THE O'CONOR DONrose to call attention to the system of guaranteeing dividends out of the local rates in Ireland on capital invested in railways in that country; and to move a Resolution. The hon. Member said, at the present time there were certain railways in Ireland, the dividends on the capital, or part of the capital, of which were guaranteed, and guaranteed from exclusively Irish sources, although the possibility of such an arrangement seemed to be called in question in the debate on the Motion for the purchase of the Irish railways. The practice of guaranteeing dividends on Irish railways had grown up unperceived. He believed it had never received the formal sanction of Parliament, and it had been gradually increasing to such an extent that soon no railways in Ireland would be made without a guarantee. The first case he could find was that of the Galway Extension Railway, the Act for which passed in 1849, guaranteeing a dividend on a capital of £500,000. The Act in this case was a public and not a private Act, and the money was advanced by the Treasury. Then came the Killarney Junction Railway to which a guarantee on a capital of £125,000 was given; the Limerick and Ennis Railway £75,000; the Tralee Line £55,000; and the West Cork Line £66,000. All those Acts, down to 1871, had this characteristic—that the guaranteed capital was the borrowed capital, and was the first charge on the receipts from the railway, and it was not till 1871 that a guarantee on the ordinary share capital of a railway company was first heard of. In 1871, the first Bill was introduced proposing to make the ratepayers of a county responsible for dividends on the share capital of an Irish railway. Since the system of guaranteeing dividends on the capital employed in the construction of railways was becoming general, and, so far as appeared, was likely to be continued, he thought it should be placed on some intelligible and satisfactory basis, and that Rules should be laid down for the guidance both of the promoters and opponents of these Bills. He believed at the present time guarantee clauses might be introduced into any Irish Railway Bill without any approval or assent being asked for from the ratepayers. 316 As a general rule, the assent of the Grand Jury of the County was sought for; but as a matter of fact the constitution of the Grand Juries was such that their assent could not be taken as the assent of the ratepayers, who had to bear the responsibility. The two bodies in Ireland, who acted on behalf of the ratepayers, were the Grand Jury and the Presentment Sessions. The Irish Grand Jury, as a rule, represented the landed proprietors of the county; while the Presentment Sessions consisted of the whole magistrates of the county, with whom were associated a certain number of the ratepayers. No great weight was due to the assent of such bodies, but even this small protection was not afforded under the present Rules of Parliament. That was certainly a very unsatisfactory state of things, and he objected to the system in the first instance, because the assent of the ratepayers was not made a necessary preliminary step. He objected to it also on another ground—namely, that the ratepayers had no control whatever over the company in respect of the works for which a guarantee was given, and that was likely to lead to extravagance and waste. As he had before said, the Grand Juries were composed of the landed proprietors of the county and the Presentment Sessions of the magistrates, and a certain number of what were called the "highest cesspayers." Those highest cess or ratepayers were selected by the Grand Jury, who also fixed the number to be associated with the magistrates at each baronial sessions. It was evident that a body thus constituted did not represent the ratepayers. In the first place they were liable to be out-numbered by the magistrates, and in the second, even if they were equal in numbers, they were not the representatives of the whole body of ratepayers, being merely the nominees of the Grand Jury; and yet they had the power of giving their assent to guarantees which might impose heavy financial burdens upon them. Would such a state of things be tolerated in this country? There was this further grievance in the matter. The Bills on which guarantees were thus granted were introduced under the guise of Private Bills, although they imposed a tax upon the general body of ratepayers. Had they been introduced as Public Bills the 317 ratepayers could object to them through their Representatives; but being introduced as Private Bills, they were passed, almost as matter of course, through the first and second stages without any opposition or debate, and then referred to Select Committees upstairs; and the only opportunity the ratepayers had of objecting to them was by feeing counsel and going to all the expense of a Parliamentary opposition. The ratepayers, however, were a scattered body, without organization—was it to be expected that a number of ratepayers scattered all over a county or a barony would unite for such a purpose? As a matter of fact, unless some three or four wealthy persons, who had a direct interest in the matter, put their hands in their pockets and paid the costs of an opposition, there was no chance of preventing a Bill, however unpopular it might be, passing through Parliament unopposed. Under the Standing Orders relative to Railway Bills