§ (Mr. Courtney, Mr. Chancellor of the Exchequer, Mr. Jackson.) [BILL 164.] THIRD READING.
§ Order for Third Reading read (Queen's Consent, and Prince of Wales' Consent as Duke of Cornwall, signified).
§ Motion made, and Question proposed, "That the Bill be now read the third time."—(Mr. Chancellor of the Exchequer.)
§ MR. DODDS (Stockton)
said, that his attention had been called that morning to the provision contained in Clause 5 as to the difficulty which would arise owing to the shortness of time allowed 56 to trustees under the Bill for procuring the assent of their cestui que trusts. It must be remembered that trustees were under the necessity of procuring the assent of all persons interested in the trust fund, and a great number of them might, at this season of the year, be in different parts of the world, so that their assent could not be procured in the course of a few days. Then, again, when the assent of the Judge was required before a trustee could act, the difficulty was almost greater. He assumed that it was intended to obtain the Royal Assent to the Bill on Tuesday next. He would remind the Chancellor of the Exchequer that on the same day the Courts would rise for the Easter Vacation, and not sit again till the 12th of April. In many cases, he apprehended that the Vacation Judge would hardly be the proper person to consider applications of this kind. Where the estate was being administered in the Court of Chancery, he apprehended that it would be necessary to apply to the Judge to whose Court the particular estate was attached. There was no chance of the application being made before the 1st of April, and if all these cases were to be left to the Vacation Judge, it was simply impossible for him to consider the numerous cases that would be brought before him. Under those circumstances, and expressing his regret that he had not been able to direct attention to the point earlier, he hoped that the Chancellor of the Exchequer would be able, if not in that House, in "another place" to grant some extension of time within which trustees might signify their assent to the scheme, or failing to do so, be bound by the provisions of the Act. The question was one of vital importance to trustees generally, and for their sake he thought there ought to be some extension of time before this provision became law.
§ MR. ANDERSON (Elgin and Nairn)
said, he rose to move the re-committal of the Bill, with a view to insert the following new Clause relating to the reinvestment of trust funds:—Any trust funds now invested in New Three Pounds per Cent Stock, Consolidated Three Pounds per Cent Stock, or Reduced Three Pounds per Cent Stock may, instead of being converted under this Act, unless it is specially prohibited by the constitution or terms of the trust, be reinvested by the trustees thereof in the purchase of—57(1.) Debenture stock of Railway Companies in Great Britain incorporated by Act of Parliament;(2.) Preference guaranteed lien annuity or rent-charge stock, the dividend on which is not contingent on the profits of the year of such Railway Companies in Great Britain as have paid a dividend on their ordinary stock for ten years immediately preceding the date of investment;(3.) Stock or annuities issued by any Municipal Corporation of Great Britain, which annuities or the interest or dividend upon which stock are secured upon rates or taxes levied by such Municipal Corporation under the authority of any Act of Parliament;(4.) Stocks or other public funds of the government of any colony of the United Kingdom approved by the Chancery Division of the high Court of Justice, and also bonds or documents of debt of any such government approved as aforesaid, provided such stocks, bonds, or others are not payable to bearer.He wished to call the attention of the House shortly to a somewhat important point in regard to which he asked to extend the power of investment. Only yesterday the Government had assented to an extension in this direction by providing that trust funds might be invested as certain funds under the control of the Court of Chancery were allowed to be invested. There was a general feeling that a further privilege should be extended to trust funds dealt with by the Bill. He, therefore, asked the House to re-commit the Bill for the purpose of introducing a clause extending the power of investment to the Debenture Stock of Railway Companies in Great Britain incorporated by Act of Parliament, which had paid a dividend on their ordinary Stock for 10 years immediately preceding the date of investment; upon the Stock or annuities issued by municipal corporations and colonial Stocks or other public funds approved by the Chancery Division of the High Court of Justice. He would point out that the concession made yesterday was really a very small extension. The