§ MR. KELLY (Camberwell, N.)
, in moving—That it be an Instruction to the Committee on the South Staffordshire Water Bill to insert the auction clauses with reference to the £60,750 unissued balance of the ordinary stock, and to the £41,637 unissued balance of the loan capital of the South Staffordshire Waterworks Company,and who was almost entirely inaudible, was understood to say that he was quite willing to make it optional on the part of the Committee to follow the Instruction, provided that, in the event of their not doing so, they had to give their reasons and the facts upon which these were grounded. He ventured to remind the House that if the Company had not 416 obtained many years ago the power to raise money which they did not want, and had never used this unissued—and which then would have been new—capital would, as a matter of course, have been subject to the Auction Clauses, and he asked the House to say now that it should be treated as new capital. The present case was almost strictly analogous to that of the Limps-field and Oxted Waterworks Company, where, when Parliament authorized the raising of new Stook, the unissued original Stock was made subject to the same restrictions as the new Stock. The question was, whether the ratepayers of the district were to pay interest upon an extra sum of £30,000 that would simply go into the pockets of the shareholders of the Company, and, in the event of the waterworks being taken over, were to be saddled with an additional sum of £30,000 for the Company's works? Practically, the Stock was now a certain 5 per cent Stock, and for the last 10 years the Company had paid a dividend of 4 per cent, and the shares had been steadily going up in value, and might be expected, at no very distant date, to reach the maximum dividend of 10 per cent. It would be said that the present high price of the Stock, which was quite recently sold at 138 ex. div., was due to the purchasers having counted upon getting allotments of the unissued Stock at par; but this could not seriously be contended, as little more than 15 per cent of the Stock had yet to be issued, and the increased value of the shares was really due to the fact that in the last 20 years the dividends had steadily increased from 1 to 5 per cent.
Motion made, and Question proposed,
That it be an Instruction to the Committee on the South Staffordshire Water Bill to insert the auction clauses with reference to the £60,750 unissued balance of the ordinary stock, and to the £41,637 unissued balance of the loan capital of the South Staffordshire Waterworks Company."—(Mr. Kelly.)
§ MR. WIGGIN (Staffordshire, Handsworth)
, in opposing the Motion, said, the antecedents of the South Staffordshire Water Company were very different from what they had been represented to the House. He, therefore, wished to explain the exact position of affairs at the present moment. The great mining district of South Staffordshire was for many years, in consequence of the pre- 417 valence of coal, ironstone pits and other mining works all over the district, very badly supplied with water. The supply was altogether insufficient, and of a very poor description. A number of gentlemen interested in the district met together, and formed a small Waterworks Company, with the object of supplying water to the South Staffordshire district. They had to search pretty nearly all over South Staffordshire before they could obtain a good supply. Experts were employed, and, by their advice, an investigation was made in the neighbourhood of Lichfield, where an excellent supply was found in the new red sandstone. Engines of something like 400 or 500 horse-power were erected, by means of which water was pumped to a great elevation, and the supply was spread over a distance of something like 40 miles, from Derbyshire on the one side to Worcestershire on the other, and the area supplied by the Company was 20 miles in width. The water supplied was excellent, and was a great boon to South Staffordshire. The scheme, however, was of no advantage whatever to the shareholders for the first six years, as no dividend was paid the first six years. In the next two years a dividend of 1 per cent was paid, and from that period the dividend had gone on increasing, until last year it reached 5 per cent. The demand for the water was very great, and 10 or 12 years ago the Company had to apply to Parliament for powers to increase the supply. They obtained powers to sink an additional well at Channock Chase, a very expensive operation; and they were altogether authorized to raise new capital of £350,000, of which about £300,000 had been expended on new works, and about £60,000 remained to be allotted, the dividend being limited to a maximum of 7 per cent, of which, however, there was little probability of its ever being reached. The complaint was that the powers Parliament had granted had never been used, and that the capital had not been raised or expended on new works. It was quite true that the 100 shares were now worth about £135, and it was for that reason that the purchasers of the original shares hoped to obtain the allotment of the unused capital, which was not new capital in any sense whatever. If it were a new capital, he quite agreed with the hon. 418 and learned Member for North Camberwell (Mr. Kelly) that it ought to be subject to the Auction Clauses. It was not, however, new capital, but capital issued and allotted some 10 years ago. It was capital in that position which the hon. and learned Member asked the House to put up for sale, and submit to the Auction Clauses, by which means the shareholders would be prejudicially affected. He trusted that the House would not sanction any such proposal. The Company were not asking for an extension of capital, nor were they proposing to erect any new works. They simply asked to consolidate certain Bills into one Act, as such a course would be more convenient and economical both to the Company and the district. He trusted that he had made himself properly understood. It was perfectly certain that the Company would be treated unfairly if any such repudiation as the hon. and learned Member referred to was agreed to.
§ MR. HINGLEY (Worcestershire, N.)
said, he was not in any way mixed up with this Water Company, except as a consumer; but, as Mayor of Dudley, he was in a position to say that the water supply provided by the Company had conferred a considerable boon upon that borough. He thought it was scarcely fair, considering what the Company had done for the district, and the manner in which they had been called upon by the Sanitary Authority year after year to expend money, amounting in the aggregate to sums of from £10,000 to £30,000, to impose the restriction upon them which the hon. and learned Gentleman opposite (Mr. Kelly) had moved. For many years the Company had had a long succession of struggles, and the issue of the capital was required for the extension of works.
§ MR. COURTNEY (Cornwall, Bodmin)
said, the hon. and learned Member for North Camberwell (Mr. Kelly) had stated his willingness to express the Resolution in a different form from that in which it now appeared on the Paper; but he had not moved it in an altered form, and it was now submitted to the House as an Instruction to the Committee on the Bill. It was quite unnecessary to give the Committee any such Instruction as the hon. and learned Member had moved. In the case of the Limpsfield and Oxted Bill a Committee certainly did 419 inquire into the matter, and had provided that unissued capital should be subjected to the Auction Clauses. But this case differed altogether from the Limpsfield and Oxted case, and he confessed that he did not see any reason for adopting the Instruction which had been moved. The Limpsfield and Oxted Bill extended the area of the operations of the Company, and applied for the extension of the authorized capital which had not been issued or required in connection with the original scheme. It was right, therefore, in that case to treat it as new capital, and it came before the Committee in the same form as if it were fresh capital about to be newly authorized. The present Bill dealt with a balance of unissued capital which was now required in order to complete the scheme which was originally authorized by Parliament. It was unexpended capital to be spent on work already sanctioned and not yet completed, and he thought that it would be taking a strong step to subject capital of that kind to the Auction Clauses. There was no question whatever of the issue of new capital. He would suggest to the hon. and learned Member for North Camberwell that, as he had shown by the example of Limpsfield and Oxted, the question could be inquired into without an Instruction to the Committee, he should withdraw the Motion, and leave the matter in the hands of the Committee.
§ Motion, by leave, withdrawn.