in this country no Bill could be promoted by an existing railway company unless it had the assent of shareholders representing three-fourths of the capital of that company; and what he proposed was that no Bill granting a guarantee for the construction of a railway in Ireland should be proceeded with unless it were shown that the assent of three-fourths of the ratepayers had been given—or at all events a majority of the ratepayers eligible to act with the magistrates at the Presentment Sessions. He was fully aware that that would not be a complete or satisfactory plan, and that the most satisfactory way would be to act through the medium of elective and representative bodies. The best mode in which the desired reform could be effected would be by the reform of the Grand Jury laws, which successive Governments had year after year promised to inaugurate, and had year after year neglected to perform. He was afraid they might have a long time to wait before the Grand Jury laws were reformed; but, meanwhile, if his proposal for obtaining the assent of the ratepayers was not approved of, he thought that the system of guarantees ought to be stopped altogether. He would only say that, desirous as he was of seeing railways extended in Ireland, he did not think they were going the right way to promote that extension by giving 318 these guarantees; on the contrary, they were proceeding in a course which must promote jobbery and extravagance. The practice took away every incentive to good management, for shareholders who knew that their dividends were guaranteed were not so likely to insist on careful management as they would be if the amount of their dividends depended upon the mode in which the affairs of the company were conducted. In most of the Irish railways which had not been financially successful the cause was to be found in the fact that there had been great waste and great expense in what was called "financing the line." He had a very great objection to "financing," and nothing could promote "financing" so much as saddling a district with a fixed interest on the capital of a railway, whether the line paid or not. He believed that no greater boon could be conferred upon Ireland than the extension and completion of the railway system, if economically, fairly, and satisfactorily carried out. He believed that could best be done by the local governing bodies raising the capital themselves, and getting the line made by cash. Under this system the lines could be cheaply made; contractors would be readily found to take them; and, when made, they could be let out on lease to existing companies. If the right hon. Baronet the Chief Secretary for Ireland would direct his attention to see how money could be advanced to local governing bodies rather than to the raising of money to pay off the existing debts upon Irish railways, it would be a better thing both for the ratepayers and for the country at large. He, for one, contended that if the ratepayers were to bear the burden, they ought to reap all the benefit that might accrue; and as they had no practical experience of how these guarantees would work, he believed they ought, at least, to be discouraged until such time as the ratepayers, through some representative body, could control them. The hon. Member concluded by moving the Resolution.
§ CAPTAIN NOLAN, in seconding the Motion, pointed out that there was a great difference between the poor rate and the county cess in Ireland. The poor rate was paid equally by the landlord and the tenant, and was levied by an elective and representative body. But with respect to the county cess, the 319 ratepayer had practically no representation at all—the whole power rested with the magistrates and with the small number of highest ratepayers selected in the way described by his hon. Friend. The magistrates were men of such high position that the cesspayers had no influence over them, and the highest ratepayers were not elected, but selected. The consequence was that, while there was general satisfaction with respect to the poor rates, there was general dissatisfaction with regard to the county cess. From what he had said, the House would perceive that the cesspayers were not properly represented on the sessions, with which rested the power of giving the guarantee for the construction of railroads. To a certain extent he agreed with both the Resolution and the Amendment of which Notice had been given, and should like to see both carried; but as that could not be, he should prefer the adoption of the original Resolution.
§
Amendment proposed,
To leave out from the word "That" to the end of the Question, in order to add the words "in the opinion of this House, the existing system under which dividends chargeable on the Local Rates are guaranteed on capital invested in the construction of Railways in Ireland is unsatisfactory, and that no Bill containing local guarantee Clauses ought to be entertained, unless in the first instance the assent be proved of at least a majority of the ratepayers eligible for association with the magistrates at each of the immediately preceding baronial sessions of the county, and that in all future cases when the rates are thus pledged for the payment of dividends, the local governing bodies should be empowered to raise on behalf of the ratepayers the capital necessary for the construction of the Railway,"—(The O'Conor Don,)—instead thereof.
