POWER FOR TREASURY TO GUARANTEE INTEREST ON CERTAIN CAPITAL OF WEST HIGHLAND RAILWAY COMPANY, ETC. (Hansard, 8 August 1896)

§ THE CHANCELLOR OF THE EXCHEQUER (Sir MICHAEL HICKS BEACH,) Bristol, W.
moved to omit the words "on such terms as they think fit," and to insert instead thereof the words:— subject to the terms and conditions contained in the agreement dated the 10th day of March, 1896, between William Hayes Fisher, Esq., and Edward George Villiers Stanley (commonly called Lord Stanley), two of the Lords Commissioners of Her Majesty's Treasury, and the West Highland Railway Company.

§ *MR. T. P. WHITTAKER (York, W.R., Spen Valley)
said that if money were to be guaranteed Parliament ought to be very careful as to the conditions, and he was glad that this Amendment had been put down, as it gave the Committee an opportunity of discussing those conditions. His first objection to the agreement was that it made no provision for special aid to the railway from the locality itself. One of the points laid down by the Royal Commission appointed in 1889 was that the great object in giving State assistance to the construction of railways should be to stimulate the locality to do something for itself. The original Instruction to the Commissioners, referring to the development of a remunerative fishing industry, desired them to ascertain how far that object required to be carried out or assisted by grants from the public funds, and what co-operation might be looked for from local sources? Further, it added:— It is proper to state that Her Majesty's Government do not contemplate any expenditure of a purely charitable character. It is their desire to consider only such proposals as are directed towards the initiation or development of any industry which affords some prospect within some reasonable period of being self-supporting. He further objected to the agreement that the guarantee was for too long a period, and the rate of interest too high. When the Commissioners recommended a guarantee being given for this railway they did so on the strength of representations made to them by the promoters that, if they would guarantee 2½ 207 per cent. for four years, the capital would be raised, but the agreement proposed to give a guarantee of 3 per cent. for 30 years. The Commission, he was confident, would not have recommended the construction but for the statement that, if the Treasury guaranteed 2½ per cent. for 4 years, then the money could be raised. The Commission also recommended that £15,000, or one-third the cost of the harbour, should be provided by the Treasury, whereas the agreement provided for double that amount, or £30,000. He questioned whether the Commission would have made this recommendation on the conditions embodied in this agreement. If the line was not going to be remunerative, he doubted the wisdom of the Government lending its name to a proposal which would go before the country asking people to subscribe on the strength of their guarantee, if they thought that at the end of 30 years the line would not be remunerative, and that the money would be lost. Then he submitted that the interest on the guaranteed capital should be a first charge on 50 per cent. of the gross earnings, and further, that the Treasury ought not to pay the rates for the district at all. They knew that one effect of constructing railways in this country had been that in some parishes the railway paid three-fourths, or 80 or 90 per cent. of the local rates. In this agreement there was no guarantee whatever but that this railway might be made to pay a very substantial portion of the rates of the parishes. The directors would not care, because the Imperial Exchequer had to make up any deficiency. He felt the more strongly on this because, in the Light Railways Bill, it was provided that there should be no additional assessment for rates beyond the value the land had before the railway was constructed. Again, there was no arrangement made for any portion of the receipts from the harbour being devoted to the payment of interest. They ought to be entitled to a portion of the receipts from the harbour as they provided two-thirds of the cost of making the harbour, and further, they ought to make it clear that the whole line should be constructed before the guarantee commenced. He opposed the Chancellor's Amendment.

§ *THE CHANCELLOR OF THE EXCHEQUER
said the hon. Member's speech was simply a résumé of the speech he made on the Second Reading. The hon. Member objected to the terms of the agreement, and thought the Treasury could have made better terms, and therefore he was opposed to the Bill. This whole matter was debated fully on the Second Reading, and the House decided, by a majority of four to one, or nearly so, that the Bill should be read a Second time. He would submit to hon. Members that that was practically a confirmation of the agreement which had been made between the Treasury and the parties concerned. The Amendment which he had proposed was simply with the view of limiting the scope of the Bill in the sense which he imagined was desired by the hon. Member and those acting with him. He understood they took objection to the clauses of the Bill as giving greater powers to the Treasury, in fact, enabling the Treasury at some later date to modify the agreement to the advantage of the company. He did not want to do that at all. He was anxious that the agreement as made should be confirmed by Parliament, and if any modification should be required, that modification should not be made without the consent of Parliament.

