HC Deb 19 February 1903 vol 118 cc381-92

said the question with which his Amendment dealt went to the very root of public life. He wished to insist on the incompatibility of the union of the offices of Ministers of the Crown with those of directors of public companies. The speech to which the House had just listened was a fitting introduction to the question he wished to raise, although the Prime Minister, who knew so many things, was not versed in finance or in criminal law. The impress of finance had been very prominent in recent discussions, and the phrase "due regard to economy" was replaced in the King's Speeches by references to considerable expenditure and to Imperial responsibilities. He would think that the first step in reducing the public expenditure would be to lessen the number of directors in the Ministry. This question had frequently been brought before the House. So far back as 1891, Mr. Goschen, who was then the Leader of the House, was asked if the Government would grant a return of its members who held directorships in public companies. He immediately got very angry and insisted that it would be invidious to comply with the request. Then the matter was in abeyance till 1895, when the Member for King's Lynn asked the First Lord if he was aware that twenty of the new Ministers held sixty directorships among them, and if they would be called upon to resign them. The right hon. Gentleman, in reply, said he would not institute such an inquisitorial investigation, and there the affair rested. Four years ago he himself moved an Amendment to the Address calling attention to the incompatibility of the union of the two offices, and a curious thing happened. No fewer than eighteen gentlemen took part in the discussion, and of them all only four had a word to say in favour of the union of the offices. One of the four was the First Lord himself, who was not a director, but who, out of a mistaken feeling of chivalry, defended his colleagues—thereby making a very considerable mistake; and another speaker was the right hon. Gentleman the Member for West Bristol, a former Finance Minister, whose absence from the House he deplored. Thanks to the influence of the Government, the Motion was defeated in the House. But the opinion outside the House was very different, for nearly every paper in the Metropolis—includingThe Times—insisted on the impropriety of the union of the two offices. On the 8th May, 1900, he again brought forward a Motion directing the attention of the country and of the House of Commons to the matter, and was defeated, curiously enough, by a majority of eleven—a majority which included no fewer than twenty Ministers of the Crown, of whom eleven held among them nineteen directorships. Now he had no personal feeling towards any Member of the House in this metter, but he would like to give the names of those eleven Ministers. They were Mr. Anstruther, Mr. Gerald Balfour, Mr. Akers Douglas, Mr. Fellowes, Mr. Hayes Fisher, Sir John Gorst, Lord George Hamilton, Mr. Walter Long, Mr. W. E. G. Macartney, Mr. A. G. Murray and Mr. Ritchie. They were the men who defeated his Motion, and he said, without any hesitation whatsoever, that the public opinion of this country and of the House itself was in favour of the widest possible chasm separating Ministers on the Front Bench from the front pages of prospectuses. He was happy to know that the Radical leaders had adopted the principle laid down by Mr. Gladstone of insisting on the resignation of company directorships as a preliminary to the acceptance of public office. What were the cardinal principles on which this Motion was supported? The principle which he maintained was that Ministers of the Crown, when they held directorships, could not liberate themselves from suspicion that arose from the conflict the administration of their Department and their interests as company directors.

When the vote of a Minister of the Crown was impugned in that House on account of his connection with a public company, all his colleagues voted straight for him like soldiers on parade, and thus he was sure of thirty-one or thirty-two votes in his favour. Mr. Gladstone had said that he hated the idea of the slightest inequality between Members, but there was one power entrusted only to a Minister of the Crown, that of imposing a charge on the public funds. Let them imagine what a situation would be created if the President of the Board of Trade, in his zeal, wanted to bring in a comprehensive measure for railway reform! He would have to submit it to a Cabinet no fewer than seven of whom were railway directors. He remembered when Mr. Mundella, as honourable a man as ever entered the House, resigned his position at the Board of Trade owing to his connection with a public company. No man consistently with the dignity of the public service, could act as Minister of the Crown and at the same time be a paid servant of a trading company. Every person who entered into the service of the State should give his whole time to that service, and not place himself in a position in which there was any possibility of his public and private duties coming into conflict. His Amendment, he admitted, was worded strongly, but it was not so strong as the denunciation of the late Lord Russell of Killowen, who said that the union of the positions of Minister of the Crown and company director constituted a perfect scandal in public life. The great majority of the funds of Departments in the present government were company directors. The Chancellor of the Exchequer who, by virtue of his office, was the head of the Civil Service in this country, was a director in two public companies.




