CONSIDERATION. (Hansard, 22 April 1887)

§ MR. WOOTTON ISAACSON (Tower Hamlets, Stepney)
I beg to move the rejection of this Bill. In opposing it, my complaint is that the machinery of this House should be made use of for the purpose of imposing upon the public a number of shares and bonds in connection with this Railway Company which must be utterly worthless if this Bill is allowed to pass. Owing to my ignorance of the Forms of the House, I unfortunately allowed the second reading of the Bill to pass unchallenged. I am informed that I ought to have opposed the second reading; but I was not aware of the course which it is usual to take in these matters. The Bill has now passed through Committee; but I may add that it passed as an unopposed Bill, and I am afraid that the Committee before whom it went were not placed in possession of the whole of the facts, so that they might have been able to judge properly of the merits of the Bill. Perhaps the House will allow me to say that this Company was incorporated in 1871, with an authorized capital of 1614 £1,166,626. This capital has been entirely expended, and the Company are owing something like £130,000 to their bankers. Their capital now consists of 5 per cent Debenture Stock to the extent of £229,126; 5 per cent Debenture Stock, 1884, £111,912; 5 per cent Debenture Stock, 1884, £250,000; 5 per cent First Preference Shares, £232,000; 5 per cent Second Preference Shares, £300,000; Ordinary Shares, £153,760; and there is a floating debt of £168,000. My opposition to the Bill, as I have already stated, is based upon public grounds. I may explain that, being a preference shareholder myself, I suffer personally from the action I am now taking. What I feel is that this House ought not to be made the machinery for passing a Bill through Parliament by which the public must suffer, and in taking shares in regard to which there is not the most remote possibility of any dividend ever being paid. And what is this railway? It is a line of only 11 miles in length, with running powers over 10 miles. In 1886 the sum due from the Company to their bankers was £124,000, and no dividend has been paid upon any of the Debenture Stock for some time. I have been in communication with the solicitor who is acting for the promoters of the Bill, and in a letter received from him very recently he says— ''Personally, I only became the adviser of the Company a year ago. I found that they were involved in embarrassments of a serious character, with a floating debt of £168,000. The truth is that the line ought never to have been made at all. The line only extends from South-port to Preston, and there could be no traffic to justify its construction. This letter was written to me only yesterday by the solicitor who represents the promoters of the Bill. He admits that the railway ought never to have been constructed, and yet the Company now come to this House with a Bill to impose upon the public an additional amount of capital which must result in absolute loss to those who are unwise enough to furnish it. I feel that it is my duty, as a Member of this honourable House, to protect the interests of the public as far as I possibly can; and I do so on this occasion, although the course I am taking is diametrically opposed to my own interests. The second paragraph of the Circular issued by the promoters of the Bill states that the measure has 1615 received the unanimous approval of the preference and ordinary shareholders. Now, Sir, that is not the fact. The preference and ordinary shareholders are, in a measure, bogus shareholders. The shares themselves were issued by a man who had to fly from the country for fraud, and they really mean nothing at all. I am one of the unfortunate preference shareholders; but I oppose the Bill because I desire to put a stop, if possible, to an imposition upon the public by the issue of this extra stock. I may say that I received no intimation that the Company intended to submit this Bill to Parliament, although I am a preferential shareholder. Therefore the statement contained in the second paragraph of the Circular of the promoters is absolutely untrue—namely, that the Bill is unanimously approved of by the preference and ordinary shareholders. It has certainly not been approved by me.

§ SIR EDWARD WATKIN (Hythe)
I rise, Sir, to a point of Order. The hon. Member has stated that he is a preference shareholder in this Company. Therefore he is admittedly interested in the matter from a pecuniary point of view. I want, therefore, to know whether, under the Rules of this House, an hon. Member who has a pecuniary interest in a matter of this kind has a right to use his position as a Member of Parliament to make a Motion for the rejection of the Bill.

§ MR. SPEAKER
There can be no doubt that the votes of hon. Members have been frequently disallowed in consequence of their interest in Private Bills; but I am not aware that such disqualification extends so far as to exclude them from taking part in the advocacy of, or opposition to, any particular measure.

§ MR. WOOTTON ISAACSON
I can understand the hon. Member for Hythe (Sir Edward Watkin) interrupting me. Gentlemen who are in the habit of promoting Railway Companies have many curious duties to perform, and they do not like any interference with their own projects.

§ SIR EDWARD WATKIN
I object to the language of the hon. Member. I am not in the habit of promoting Companies, as the hon. Member very well knows.

§ MR. WOOTTON ISAACSON
On looking through the Stock Exchange 1616 Shares Book I find that the hon. Baronet represents no less than 12 different Companies.

§ SIR EDWARD WATKIN
Nothing of the kind.