§ *MR. EDWARD STRACHEY (Somerset, S.)
said the Chancellor of the Exchequer had remarked truly enough that a good deal had been said in the discussion which applied more to the Second Reading stage than to the present. At the same time he thought the Committee should remember that this Amendment on the Paper, which it was discussing as a whole, was only placed there by the Chancellor of the Exchequer last Thursday. It seemed to him that this Amendment raised a new issue. The Chancellor of the Exchequer said that no agreement had been made by a previous Conservative Government as to the conditions on which the line should be made. He should like to call the attention of the right hon. Gentleman to a Paper issued on the 23rd May 1895, which dealt with this particular question. In it there was a letter dated the 16th June from the Treasury before the Election of 1892. In that letter the Lords Commissioners 209 said that they would be prepared in the next Session to introduce a Measure giving a public guarantee for 30 years of 3 per cent. on the capital sum of £250,000. That letter added that it must be understood that this assistance was subject to the conditions that the promoters should obtain the necessary Parliamentary powers, that they should enter into an agreement with the North British Railway Company to work and maintain the line on 50 per cent. of the gross receipts, the remaining 50 per cent. going towards the payment of the 3 per cent. dividend. The terms of that letter laid it down distinctly that the Bill had only been introduced subject to the company accepting these conditions. The Committee would see that there was a considerable difference between the conditions now suggested and to be accepted by Parliament, and the conditions suggested in the letter of 16th June 1892. According to the present agreement set out by the Amendment of the Chancellor of the Exchequer, the right hon. Gentleman asked the Committee to accept a larger liability, and, instead of there being four short conditions in the last Parliamentary Paper which had been issued with reference to this agreement at the beginning of the year, there were no fewer than nine articles of agreement covering a whole page of the Paper. He thought that the Committee would see that the Chancellor of the Exchequer was not making nearly so good a bargain with the North British Railway Company as he might have made in the interests of the taxpayer. He could not see why the right hon. Gentleman should wish to throw over the earlier agreement. The only reason given was that the railway company refused to accent it. But it had also to be remembered that in this matter it was obvious that the Treasury were giving the North British Railway Company a substantial subsidy. At the meeting of the company held in 1894 the Chairman, speaking of this Bill, said that it was of the utmost importance that the company should be connected with the coast, and the directors believed it to be of paramount importance to their interests that this extension should be made. It was clear, therefore, that the Chairman of the Company thought that they were going to get a substantial gift 210 from the Treasury in order to develop the line; but there had been other lines promoted in the interests of other railway companies before the House, and there was a good deal of competition going on in that part of Scotland. It was generally believed that one of the objects in making the line was, not so much to develop the fishing industry and to benefit the crofters, but to develop the line in the interests of the tourist traffic. It was clear, from the Papers which had been issued, that this proposal had first of all been made by the Conservative Government in 1891, just before the General Election of 1892. When the late Liberal Government came into power, Sir John Hibbert, in the Parliament of 1893, refused to alter the conditions which had been made in June 1892. But later on the conditions were altered for this reason, because on the 6th August 1894 the present First Lord of the Admiralty put a question to the then Liberal Chancellor of the Exchequer asking him whether the Government were going on with this Bill and whether they intended to fulfil the pledges given by the previous Government. The late Chancellor of the Exchequer (Sir William Harcourt) said that his Government would carry out the undertaking which had been given by their predecessors, and in consequence of this undertaking a Bill was introduced in 1895. Until pressure was put upon his right hon. Friend the late Chancellor of the Exchequer by the present First Lord of the Admiralty, this question was not proceeded with, and in his judgment it was clear that Sir John Hibbert did not like the Bill, and thought it was a bad principle to take the money of the general taxpayer in order to promote a small line in this part of Scotland.

*THE CHAIRMAN OF WAYS AND MEANS
I do not see the relevancy of the hon. Member's remarks. The only question now before the Committee is whether the Treasury shall have a free hand in dealing with the West Highland Railway Company, or whether it shall be bound by the terms of the agreement already entered into.

§ *MR. STRACHEY
said he was led into this digression by the remarks of the Chancellor of the Exchequer, but as to the Amendment before the Committee, 211 he thought it had been made clear that this proposal did not originate with the Liberal Government, who simply took up the pledges made by their predecessors.

*THE CHAIRMAN OF WAYS AND MEANS
Would it not be more convenient to get rid of these words, and then the whole Amendment of the Chancellor of the Exchequer can be discussed? The only question at present before the Committee is the omission of the words "on such terms as they may think fit." When these words are disposed of, it will be competent to hon. Members to move Amendments to the Amendment of the Chancellor of the Exchequer. But until those words are left out no Amendments can be moved to the Amendment of the right hon. Gentleman.

