CONSIDERATION. (Hansard, 20 July 1883)

HC Deb 20 July 1883 vol 282 cc17-31 17

§ Order for Consideration, as amended, read.

§ Motion made, and Question proposed, "That the Bill, as amended, be now considered."

§ SIR JOSEPH PEASE
said, lie was sorry, when the House had so much other Business before it, to have to occupy time in moving, "That the Bill, as amended, be considered on that day three months;" but the task he had undertaken was one which he had undertaken entirely as a matter of public duty. He had stated, some time ago, that if the Standing Order were left alone, he would leave the Hull and Barnsley Company to take such course as they approved; but, when the Standing Order was passed and modified most carefully by the Chairman of Ways and Means, he (Sir Joseph Pease) felt it his duty to the House, to the commercial interests of the country, and to the Railway interest in particular, to see that this Bill should have the careful consideration of the House. It was on that ground he moved that the Consideration should be postponed. He might be told that he was opposing the Bill as a Railway man. He was not at all afraid of that charge, because it seemed to him that the House had taken into its hands—rightly he dare say—the question of competition between different Railway interests; and, when the House decreed competition, it behoved Railway Companies to carry out that competition according to the rules and forms laid down by the House, and according to the laws they were obliged, from time to time, to pass. If the House agreed to encourage competition, he, as a Railway man, was quite ready to acquiesce in that view; but he must appeal to the House that the rules regulating competition should not be abrogated by the Act of any Company or private individual. If the House were to decree that this Bill should pass, he should feel that he had done his duty in calling the attention of the House to it; but it seemed to him that there were very grave reasons why it should not be allowed to pass into law. The Bill itself was of a very peculiar and a very remarkable character. No doubt, Bills of a peculiar character had been passed by the House in former years, and, notably, the London, Chatham, and Dover Railway Bill; but that Bill was introduced after an arbitration before Earl Cairns and the Marquess of Salisbury. The present Bill involved 19 the payment of interest out of capital to a very large extent, far outside the Standing Order recently passed at the suggestion of his lion. Friend the Chairman of Ways and Means, and after the proposal had been supported in a speech by his hon. Friend below him (Mr. Chamberlain). If they passed this Bill, it seemed to him (Sir Joseph Pease) that they would do away with all respect for Statute Law, and all respect for their Standing Orders, and they would deal a death-blow to the observance of that upright and straightforward dealing which ought to characterize all matters connected with trade in this country. The Bill had been very much modified since it had been laid on the Table of the House. It was proposed that 5 per cent should be paid on a capital of £3,000,000 sterling, and it further proposed that 5 per cent should be paid upon an additional share capital of £2,400,000, in accordance with the Act of 1882. That latter clause had since been eliminated from the Bill, and the measure now merely referred to the capital of £3,000,000 sterling of the Hull and Barnsley Railway, and it was to that provision that he desired to call the attention of the House. In 1880, the Hull and Barnsley Company obtained their Act of Parliament, and the Act contained the usual provisions to put in force the Statute Law as sanctioned by the Standing Order of 1845. The promoters accepted the Bill, with the restriction that they should not pay interest out of capital, because that was a clause which had been enacted in every Railway Bill for a long series of years. Having obtained their Bill, they found that they wanted shareholders, and the idea of paying interest out of capital seemed at once to have occurred to the Board. They proceeded, however, with great caution, and this was one of his reasons for finding fault with their proceedings. Before they inserted a clause in their prospectus, in which they proposed to pay interest out of capital, they took the opinion of very eminent counsel. He was not aware what the result of that opinion was; but he had no doubt that