§ MR. SPEAKER
I must toll the hon. Member for Stepney that the hon. Baronet was perfectly in Order in calling my attention to a question which, might hereafter arise as to the position of the hon. Member in regard to this Bill.

§ MR. WOOTTON ISAACSON
Then I will not proceed further with the point I was about to bring before the House. I will only say that, in my opinion, the Committee to whom the Bill was referred have given their decision under an entire misapprehension as to the facts of the case and the merits of the measure. The Bill is promoted for the special purpose of raising a large amount of preferential capital, although the Company are paying no dividend at the present moment upon their existing preference stock; while on the other hand they are owing a large amount of money to their bankers. How can it be possible to find the money in future to pay dividends on the preference capital? In the second paragraph of the Preamble of the Bill the promoters say— Whereas a considerable portion of such debenture stock has been issued and applied for the aforesaid purposes, and the Company are in negotiation with their other creditors to satisfy the outstanding debts and liabilities of the Company which exceed £150,000 by the issue of debenture stock to such creditors at a discount, and it is therefore expedient to increase the amount of the said debenture stock and authorize the issue thereof on such terms and conditions, and at such prices as may be sanctioned by the shareholders of the Company at a general meeting. Then they go on to say that— The Company may from time to time create and issue debenture stock for any sum or sums not exceeding in the whole two hundred thousand pounds and such debenture stock and the holders thereof respectively shall be of the same class or description and subject and entitled to the same powers provisions liabilities rights priorities privileges and incidents whatsoever in all respects as if the debenture stock authorized by this Act had formed part of and an addition to the amount of the "West Lancashire Railway (1884) Debenture Stock authorized by The West Lancashire Railway (Capital) Act 1884. Well, Sir, I say again that my only motive, in objecting to this Bill, is that the public should not be imposed on by the issue of fresh stock, when there is no likelihood whatever that any dividend 1617 will be paid on a future occasion. I hope that hon. Members will see the necessity of joining with me in opposing' the Bill and in preventing it from becoming law. There is only one other matter which I will mention. The hon. Gentleman the Chairman of Ways and Means (Mr. Courtney) could not have known that the shares of this Company really represented bogus preference and ordinary shares for which no consideration at all has been received, although they figure in the capital account to a large amount. I am sure that if the hon. Gentleman had been able to take that matter into consideration he would have placed his veto upon the further progress of the Bill.

§ MR. PULESTON (Devonport)
I am sorry to find myself in opposition to the hon. Gentleman who has just sat down; but I wish to point out that it has always been an established Rule of this House that, unless for some extraordinary reason, the House itself should never interfere with the decision of its Committee after a Bill has passed a second reading, and been relegated to a Committee.

§ MR. WOOTTON ISAACSON
stated, that the preference and ordinary shares of this Company were bogus shares for which no consideration had been paid, and that that fact was not brought before the Committee.

§ MR. PULESTON
I have no interest in this railway either directly or indirectly, nor do I know any Member who has, except the hon. Member who has just told us so. But all the particulars of the Bill which it was necessary to know must have been present in the minds of the Committee, and of the Chairman of Ways and Means in particular, than whom there is no man more careful in sifting out all the facts and circumstances connected with matters of this kind. The Bill now comes before us with the unanimous endorsement of the Committee, and I cannot allow that any sufficient reason has been given by the hon. Member to justify the House in rejecting the Bill at the present stage. The hon. Member has based his objection to the Bill mainly upon his statement, which I cannot assume to be entirely correct that the preference and ordinary shares of this Company are bogus shares.

§ MR. WOOTTON ISAACSON
Pardon me; what I meant to say was that two-thirds of them were.

§ MR. PULESTON
That is certainly not my information. There is, however, no doubt of the fact, and I do not understand the hon. Member to deny it, that every single person connected with this Railway Company, except the hon. Member himself, is in favour of the Bill; and I am given to understand that the Company include some very respectable people, who know very well what they are about in reference to this measure. The principal reason the hon. Member has assigned for moving the rejection of the Bill is that the railway has not paid hitherto, and therefore that it will never pay in future. Now, I think that is the very reason to justify the promoters in bringing forward a Bill of this kind.

§ MR. WOOTTON ISAACSON
Will the hon. Member pardon me.