§ MR. LOUGH
said that the words "on such terms as the Treasury think fit," were the words which afforded a guarantee that attention would be paid to this matter up to the last, and that the Treasury could exercise their discretion up to the last. As it was, the Committee were asked to fix the details of the agreement that day, and he did not think that they were competent to do that. He was suspicious about this agreement. The Chancellor of the Exchequer said the agreement had been entered into, but surely it could not be sanctioned without the consent of Parliament. It was for the House to say whether it approved or disapproved of the agreement, and, if it disapproved, the Treasury could say," We wanted to get this agreement through, but Parliament refused to sanction it." He did not like the agreement, and, if they omitted the words that gave the Treasury discretion, it would be impossible later on to do anything but adopt that agreement. He did not think that the Treasury ought to have entered into any agreement with the railway company. Why did not the Board of Trade do it? There was something very suspicious in the fact that this particular railway company had gone to the Lords of the Treasury instead of to the Board of Trade, the Department concerned with railways. A great deal had happened since the original agreement was made, but the new agreement practically embodied the conditions asked for three or four years 212 ago. The first appeal to the Treasury was made in May 1892, towards the end of the period of office of the Liberal Government. The first promise of the Treasury was given in a letter dated June 16th 1892, and there was no substantial difference between this agreement and the promise made by the Treasury in June 1892. There were, however, slight differences. The Chancellor of the Exchequer had shown that it was necessary to modify the first agreement made and to keep an eye upon the company. The right hon. Gentleman said that this was a better agreement than any previous one, but his hon. Friends did not think so. The fact that new agreements were constantly being made showed that the matter was a very difficult one to settle, and probably this new agreement would be found, after a little time, to be as faulty as the previous ones. It was very difficult for the Committee to undertake the responsibility of leaving out the words included in the Amendment, the words which would give the Treasury some control over the matter. If they were to proceed with this business the Board of Trade, or some other Department interested, ought to have control over the company and its arrangements. He therefore held that these words ought not to be left out.

§ MR. J. H. DALZIEL (Kirkcaldy Burghs)
said that he did not quite understand the statement made by the Chancellor of the Exchequer a few minutes ago. He had understood the right hon. Gentleman to convey that he was really reserving power to alter the agreement by his proposal.

§ *THE CHANCELLOR OF THE EXCHEQUER
No, just the contrary.

§ MR. DALZIEL
said that had it been the other way he and his hon. Friends would have been better pleased. They were anxious, as far as possible, to limit the Bill in its operations and to restrain the right of Parliamentary control. However, the Chancellor of the Exchequer's statement that he would view the Amendment which he (Mr. Dalziel) had placed upon the Paper in a favourable manner, met some of his objections to the Bill. But if the present Amendment were passed, the right hon. Gentleman would part with the power of controlling certain matters. There was, 213 for example, the question of local rates. Under this agreement they were improving the land for the local landlords, who were doing nothing for the railway. They were giving the landlords a large interest in a railway made by public money, and they were going to relieve the landlords in respect of the local rates because they were putting up an assessable, subject, which meant that substantial relief would be afforded to the landlords. As the landlords would not give the land, they ought not to be greedy enough to ask the House to relieve them from local rates.

§ MR. COURTENAY WARNER (Staffordshire, Lichfield)
said that this was legislation by reference—not by reference to an Act of Parliament, but to an agreement which very few people would ever read. Probably, very few people in the country through which this railway was going would know anything about tin's agreement, yet they were going to give the agreement the force of an Act of Parliament by embodying it in this Bill. In the circumstances there was no reason why they should omit the usual words giving the Government Department concerned a free hand.