§ Question proposed, "That the words proposed to be left out stand part of the Question."
§ MR. CONOLLYthought that the hon. Member's Resolution had attacked the great blot on the Irish system of railway legislation. The granting of these guarantees to railways was a vicious system, which had arisen out of one irregular proceeding—namely, the guarantee granted to the Great Western of Ireland, in order to continue their line from Athlone to Gralway. This had been used as a precedent, and there was no law authorizing this vicious procedure. These Bills passed through this House instead of allowing the rate- 320 payers to decide for themselves. The consequence was that a number of useless and unprofitable schemes were projected and brought before Parliament, and the ratepayers were fixed with the liability of guarantees granted by bodies on which they were not represented. He maintained that primâ facie the promoters of railways in Ireland had no more right than they had in England to call upon the ratepayers to assist them. County rates were raised for county purposes, and ought not, in his opinion, to be diverted to any other object. He hoped the right hon. Gentleman who now so ably filled the office of Chief Secretary, would take care that this system was not allowed to continue—it was a most vicious one. Any line, however unpromising, could be promoted and carried out by means of these local guarantees, and the business had now become the nucleus of jobbing professional "promoters" of railways, wandering from county to county, seeking for guarantees to enable them to construct railways that otherwise would not be constructed at all. A case in point had recently occurred in Parliament. A Bill, authorizing a projected line of railway, was recently before a Committee of the House of Lords, which had been bolstered up by guarantees from various counties through which the line was to run. The guarantees had been sought of the Grand Juries of the counties of Fermanagh, Leitrim, and Sligo, and not from the ratepayers of those counties; but the Committee having refused to sanction those guarantees the Bill had dropped through. He was himself connected with an opposition line which, without guarantees of any sort, but solely by the energy and enterprise of its shareholders, had constructed a line of 37 miles, and had successfully worked it. They now desired an extension of that line; but they were unable to undertake it by reason of this opposition line, which had been foisted on the House by means of these vicious guarantees. Nothing could be more prejudicial to Irish railways than such a system. He could not entirely concur in the terms of the Resolution, inasmuch as while denouncing the system of guarantees in one part it proposed to restore them in another form. He objected to guarantees altogether, and he believed that if the sense of the ratepayers 321 was fairly taken they would never be given. The county rates should be applied for county purposes, and not for aiding impracticable railway schemes. They in Ireland had hitherto avoided the serious calamity which existed in England, and which had been so well brought before the House by the hon. Member for Devonshire, of having every description of charge placed upon the county rates. And they, with this example before them, did not intend to fall into such a mess, for which even here in England it had puzzled the Government to devise a remedy.
§ MR. M'CARTHY DOWNINGsaid, he entirely agreed with the first part of the Resolution, that the mode in which guarantees on capital were now given was not satisfactory; but his hon. Friend was not well informed as to the manner in which they were obtained. He was mistaken in supposing that the Bills in question passed through this House without inquiry, and almost as a matter of course. On the contrary, he could assure his hon. Friend that there were several instances in which such Bills had been thrown out because the assent of the Presentment Sessions had not been obtained. In one instance, a railway was proposed to be made through a district for the benefit of the landed proprietors; and these proprietors imposed the whole of the rate on the occupiers, relieving themselves from all liability in the matter. It was no wonder such a Bill should be thrown out. Several Select Committees had sat on the subject of these local guarantees, and he thought the Irish people had reason to complain that the Government had neglected to act on their recommendations. The root of the evil was that the ratepayers who were associated with the magistrates in the Presentment Sessions were selected by the Grand Jurors, who could nominate their own tenants, instead of being elected by the ratepayers, who therefore had no real representation; and the only remedy would be found in legislation to improve the constitution of the Presentment Sessions. There were four companies in Ireland which had, open and at work, 151 miles of railway, and who had not demanded a shilling of the guarantee without which the capital for their construction could not have been raised; and the probable effect of the proposed 322 Resolution, if it had been in force, would have been to prevent the making of those lines at all. The local governing bodies referred to could raise money if it were required, but he would not trust them to do so—he would prefer to rely on magistrates and representative ratepayers associated with them. But without guarantees Ireland could not have the railways which were essential to her development. He appealed to the right hon. Gentleman the Secretary for Ireland, if he had not time to inquire into the whole subject, to bring in a short Bill altering the system of Presentment Sessions so as to give protection against jobbery, and render it acceptable to the people of Ireland. For the rest, let him leave the guarantees alone, without them, necessary railways must be made, only make provision that the ratepayers should not be held responsible for taxation without representation.
