§ As amended, considered.
§ *(3.10.) MR. P. STANHOPE (Wednesbury)
I beg to move after Clause 18 to insert the following clause:—It shall be an obligation upon the Corporation within seven years after the opening of the canal for traffic, and unless the whole amount of the sums authorised to be advanced to the Company by the Corporation under the provisions of this Act shall have been repaid to take the necessary steps to put in operation the stipulations of Clause 199 of the Manchester Ship Canal Act of 1885, for the vesting of the undertaking in a public Trust representative of the district served by the canal.I do not propose to enter into any of the matters which I brought before the House in connection with this Bill on the Second Reading. The Bill has now been before a Select Committee, and we are asked to consider the Report of that Committee. In the first place, I wish to point out that the Committee had very little to guide it in coming to a decision upon the principle of the Bill, but the 763 particular ground upon which I would venture to insist in connection with ray proposed clause is that it would, at all events, place the relations of the Corporation and the Canal Company upon a business-like footing, and establish no dangerous precedent. This is not the case at present. The proposal of the Corporation is an entirely novel one, and I think that the House, however urgent the case may be, should thoroughly understand what it would do by passing the Bill in its present shape. There are two public Departments interested in this Bill—the Board of Trade and the Local Government Board. The Board of Trade has, I believe, made no report to the Committee, and, therefore, the House has no knowledge of what the opinion of the Board of Trade is upon either the direct or indirect municipalisation of canals. On the other hand, the Local Government Board has made a Report on small matters of detail, but it does not touch upon the larger question as to whether it is right to allow a Corporation to advance large sums of money on the security of a private undertaking without any positive security that the undertaking will, within a fair and reasonable period, pass under the control of a Public Trust. I am of opinion that that ought not to be done, and I have, therefore, put this clause on the Paper. I do not want to do anything that would interfere with the completion of the Canal, but I think that some such provision as the one I propose is necessary in the interests of the ratepayers and of the public. I am bound to say I am very much surprised that a proposal so novel in its character and so extremely dangerous as that contained in the Bill should have received so little attention at the hands of the House. I had hoped, at all events, that the Chairman of Committees would have brought to the consideration of the question a rather larger comprehension of the great principles involved than he seemed to show when he spoke on the Second Reading. The scheme cannot be regarded as an ordinary Private Bill, involving no considerations of public policy or public interest. It is one which involves very large considerations of that character and on that ground, and not from any feeling of antagonism to 764 the Ship Canal or the Corporation who have come forward so generously at this moment—in the interest of public policy and sound municipal finance I move the new clause that stands in my name.
§ Clause (If, seven years after opening Canal, the advance is not repaid, the undertaking shall vest in a public trust,)—(Mr. Philip Stanhope,)—brought up, and read the first time.
§ Motion made, and Question proposed, "That the said Clause be read a second time."
§ *(3.20.) SIR W. HOULDSWORTH (Manchester, N.W.)