§ *MR. STRACHEY
moved to insert, after the word "contained," the words "under Articles 1 to 4 inclusive." As it now stood the Chancellor of the Exchequer's Amendment would embody nine articles, covering a very large scope indeed. As regarded the question contained in Article 5, be thought the Committee ought to have some explanation from the Government why they proposed this very long term of years. The Royal Commission on the Western Highlands and Islands, which was appointed by a Conservative Government, recommended not a term of 30 years, but that the Government should guarantee 2½ per cent. interest on the sum of £285,000 for four years. Apparently, in the opinion of the 214 Members of this Commission, who were appointed for the special purpose of investigating the distress in the congested districts in the Highlands, was that it was only necessary to guarantee interest for four years at the rate of 2½ per cent. But the Government proposed to guarantee interest at the rate of 3 per cent. for 30 years. The Government had gone out of their way in this matter to increase this subsidy. Of course, it might be said that the amount to be guaranteed had been diminished to £250,000, that was, by £35,000, but that was a very small matter indeed when the increase in the term of years from four to 30 and the increased rate of interest was considered. The Committee ought to have a full and clear explanation on this point. Why had the Government come to the conclusion that the Commissioners were wrong, and that their recommendations ought to be disregarded? He could not see what right the Treasury had to ignore those recommendations. So far as the Committee knew, the Government had made no investigation at all into the matter. They simply took the statements of the North British Railway Company and the landowners in the district, and the other people who were anxious to have this line. Then, again, on the question of making the pier, the Government had gone entirely against the recommendations of the Commissioners. The Commissioners proposed a free grant of only £15,000 should be given in aid of the making of this pier, and instead of that the Government proposed to give £30,000. Of course they could not expect hon. Members from Scotland to protest strongly against these proceedings, though there were some of them on his side of the House who were not ready to rob the English taxpayer for the benefit of a small section of people in Scotland; but English Members would not be doing their duty if they did not call attention to the reckless way in which the Government were proceeding, in actually giving twice the amount towards this pier which the Royal Commission recommended. He begged to move his Amendment.

§ *THE CHANCELLOR OF THE EXCHEQUER
was quite unable to accept the Amendment. The hon. Gentleman made the extraordinary proposal to take only four articles of an agreement already 215 made and make them binding on the Government, leaving the remaining articles out altogether. The agreement must be binding as a whole or not at all. One of the articles which the hon. Gentleman omitted absolutely limited the liability of the Treasury. The reason for the change in the agreement from the amount suggested by the Commission to which reference had been made was that it had been found absolutely impossible to induce any responsible railway company to take up the proposed line on better terms than those contained in the agreement. It was for the Committee to say whether those terms should be accepted or not, but it was impossible to adopt only four articles of the agreement and leave out the others. ["Hear, hear!"]

MR. GIBSON BOWLES (Lynn Regis)
said that he thought the objection of the Chancellor of the Exchequer was perfectly reasonable. But that left the main question untouched. The objection he felt to this system of legislation by reference was very great indeed.

§ *THE CHANCELLOR OF THE EXCHEQUER
said he thought it would be well to schedule the agreement.

MR. GIBSON BOWLES
said he was about to propose that very thing.

§ MR. DALZIEL
said the difficulty they laboured under was in having this agreement at all. It was a matter for complaint that the Treasury, without the authority of Parliament, should enter into such an agreement and then ask the House to adopt it.

§ *THE CHANCELLOR OF THE EXCHEQUER
The agreement was laid before Parliament three or four months ago.

§ MR. DALZIEL
admitted that, but he hoped in future, on matters of public policy, the Government would take the opinion of Parliament before the Treasury entered into such agreements.

MR. GIBSON BOWLES
thought the offer of the Chancellor of the Exchequer to schedule the agreement met the real difficulties of the case, and he suggested that the hon. Member should withdraw his Amendment.

§ MR. WHITTAKER
thought the difficulty of the case was this, that the Commission might not have recommended the making of this line on the conditions 216 now proposed. The Commission proposed a guarantee of 2½ per cent. for four years. Had they known that it could only be made on a guarantee of 3 per cent. for 30 years they might never have recommended the line. The agreement ought to be brought into harmony with the recommendations of the Commission, and then leave it to the railway company to accept or reject it. The agreement would involve the Treasury in considerable loss. On the Second Reading the Chancellor of the Exchequer estimated that the traffic on the line might yield £7 per mile per week, but since then the General Manager of the North British Railway Company had informed a Select Committee of the House upon another Bill that the traffic receipts on the West Highland Railway had been very disappointing. The receipts were only five guineas a mile, one-half of what they had been estimated to yield. If the receipts of the supposed line turned out to be only half the estimate, then the loss to the Treasury would be considerable.

THE CHAIRMAN OF WAYS AND MEANS
did not see how this arose on the question before the House, which was whether four articles of the agreement should be inserted in the Bill or the whole agreement.

§ MR. WHITTAKER
said he was trying to give reasons why Parliament should not enter into a guarantee which would involve the Treasury in greater loss than the Chancellor of the Exchequer seemed to imagine. Instead of a loss of £500 a year, he believed it would be £4,000 a year, and although that was a small sum to the British Exchequer, still this line was only one of a series to be proposed, and no doubt they would all be based upon the princples embodied in the present Bill. He was satisfied in his own mind that the best judgment of the Treasury must be against this proposal.