Court of Chancery allowed trustees to invest, besides the ordinary Three per Cent Government Stock, in India Four per Cents, in Metropolitan Board of Works Stocks, and on mortgage on real securities. With regard to real securities, the extension of the power of trustees in regard to investment was very trifling, because, in consequence of the depression in the value of land, no trustee was likely 58 to invest funds under his control in real property. Therefore real securities must be put aside as an investment. Then, with regard to India Four per Cents he believed there was a sum of £50,000,000 or £60,000,000 in which trustees could invest. He now asked the House to accept his proposition, because a precedent had already been established for it some years ago. What he asked the Government to do in this case was already the law in Scotland in reference to trust funds. In the year 1884, an Act was passed providing for the investment of trust funds in Scotland which gave to trustees in Scotland the identical power for which he now asked. He did not think the House would say the Scotch people were not prudent in the matter of investment, and if they were contented to have a power of this kind, and to use it constantly, it was quite evident that it had been found to work effectually. Therefore, there would be no danger in introducing the same provision with regard to trust funds in this country. All that he asked was that the power already given to trustees should be extended to other classes of security—such as Preference and Debenture Stocks of Railway Companies. The right hon. Gentleman the Chancellor of the Exchequer had referred to them in introducing the Bill as having increased very much in value, and no one could doubt that they were a first-class security. He only asked that such Preferential Stocks should be available as had paid a dividend on their Ordinary Stock for 10 years preceding the date of investment. In the first place, he asked for the inclusion of the Corporation Stocks of the various municipal towns in the Kingdom. He thought it would be conceded that these were as safe an investment as the Metropolitan Board of Works Stock. That was an investment already approved of by the Court of Chancery. He would ask the House how it could be said that the Corporation Stocks of the various towns of the country and the equally valuable Stock created by the Metropolitan Board of Works were not ample security for the investment of trust funds? Everybody knew that the Corporation Stocks of such towns as Birmingham, Liverpool, and Manchester were a most valuable security, and he asked why the principle which had 59 already been adopted in regard to the Metropolitan Board of Works should not be extended to the Stocks of these various Corporations? In the next place, he proposed colonial securities as another branch of investment which had operated well in Scotland. Trustees at present might invest in one branch of Colonial Stock—namely, the India Four per Cents, and he failed to see why they should not be able to invest in the New South Wales Three-and-a-Half per Cents, as well as in the India Four per Cents. Nevertheless, trustees were permitted to invest trust funds in Indian Stock, while they were not permitted to invest in the Stock of New South Wales and other Colonies. The clause he had drawn up contained a provision that the Court of Chancery should make an order as to which of the Colonial Stocks trust funds might be invested in. He thought the proposal was a very reasonable one, and he hoped the Chancellor of the Exchequer would thoroughly understand that he had no desire to interfere with the success of the right hon. Gentleman's scheme, nor did he believe that his present proposal would militate in any way against it. He did not think that it would affect the financial scheme of the right hon. Gentleman in any degree whatever; but inasmuch as the scheme would have the effect of necessarily cutting down small incomes, he asked the right hon. Gentleman to open the door to other securities, by means of which trustees would be enabled to got a dividend equivalent to 3 per cont. If that were not done, and it was not suggested that they would affect the success of the financial scheme, the impression would get abroad that the object of the Chancellor of the Exchequer was to convert the Government Stocks into Consols, and to compel trustees to invest in them. Under these circumstances, he asked the House to allow the Bill to be re-committed for the purpose of introducing the clause of which he had given Notice.
Amendment proposed, to leave out the words "now read the third time," and add the words "re-committed in respect of a New Clause."—(Mr. Anderson.)
Question proposed, "That the words proposed to be left out stand part of the Question."