I rise for the purpose of opposing the clause. The same question was raised on the Second Reading, and the arguments used against the hon. Member's proposal then are equally valid to-day. The hon. Member says all he wants is that this should be a business-like arrangement. Now, I believe the provisions of the Bill, as they stand, will be found to be of the most business-like character. The only clue I could get of what the hon. Member regards as a business-like arrangement was his statement that the Corporation, representing the ratepayers, should have undertaken the work of the Manchester Ship Canal instead of a private company. Anyone who knows how the large enterprises of this country have been carried out, will see it was impossible that the Corporation could have made such a proposal. Parliament would not have sanctioned it, and the Corporation could not possibly have carried it out successfully. It is perfectly true that the ratepayers have come forward voluntarily at the instance of their representatives in the Corporation to aid and assist in the work, but I think it will be found in the Bill as it stands that there is every guarantee and every security that their interests will be fully safeguarded. The proposal that at a certain date the undertaking shall be converted into a public trust is a most inconvenient arrangement. I quite admit that, the time may arrive—I hope it will arrive—when the Company will be converted into a public trust. But I have always understood the object of a public trust is to protect a surrounding district or those who are interested in a great work as against those who have only a pecuniary interest in what has 765 developed into a great monopoly. It seems to me these trusts are security against those who hold a great monopoly from using the monopoly for their own interests, and not giving the full use of that monopoly to those who are interested in it. The time has not arrived for that. Nobody can say the Manchester Ship Canal Company is a monopoly at present. Although I trust before seven years have expired good results will have followed—I believe that by that time the interest upon the advance of the Corporation will be met out of revenue—still I doubt, very much doubt, whether we shall have got much beyond that within seven years. Although I believe in the ultimate great success of the canal, it must be a gradual process, and I think it would be a most inconvenient arrangemeni to fix a certain time within which this work should be converted into a trust. The present Act enables the public at any time to come forward and convert the undertaking into a trust whenever the circumstances are such as as to justify it, and I do not think the House ought to contemplate that conversion till the circumstances justify and demand it, nor until we have particulars of the conditions under which that conversion is to take place.
§ *MR. COLMAN (Norwich)
Perhaps, in the absence of the Chairman of the Select Committee to whom the Bill was referred, I may be allowed to say that the point raised by the hon. Gentleman a few weeks ago was not formally referred to the Committee, but questions on the subject were put to some of the witnesses. The Mayor of Manchester gave what seemed to be an entirely clear explanation. It was that the Corporation and inhabitants of Manchester look forward to the time when this work will become a public trust, but they feel that to have their hands tied within a certain period would add to the difficulties of the situation. I believe there are some other schemes or trusts in the neighbourhood of Manchester which might be amalgamated at a future time, but it would be unfair to tie the hands of the people at present. In that view the Committee agreed. They felt it was best to leave the matter as at present in the clause of the Manchester Ship Canal Company's Act. That clause gives power hereafter at a time that may be convenient 766 to promote a scheme of this sort. I quite agree that an undertaking of this kind had better ultimately become a large public trust, but in view of the information given by the promoters in favour of leaving the clause as it stands in the Act, I shall vote against the hon. Member's proposed clause.
§ MR. COURTNEY (Cornwall, Bodmin)
I wish to point out that under this clause, if after seven years the Canal is in a flourishing condition and the sum repaid to the Corporation, there is no obligation on the part of the Corporation to do anything, and it may be said that the opinion of Parliament is that the undertaking is not to be interfered with at all. The clause of the existing Act enables the Corporation at any time to apply for a Bill to create a trust in respect of this undertaking, and the company are bound not to oppose it.
§ Motion and Clause, by leave, withdrawn.
§ *(3.30.) SIR J. PEASE (Durham, Barnard Castle)