§ MR. LOUGH
said if they accepted the Amendment of the Chancellor of the Exchequer they would fix the rate of interest and all the details in the agreement. Why should they give a higher guarantee in this case than was done under the Light Railways Bill? Money was cheaper now than when the Commission recommended the guarantee for this railway. Instead of 3 per cent. for 217 30 years, he thought a guarantee of 2 per cent. for 15 or 20 years would be sufficient. He hoped that they would not have many Bills of this kind brought into that House in the future.

*THE CHAIRMAN OF WAYS AND MEANS
said that no Amendment which involved any alteration of the terms of the agreement would be in order, but it was possible for the Committee to impose certain terms upon the Treasury. He had pointed out that one of the Amendments of the hon. Member for South Somersetshire would probably be in order if the Committee accepted the Amendment of the Chancellor of the Exchequer.

§ MR. J. M. WHITE (Forfarshire)
asked if they could discuss the agreement on the Schedule? The Chancellor of the Exchequer, he thought, showed inconsistency in that he was quite willing to have the agreement embodied as a Schedule, and yet, although those Schedules were always discussed by Parliament, he said they must either accept or reject the agreement.

§ *THE CHANCELLOR OF THE EXCHEQUER
said it did not rest with him, the question had been decided by the Chairman. The agreement could not be modified, it must be accepted or rejected.

§ MR. WHITE
thought the Chairman had said that the agreement could be modified.

*THE CHAIRMAN OF WAYS AND MEANS
said that what he said was that the agreement could not be modified. The House could reject it or accept it. If the House accepted it if was obvious that the Agreement could not be modified. If they embodied the agreement in the Schedule they could not discuss the agreement on the Schedule.

§ MR. WARNER
said he had an Amendment down which would, he thought, rather meet the difficulty.

*THE CHAIRMAN OF WAYS AND MEANS
said it seemed to him that the Amendment of the hon. Member was absolutely contradictory. If the House accepted the terms and conditions of the agreement, it was unnecessary to say that those terms and conditions should be consistent with the provisions of the Act.

MR. J. McLEOD (Sutherland)
said, as he understood it the whole controversy on this agreement was as to its terms. Personally, he was strongly in favour of this line, but he thought the Treasury bad made an exceedingly bad bargain. There had been huckstering on the part of the promoters of the line. No sooner had they got into favour with the Treasury than they immediately began to harden their terms.

§ *THE CHANCELLOR OF THE EXCHEQUER,
on the point of order, said the Amendment before them was simply that of the hon. Member for Somersetshire. He submitted that the general discussion ought to take place on the general Amendment.

*THE CHAIRMAN OF WAYS AND MEANS
said he bad already pointed that out once or twice, and he must really ask hon. Members to confine their remarks to the definite point before the Committee, which was in regard to Articles 1 to 4 only.

§ MR. LOUGH
asked if he should be in order in objecting to Article 1 being included in the agreement in its present form?

*THE CHAIRMAN OF WAYS AND MEANS
said that would not be in order. The hon. Member should have moved to omit Article 1.

§ MR. WARNER
said they objected to Clause 5 of the agreement on account of the rate of interest which was to be given. The price of the stock would be very much above par if they guaranteed 3 per cent. for 30 years, and, instead of £260,000 at 3 per cent., they had much better fix the amount at £300,000 at 2½ per cent. The Commission had recommended as the rate of interest something between 2 and 2¼ per cent., and to give 3 per cent. was an enormous concession to the railway company. Moreover, not one word was said about there being enough trains, or as to the rates being fair. Although it was proposed to give away twice as much money as the Committee recommended, there was no guarantee given as to the proper carrying out of the duties of the railway company.

§ MR. WHITE
said the Chancellor of the Exchequer had stated that what the Treasury would be liable to under the guarantee was £2,000 a year. He believed the Treasury were committing 219 themselves by the guarantee to £4,000 or £5,000 a year. The right hon. Gentleman had also said that the line would not have been made were it not for this guarantee. That he was also inclined to dispute. The conditions which prevailed to-day were very different from the conditions which prevailed when the line was first mooted. He was perfectly-satisfied that the line would be made by the North British Railway Company, even if the guarantee were withdrawn.

*THE CHAIRMAN OF WAYS AND MEANS
Order, order! The hon. Gentleman forgets that the principle of the Bill, which is that this guarantee should be given, has been adopted. The arguments of the hon. Gentleman would have been more properly addressed on the Second Reading of the Bill. All we have to do now is to discuss the details.