§ MR. H. A. HERBERTsaid, that since the decision come to by Parliament in the present Session on the subject of Irish Railways, there was no resource left to the promoters of railways in Ireland but guarantees; and yet Irish Members seemed anxious to cut off that resource if they could. It would now be more difficult to get guarantees than ever it had been before. He did not believe that the relation between the magistrates and the ratepayers was such as it had been represented to be—he did not believe that the magistrates overpowered the ratepayers. In his own county, at any rate, the magistrates and ratepayers understood each other, and the guarantees that had been given by both parties, share and share alike, had operated most beneficially for the interests of both.
§ MR. BRUENthought it would be obvious to the House, from the discussion which had been held, that the system of guarantees had not led to any abuse. But he must go further, and say that the principle of these guarantees was an unfair one. The associated ratepayers should certainly have a voice in these matters, and no taxation should be initiated without their consent. He hoped the question would attract the attention of the Chief Secretary for Ireland.
§ MR. COGANthought it would be most unfortunate for the extension of railways in Ireland if the principle of 323 guarantees were discountenanced. At the same time, he considered that no guarantee should be enforced on a district except with the full assent of those who would have to pay it; and, therefore, he agreed in the principle of the hon. Gentleman's Amendment. Taxation should never be allowed to fall on the occupier alone. He could not, however support the latter portion of the Resolution of his hon. Friend. He thought that the entire capital should be guaranteed on the district for all time, instead of for a limited period.
§ MR. O'REILLYsaid, that there was really no law in the matter, but it was open to the promoters of any railway to bring in a Bill containing a clause for a guarantee to be given by the county. There was no fixed or settled rule as to the guarantees to be authorized by the Grand Juries or Presentment Sessions, and formerly they were confined to giving assistance to a certain specified amount. A practice had, however, gradually grown up of extending the guarantee from debenture or borrowed capital to original capital. This was a change of very dangerous tendency. He could confirm the statement that there was now no legal necessity for obtaining the consent of the county, and no way in which the assent of the ratepayers would be ascertained; nor was there any instance of a Bill containing a guarantee clause being thrown out unless upon opposition before the Committee upstairs. Cases had been known in which individual cesspayers had been obliged to pay down the cost of opposing a Bill before the Parliamentary Committee, in the hope of being recouped afterwards by their brother cesspayers. The Private Bill Committees ought to have some guide in regard to dealing with these guarantees. It had been insisted on that some sort of consent on the part of the county should be put in, and it was the practice of Lord Redesdale to ask whether the Grand Jury and the Presentment Sessions had passed a Resolution in favour of the Bill. No security, however, existed that the Grand Jury at any particular Sessions had been duly authorized to give the guarantee in question, or that notice, even, had been given prior to the meetings of these bodies that a Resolution would be proposed in favour of a guarantee to a railway. He trusted that one result of 324 this debate would be that in future no reliance would be placed on these resolutions. If the practice of guarantees was to be continued, it ought to be systematized and definite, and explicit rules should be drawn up. He admitted the advantage of promoting railway extension in Ireland by a system of well-considered guarantees, but he thought the House ought not to be altogether blind to the results to which it might lead. It might tend to making the company careless of the interests of those who paid the guarantee; it might induce the construction of speculative lines to be constructed by guarantees, and lead to the most disastrous consequences in the Irish railway system. So long as adequate securities were taken that the opinion of the localities which were to be made liable were fairly consulted, and their assent obtained before any Bill could be passed by a Committee, he could not see any objection to the system of guarantees; but he thought it was the duty of the responsible Government to take up the matter, and devise some distinct plan for the attainment of the object in view, and that this should be done in time for the Private Bill legislation of next year.
