the Bill would be at least productive of this advantage —that it would create, in the person of the Secretary to the Treasury, an officer who would answer in that House for the Metropolitan Board of Works; and as the right hon. Gentleman himself held a responsible position, some sort of connection would thus be established between Parliament and that Board. Hitherto he (Colonel Sykes) could never get any Government official to answer for the acts of the Metropolitan Board of Works. He was of opinion that the Bill should be referred to a Select Committee, in order that it might be thoroughly examined before any legislation was based upon it. So far as he could see, its effect would be to lay an increased burden of 2 per cent upon the rate-payers, with the view of paying off the capital sum. Already, in order to insure the payment of the debts of the Metropolitan Board, the poor had to pay an enhanced price for their coals, and. therefore had a just right to complain. At any rate, this House should exercise a direct control over the works undertaken by the Board.
§ MR. J. LOWTHER
said, he did not object to the Bill being referred to a Select Committee; but he thought that the House was somewhat hasty in expressing agreement with its principle. He thought that a more inopportune moment could not have been selected for introducing so important a scheme than the present moment; and that not simply because the Session was wearing towards its close, but because Parliament was on the eve of entering upon 344 reformed legislation to meet the requirements of metropolitan government. He thought it would have been wiser to have delayed this Bill, for its only effect would be to fix more firmly than ever round the neck of the people of London the huge millstone of the Metropolitan Board of Works. He believed the ratepayers would rather see that Board entirely dissolved.
§ DR. BREWER
said, the Metropolitan Board of Works had been originally called into existence by Parliament to supersede the Commissioners of Sewers. As time passed on, fresh works and responsibilities were thrust upon the Board without the necessary funds being given to it to carry out the schemes, and the consequence was that the Board now came before Parliament asking for facilities to relieve itself of a responsibility of £10,000,000. He maintained that Parliament having put the Board into this awkward position, was bound to do all in its power to extricate it from the dilemma.
§ MR. T. CHAMBERS
said, he could not admit that Parliament should be held responsible for the position in which the Metropolitan Board was placed. The Bill was a remarkable comment on the proceedings of the Metropolitan Board of Works, for it appeared that while that Board had an unlimited power to tax occupiers, they could not, however, make any further addition to the taxation, on account of the inability of the rate-payers to bear the burden. He had little faith in the moderation of the Board; and it by no means followed that, because they were enabled to borrow money on easier terms, the ratepayers would derive any benefit from that fact. Of course, investments by trustees would only be made with the requisite consents under trust deeds and settlements, and to that he did not see any objection. He hoped the Bill would be sent to a Select Committee.
§ MR. ALDERMAN LUSK
said, he hoped the Government would give time to enable the rate-payers of the metropolis to state their case fully. The rates were increasing year by year, and every consideration should be paid to the wants, grievances, and even feelings of the tax-payers.
§ MR. SAMUDA
said, he thought the purposes to which the money proposed to be raised was to be applied should be 345 clearly specified before the Bill was passed, and that if this were done the provisions of the measure would not be objected to. For instance, it might at some future time be found necessary to carry the main drainage works out to sea, and a very largely increased expenditure would be required for this purpose. It would be well, therefore, to fix beforehand the amount which the Bill was intended to cover, so that if any further sum should be required a fresh application to Parliament should be made for that purpose.
§ Motion agreed to.
§ Bill read a second time, and committed to a Select Committee.
§ And, on July 21, Committee nominated as follows:—Mr. AYRTON, Sir STAFFORD NORTHCOTE, Lord FREDERICK CAVENDISH, Mr. SMITH, Mr. M'LAREN, Mr. CROSS, and Mr. CHAMBERS:—Three to be the quorum.