§ MR. WHITE
said he was speaking against the generosity of the guarantee, and was putting forward the argument that the railway would in any case be made, in order to induce the Chancellor of the Exchequer to cut down the terms of the guarantee. He thought the North British Railway Company ought to take a much larger share of responsibility in regard to the capital, because of the advantages they would derive from the line.

*THE CHAIRMAN OF WAYS AND MEANS
I really cannot see the relevancy of all this.

§ *THE CHANCELLOR OF THE EXCHEQUER
appealed to the Committee to come to a decision on the point, which was really unimportant.

§ MR. DALZIEL
said there were two points he wished to bring to the notice of the right hon. Gentleman the Chancellor of the Exchequer. He thought the accounts ought to be audited by the Auditor General, as was done in the case of the Caledonian Canal. The other point was in regard to the date when the amount was to be paid. The right hon. Gentleman had said that it would not be paid until the whole line was open for traffic. He regarded that announcement as satisfactory.

§ MR. WHITTAKER
thought there should be some security that the traffic service of the line would be satisfactory. That was an important point to keep in view, in case the line should prove 220 unremunerative. He also wished to know whether, in case the line should prove to be remunerative, compensation would be made to the Government for any payments they might have made under the guarantee? He noticed that the North British Railway Company might acquire the line after 1900. The company would probably take it over if it proved successful; but in that event accumulated interest on the amount advanced by Government should be charged. The Chancellor of the Exchequer had said that £40,000 would be produced in the locality towards the construction of the line. All he could find in regard to that in the circular issued was the statement" local subscriptions towards the undertaking are estimated at £40,000."

§ *THE CHANCELLOR OF THE EXCHEQUER
said he had made inquiries, and understood that the £40,000 would be produced in the locality, including the value of land proposed to be given or taken in shares.

§ MR. WARNER
moved to amend the proposed Amendment by inserting at the end the words— so far as such terms and conditions of the said agreement are consistent with the provisions of this Act.

*THE CHAIRMAN OF WAYS AND MEANS
ruled the Amendment out of order.

§ MR. DALZIEL
thought it would be better for them to raise their objections to the clause now, as it would materially facilitate the progress of the Bill. He complained that any Member of the Government should pledge the House of Commons to this agreement without first having asked the consent of the House. The agreement should be laid on the Table of the House while Parliament was sitting, and the House should be asked to accept it. The whole proceeding in connection with this matter was open to objection. When they were pledging public money by guaranteeing the payment of a dividend to a private railway company, they were entitled to have some kind of check on the expenditure of the company during the continuance of the guarantee. What he desired was that the accounts of the 221 company should be, year after year, submitted to the Auditor General's Department, and that there should be a representative of the Treasury on the directorate of the West Highland Railway Company for the purpose of protecting the public interest. He hoped the Chancellor of the Exchequer would see his way to grant these concessions.

§ *THE CHANCELLOR OF THE EXCHEQUER
said with regard to the first point raised by the hon. Member, it was the invariable practice for the Treasury to make an agreement before presenting it to Parliament. He could hardly see how business could be conducted in any other way. He believed there was no cause of complaint with regard to the agreement made last spring, because it modified the previous agreement in the interests of the Treasury. ["Hear, hear!"] With reference to the audit of the accounts of the railway company, the agreement contained ample provisions for securing that the Treasury, through the Board of Trade, should have power to examine from time to time the accounts of the company and the returns of the traffic. As to the particular method by which that should be accomplished, he would consult his right hon. Friend the President of the Board of Trade on the point. If he thought it would be better done by the Auditor General than in any other way, he would be quite willing that it should be so done. ["Hear, hear!"] All that was required in the public interest was that there should be an efficient examination of the accounts, so as to secure that they were correct. As to the suggestion of the hon. Member that there should be a representative of the Treasury on the directorate of the West Highland Bail-way Company, he did not think the object the hon. Member had in view would be effected by the appointment of such a representative, because the West Highland Railway Company had agreed to hand over the working of the line in perpetuity to the North British Railway Company, and the mere presence of one director on the Board of the West Highland Railway Company would practically exercise no real control over the working of the line. What he thought would be a better plan would be this—that every year the Board of 222 Trade, through one of its inspectors, should make a careful examination of the workng of the railway, and should present a Report to Parliament, so that if there were any complaints as to inefficient or improper working the Board of Trade should bring the matter before the Railway Commissioners, with a view of securing that justice should be done. That, he believed, would really be a more efficient way of carrying out what the hon. Member for Kirkcaldy desired.