it was in accordance with the judgment of the Master of the Rolls which came afterwards. But, in spite of the judgment of the Master of the Rolls, and of the legal opinion thus obtained, a clause was inserted in the prospectus, of which, 20 according to the Hull papers, 300,000, weighing somewhere about 14 tons, were sent out. Advertisements or notices were issued in at least 51 newspapers, and the Company paid something like £55,000 to various brokers, in order to secure the issue of shares. The Board then proceeded to pass a Minute, authorizing them to obtain tenders for a contract in the usual way; and, on the 15th November, they rescinded that resolution, and the Chairman was sent to London to make other arrangements. he made a contract with a highly respectable firm of contractors—Messrs. Lucas and Aird—by whom the works were to be put through, and by whom interest was to be paid, although they had previously obtained the opinion that the payment of interest out of capital was altogether illegal. He would not trouble the House by entering into the contracts. On the 4th March, before any interest had been paid, the Master of the Rolls granted an injunction against the Company, to restrain them from paying interest out of capital, and no interest up to that time had been paid. An expense, however, of £2,200 had been incurred, for a grand celebration in connection with the passing of the Act on the 15th July. No sooner did the Company get notice of the injunction which had been granted by the Master of the Rolls, than they attempted to sail to the windward of it; and they succeeded, through the contractors, in forwarding to the shareholders the dividend which the Master of the Rolls had declared to be an illegal payment. He could not imagine, for a moment, how Messrs. Lucas and Aird men of proverbial intelligence, could have obtained no other security for the payment of their advances than the promise that an Act of Parliament would be subsequently introduced. He saw in the contract between Messrs. Lucas and Aird a curious reference to a sum of £100,000 to be paid to them for the speedy completion of the works; but he could only find one reference in the contract itself to the completion of the works; and it was that they should be finished by the year after next. It would be apparent to the House that the Company had defied the law; that they had made arrangements to go beyond the law; and that, even after the Master of the Rolls had laid down the law, they went, with their eyes open, and made arrangements with the contractors to pay this interest. 21 He was prepared to assert that no Bill was ever introduced into the House in such a position, in order to secure the sanction of Parliament to the payment of interest out of capital. The House knew the nature of the agitation which was got up last year. In that year a Committee was appointed, at the instance of the Chairman of Ways and Means, which reported in favour of altering the Statute Law. This year there had been the same kind of agitation again; and the Chairman of Ways and Means, no doubt considering it advisable to conform to the views of the people behind the agitation, brought in a Standing Order which was most carefully and consistently guarded. That Standing Order was passed by the small majority of 8 in the House; but it was found that even that Standing Order would not allow the Bill to be passed. The Standing Order and the present Bill were diametrically opposed to one another. First of all, the Standing Order of his hon. Friend the Chairman of Ways and Means contemplated a Committee of Inquiry; but there had been none. On the 12th of July, his hon. Friend held a Committee on the Bill, and received a Report from the Board of Trade, in pursuance of his own request, and which Report was said to be in pursuance of the Standing Order. But the Standing Order said that no Company should pay more than 4 per cent, and the Bill proposed to pay 5 per cent. The Standing Order was prospective. The Bill was evidently retrospective. The Standing Order said that the 4 per cent should appear in the advertisements and prospectuses; but the advertisements and prospectuses of the Company were issued in 1879 and 1880, when it was illegal to pay interest out of capital altogether. None of the half-yearly Reports of the Company complied with the Standing Orders. The Board of Trade were told that if the provisions of the Bill did not become law, it