HC Deb 10 February 1897 vol 46 cc70-87
*MR. GEORGE KEMP, (Lancashire, Heywood)

in moving the Second Reading of this Bill, said that in doing so he wished to ask for that forbearance which hon. Members never failed to extend to one who had seldom ventured to take part in the Debates of the House. ["Hear, hear!"] He confessed that he rose with diffidence because he knew that any efforts of his would fall short of the importance of the subject, and because he felt that the title of the Bill might be lacking in the attractiveness which was due to a Wednesday afternoon Measure. [Laughter.] Nevertheless, the Measure was one which would confer an act of justice. It, was far-reaching in its scope, and would prove to be beneficial in its effects, and acceptable to the working classes. By the law as it at present stood, under the Act of 1888, it was enacted that in the distribution of the property of a bankrupt, or in the distribution of the assets of a company which was being wound up, certain debts should have priority—first, local rates and assessed taxes not exceeding one year's assessment; secondly, the wages or salaries of clerks or workmen not exceeding £50, due for services rendered during four months prior to the receiving order or the winding up of the company; and thirdly, the wages of workmen or labourers not exceeding £25, duo for services rendered during two months before the same date. Hon. Members would see that no provision was made in that Act for claims for the payment of wages when a company was being wound up and the assets were not sufficient to more than cover the claims of the debenture holders. It was proposed by this Bill that, when a company was being wound up, the debts he had mentioned as having priority over other debts should also have priority over the claims of debenture holders under a floating charge on the assets, effects, or uncalled capital of the company, and that if a receiver was appointed on behalf of the debenture holders those debts should be paid out of the assets of the company in priority to any claims of the debenture holders for interest or capital. When they considered the number of joint stock companies in existence, and the great number of workmen and workwomen engaged by them, it must be patent that the Bill would have a far-reaching effect. It might be said that the number of cases in which workpeople would be subject to loss from wages through the winding up of companies would be small, because wages were as a rule paid weekly; but in regard to payment by piece work the case would be quite different. A weaver, for instance, might have a peculiarly delicate warp into which a great amount of work had to be put, and it might require two or three weeks to complete it. In that case the workman would be deprived of his wages under the present law. Moreover, a clerk who was paid quarterly would run the risk of losing even a larger proportion of his wages. Any Measure the object of which secured wages to the workman must have the best results for both the workman and the general trade of the country. If he had any doubt on the subject of its beneficial effect that doubt would have been laid at rest by the remark of a Radical friend of his, that he was not aware that such a good Measure could have emanated from a Member who sat on the Unionist side of the House. [Laughter.] He did not see that hon. Friend in his place, but he trusted he would be there that afternoon to give his blessing to, and, if need be, his vote for—though he hoped that would not be necessary—this solitary specimen of well-doing from that side of the House. [Laughter.] He should like to say a few words as to the justice of the Measure. In doing so he would call attention to Clause 2 of the Bill, which provided that debts such as he had referred to should have priority over the claims of debenture holders under any floating charge on the assets or uncalled capital of the company. ["Hear, hear!"] That was to say, that money which had been lent on mortgage, or in the form of mortgage debentures, on the lands and buildings alone, would not come within the scope of the Bill. To make plain the incidence of the order of payment in the case of a company being wound up, he would take the case of a limited company, with, they would suppose, an ordinary share capital of £300,000, debentures to a similar amount, and weekly wages paid of £1,000. They would suppose, too, that there was a mortgage of £10,000 on the lands and buildings of the company. First in order of payment there came this mortgage of £10,000. Secondly, came the workpeople with their claims for their wages—if their wages were in arrears, say two weeks, £2,000—as against the debenture holders under a floating charge on the remaining assets of the company; then came the debenture holders, and fourthly came the ordinary shareholders. What was the justice of this? First of all, the mortgagee got his money, because it was on the lands and buildings, which were not in any way affected by, nor did they affect, the work of the workpeople. Secondly, why should the workpeople come in priority to the debenture holders under a floating charge? For the reason that the raw material and the articles partly or wholly manufactured were part of the assets of the debenture holders. This raw material had been benefited by the work of the workpeople to the extent of the time for which their wages were in arrear. Therefore, it was only right and just that the workpeople should have the benefit of the enhanced value of these articles, which, as the law stood at the present time, would be first claimed by the holders of debentures or debenture stock. He quite agreed that the greatest care should be taken that no legislation should be passed which would minimise the security and the value of these debentures; but he submitted that, apart from the justice of the case and apart from the fact that the principle had already been admitted by the Act of 1888, the holders of debentures or debenture stock under a floating charge would not have their securities appreciably diminished by the payment of wages due. He would take the case which he had already mentioned—a case in which the figures he had given represented a business concern which was going at the present time, the actual amount of debentures, the actual amount of ordinary capital, and the actual amount of wages paid weekly. They would suppose that two weeks' wages, or £2,000, were owing. Those £2,000 were only two-thirds per cent. of the value of the debenture share, and it would be dfficult for anyone to show that the weekly wages of any business concern would be more than a fractional amount per cent. of the debentures: and supposing the debentures were very small in proportion to the whole share capital, and smaller in proportion to the weekly wages, then there would be all the less chance of the debenture holders not being paid in full, because the assets would be so much the greater. ["Hear, hear!"] But the cases they hoped to meet by that Bill were those where the debentures were very large in proportion to the whole capital and in proportion to the wages. In those cases he submitted that the wages would only form a very small fractional amount per cent. of the value of the debentures. He admitted that debentures varied in different trades and businesses, and that they could form no exact rule; but he thought that, as a general rule, what he had pointed out would be the case. But if it was a small thing to debenture holders that wages should be paid, it was by no means a small matter that the working people should get their wages. To them the loss of one or two weeks' wages was a very considerable thing. It was, in fact, a matter of bread and cheese to them, and therefore it was of the utmost importance, in his opinion, that the Bill should be passed into law. Many Measures which were brought forward from time to time in the interests of working men had, rightly or wrongly, this objection urged to them—that, while the Measures were apparently in their interest now, ultimately they would prove to be to their detriment by restricting the circulation of capital or by driving trade away to other countries. He submitted that in the case of this Bill this objection could not be made. In his opinion, not one penny less would be invested in industrial undertakings if the Bill passed into law, nor would any trade which England enjoyed at present be driven to other countries. This was a great opportunity for the House to pass a Measure which would do an act of justice to a large class of the community and would not inflict injury on anyone, and he hoped the Bill would be allowed to peacefully pass its Second Reading and ultimately to take its place on the Statute Book. [Cheers.]