THE MARQUESS OF HARTINGTONsaid, that without entering into the abstract question of the desirability of guarantees, he thought that in many instances they might, no doubt, be, and and had been, abused; but, on the other hand, useful railways had been made by the aid of this system which otherwise would not have been constructed. He was of opinion that it ought to be left to the Select Committee to form their own judgment upon each particular case whenever it arose, and that it was utterly unnecessary for the House to adopt any general conclusion as to the advisability of guarantees. It appeared to him that there need be no difficulty in agreeing to the first part of the Resolution, which declared the existing system to be unsatisfactory. It was unsatisfactory from two points of view. In the first place, guarantees which ought not to be given might be obtained without sufficient information being laid before the Committee who considered the Bill, whether they had been obtained from the cesspayers, after full information as to the extent of the liabilities they were about to undertake. 325 Again, it was unsatisfactory because guarantees might appear to be refused when they had in reality been given. By a Standing Order of the House of Lords, the guarantee clauses of a Bill would be struck out unless it were proved that the assent given was unanimous. However, he (the Marquess of Hartington) thought that quite sufficient had been done by the attention that had been called to the matter in both Houses of Parliament, and he trusted that it would receive the consideration of the Chief Secretary for Ireland and the President of the Board of Trade. If the first part of the Resolution were adopted, the question might, he thought, be safely left in the hands of Her Majesty's Government. A new Standing Order would probably suffice for all that was wanted. They ought to secure full publicity, and the assent ought to be procured in some specified manner, and every opportunity be afforded for protest and examination. Besides, all this ought not to be left to the mere chance of its being an opposed Bill. In all cases, whether a Bill were opposed or not, it ought to be fully provided that all the prescribed proceedings had been gone through before that House sanctioned these guarantees. Probably the preparation of a Standing Order to that effect would not be beyond the powers of the Board of Trade, assisted by the authority of that House; and he trusted, therefore, that the House would be induced for the present to leave the matter in the hands of that Department. It was quite unnecessary at the present moment to enter into the question of the Irish Jury laws, although he could not help regretting that the Irish cesspayers were not better represented. This question was becoming a matter of more pressing importance than had been supposed, and he trusted that before taking any steps in the matter the House would wait for a complete reform being made in the Grand Jury laws.
§ SIR MICHAEL HICKS-BEACHsaid, he was satisfied that all would admit the importance of this subject, which had been brought before the House with so much knowledge and ability by the hon. Member for Roscommon (The O'Conor Don), and which had undoubtedly assumed far greater importance since the decisive Resolution at which the House had arrived this Session with re- 326 gard to the purchase of the Irish railways. Having declined to entertain that proposal, Parliament was all the more bound to consider what could be done to promote the extension and completion of the Irish railways. He did not wish to enter into the question of the advantage or disadvantage of the system of guarantees as a whole. Undoubtedly, there was much to be said against the system. The hon. Member for Longford (Mr. O'Reilly) had properly pointed out the very considerable distinction between guarantees of interest upon share capital and similar guarantees upon loan capital—the latter being far less a source of evil than the former. Guarantees were always liable to the objection that they might be dealt in by contractors, lawyers, and engineers for their own benefit rather than for the interest of the country through which the proposed line would run; and therefore if they were to be allowed, Parliament should take care, when sanctioning them, that those who would have to pay under them should have the fullest opportunity of giving or refusing their assent to them. On the other hand, however, it must be admitted that without the system of guarantees many railways now producing considerable benefit to Ireland would never have been constructed. It would not be right, therefore, too hastily to condemn the system, but they should do all that could be done to prevent or lessen the evils to which it might be liable. What was the Irish system of guarantees? The hon. Member for Longford had very properly described it as being no system at all. Thanks to the noble Lord the Chairman of Committees in "another place" (Lord Redesdale), whose services had been of so much advantage to the country, no Bill containing a guarantee had passed Parliament, if opposed by the cesspayers, nor unless it was sanctioned by the Grand Jury of the County. It, however, by no means followed that the assent of the Grand Jury implied the assent of the cesspayers. Having held office for so