I beg to move the insertion of the following clause:—The Corporation, during such time as they hold any of the New Debentures, may, by writing under their corporate seal, from time to time appoint some person to attend any meeting of the Company, and such person shall have all the priveleges and powers attaching to a preference shareholder of the Company at such meeting, and may vote thereat in respect of the New Debentures for the time being held by the Corporation, and shall be entitled to the same number of votes in respect thereof as a preference shareholder of the Company would be entitled to in respect of preference shares of the same nominal value as the New Debentures for the time being held by the Corporation.On the occasion on which the Bill was last before the House a few weeks ago, I took the opportunity of making one or two observations upon it. It is, as I then said, a Bill of a most extraordinary character, the like of which has never been seen since Bills have been brought into Parliament. It is a Bill to enable a municipality to raise upon its credit the amount of £3,000,000 sterling, and to place it at the disposal of a concern which, however great its engineering excellencies, is practically at the present moment unable to raise in the open money market a single sixpence. I feel that having looked into these matters for some years, I should not be discharging my public duty unless I again called the attention of the House to the 767 matter by moving the clause which stands in my name. My Amendment is in two parts; the one being as to the increase of the number of the representatives of the Corporation in the Canal Company's Directorate, so as to give them a preponderating vote of one Director during the advance of the money, and the other point being to give the Corporation the power to vote as if they were preference shareholders. As the matter stands at present, as bondholders they would not have the power to vote at all in the meetings of the Canal Company. These two points I propose to unite in the remarks I address to the House. In asking the House to consider these Amendments, I must endeavour to show the very peculiar character and prospects of the canal. I have no personal interest whatever in the matter beyond the great duty which is cast upon each of us of taking care that no bad precedent is set in advancing money by municipal corporations for what are really after all works undertaken by private enterprise. I propose that the Board, during the continuation of the advance, should consist of 15 members, eight of whom should be chosen by the Corporation. As I propose to erase the words which limit the choice to members of the Corporation, there would, under this proposal, be no possible reason why, if the Corporation were satisfied with the proceedings of the present directors, they should not continue their appointment as representatives of the Corporation, but if, on the other hand, they are dissatisfied with the proceedings of the Canal Company—having advanced them£3,000,000 sterling in their exigencies—then they should have the opportunity of having a preponderating voice on the Board of the Canal Company, and be heard in the general meetings. The voting of preference shareholders is regulated by a scale according to statute law, so that I need not go into that matter. The very history of this Canal is really a reason why I ask for these additional precautions on behalf of the ratepayers of Manchester. After a long Parliamentary fight the Act was obtained in 1885. The original scheme of the Canal Company was for £8,000,000 in Ordinary shares, and £2,000,000 in bonds. The loan capital was subsequently 768 reduced by an Act obtained in 1886, which allowed interest to be paid out of capital up to a certain sum, and in accordance with the rules laid down for reducing the power to borrow when interest is paid out of capital the loan capital was reduced to £1,812,000. In October, 1885, what were the circumstances of the company? Out of the £8,000,000 of capital only £751,560 had been raised in the open market. In 1886 I find an extraordinary document issued by the Messrs. Rothschilds. I find the Bank of England, who had been put down as bankers, had their name crossed out as receivers of the money. Out of the £8,000,000 capital, £751,560 have only been subscribed. Messrs. Rothschild asked for the rest, and they stated that the company had entered into a contract with Messrs. Lucas and Aird for the execution of the works for a sum of £5,750,000, being £561,000 less than the Parliamentary Estimates. I am informed there was no such block contract as that stated, but merely a contract on scheduled prices, based on engineers' quantities, and everybody knows how the quantity of work runs up upon merely scheduled prices. The Act of 1886 also gave the company power to raise money and to get shares off on to the market by means of a trap to the small investor—that is by paying interest out of capital. The sum of £490,000 has been paid out of the capital of the company into the hands of the shareholders, but even the prospectus of Messrs. Rothschild——
§ MR. SYDNEY GEDGE (Stockport)
I rise to order. I submit the hon. Baronet has not yet said a word on the subject of the Amendment.