in seconding the Motion, said they had only one object in introducing this Bill, and that was to bring the legislation on the question of the payment of wages up to date. Circumstances had arisen since the House last dealt with this question which necessitated an alteration of the law. It would be only fair to say that this was the fifth occasion on which the House had endeavoured to grapple with this question, and on that occasion they had endeavoured, by the names on the back of the Bill, to dissociate it from any Party bias. In 1883 the Companies Act was passed, which enabled workpeople and clerks to have a preference where a company went into liquidation. In 1883 the Bankruptcy Act was passed, and this extended the preferential payments to rates as well as to wages. In 1886 another step was taken, and the Agricultural Labourers' Wages Bill was passed to enable labourers, in cases of bankruptcy, to recover a portion of their wages. In 1888 the Preferential Payments Bill was brought in and repealed the three Bills which he had just named. The noble Lord who moved the Second Reading of that Bill in the House of Lords made use of these words:— The object of the Bill was to give wages in this country the same conditions of justice as they received in other countries in respect of their priority in case of bankruptcy, liquidation, or the winding up of companies. … The Bill would do away with much hardship to the wage-earning classes of the country. That was the object of the Bill now before the House. Was it necessary? Speaking for his own county of Lancashire, he knew they were honeycombed with limited liability companies, and they all knew perfectly well that so long as Members of that House lent their names to these concerns the practice of limited liability companies would go on and flourish. That was all very well for a time; but now, when limited liability companies issued what were called floating debentures, which covered every stick and stone possessed by that company, it was a different matter. When the Receiver for these holders took possession he snapped his fingers at the workpeople, and took the benefits of their labour in the goods he seized on behalf of the debenture holders, and the workpeople had to go away, having lost their capital. As the hon. Member had said, this was a terrible thing for workmen, hundreds of thousands of whom lived from week to week on their wages, and who, if they had to go without a week's wages, got into arrears with rents and rates, with food bills, with contributions to insurance funds for their children in case of sickness or death, and with their contributions to their trade organisations. It might be asked were there any grievances calling for the Bill. Well, the Bill had emanated from the textile operatives of Lancashire, and there were at the moment within the precincts of the House representatives of the Textile Operatives Association, an association which represented 170,000 men. They felt the pinch caused by the want of such legislation as the Bill proposed. He mentioned two cases which had come to his knowledge within the last twelve months, which occurred in districts adjoining his constituency. One was on the south side, where a limited company mortgaged its freehold and every stock and stone was covered. Rates to the amount of £270 became due, a receiver took possession, and the Corporation of Ashton-under-Lyne were deprived of their rates, for there was nothing to distrain upon. Then again, as showing the case affecting the workpeople. On the western side of his constituency there was a limited company who issued floating debentures covering the whole stock got into arrears, and a receiver took possession. What happened? There were four workmen whose wages were in arrear to the extent of some £4 each, and these wages were lost, and in addition three of these men were called upon to pay their fellow workers under them, and the receiver for the debenture holders got the benefit of this. There were some 24 women reelers, whose average wages did not reach 16s. a week, who had the pleasure of seeing their hard-earned money go to the receiver, they receiving not a single penny on account of it. These cases were examples of thousands that might happen in consequence of these issues of debenture stock in the nature of floating debentures. On this question he thought the House would be glad to hear the opinion of the hon. Member for the Cricklade Division (Mr. Hopkinson), to whom he was greatly indebted for assistance in drawing up this rather intricate Bill. They had hoped to be able to draw a Bill of one section, but found they could not do that. They had to meet the case of companies going into liquidation, assets being paid into Court, the Court having to distribute them. The Court could only interpret the Law, and the Bill was wanted to put the Court in the position that, when distributing assets, debenture holders should not have priority over workpeople. The second clause dealt with the case in which the receiver for debenture holders popped down on a concern and took possession of everything. It was, therefore, necessary to add the second clause, and he thought if the Bill went before the Standing Committee on Trade it might require a third clause to consolidate it with the Act of 1888. His hon. Friend had referred to the justice of the claim of workpeople to payment before debenture holders. It was well understood that debentures were paid, or ought to be paid, out of the profits of a concern, that was the sum of money remaining after the payment of rates, taxes, wages, and working expenses. Debenture holders never expected to be paid out of capital, that would be an unfair and improper thing. In the paying out of profits or estimated profits, wages should first of all be deducted. It had ever been the rule of the House to afford, as far as possible, protection for the lives and limbs and health of workpeople, and he felt perfectly certain that in extending this Act and bringing it up to dale the House would be only following out a principle which had been acted upon for the last 40 years.