said he was delighted to hear even of that late repentance; he was glad the right hon. Gentleman had shed them, although he had held them until a year ago. Under the rules of the service he was bound to censure, if not dismiss, a civil servant for acting as a company director, and how could he do that if he were himself breaking the rule. Might he not be told "Physician heal thyself?" He would now come, by an easy transition, from the Chancellor of the Exchequer to the Secretary of State for War. He was a gentleman of many parts, and he excelled in them all according to the opinion of certain hon. Members opposite. He was a man of wonderful and versatiel genius, and he was also a company director. He had lately posed in a military aspect, and had received royal salutes as a militia officer. He, in his capacity as Secretary of State for War, would cashier any poor officer who had nothing but his pay and who was induced to take a directorship. Yet he was a company director himself. When he first directed attention to the right hon. Gentleman's companies they were the mystic number of seven. That number was reduced to five, then to three, and now the right hon. Gentleman was director of only one company. It was the right hon. Gentleman's pet lamb, and he would tell the House something about it. That wonderful financial genius, who was not at all unknown to the Treasury Bench he meant the revered Mr. Hooley—in whose case a prosecution was incon- venient and unsuitable—used to say that the principal thing in a prospectus was the front page, and that he had paid no less than &60,000 for a good front page. Now the right hon. Gentleman was a famous man; his fame had extended to what Mr. Austin, the Poet Laureate of the Party opposite, called the "gold reef city." An advertisement appeared in a Johannesburg paper setting forth the directors of the Rock Life Assurance Company, and they included, in double-leaded type, "The Right Hon. St. John Brodrick, M.P., Secretary of State for War." When attention was drawn to it, directions were given that the name of the Secretary of State for War should appear in small type, and not be double leaded. He was no longer to appear as a "double-barrelled front pager."

MR. STRUTT (Essex, Maldon)

said that the advertisement appeared without the authority of the Secretary of State for War, and was inserted by the agent of the company in Johannesburg. Immediately it was discovered it was corrected by cable.


said he thought the Secretary of State for War was able to defend himself, even though he could not defend his office.


said the right hon. Gentleman had not asked him to defend him.


said there was one observation he felt bound to make, which he thought would anticipate an argument which the First Lord of the Treasury might advance in his reply.

No doubt the right hon. Gentleman would reply very well, because he knew nothing about the subject. It might be said that Gentlemen on the Treasury Bench, many of whom were not wealthy men, should be allowed to eke out the pittance given to them by an ungrateful and parsimonious country by accepting directorships. At present eighteen Ministers, the greatest geniuses the earth had ever produced, were where starving themselves on salaries amounting to &93,000 per annum, and they held fourteen directorships. He stated, and he would defy contradiction, that thirty-three out of fifty-six Ministers of the Crown who constituted the present Administration held sixty-eight directorships. In that was included the Chancellor of the Exchequer, who had now been converted, and, therefore, the correct number of Ministers holding directorships was thirty-two, and they held no fewer then sixty-eight directorships. Out of the 670 members of the House only thirty-two per cent. were directors, but more than fifty per cent. of the members of the Government, who ought to give all their time to the country, were directors. Ministers should not incur the suspicion of being engaged in a conflict between their public and private duties. No one would say a word in disparagement of the Duke of Devonshire, but he should not be president of an Armaments Committee when he was chairman of a company which supplied arms to the navy. The Duke of Devonshire was chairman of the Barrow Hematite Company and a director of the Furness Railway Company. As to the Secretary of State for War, he would appeal to the First Lord of the Treasury, now that Army Administration was in such difficulty and danger, to ask him to retire from the Rock Life Assurance Company. The Secretary of State for India was also a director. He was on the Board of the Pelican Life Insurance Company. It was the last of many directorships held by the noble Lord, a kind of "pelican in the wilderness." The President of the Board of Trade held nine directorships, but he resigned them when he was appointed. He maintained it was inconvenient that a gentleman who had held no fewer than nine directorships should be at the head of a department dealing with company matters, and in which he must always come into conflict with company interests. As to the Lord Advocate, he had three directorships, some extraordinary and some ordinary.