would be impossible to continue the works for more than two or three months longer. There was another allegation which he wished to call attention to, because it appeared to him that the Report which had been presented from the Committee by the Chairman of Ways and Means was founded on it, and the Report also of the Board of Trade. The statutory accounts were published duly by the Company; and no one could find fault 22 with the form in which they appeared. It appeared from them that on the 31st December no less a sum than £2,130,000 was at the command of the Directors. The amount to be spent, according to the statutory declaration necessary to be made by all Companies, was, up to the 30th June, £533,000; and the Company would require, up to the end of the year, £1,599,000 to complete their obligations with regard to works. The Board of Trade said, very wisely, that the Company seemed to have paid no attention to finance. First of all, the preliminary expenses amounted to the large sum of £72,900; and, in their Report, in order to show what had become of so large a sum, the Company stated that the advertisements had cost £10,000; brokers' receipts for commission, £54,900; whereas the interest on the pre-payment of calls by the Company was only £14,000 during four half-years. The bankers had allowed £12,000 in one year for money in hand; and these figures certainly showed a large amount of transactions which ought to have been investigated by the Board of Trade, or else by the Chairman of Ways and Means, before any Report that could be satisfactory was sent down to the House. The hon. Baronet the Chairman of Ways and Means stated in his Report that he was moved to report the Bill by the fact that 8,000 or 10,000 persons would be thrown out of work if the Bill were not passed. Why? Navvy Jack was a creature here to-day and gone to-morrow; and no sooner was he out of work in one place than he got it elsewhere. There was, therefore, no force whatever in that argument. The Board of Trade said the same thing; but he failed to see its bearing. Now, what did the argument of stopping the works amount to? The Bill did not raise a shilling of extra capital in any shape or form. The capital of the Company remained the same as it was by the Act of Parliament already passed. There was still a sum of £300,000 to be borrowed, and £1,113,000 to be called on the shares. There was no question of getting the amount of the capital. The capital had been greedily taken up; and there was no question of getting out of the shares. If this Bill had any effect, it was taking money out of the hands of the Directors and placing it in those of the shareholders. The effect of not giving the Directors power to complete the works 23 would be to place the money again in the hands of the Directors. The Directors did not spend the money, and did not make calls on the shareholders; then it would remain in their pockets until after the works were finished in 1884; so that, within 12 months of the present time, the whole question must come to an end. In his opinion it was much better that the matter should remain as it was. In the House of Lords, the Lord Chancellor had made a strong statement as to the propriety of leaving all Bills alone until the Statute Law was altered, indicating that it was intended to repeal it, piecemeal, by legislation. He contended that the House of Commons could not well pass this Bill. The Directors had taken the Act with the usual clause in it; they had taken opinions as to the legality of the prospectus; and they had issued it knowing that the clause they had inserted in it could not be carried out legally. They had issued it on the chance of nobody inquiring into the matter; but, fortunately, somebody had done so. Even after they obtained the decision of the Master of the Rolls, they went on, and, in spite of everything they knew to be right, decided on paying interest out of capital. How much they had paid out he did not know; but he thought he had proved conclusively that, in effect, this Bill would not be to further the works, but rather to take money away from the works out of the pockets of the Directors for the purpose of paying interest on capital, and placing it in the pockets of the shareholders. The case was of so strong a character, and so well exemplified the danger of interfering with the Standing Orders of the House, that he begged to move the Amendment of which he had given Notice.