*SIR CHARLES DILKE (Gloucester, Forest of Dean)

said the admirably clear speech of the hon. Member who introduced the Bill left one point doubtful. He called it a far-reaching Measure, but for his own part he did not think it was that. As to its necessity he quite agreed, and, his own name being on the back of it, he would not say a word against the Bill so far as it went, but it was not a far-reaching Measure, it did not go far enough. No time need be spent in discussing whether a grievance existed. The cases which had occurred in Lancashire were not very numerous, but there had been cases recently, and, as there was likely to be an extension of company business in Lancashire, the cases would increase in number as time went on. It was perfectly clear that the principle of the Bill was the principle of the existing law, and the intention of Parliament was to give workpeople's claims priority. This intention was pressed a great deal further as regarded seamen, who had a much greater priority than other workmen, and the principle there laid down was continued by the Bill, a principle Parliament no doubt meant to cover the cases contemplated in the Bill. His few remarks were directed to the extent to which the Mill would go, and he spoke with great diffidence in the presence of those acquainted with Company Law, and the law in relation to debentures and bankruptcy, of which he admitted he knew nothing, though he saw there were difficulties to meet. One hon. Member whose name had been mentioned was a high authority on the subject, and another whose name was on the back of the Bill, the hon. Member for Eccles, was a high authority on Company Law. No doubt these hon. Gentlemen would tell the House how far the Bill would go. The Mover had frankly admitted that mortgages were not covered by the Bill. Would the cases which had actually arisen in Lancashire be covered by the Bill? He had doubt upon this point. Would the Bill cover ordinary debentures? It was a matter upon which he had grave doubts. The Bill had two limitations, it was limited to the winding up of companies and to debentures or debenture stock under any floating charge. Would the expression, "under any floating charge" cover ordinary debentures. Were not debentures or debenture stock under any floating charge rather a class of preference shares than ordinary debentures, and would ordinary debentures not be covered by the words? He was not a legal authority, and put this as an honest difficulty, which he hoped would be fairly thrashed out by the Standing Committee to which he supposed the Bill would be referred. He would there attempt to raise the question by putting down Amendments to extend the Bill to cover these points. The words "in the winding up of any company" appeared to be an unnecessary restriction. No doubt it might be necessary to somewhat lengthen the Bill, but why not deal with the matter thoroughly and apply the Bill to individuals and trading partnerships? He confessed he could not see why, if the principle of the Bill was good, it should not be so extended, and to debentures of every kind. These were, perhaps, points to be submitted in Committee, but even now the House might have some guidance from, the Government as to how far the Bill would go.


said the right hon. Baronet had just disclaimed knowledge of the Law on the subject, and in doing so he was very much in the position of everybody else, whether lawyers or not, because conflicting decisions did not cover the whole question. There was the question of registration, the application of the Bills of Sale Act to debentures which left a large amount of doubt, which would be partially set at rest by the Bill. He did not rise to oppose the Bill at all, quite the contrary. It was a singular fact that when the Bill of 1888, which introduced into our Law, as distinguished from foreign law, a new principle of great commercial importance, no discussion on the principle took place at all, and the remarks made on the present occasion did not deal fully with the question of principle. For instance, the hon. Member for Oldham spoke of debentures not being payable out of capital and not attaching to capital, but he knew of no such principle; debentures were evidence of debt, coupled frequently with a charge—


said what he meant to say was that the interest on debentures was not paid out of capital.