The hon. Member is wrong. I have no extraordinary directorships.


said, that as Public Prosecutor, the Lord Advocate would have to intervene in cases of fraud. How would he manage in a case of fraud against one of his own companies? Would a prosecution be inconvenient and unsuitable? Another Scotch Minister, Lord Blafour of Burleigh, had three directorships. The President of the Board of Agriculture had no directorships, and he thought he knew what that right hon. Gentleman's opinion was about Government directorships. The Postmaster General had no directorships, but he had directorships before he became a Minister of the Crown. On the 6th May, 1901, he asked the Secretary of State for the Colonies the following question — Whether he is aware that last September a proclamation was issued by the Governor of Johannesburg dealing with the conduct of banking business in that city, and containing the announcement that notes of the Bank of Africa would be accepted as cash at all the Government offices within the town and district of Johannesburg, and what is the reason for the conferring of this privilege on the Bank of Africa? The Secretary of State for War, who replied, said he had not seen the proclamation, but that inquiry would be made. He repeated the question a few months afterwards, and then tried the Financial Secretary to the War Office, who also said that inquiries would be made, but he had never heard anything further about it. When he asked that question he knew that the Postmaster-General was a director of the Bank of Africa with Mr. Rochefort Maguire, of the Rand. As to the minor Ministers, they had fifty-three directorships. One of them, the Chancellor of the Duchy, had no directorships. He was Whip for many years, and was a gentleman whom they all admired and respected; but although he held no directorships, he, as Whip of the Party opposite, was in some way or other associated with company promoting financiers. He kept the cheque for &30,000 that Mr. Hooley gave to the Conservative funds until the Government thought it would be inconvenient to cash it, and sent it back. It was always a rule of the House that Ministers should, as far as possible, be exempt from commercial and financial transactions. The Secretary to the Treasury was chairman of a company. Surely it was inconvenient that a Whip should have anything to do with such matters, having regard to the way in which committees on railway matters were constituted. Turning to the Junior Lords of the Treasury, the hon. Member for St. Andrews was a director, but he was a kind of proselyte, having received the office since his appointment as a Minister of the Crown. The offer of a directorship to a Minister of the Crown was a very ugly thing for those who made it, to say nothing about those who accepted it. The hon. Member for Sevenoaks was a director of six companies; he only hoped that since his acceptance of office the number had been reduced as much as his majority. He was glad to be able to say of the Attorney General, who had just had a bad quarter-of-an-hour, that he was not a company director. But the Solicitor General was a director, which showed that the hon. and learned Gentleman had, in his exile in England, acquired the financial genius of the English people. The Treasurer of the Household was a director of the Barrow Hematite Iron and Steel Company, which provided munitions for ships of war.

MR. RANDLES (Cumberland, Cockermouth)

said the Company made only iron and steel rails.


said that would suit his case still better. Then there were eight Lords-in-Waiting, and five of them had as many as twenty-two directorships. Ten members of the Cabinet had fourteen directorships, half of which were of railway companies, though the Minister for Agriculture had said, in a recent speech, "Railway companies are managed by ornamental directors." He knew for a fact that a gentleman who had sat on the Treasury Bench was offered a directorship with &400 a year, and told he would not be required to go near the board, but simply to give his name. He was a poor man, but honourable, and refused the offer. Guinea-pigging, which was a reproach to this House, but which, he believed, was much exaggerated, would cease to exist if they could only weed out directors from the Treasury Bench. The position of guinea-pigs in the House of Commons must be made intolerable, and he urged the House to purify the Treasury Bench by Insisting that Ministers should consider the reward of the salary they received from the country as amply sufficient, without attaching their names to trading institutions. He begged to move. He concluded by moving his Amendment.

MR. ROCHE (Galway, E.)

formally seconded.

Another Amendment proposed— At the end of the Question, to add the words, 'and we humbly represent to Your Majesty that thirty-three of the fifty-six Ministers of the Crown who constitute Your Majesty's Administration hold among them no fewer than sixty-eight directorships in public companies, and that we consider the position of a public company director to be incompatible with the position of a Minister of the Crown, and that the union of such offices is calculated to lower the dignity of public life.' "—(Mr. MacNeill.)

Question proposed, "That those words be there added."

Debate arising.

And, it being Midnight, the Debate stood adjourned.

Debate to be resumed Tomorrow.

Adjourned at one minute after Twelve o'clock.