§ MR. CROPPER
said, he would not delay the House more than a minute in seconding the Amendment of his hon. Friend the Member for South Durham (Sir Joseph Pease). The whole merits of the case were discussed a short time ago, on the 6th June; and, therefore, there was nothing to be gained by entering again into any argument as to the question of paying interest out of capital. But the case seemed to go a great deal too far in advance of the decision which he thought the House came to wrongly five weeks ago. Not content with taking the 4 per cent allowed by the Standing Order, the Bill, in advance of 24 the decision of the House, claimed 5 per cent; and, as the hon. Member for South Durham had shown, the Company proposed to raise an additional share capital of £2,400,000 on the same terms. He felt that everything his hon. Friend had stated deserved the attention of the House, and he had great pleasure in seconding the Amendment.

§ Amendment proposed, to leave out the word "now," and at the end of the Question to add the words "upon this day three months."—(Sir Joseph Pease.)

§ Question proposed, "That the word 'now' stand part of the Question."

§ COLONEL GERARD SMITH
said, he had listened to the speech of the hon. Baronet the Member for South Durham (Sir Joseph Pease) with much surprise. He (Colonel Smith) had regarded the Bill as an unopposed Bill; and, according to the Rules of the House, unopposed Bills — that was to say, Bills against which no party bad a locus standi, on a matter of Petition, went before the Chairman of Ways and Means, assisted by other hon. Members and the Speaker's Counsel, who took the matter into their consideration. Under those circumstances, he trusted that the House would hesitate before it attempted to upset a decision arrived at after full inquiry by a Committee presided over by the Chairman of Ways and Means. He did not intend to follow the hon. Baronet in a single word he had said as to the purely personal matters which the hon. Baronet had thought it right to bring before the House. He (Colonel Smith), for one, would be no party to wasting the valuable time of the House in the discussion of a purely personal matter; but the House ought to know that the hon. Baronet was a Director of the Board of the only Railway which was in direct opposition to this Company. The hon. Baronet had done all that he could to damage the Company which he (Colonel Smith) represented; but he knew very well that, in circles where these matters were understood, the statements of the hon. Baronet would damage the Company the hon. Baronet himself represented much more than the Hull and Barnsley Company. The Bill had been carefully amended, and, in deference to the decision of the other House, various provisions of the Bill had been cut out, in order not to prejudice a question which was still sub judice, 25 the Houses of Lords and Commons not being entirely agreed upon it. He should have thought that this would have satisfied the hon. Baronet the Member for South Durham—namely, the cutting out of every provision of the Bill which could be objectionable, leaving such matters to be settled another year. But the hon. Baronet was not satisfied, and he came down to the House, in a strange spirit of inconsistency, to try and oppose the Bill. And why was the hon. Baronet inconsistent? It was because, on the 6th June, when the question was previously discussed, he had made use of these words— He believed that the representations which had been made by the promoters of the Bill had been owing to an entire want of knowledge of the law."—(3 Hansard, [279] 1855.) The hon. Baronet now said that they had taken the opinion of eminent counsel, and that they know the law. Which was right? Then, again, the hon. Baronet said on the 6th June— If the Hull and Barnsley Company had made a mistake, he, for one, should not for a moment object to their coming in a white sheet, with a candle in their hands, asking to be put right, after due inquiry, with their shareholders. He would not oppose them if they did that—he should pass no opinion on the Hull and Barnsley scheme as a railway enterprize; but he said this—if they had made a mistake, by all means let them acknowledge it."—(Ibid.) Now, the hon. Baronet seemed to have changed his mind, and he came down to the House, in defiance of the pledge he had given to support the Bill.

§ SIR JOSEPH PEASE
said, that, on the occasion referred to, he was arguing against the Standing Order and what lie said was that, if there had been no Standing Order, he should not have opposed the Bill; but as there was a Standing Order, and this Bill did not comply with it, he thought it ought not to be allowed to go on.

§ COLONEL GERARD SMITH
said, he declined to follow the hon. Member into the statement he had just made. He would rather follow the previous declaration of the hon. Member. It certainly seemed strange, after the words used by the hon. Baronet on the 6th June, that he should come down to the House now with a violent opposition to the Bill. He would not waste the valuable time of the House, on a day when they had other important matters to discuss. This was an attempt by a side-wind to upset the decision come to in June for the 26 establishment of a principle which would not only help the development of railway enterprize in this country, but, if applied to Ireland—with probably similar results — would tend as much as anything to the establishment of tranquillity and peace in that country. He opposed the proposition of the hon. Baronet the Member for South Durham, on the ground that it would weaken the hands of the Chairman of Ways and Means, if the House consented to adopt the practice—now, he regretted to say, too common—of upsetting the decision of Committees upstairs. If they did nothing else, by rejecting the Amendment, they would show the hon. Baronet the Member for South Durham that the House of Commons was not the place for the ventilation of private grievances between opposing Railway Companies.

§ SIR ARTHUR OTWAY
said, he was altogether in a different position from the hon. Baronet who first addressed the House (Sir Joseph Pease), or the hon. and gallant Gentleman who had just sat down (Colonel Smith). He had no interest whatever in the question, beyond that of doing what he considered to be right in the performance of his duty towards the House. He must say, in regard to this Bill, that lie was somewhat surprised at the quarter from which the opposition had arisen, when he recalled the observations of the hon. Baronet on the 6th June, and he concurred in the statement made by the hon. and gallant Member for High Wycombe, because the hon. Baronet, on that occasion, most distinctly stated—and he (Sir Arthur Otway) held in his hands a copy of the hon. Baronet's words—that if the Hull and Barnsley Company had made a mistake and would bring their Bill before the House, he, for one, would not oppose it.

§ SIR JOSEPH PEASE
said, he would ask his hon. Friend (Sir Arthur Otway) to quote the whole of his speech. This argument was addressed entirely to the Standing Order; and what lie had said was that, if the Company had made a mistake, let them acknowledge it. But he found they had not made a mistake. They knew very well what they were doing.