said he knew of no such principle; debentures were evidence of debt, coupled with a charge on the assets of the company, and he did not know in the ordinary way why debts should not be paid out of capital The Bill had been defended on the ground that the assets claimed by the debenture holders might be created by the workpeople, who, therefore, should have the first claim; but that principle was too widely expressed, for part of the assets covered by the Bill was the uncalled capital, with which, of course, the workpeople had nothing to do. What he thought was the general ground was the absence of means on the part of the workpeople, comparatively with the assets at large of the trading company, which rendered their livelihood the first charge on the trading concern. Even more important was the fact that debentures were not registered and workpeople had no knowledge of them, and that after the close of the operations of the company a secret hand might be stretched out and the whole of the assets taken away from the workpeople who had relied on them for payment of wages. That was the principle embedded in their Bankruptcy legislation—that where goods were in the ordinary disposition of a person and in his apparent ownership they were not to be abstracted in the event of failure, and thus be swept away assets upon the faith of which people had been working. There were many reasons for this Bill, and the principle for it was established by the Act of 1888. That Act was of very great commercial importance, and was wisely and widely extended by this Bill. But if those principles were correct, why were they limited in the measure they were by the Bill before the House? The Member for Oldham said it was wished to deal with the matter in one section. He failed to see the necessity for two sections. It was quite clear, in the Kidderminster case, that where a Receiver took possession the rights of the workpeople should be protected; but he was not aware it had been decided that where there was no Receiver in possession the debenture holders could claim priority. That was the answer to his right hon. Friend. He thought debentures would not claim the precedence which they ought not to have. But did the Bill go far enough, and if they approved its principle, ought they not to attempt to extend it? Why should it be limited to a floating charge? A debenture carrying with it a specific charge would, a fortiori, be held to be within the Kidderminster decision. It need not be registered, any more than a floating charge; it was thus kept secret from the workpeople, and the whole operation might be to take away the entire assets, and so deprive the operatives of their wages in the event of a winding-up. The point to be remembered and remedied was—that debentures were expressly exempted from the operation of the Bills of Sale Act by Section 17. Why should a limited company have an advantage over the ordinary trader in withdrawing from publicity a fact which was important to creditors (including workpeople), and to all dealing with the company, as well as to shareholders? He ventured to suggest that among the Amendments introduced into the Bill should be one repealing Section 17 of the Bills of Sale Act, and giving all these instruments that publicity which was essential when dealing with limited companies. He believed the real remedy, both in principle and practice, was to secure information for the employees and others in dealing with such companies. His right hon. Friend had spoken of the case of mortgages. These were anomalies in this matter altogether. A debenture need not be registered under the Bills of Sale Act, but a mortgage—a more formal instrument—if it included personal chattels, must be registered. There was a distinction which ought to bring debentures clearly within the scope of registration. A mortgage was at present in a position which was inferior in that respect to a debenture. What was still more singular was, that not only need none of these debentures be registered, except in the list of securities of the company, but if they were not registered in the company's own book, according to the Statute, it had still been held that they operated and were valid. Advantage ought to be taken by this Bill to secure the publicity of all instruments containing charges on a company's property, thus giving the employees notice of the possibility of the assets being abstracted. A greater evil still would then be put an end to. Debentures were constantly made the instruments of systematic fraud on the part of vendors, sometimes of very rotten concerns. A business was sold, a debenture was taken in payment—often a very extortionate price—and in the end a secret hand was stretched out, to the prejudice of the shareholders, employees and creditors, and the same vendor could retake possession of the full property for which he had been paid. That was a most unjust state of the law, and one which, in the public interest, ought to be remedied. The Bill went a step in that direction; it was sound in principle, it remedied an evil in practice, and he hoped that in Committee Amendments would be introduced to widen its scope and improve the existing law.


observed that the policy of the protection of the wages of workmen had boon of slow growth. The first time he was concerned in obtaining such protection in that House was in connection with the Bankruptcy Act of 1883, up to which period, in the case of certain companies which became bankrupt, wages had no claim whatever, but had to take their chance with the debts of other creditors. He regarded this Bill as a distinct advance in and continuation of the policy of 1883, and on that ground he supported it. His name was on the back of the Bill, but until he heard the very lucid speech of the hon. Gentleman who had moved the Second Reading he confessed he had not noticed the qualifying words in the last line of Clause 2, by which a certain class of debenture stock would still be exempted from the operations of the Measure. He was desirous that all debenture stock should be included within its scope, and he hoped the promoters would, when the Bill got before one of the Grand Committees, consent to such Amendments as would secure this object. The system which had been described by the hon. Member for Islington of promoting debentures to be issued on a company's property without a single creditor other than the debenture holders being aware of the transaction, was a great and legal wrong and injustice to the labouring and other portions of the community of this country which ought to be remedied. He hoped that in the further stages of the Bill Parliament would insist upon making an advance upon all previous legislation, and provide that no debenture whatever should be exempt from the claims of the wages of the workpeople, He trusted the Solicitor General would take note of the strong desire from every part of the House that all forms of debentures should cease to enjoy that protection which they had hitherto had, but should come within the scope of the Bill and be made to lose any priority over the claims of workpeople to wages—which ought to be superior to any other claim. He heartily supported the Bill so far as it went, reserving to himself the right to further suggestions till a later stage.