§ THE CHANCELLOR OF THE EXCHEQUER (Mr.GOSCHEN) (St. George's,
60 Hanover Square)
said, he regretted that the Government could not accept the proposal of the hon. and learned Member. It appeared to him that the hon. and learned Member desired to substitute, for the Consols in which parents and testators had desired to invest, a variety of other securities, although it was the evident intention of such testators to bind up their money tightly in Government securities and not allow them to be invested either in Colonial Bonds, or any other securities. The Government had gone as far as it could by providing yesterday that a certain limited amount of Stock sanctioned by the Court of Chancery might take the place of Consols, and every person who chose could, by re-investment in those funds, get 3 per cent, because the Stocks in question would give them 3 per cent. But the hon. and learned Member went beyond that, and proposed to include Stocks which gave more than 3 per cent, and also gave power to Trustees to choose their investments. Whether that was a right or wrong principle, it ought to be looked at apart from the present Bill; and the question whether the investments authorized by the Court of Chancery ought to be widened or not could not come within the scope of that measure. He would illustrate that paint. The hon. and learned Member seemed to suggest that the Court of Chancery should determine what kind of Colonial Stock might be bought in place of Preference Stock. He could hardly imagine the Court of Chancery sitting down to inquire into the condition of the Colonies in order to decide which of the Colonial Stocks should be sanctioned and which should not. There would probably be a jealousy on the part of the Colonies that were left out. Again, there were such cases as extravagant Colonies piling up debt very fast; and he did not think that the House would desire to substitute any cases where the testator or the parent deliberately wished to leave tied up in Government securities investments of the class included in the proposals of the hon. and learned Member. The Government had gone as far as they thought the case allowed. They had admitted such securities as had been sanctioned hitherto; but they could not, by an incidental clause in the Bill, re-open or sanction a principle of far wider applica- 61 tion—namely, that of putting Colonial and other Stocks precisely in the same position as the Stocks of this country. In reply to the question of the hon. Member for Stockton (Mr. Dodds), he thought the hon. Member had not noticed Sub-section 3 of Clause 9, which provided that investment in various Stocks sanctioned by the Court of Chancery should not be deemed a change of investment. He would engage himself as far as this—in any exceptional case where there was a difficulty in obtaining the sanction of all the Trustees, no attempt would be made to take any advantage of any delay, official or otherwise, on the part of any owner so as to exclude him from the benefits of the Act. The Bill, however, had been varied, and he thought the hon. Member would find that his objection had disappeared.
§ SIR HENRY JAMES (Bury, Lancashire)
said, he could not understand why the Government declined to accept the suggestion that securities sanctioned by the Court of Chancery should be available for the investment of Trust Funds. He felt the force of the criticism of the right hon. Gentleman the Chancellor of the Exchequer upon the proposition to invest in a variety of securities; and perhaps it would not be right to allow a Trustee to select the kind of security in which he would invest. But he was not asking the Chancellor of the Exchequer to do anything of a speculative or experimental nature; but to follow legislation which had already been sanctioned by the House. He failed to see why the Government could not, consistently with what they did yesterday, extend slightly the clause of the hon. Member for North Norfolk (Mr. Cozens-Hardy). When the Settled Lands Act was passed in 1882 a course was taken which he thought might with justice be followed now, seeing that it affected the matter they were now discussing. It was determined by that Act that on land being sold the money might be invested on Government securities, or on other securities which the Act described. By that Act the Legislature allowed the money of a testator to be invested in land, and set forth what was to be done with the profits derived from such land. Among the securities sanctioned was the purchase of the Stock of any Railway Company 62 which had for 10 years before the date of investment paid a dividend on its ordinary stock and shares. His hon. and learned Friend the Member for Elgin and Nairn (Mr. Anderson) asked the House to continue in this instance what was, in reality, a perfectly safe piece of legislation; and the reason they were asked to do so was that the step taken by the Government would not secure 3 per cent from investments in Consols. He would remind the Government that they were not really asked to interfere with any principle beyond that which was interfered with yesterday. They were only asked to extend the clause, so as to enable the interest upon invested Trust Funds to be increased from 2½ to 3 per cent, but no investment would be allowed to take place except with the sanction of the Court of Chancery. The Debenture Stock of a Railway Company which had paid dividends on their ordinary Stock and shares for 10 years must be a safe investment. He did not approach the question in any spirit of hostility towards the Government; nor did he know whether it would be better to make an appeal to the Government in "another place," or to take the matter in hand now. He would advise his hon. and learned Friend not to press the Government now; but to give them an opportunity of considering the matter. But if that course was not taken, and the Motion was pressed to a Division, he should certainly support his hon. and learned Friend.