§ SIR ARTHUR OTWAY
said, it would be very hard upon the House if he were required to quote the whole of the speech of the hon. Baronet. The hon. Baronet certainly did make a serious 27 assertion, that if the Hull and Barnsley Company brought in the provision they were now asking for, he would not oppose it. He (Sir Arthur Otway) only did what he considered he was bound to do in asking the House to amend the Standing Order. When the Bill was brought before him, he had to consider the circumstances of the case, and the Board of Trade were directed to make a Report upon the matter. On receiving that Report from the Board of Trade, the Committee came to the conclusion I that, under the circumstances, the relief sought for by the Bill ought to be granted. What did the Board of Trade say in their Report? The Board of Trade recited the circumstance, that the capital had been supplied both privately and by the shareholders; and they then went on to say— In these circumstances, and without offering any opinion as to the course which the Directors have taken in raising the capital under the Act of 1880, or as to the arrangements entered. into with the contractors—a statement relating to which is given in the Preamble of the Bill, the Board of Trade are of opinion that no impediment should be placed in the way of the early completion of the railways which were authorized by Parliament, after lengthened and exhaustive inquiries, as being of great public utility, and that the powers sought by the Bill should be sanctioned. The shares in the first capital of £3,000,000, having been issued, with the understanding that the shareholders were to receive 5 per cent, it would appear desirable that that rate should be sanctioned, and that the same rate should be authorized for the share capital of £2,400,000 under the Act of 1882, as proposed by the Bill. The Board of Trade, it would be seen, suggested that interest might be allowed at the rate of 5 per cent; but the Committee were not of the same opinion, and as, in amending the Standing Order, the House had suggested 4 per cent, the Committee struck out the higher rate of interest. The hon. Baronet the Member for South Durham had put words into his (Sir Arthur Otway's) mouth which he could not find in the Report of the Committee, to the effect that 8,000 or 10,000 men would be thrown out of employment; but all that he would say was that it was all very well for the Chairman of a great and promising concern to look with equanimity upon a proposal which-might involve the throwing of 8,000 or 10,000 men out of employment, and regard it as a matter of very little consequence. He (Sir Arthur Otway) regarded it as a matter of very considerable importance; and when he 28 was told that, if this Company did not obtain the relief they sought, 8,000 or 10,000 men engaged in a useful and great work would be thrown out of employment, it was certainly not a matter which was without its influence upon him. The Committee thereupon had come to the conclusion stated in their Report, and he saw no reason for departing from the conclusion come to on that occasion. Certainly, nothing which had been brought forward by the hon. Baronet would induce him to change his opinion. The hon. Baronet was one who was opposed to all enterprize on the part of people who were not so well established as himself; but considerations of that kind would have very little weight with the public or the House. As he had said, he was perfectly indifferent in this matter. If the House thought fit to pass by what had come down from the Committee, he should not feel in the least degree mortified. He had done what he thought it right to do. The Committee were satisfied with the conclusion they had come to, and they left the question in the hands of the House. He had no feeling whatever in the matter; and if the House thought fit to decide in favour of the proposition of the hon. Baronet, all that he could say was that it would give him some surprise, but no dissatisfaction whatever.

§ MR. THOMAS COLLINS
said, he thought the House was very much indebted to the hon. Baronet the Member for South Durham (Sir Joseph Pease) I for having brought the matter forward. It seemed to him to be a question of public policy, to be decided by the House, rather than by the Chairman of Committees. The question was, whether a Railway Company, having knowingly and wilfully broken the law, should now come down for a special Act of Parliament, to set themselves right in the teeth of the breach of the law they had already committed? It was a great question whether this power ought, on any occasion, to be granted; and, if it was, it ought to be prospective and not retrospective. He objected to the condonation of a fault openly and wilfully committed by per sons who ought to know better. On that ground alone, without entering into the question of paying interest out of capital, the should support he Motion of the hon. Baronet.