§ MR. DALZIEL
said he was extremely grateful to the right hon. Gentleman for the statements he had made. He accepted the right hon. Gentleman's proposal on the latter point at once, and he hoped the right hon. Gentleman would keep in view that one of the most important considerations was to see that the line was economically worked. ["Hear, hear!" from the CHANCELLOR of the EXCHEQUER.]

§ MR. WHITE
was understood to express the hope that the Chancellor of the Exchequer would consider the desirability of reducing the rate of interest on the guarantee from 3 to 2½ or 2¼ per cent. The hon. Member was proceeding to discuss figures in connection with the working of the line, when

§ *THE CHANCELLOR OF THE EXCHEQUER
observed that the Committee had heard all this before. It had been already said by several hon. Members, and he hoped, therefore, that a decision would be come to upon the matter. He had endeavoured to do his best to meet the wishes that had been expressed by hon. Members.

§ MR. WHITE
asked why should there be a 3 per cent. interest charged on this guarantee when the total amount of the expenditure on the line would be met by the money obtained in respect of the traffic over the West Highland Railway?

§ *THE CHANCELLOR OF THE EXCHEQUER
The reason, as I said on the Second Reading of the Bill, is that this is not a guarantee of capital but is solely a guarantee of interest. If we were guaranteeing capital, 3 per cent., I admit, would be too high. But what we do is to guarantee the interest of 3 per cent. for 30 years, and, therefore, anybody investing in such security must 223 either run the risk of losing his capital at the end of 30 years, or establish a sinking fund.

§ *MR. LOUGH
recognised the concessions which the right hon. Gentleman had made, but remarked there was a matter he wished to raise with regard to the deductions from the 50 per cent. which was to be devoted towards the payment of interest on the guarantee. There was to be a deduction, in the first place, of Government duty, and in the second place of local rates and taxes. But in the Memorandum on which the agreement was based it said the remaining 50 per cent. should be devoted, in the first instance, towards paying a dividend of 3 per cent., and then, at the end, it said that these conditions having been satisfied the Treasury should promote a Bill in Parliament, which was the Bill they were discussing. But the agreement did not satisfy those conditions, because, instead of the 50 per cent. being devoted to the payment of the interest they had, first, the deduction of the Government duty, and secondly, of local rates and taxes. He would ask the right hon. Gentleman to consider whether these deductions should be made.

§ *THE CHANCELLOR OF THE EXCHEQUER
said what he would propose would be that as far as the local rates and taxes were concerned he would take the words that appeared in the Light Railways Act with regard to the assessment of land taken for a light railway which was aided by a Government grant, and he would move to insert in the Bill a provision to the effect that during the period of 30 years the railway-should not be assessed to the local rates at a higher value than that at which the land would have been assessed had it remained in the condition it was in immediately before the construction of the railway. The hon. Member would see that that would prevent the rates coming to any large amount.

MR. McLEOD
admitted that the right hon. Gentleman had made substantial concessions, and had succeeded in removing some objections to the Bill. With regard to the inspection, control, and working of the line, he would point out that one advantage of giving the auditing of the accounts to the Auditor General would be that that House would 224 have figures before it on which there might be discussion on anything requiring notice or criticism.

§ *MR. STRACHEY
asked that a reply should be given stating why the Committee should be asked to vote an expenditure of £30,000 to make this pier and harbour when the Royal Commission on the Highlands and Islands only recommended the expenditure of £15,000 for this purpose? That was a substantial point which the right hon. Gentleman had not met. He had given them no reason why this heavy additional tax should be put on their constituencies to enable a railway company to pay larger dividends to its Scotch shareholders. He would like to call attention to Article 8 of the Agreement. That article provided that if at any time during the continuance of the agreement the undertaking authorised by this Act was, with the consent of Parliament, acquired by, transferred to, or amalgamated with the undertaking of any other company or companies, then such company or companies should be deemed to be substituted for the present company. The meaning of that article was to enable the West Highland Railway, practically, at any time by a private Act of Parliament, which that House would very likely know nothing about, to sell to some other railway company the benefits they would get under this special State guarantee. The Government were increasing the value of this line by giving; them an asset which might be sold by the Company. This provision was not a satisfactory one in the interests of the taxpayers. He did not object to a provision under which the company might amalgamate or sell, but he did object to there being no provision in the agreement that, if the railway company sold at a profit above the amount it cost to make the railway, then that amount of profit must be held in suspense to indemnify the British taxpayer against any loss there might be. Otherwise there would be an absolute certainty of no profit, and very likely loss, though the shareholders might be able to largely increase the value of their shares by the sale, having this valuable guarantee of the Government to sell. He thought the Chancellor of the Exchequer ought to agree to insert 225 such a provision in the Bill. He thought, also, it was a considerable matter of complaint that there was no provision in these articles as regarded railway rates. They were making this railway at the expense of the general taxpayer, and he thought the least that might have been done was to see that those agriculturists and others living in the district were protected as regarded the railway rates they would be called upon to pay.