§ MR. W. BECKETT (Nottinghamshire, Bassetlaw)
said, that, for his own part, he quite agreed with the order embodied in the words of the Amendment; but he did not agree with the words of the Preamble—Unless it is specially prohibited by the constitution or terms of the trust.He hoped the Chancellor of the Exchequer would accept the suggestion made from the Benches opposite. He had received a considerable number of letters from various persons occupying the position of Trustees who complained of the limited range of investments; and he thought it was expedient that the Chancellor of the Exchequer should enlarge the powers of investment under the sanction of the Court of Chancery.
said, that it was only by the indulgence of the House that he could speak again. He would earnestly 63 entreat the House to pause before accepting the principle laid down by his right hon. and learned Friend opposite (Sir Henry James). The House must not only look at the narrow point, important as it was, of raising the income of a certain special class. [Sir HENRY JAMES: Maintaining.] It meant raising the income from the amount which would be derived from Consols. There was a much greater principle involved. The suggestion and the Amendment came to this—that new investments and other securities, such as Railway Debentures, were to be placed on the same footing as Government Stock. A precedent had been quoted to show that the concession had already been made, and that railway securities were looked upon as being as sound as land. This was not a question which could be dealt with in a hurry, involving, as it did, the establishment of the principle that Government securities were to be displaced from the position which they had held hitherto, of being confined to a small select number of securities sanctioned by the Court of Chancery, and that a much broader range should be given to investments. The proposal, if adopted, would really strike a blow on what he might call the credit of the State. He would not say it was a matter that ought not to be allowed; but he thought it ought not to be done until it had received the fullest consideration. He suggested that the question should be raised upon Lord Herschell's Bill with regard to the power of trustees. When that Bill came before the House the matter might be thoroughly discussed; but it could not be conveniently dealt with on the present occasion. What he wished to press upon the House was that in attempting to deal with a certain limited number of cases they were really introducing a new principle into the finances of the State, which might be fraught with considerable danger. He was sure that his right hon. Friend opposite would be aware of the force of this objection; because when once they admitted a security, and the security was found to be unsatisfactory, it would be extremely difficult to go back. He had been treated with such singular courtesy and consideration during the whole of the debates on this Bill, and he had found such a spirit of co-operation in all parts of the House, that he was most reluctant to establish 64 a point of difference with any hon. or right hon. Gentleman; but acting as guardian of the public purse, he could not depart from the principle to which he attached so much force.
§ MR. HENRY H. FOWLER (Wolverhampton, E.)
said, the reason given by the Chancellor of the Exchequer for resisting the Amendment was that it was undesirable to raise such a broad principle, as this appeared to be, on the last stage of the Bill in that House. He (Mr. Fowler) would, however, point out that the question was very fully discussed before a very strong Select Committee, presided over by Lord Cross, to consider Lord Cairns' Settled Land Act. The principle was then settled that Trustees selling settled land should have power to invest not only in Consols, Government securities, and Court of Chancery, but on the security of bonds, mortgages, or Debentures of Railway Companies which had paid dividends on their ordinary Stock for 10 years. Therefore, the principle involved in the proposal of the hon. and learned Member for Elgin and Nairn had already been settled by the House—namely, that Trustees should have power to invest not only in Government securities, but in Railway Debentures. He trusted that the Chancellor of the Exchequer, with the Lord Chancellor and their Legal Advisers, would reconsider the matter, with a view of ascertaining whether, with due regard to the safety of the State, the concession now asked might not be made? He would not ask the right hon. Gentleman to deal with the matter at once; but simply to promise that it should be dealt with in "another place."
§ THE ATTORNEY GENERAL (Sir RICHARD WEBSTER) (Isle of Wight)
said, he wished to remind the House of the way in which the question arose—the attention of the Government had been prominently called to the matter; and he could assure the right hon. Gentleman (Mr. Henry H. Fowler) not only by representations made inside the House, but by representations made by the general public. The matter had, therefore, been considered; and he hoped and trusted that something might be done in general legislation, if not in connection with the present Bill. They had already agreed to include those securities in which the Court of Chancery allowed trust money to be invested; but 65 they did not consider that that embraced the larger question which was now raised—namely, securities upon which a high rate of interest was obtained. He trusted that those who were interested in the matter would be satisfied with the assurance he had given. All he could say was that the Government were exceedingly anxious that Trustees should be empowered to invest in other securities, provided that it was consistent with the safe security of the trusts committed to their charge.