§ MR. C. H. WILSON
said, the hon. Baronet the Chairman of Committees had stated that he was perfectly indifferent in this matter. Now, he (Mr. C. H. Wilson) was not indifferent in it at all. He took a very deep interest in it as one of the Representatives of the town of Hull; and he might say that this was really an attempt to destroy the united feeling and desire of the town of Hull to relieve themselves of a great Railway monopoly. All those hon. Members who were in favour of sanctioning a great Railway monopoly in that part of the country would support the Amendment of the hon. Baronet below him (Sir Joseph Pease); but he did not see how those who regarded the efforts of the community to relieve themselves of the weight of that monopoly were to proceed if these difficulties were to be placed in their way by Parliament? They had had to raise millions of money already; and everyone knew that it was utterly impossible to induce shareholders to invest, unless they could see a prospect of some immediate return for their money. This was actually a question whether the Port of Hull should deal with a monopoly they had suffered from for a number of years, or whether they should be allowed to remain in the hands of one Railway Company, which had for some years favoured other ports in preference to Hull. This feeling was so strong that the Port of Hull was unanimous in the matter; and it appeared to him that it would be monstrous for the House of Commons to object to this measure, and, by doing so, to throw out of employment the large number of men who were at present engaged in constructing one of the most important Railways and one of the finest docks in the country. That might possibly be considered by the hon. Baronet a matter that would be for the advantage of the Railway Company which he represented; but he (Mr. C. H. Wilson), as a large trader and shipowner connected with the town of Hull, felt sure that even the North-Eastern Railway would benefit by this addition to the trading interests of the Port of Hull. It was all very well for a Director of the North-Eastern Railway, who happened to possess a seat in the House of Commons, to take this course; but he (Mr. C. H. Wilson) did not think it right that matters that were really of private interest should be put upon public 30 grounds, for that was what that opposition virtually amounted to. ["No, no!"] They might cry "No;" but he was speaking of what he knew to be a fact; and he hoped that this measure would receive the support of all those who regarded the interests of the community, and who believed that they ought not to be compelled to suffer a disadvantage in consequence of a monopoly of any sort or kind.

§ MR. GILES
said, he could not help reminding the House that, in these matters, they were guided very much by precedent; and he felt that, if they were to go into the merits and demerits of a scheme which had been thoroughly thrashed out by a Committee of the House of Commons, and upset the decision of that Committee by a side wind, they would establish a very awkward precedent. If payment of interest out of capital was going to be stopped, they might say good bye to the grand public works of the country. This country was noted for its grand public works, and he ventured to say that there were no greater works being executed at the present time than the new dock at Hull, and the Hull and Barnsley Railway. This new dock was made because the Port of Hull was not capable of accommodating the shipping of the present day; for, though there were many good docks at Hull, there were none capable of accommodating the largest merchant ships of modern construction. He hoped the House would reject the Amendment of the hon. Baronet the Member for South Durham (Sir Joseph Pease).

§ MR. WARTON
said, he thought the hon. Baronet the Chairman of Committees had departed a little from his usual impartiality, when he brought such a general charge against the hon. Baronet the Member for South Durham (Sir Joseph Pease), as saying that the hon. Baronet opposed every scheme of this kind, and that lie had discussed it as a mere partizan. The hon. Baronet the Chairman of Ways and Means had departed somewhat from his judicial position of a Judge. The hon. Baronet the Member for South Durham had not allowed himself to be influenced by the payment of interest out of capital. That was not the question; the question was one of public honesty; and for that the hon. Member for South Durham had always stood up. Had this Company acted honestly or not? That was 31 the only matter that was worthy of the consideration of the House; and, so far as the statement made by the hon. Member for Hull (Mr. C. H. Wilson) was concerned, that the unanimous feeling of Hull was in favour of this Railway, all he (Mr. Warton) could say was, that as Hull was a large and wealthy place, the people there should start a Company to make this line on an honest principle. The hon. Baronet the Member for South Durham appeared to him to be standing up for the principles of common honesty; and on that ground he thought the house was indebted to the hon. Baronet for the action he had taken in the matter.

§ Question put.

§ The House divided:—Ayes 109; Noes 121: Majority 15.—(Div. List, No. 218.)

§ Main Question, as amended, put, and agreed to.

§ Consideration, as amended, put off for three months.