short a time, he had no desire at the present moment to enter into the merits or the demerits of the Grand Jury system of Ireland; but he might remind the House that the system was described by the Committee over which the hon. Member for Roscommon had presided 327 in 1867 as a pure and economical one. He could, however, see no reason why the opinion of the county Grand Jury on such a matter should represent more than the opinion of the individual landowners, of which it was composed. The mere expression of opinion by that body should not be regarded as sufficient to lead Parliament to bind the cesspayers of that part of the country to be liable to pay large sums for an indefinite number of years, in order to secure the interest on the capital of a railway company. In other matters, it was not in the power of a Grand Jury to initiate taxation at all. But while, on the one hand, the opinion of a County Grand Jury had been held as sufficient proof of the assent of the cesspayers, a very little opposition from a few cesspayers had induced Parliament to reject Bills which were widely approved of. In the case of the Sligo and Leitrim Railway Bill, which came before a Committee of the House of Lords a short time ago, there was evidence of a very large amount of popular support of the scheme. Yet that proposal was rejected by a Committee of the other House on the ground that no similar proposal had been assented to when it was opposed by any of the ratepayers. So that the case at present stood thus—that whereas a county Grand Jury, acting without proper authority, had been sometimes held sufficient to give a sanction to those guarantees, in other instances the mere opposition of a few ratepayers, who might have been set in motion by a railway company fearing competition, might cause the rejection of a guarantee. The House would admit that such a state of things was not only unsatisfactory, as the hon. Member for Roscommon put it in his Resolution, but urgently required a remedy. And when he heard the remedy suggested by the noble Lord opposite (the Marquess of Hartington), and by the hon. and gallant Member for Longford, he felt that they were entitled to call on the Government to take up that question with a view to its solution. The noble Lord had suggested that it might be possible, in the course of the present Session, to frame a Standing Order by which it should be required that notice should be given in the localities affected of any proposal for these guarantees; that full opportunity should be afforded for all the cesspayers who 328 were interested to make themselves acquainted with what was actually proposed; that opportunity should also be afforded for objections to be taken in the localities, instead of compelling persons to come at great trouble and expense before a Committee of that or the other House of Parliament;—and, in fact, that some scheme should be adopted for really ascertaining the opinions of the places concerned, before Parliament took any step on so important a matter. There was much in that suggestion which required careful consideration; but he would point out that at present there were no means of obtaining, through any recognized assembly, the opinions of the cesspayers on such a matter as this. He was disposed to think that the more that question was gone into the more it would be found that, for its real, fair, and proper solution, they must wait for a reform of the Grand Jury laws. Personally he should be extremely ready to devote his best and immediate attention to the subject, and, in concert with those who had had so much experience as the hon. and gallant Member for Longford and others, he would endeavour to secure, if possible, that such a Standing Order as had been suggested should be framed in the present Session. But he could hold out no promise on the subject, for the reason he had already stated. As to the proposal then actually before the House, and contained in the Resolution of the hon. Member for Roscommon, he understood that the hon. Gentleman did not intend to press it. He thought his hon. Friend would rest content with the discussion which he had raised, and with the assurance he (Sir Michael Hicks-Beach) had given on the part of the Government. It was possible that some solution might be arrived at this Session which, if it did not place the matter on a thoroughly satisfactory basis, might do away with a good many of the objections to the present most illogical system.
THE O'CONOR DONexpressed himself satisfied with the result of the debate, and thanked the right hon. Gentleman for promising to give the subject his consideration. He trusted the right hon. Gentleman would not think it right that the present anomalous state of things should go on indefinitely in the prospect of its being remedied when they 329 had a reform of the Grand Jury system. After what had been said he was willing to withdraw his Motion.
§ MR. MITCHELL HENRYhoped the right hon. Baronet would devote his immediate attention to that subject, in which case the Irish Members would be extremely grateful to him and the Government.
MR. MACARTNEYalso expressed his extreme satisfaction at the statement of the Chief Secretary for Ireland, and hoped that representation of the ratepayers, now a mere shadow, would be converted into a substance.
§ Amendment, by leave, withdrawn.