*MR. ALFRED HOPKINSON (Wilts, Cricklade)

was sure that those who supported this Bill could claim that they were dealing with a real grievance, and one which could be cured without inflicting any practical injury. With regard to the scope of the Bill, several remarks had fallen from the other side which rather indicated that it was not the far-reaching Measure it was represented to be. If that were so, and it was likely to be an incomplete Measure, not really based on sound principles, he should not be there to support it. The promoters had put their finger on a real practical grievance which could be removed without injury to anyone by merely carrying out to its legitimate conclusion the policy of the Act of 1888. The Bill was so drawn as to remove the grievance effectually. Possibly there might be some misconception as to this, owing to the ambiguity of the term "debenture." It might mean (1) a mere acknowledgment of a debt by a company. No change in the law was necessary to give the workman his priority in that case. (2) It might mean, and this was the commonest case probably, a security giving a floating charge over the assets of the companies. This did not prevent the company dealing with any part of its property while a going concern, but in case of a winding up or of a Receiver being appointed, in an action by the debenture holders, their claims would have priority over the claims of workmen, as well as other creditors of the company over the assets as they then existed. Section 2 of the Bill dealt with the case in a winding up; Section 3 with that where the debenture holders were enforcing their claim by action or by taking possession without a winding up. (3) Where a specific charge was created by a mortgage of part of the company's property as well as a floating charge over other assets. The Bill would give priority to the claims of the clerk or workman over the claims of the debenture holders under the floating charge, but would not disturb the claim under the specific mortgage. An ordinary mortgagee's security was not disturbed in case of the mortgagor's bankruptcy, and so it should not be disturbed in the winding up of a company. Probably, in practice, if the Bill were passed the workman could never lose his wages, as even where a specific mortgage was created the workman's claim to prior payment would avail against the money raised by mortgage or anything that had been purchased with it. If where specific property was transferred under a bill of sale or conveyed by mortgage to a mortgagee, workmen were given priority not only against the assets of a company, but over securities so created, the Legislature would be embarking on a dangerous policy, and he did not think it was necessary for the practical protection of the workman either under a winding up or where a Receiver had been appointed. To disturb the 17th Section of the Bills of Sale Act would interfere with a most useful and convenient form of security upon which millions of money had been invested. As the Bill was framed it met a practical grievance without introducing any anomaly in the law as to either real or personal property, and he hoped it would be rapidly passed. ["Hear, hear!"]

MR. A. J. MUNDELLA (Sheffield, Brightside)

said that everyone sympathised with the objects and intentions of the Bill, and if its provisions were not complete he hoped that in Committee it would be made as complete and thorough as its promoters intended it to be. He maintained that workmen ought to have prior claim over all others, on the ground first, that workmen had not the means, and it was not their business, to inquire into the solvency of the parties for whom they worked; secondly, because every stroke of work the workman did to the last moment of his employment contributed to increase the value of the assets for all the creditors. If the work was incomplete other workmen had to be employed to finish it. The position of the workman differed from that of the ordinary creditor, who inquired into the solvency of the people he was dealing with, and took his risk with the rest of the creditors. He believed there was every desire that this Bill should pass. ["Hear, hear!"]

MR. WARR (Liverpool, E. Toxteth)

said he desired to support this Measure because he believed it to be a Measure of justice to clerks, servants, and workmen. His only doubt was one which he shared with the right hon. Member for the Forest of Dean, as to whether it was a Measure which went far enough to give the classes which it was intended to benefit the assistance to which they were fairly entitled. Of course, it was clear that the holder of a floating debenture had a direct interest in the carrying on of the business, floating assets of which were pledged to him; and, consequently, his security was benefited by the services of the workmen. It was not clear that the same principle should apply to the holder of property specifically charged in favour of a mortgagee, but at present he saw no sufficient ground for placing a workman in a position in this respect inferior to that of a seaman. A seaman was entitled to what was known as a maritime lien upon the vessel on board of which he served, and a maritime lien takes precedence over the claims of a mortgagee of the vessel. The point is one which should receive the careful consideration of any Committee to whom the Bill might be referred.