§ *THE CHANCELLOR OF THE EXCHEQUER
was understood to say that he would undertake to do that.

§ *MR. STRACHEY
said that, of course, if the Chancellor of the Exchequer undertook to do that, that was all he wanted as regarded the rates and tolls to be charged.

§ MR. WARNER,
who was received with cries of "Oh!" and "Divide!" expressed a wish to say a few words upon the whole question.

§ *THE CHANCELLOR OF THE EXCHEQUER
rose in his place, and claimed to move, "That the question be now put."

§ MR. DALZIEL
asked the Chancellor of the Exchequer to consider between now and Report whether words ought not to be inserted providing that the guarantee should not commence until the line had been completed.

§ *THE CHANCELLOR OF THE EXCHEQUER
undertook to look into the point.

§ *MR. STRACHEY
moved to leave out the words "and loan."

§ *THE CHANCELLOR OF THE EXCHEQUER
moved to add at the end of the clause the words— Daring the said period of thirty years the Board of Trade shall make an annual report to Parliament as to the condition and working of the railway and the receipts and expenditure of the Company with regard to the railway.

§ *MR. STRACHEY
moved to add at the end of the clause:— Provided that the Treasury shall not give any such guarantee or make any such grant (a) unless it shall be certified to them by the Secretary for Scotland that the making of the railway would benefit agriculture in the district traversed by the railway, and that such railway is necessary for the development of the fishing industry; (b) unless they are satisfied after local inquiry that the said railway, pier, breakwater, and other works would not be constructed without special assistance front the State, and that the same if constructed would not unduly compete with any existing railway undertaking; (c) unless they are satisfied that landowners, local authorities, and other persons locally interested have by the free grant of land given all reasonable assistance and facilities in their power for the construction of the said railway, pier, breakwater, and other works. He would now only formally move the Amendment, as perhaps the Chancellor of the Exchequer would have no objection to accepting it.

§ *THE CHANCELLOR OF THE EXCHEQUER
said the Amendment could not be inserted in the Rill, because the guarantee had been already given.

§ *MR. STRACHEY
said that surely it was only a guarantee given contingent upon the sanction being given by the House. Did not the words "subject to the Treasury be authorised" occur? He did not think that the right hon. Gentleman would find that the Treasury ever gave an absolute pledge that they would give a guarantee. It would be a most dangerous thing that the Treasury should be allowed to enter into a guarantee with a company or with individuals which was not to be subject to the approval of the House, and he could not think that the Treasury had given such a guarantee. It would constitute an enormous constitutional change if the Treasury could tie the hands of the House of Commons in such a way. A careful perusal of the correspondence convinced him that the 227 Treasury made such proposals subject to approval being afterwards given by Parliament.

§ THE CHANCELLOR OF THE EXCHEQUER
did not want to interfere with the speech of the hon. Member, but he thought it was well he should point out at once that the guarantee had been given by the Treasury, but that of course it could not be carried out without the consent of Parliament.

§ MR. STRACHEY
said that it did not appear to him that the right hon. Gentleman had answered his point. The Treasury had given the guarantee, and the House of Commons were not to interfere with it. [Cries of "No, no!] "J He did not see why the railway company should object to having these provisions put in. Would the right hon. Gentleman object to insert the words— unless they are satisfied that landowners, local authorities, and other persons locally interested have by the free grant of land given all reasonable assistance and facilities in their power for the construction of the said railway, pier, breakwater, and other works. It was not unreasonable, when they were being asked to vote a very large sum of money to develop a particular district and different estates of certain Scotch landlords in whom the Government seemed much interested, they should insist that the landlords should give their land free or give facilities as English landlords had to give under the English Light Railway Bill.

*THE CHANCEELOR OF THE EXCHEQUER
rose in his place, and claimed to move, "That the Question be now put."

*THE CHAIRMAN OF WAYS AND MEANS
accordingly put the Question," That those words be there added," and ordered the House to be cleared for a Division, whereupon several hon. Members exclaimed, "Tell them to stand up."