§ MR. CHILDERS (Edinburgh, S.)
said, the hon. and learned Attorney General had, he thought, put the matter on the safest footing. He was sorry to say that he was Trustee for so many people that nothing would personally suit him better than some proposal like the present; but, in his opinion, it would be altogether opposed to sound principle. But he was obliged to differ from his right hon. and learned Friend who sat near him. He was afraid that if they gave to Railway Debentures this special character of being on a par with Government securities, it would be impossible to exclude other securities, just as safe; and, even as to railways, looking through the list of securities, it would be found that there were 50 or 60 which would be admitted under this scheme. He quite agreed with the hon. and learned Attorney General and his right hon. Friend the Chancellor of the Exchequer that the matter was a proper one to consider in connection with the Bill which was coming down from "another place;" but he thought it would be dangerous to do anything now in the direction proposed by the hon. and learned Member for Elgin and Nairn.
§ SIR ROBERT FOWLER (London)
said, he had listened with great pleasure to the remarks of the right hon. Gentleman who had just sat down (Mr. Childers); and he hoped the Government would adhere to the course they had marked out for themselves. It was all very well to speak of Railway Debentures; and it might be desirable, when an individual was investing considerable sums of money every year, that he should be able to invest in ordinary Railway Stock; but he did hope that the House would not sanction the proposal of the hon. and learned Member opposite (Mr. Anderson), and place these large and 66 miscellaneous securities in the same position as Consols.
§ SIR HENRY JAMES
was understood to ask what course the Government would take when the Bill now before "another place" came down? Would the Government give facilities for its full consideration?
§ MR. GOSCHEN
said, it was a Bill in which considerable interest was taken; and he thought it desirable that it should receive the best consideration. Ample opportunities would be afforded for discussing what securities should be authorized; and the list should be examined, with a view of ascertaining whether those which were now sanctioned could be increased with safety. He hoped that his hon. and learned Friend (Mr. Anderson) would not be disposed to press the Amendment to a Division. He was unable so far to compromise the present position of the Government as to hold out any hope, though, speaking for himself, he would be prepared to place Railway Debentures in the same position as Government securities. He quite admitted that a somewhat extended area might be allowed for investments. No doubt, there would be ample facilities for considering the matter hereafter; but he could not go beyond that.
§ THE CHAIRMAN OF COMMITTEES (Mr. COURTNEY) (Cornwall, Bodmin)
said, he hoped the House would permit him to say one word, although he had not heard the whole of the debate. The question of enlarging the power of Trustees was one which undoubtedly deserved consideration, and might be followed up by some practical result; but he demurred to such an enlargement of the Bill as was now proposed. The Bill was a measure to enable the Government to pay off certain holders of Stock, and the holders of the New Three per Cents were entitled to be paid off if they liked. There was no compulsion; but, as a matter of course, they would, if paid off, have their money to invest as they might or could. The holders of any of the Government Stock would be entitled under the Bill either to be paid off, or to remain as they were. That was a transaction which was complete in itself, and it would only embarrass the transaction to give power to invest in other securities. The object of the Bill was clear, and it would be bad policy to go beyond it.
§ MR. SPEAKER
inquired whether the hon. and learned Member for Elgin and Nairn wished to withdraw the Amendment?
§ MR. ANDERSON
said, he trusted that he might be allowed to say a word. He had given Notice of the Amendment some time ago, and it had been on the Notice Paper for several days; but owing to the Forms of the House he had not been able to bring it on. Therefore, it could not be said that he had taken the Government by surprise; and he should have been prepared to withdraw the Amendment if some assurance had been given that the principle involved in the Amendment would be accepted. He had entirely failed to hear anything of the kind from the Chancellor of the Exchequer, and, therefore, he must go to a Division.
§ Question put, and agreed to.
§ Main Question put.
§ Bill read the third time.
§ Motion made, and Question proposed, "That the Bill do pass."
§ On the Motion of Mr. Secretary JACKSON, verbal Amendments made.
§ MR. T. M. HEALY (Longford, N.)
said, that he objected to the course the Government were taking. Amendments had been moved which were alleged to be purely verbal, but of which the House had no means of judging. Instead of taking that course on a Bill of so momentous a character, the Government ought to have re-committed the Bill.
§ MR. SPEAKER
I read the Amendments to the House. I understand this to be a merely verbal Amendment transposing the words and leaving the sense precisely as before.
§ THE SECRETARY TO THE TREASURY (Mr. JACKSON) (Leeds, N,)
said, he would explain that a mere transposition of words had been effected in the clause accepted yesterday. He was exceedingly sorry to have to move the Amendment at so late a stage; but it could not be avoided.
Question put, and agreed to.