MR HERBERT WHITELEY (Ashton-under-Lyne)

said he was always reluctant to trespass on the time of the House unless the subject was one in which he took a special interest, or of which he had intimate knowledge or experience. He wished to fully endorse what had been said by his hon. Friend the Member for Oldham. Such cases as he had referred to were not of infrequent occurrence. It was a great hardship that an Official Receiver might not only deprive the workmen of the wages they had earned, but might add insult to injury by taking the results of their work. An investor could very well ascertain whether his investment was of a sound or suitable nature, whereas the worker was unable to gauge the credit of his employer. To the investor the loss of his investment meant more or less inconvenience, but to the worker the loss of his wages, in addition to his being thrown out of work, meant that he would have no food for himself and his family. The ease, he thought, was a plain one, and he was sure the House would regard from a nonparty point of view what was a desirable Measure.

*MR. W. E. M. TOMLINSON (Preston)

supported the Bill, which he regarded as a corollary to the Act of 1888. It had come to be more and more the practice for the debenture holders in bankruptcy cases to anticipate the order of the Court in winding up, and to put in their own Receiver. He had had many cases come under his notice where the double process of the Receiver and the liquidation proceedings had gone on together, but as far as his personal experience went the eases in which there had been failure to provide in some way or other for the wages being paid were not very numerous. Generally speaking, if there was any value in the property of the company it was the object of the Receiver and of the debenture holders to carry on the business as a going concern; and when that was the case it was the general desire that the wages should be provided for. He thought that, in justice to the commercial community, it should be said that there was a desire wherever it was possible to find some means to pay the wages, and he did not think that debenture holders would offer any opposition to the Bill. As to the ex- tension which had been suggested, it would introduce very difficult questions, and he did not think that they would be doing a service to the cause of the workmen if they tried to extend the scope of the Bill in the direction proposed. He apprehended that the Bill would have the support and good will of every portion of the House.


thought there had been in every part of the House a general agreement as to the fairness of the principle on which the Bill was founded. The debenture holders had a charge upon the undertaking, and it certainly was very difficult to say why, consistently with any principle of equity they should not be compelled, on the principle of the Act of 1888, to give a certain priority to those workmen by whose exertions their security had been provided, So far there was, he submitted, no disagreement, and he believed he expressed the views of the Government in saying that. Without attempting to give a very exhaustive definition of what a "debenture" was, he might point out that debentures might be treated as belonging to two classes. They might merely create a floating charge on the undertaking, in which case the company was at liberty to dispose of its property, and the charge was applicable only in respect of such property as was there when the debenture holders stepped in to take possession. But there was a second class of debentures, which comprised not merely a floating charge on the undertaking, but also a specific mortgage, it might be, on the land and buildings which belonged to the company. As he understood the provisions of the Bill, it was intended to apply to the first class of debentures, and to the second class so far only as the floating charge was concerned. The Bill was so drawn as to exclude from its operation the specific mortgage which might be comprised in many instruments. At the same time he thought it certainly would be desirable that in the Committee stage the language of the Bill should be made a little clearer upon that point, particularly in regard to the third section of the Bill. He thought some further words would be necessary in order that the intention of the House might be so clearly expressed that a Court of Law would give effect to them. This Bill, dealing with debentures so far as they created a floating charge, would practically meet every case of the charge so far as chattels were concerned. But when they came to the question of a specific mortgage on real property they were on much more debatable ground. The proposal to extend this Measure to such specific mortgages would certainly require serious consideration, as, if it were accepted, it was difficult to see why that principle should not be applied to all mortgages, so long as the mortgagor was allowed to remain in possession and carry on his business. He should not like to say that he was in favour of so large an extension of the principle of this Bill, particularly as he believed the application of the Bill to chattels would meet the grievances which is was desired to remedy. There were some matters which would require consideration when the Bill was in Committee. The Act of 1888, to which this Bill was perhaps a corollary, contained machinery by which the Act was carefully applied and worked out, and he thought this Bill would need to adopt that machinery so far as it was applicable to the cases which were dealt with. He suggested that the Law Committee would be the most appropriate tribunal for dealing with the Bill.

Bill read a Second time, and committed to the Standing Committee on Law, Etc.