§ *SIR J. PEASE
, continuing, said: I was showing what the financial history of the undertaking is. The prospectus of the Rothschilds, which proposed to create £8,000,000 in shares, fell flat, and the Company had to come to Parliament in the following year and to divide this £8,000,000 of share capital into £4,000,000 of five per cent. preference and £4,000,000 of ordinary shares. The Preference Shares were underwritten by large financial houses, which, of course, meant an additional cost in raising the money, but the public still only lifted 769 £800,000 of these preference shares, and £3,200,000 of the £4,000,000 of preference shares had to be taken up by the syndicate who had underwritten them. I believe these are facts which are perfectly undisputed, and that at the present moment the £10 preference shares are worth only £7, and the ordinary shares, £10 paid, are worth £5. The Company have power to raise £600,000 second debentures. The Manchester Corporation are to be in the unenviable position of second mortgagees, or it might be said third mortgagees; and as such mortgagees, they ought really to be protected by the House. Last year's balance-sheet shows the present unfortunate financial state of the company; and I think that when a company of this kind asks the House for a suspension of the Standing Orders, they ought to mike out a stronger case than has been submitted to the House. They surely knew in November, 1890, the difficulty they had experienced in raising money, and they ought to have inserted notices to come to Parliament then; and now they come to Parliament at the end of this Session to ask that the Standing Orders may be suspended in order that this large amount may be obtained from the Corporation. The Manchester Corporation was appealed to only in the spring of this year, and like prudent men as they are in most respects, they sent their engineer over the works, and, instead of agreeing with the estimates of the company, they said it would take something like £200,000 more to finish the canal. At the present moment, therefore, the Rothschild prospectus of £8,400,000 now will, for the completion of the work, stand at £13,400,000, the estimate for the completion of the works haying been wrong by £5,000,000 on a proposed expenditure of £8,000,000. Under these circumstances, it seems to me that that which I am asking the House to do for the ratepayers of Manchester is that which the House ought to do in order to secure them in their position in making an advance for work which, it is said, will be attended with good to the city, but which is in such an impecunious position as the figures describe. There are works still to be finished, and, with some knowledge of such matters, I have a right to say that the estimate for their completion is not trustworthy. 770 There is dredging to be done at Eastham, a canal between Eastham and the Weaver to deal with—this having been silted up once or twice by serious slips. There is work to be done in connection with the Runcorn sea wall, where there are shifting sands. These are important works, and I hold that in regard to such works engineering estimates are always to be distrusted. I hope the estimate of the Corporation may prove accurate, but I am sure I shall not prove a false prophet when I say that serious difficulties which are not at present contemplated will be encountered. On the 1st January, 1896, some four and a half years from the date of which I am speaking, £1,300,000 of the first loan of £1,800,000 falls due, and there is to be paid for these either 3½ per cent. perpetual bonds or payment made in cash. I believe the revenue from the Bridge-water Canal makes the bonds perfectly safe, but I shall not be surprised if the bondholders prefer their money to 3½ per cent. perpetual bonds in an undertaking of a doubtful character. Therefore, with these views, I think I have shown that I have not been idle in looking into the position of the canal and in coming to the conclusion that the Manchester Corporation ought to have a preponderating voice in the management of the canal so long as it is in advance on such a security. I beg to move the adoption of this new clause.
§ Clause (Votes of Corporation at meetings of Company,)—(Sir Joseph Pease,)—brought up, and read the first time.
§ Motion made, and Question proposed "That the said Clause be read a second time."
§ *MR. LENG (Dundee)
In the absence of the Chairman of the Committee, I would like to say a few words in reply to the hon. Baronet. I hold that it would be inconvenient to the House if, after referring the matter to a Committee to examine into the financial details, and that Committee having discharged its duty with all the care and consideration at their command, the same details should now be reviewed by the House. The hon. Baronet has spoken in the interests of the Corporation of Manchester, but it is a fact that that Corporation was ably represented before the Committee, and that a number of witnesses 771 were called who stated the views and feelings of the Corporation. It was brought before the Committee that at a large town's meeting only two hands were held up against the proposal in the Bill. We had before us the Chairman of the Finance Committee of the Corporation, who showed that all the financial details had been most carefully examined into and considered. The hon. Baronet is now asking for that which the Corporation, who are responsible to the ratepayers and know the wishes of the ratepayers, are not asking for. It is a superfluity of generosity which the hon. Baronet is asking at our hands. The ratepayers and the Corporation of Manchester are perfectly satisfied with the arrangements as they stand, and why should the House offer voluntarily to do for them that which they do not request the House to do? As a matter of principle I think that when a Corporation such as that of Manchester is satisfied, we should not go beyond it. Without going into the details of the case, I trust the House will support the decision of the Committee.
§ Question put, and negatived.
§ Ordered, That Standing Orders 223 and 243 be suspended, and that the Bill be now read the third time.—(Mr. Caldwell.)
§ Bill read the third time, and passed.