§ MR. PULESTON
I hope the hon. Member will not interrupt me. The Bill has been introduced in the hope and belief that dividends will be paid when the railway has made further progress, and it will certainly be impossible for it to do that unless it gets this additional capital. If Parliament consents to pass this Bill, it is believed that the line will become a solid and paying concern. It is with that idea that the promoters are seeking to obtain these fresh powers. The rejection of this Bill means, however, a good deal more than that, because it contains many other important provisions of a public nature which it would be unfortunate not to pass. I cannot conceal from myself for a moment, that if the proposal of the hon. Member is accepted, and you have already decided, Sir, as I understand it, and the hon. Member will not be able to vote upon the question himself—if the Motion is agreed to, it will strike a blow at every principle of Private Bill legislation in this House. So far as I understand the matter, it is the Railway Company themselves who come here to seek a remedy for the existing state of things, which, after mature reflection and consideration, and after consultation with the persons interested, they believe will place the railway in a paying position, and make it useful to the country through which it passes. The facts of the case are stated very 1619 frankly in the letter from the solicitor to the promoters of the Bill which the hon. Gentleman read. That gentleman says that the line ought never to have been constructed, but that is perfectly consistent with the fresh powers now asked for. These new powers have been rendered necessary, because this undertaking in its inception was promoted without sufficiently mature and proper deliberation. But having sustained these heavy losses, it is almost monstrous to maintain that this House ought not to afford some kind of relief to the unfortunate shareholders and bondholders, who are simply acting with the consent of the persons interested. The Company, in issuing further debenture stock to the amount of £200,000, make provision that it shall not take priority over the existing debenture stock. It will, therefore, interfere in no way with the interest which ought to be paid on the stock held by the hon. Member himself. Under these circumstances, and taking all the facts into consideration, especially bearing in mind the important bearing of such a question upon the general legislation of this House, I hope the House will have no hesitation whatever in refusing to accept the proposition of the hon. Member, but will endorse the decision of the Committee upon the Bill.

§ SIR JOSEPH PEASE (Durham, Barnard Castle)
I will only add a few words by way of supplement to the observations which have just been made by the hon. Member opposite. I have nothing whatever to do with this railway. I never saw it; but, unfortunately, I have friends who are interested in it, and who certainly desire that the Bill should pass. There are reasons why the measure should pass far beyond those reasons for its rejection which have been stated by the hon. Member opposite. The line cannot be called a bogus line. A line between two such important towns as Preston and Southport, which, has been constructed to serve the entire district of West Lancashire, cannot be called a bogus line. The capital invested in the line amounts to more than £1,100,000. It has been my duty more than once to call the attention of the House to undertakings of this nature. Very frequently, gentlemen, like the hon. Gentleman opposite, are tempted into projects 1620 of this kind by misleading prospectuses, and in the end the Companies have to come here to wind up the business. When they come here to wind up, we should, I think, treat them with the consideration they require. The Bill has not only received the general approval of the shareholders, but it was passed at a large public meeting of the shareholders—a fully representative meeting—and passed, I believe, unanimously. I understand that the hon. Member was not present at that meeting.

§ MR. WOOTTON ISAACSON
I was not invited.

§ SIR JOSEPH PEASE
I am told that it was a regular Wharncliffe meeting, at which a large number of shareholders were present, and a great number of others represented by proxy. The line has cost a great deal of money, and the shareholders now say—"You must place other securities in front of ours in order to pay off some £160,000 of floating liabilities which will have to be taken up." All that these unfortunate shareholders desire is that they may be placed hereafter in a better position, and they are willing to place new securities in front of their own. No injury can be inflicted upon the securities which the hon. Gentleman opposite holds as a bondholder. Under these circumstances, I trust that the Bill will be passed in its present stage, and the result will be to place the concern, which is already in serious difficulties, in a more advantageous position so far as its own shareholders are concerned.

§ THE CHAIRMAN OF COMMITMEES (Mr. COURTNEY) (Cornwall, Bodmin)
I will not detain the House for more than a few minutes in regard to this Bill. The Bill came before me as an unopposed Bill, and, of course, I considered it upon its merits. The hon. Member for Stepney (Mr. Isaacson) in quite correct in describing the position of this Company as a most unfortunate one. The simple question now raised is whether the proposal made by the Company, and approved by the mass of the shareholders, is the best mode of enabling the Company to escape from its present unfortunate financial position. Upon its own merits, and in consideration of the support it has received, it certainly appeared to deserve the attention of the Committee. The hon. Member for Stepney now asks the House to 1621 refuse to ratify the decision to which the Committee upstairs has arrived. The Bill proposes to deal with a floating debt by the issue of preference shares. The hon. Member, as the holder of first preference stock, objects to that arrangement.

§ MR. WOOTTON ISAACSON
It was not on my own behalf that I spoke, but simply on behalf of the general public. My contention is that the general public ought not to be deluded into advancing money for a concern which will never, in all probability, pay a dividend.

§ MR. COURTNEY
No doubt, the holders of preference shares are fully entitled to have their interests respected, but they accept and willingly support this scheme. As a matter of fact, the scheme is promoted entirely in their interest. If the hon. Gentleman objects to it, I must point out to him that he has not been so vigilant as he ought to have been. The Bill itself provides that the preference stock shall be issued with the sanction of three-fourths of the present holders, and I think that should be a sufficient guarantee that nothing will be done which is likely to be detrimental to the interests of the shareholders.