PUBLIC WORKS LOANS [REMISSION]. (Hansard, 23 July 1908)

§ MR. T. M. HEALY
May I ask the Financial Secretary to the Treasury to give the explanation I asked him for last night?

§ THE FINANCIAL SECRETARY TO THE TREASURY (Mr. HOBHOUSE,) Bristol, E.
said the explanation which the hon. and learned Gentleman desired was in respect of Clauses 4 and 5. The history of this transaction, which went back to no inconsiderable date was practically this. The railway was constructed out of a loan which originally came to about £20,000. It was raised partly by subscription, in which he thought the Spinners Company was largely concerned, and partly by subscriptions by local residents, and partly by grants from the Treasury to £100,000. The estimated revenue of something like £4,000 was found to be very much overestimated, and it eventually proved to be about £2,000, having a net deficiency of £49,450. The position came to this, that the local railway which was at that 480 time working the line on behalf of the original constructors, found they were working it at a loss of £4,000 or £5,000 a year, and they made an offer of £2,000 to buy the line. The question arose whether it was wise to scrap the railway or to leave it, to be worked at a loss, to the Belfast and Northern Counties Railway Company, or, as it subsequently became, the Midland Company. By scrapping it a sum of something like £6,000 might have been obtained to cover the small sum advanced for construction, but looking at it from the point of view of those who held the mortgage it was thought better to let it go on being worked, and a sum of £2,000 was eventually accepted for the line. It then became necessary, in order to restore to the Public Works Loan Fund this sum of £17,000, to come to Parliament with this Act. The whole thing was an unfortunate speculation. Railway experts were sent down from time to time to inquire into the working of the line. The first two greatly over-estimated the traffic returns and under-estimated the cost of the line. That led to the unfortunate financial state of things which existed when the bargain was struck. It had not injured in any way the persons who subscribed originally to construct the railway, and on the whole he thought the best thing that could have been done was to have continued the line by letting it be taken over by the Midland.

§ MR. T. M. HEALY
admitted that the present Government had no responsibility for the transaction, but he wished to denounce the British Treasury. This was one of the grossest instances of the stupidity, neglect, and absolute incompetence of the British Treasury. He attacked the job at the time, and said it was a humbug. He told them they should dandle this little railway on their knee, and instead they threw it to the wolves. The Treasury concealed from Parliament that there was this loan 481 in the background. They did not dare disclose it, as money was being actually thrown away. This was a little railway made locally. The local people put their money in it, and got a little loan from the Treasury. The loan was not being paid, but he supposed the railway was far more valuable than the loan. The gentlemen connected with the Belfast and Northern Counties Railway had a secret deal with the Midland Railway Company to whom they intended selling the line, and they kept it from the Government, and persuaded some gentleman in the Treasury to foreclose the mortgage. Irishmen did not know how these suggestions were driven into the minds of the Treasury. They did not know the Treasury clerks; but gentlemen in England who had the ear of the Treasury and the advantage of their society and could make suggestions to them, did get them at times to do what turned out to be gross and scandalous jobs. They foreclosed their mortgage, and, through the Member for East Worcestershire, said—"Oh, what are we to do? These little Irish shareholders are poor people, and have just sold and destroyed their little railway." That was very good, but the following year the great Midland Railway of England came and bought up the Belfast and Northern Counties Railway and this little railway. Why did not the right hon. Gentleman and the Government of the day come forward then and insist on recovering from the Midland Railway Company, who had a most valuable bargain, this £17,000 for the taxpayers? Where were the watch dogs of the Treasury? They talked about the way in which the Irish peasants did not pay their debts and the insolvency of the Irish ratepayers; but why did not the Treasury of that date say that, in addition to giving them this ten miles of railway for £2,000, there was £17,000 which they were not charging them and which they 482 would bring forward when the new Government came into office? Whoever was the Treasury clerk responsible for keeping from Parliament a transaction by which they made a present to the great Midland Railway Company of £17,000 ought to be bastinadoed. He considered the matter one of such grave importance that in his view a Select Committee ought to be appointed to inquire into it. It was inaccurate, he believed, to say that the shareholders lost no money by the transaction. He thought they lost the whole of their money, and they, at any rate, got no satisfaction out of the business. Parliament had had to wait until the year 1908 for the sequel to this transaction. Why did the Public Loans Bill of 1908 contain this sum of £17,000? Why was it not proposed in 1907, 1906, or 1905? Why had there been all this delay? It was because the Treasury hoped that Parliament would have forgotten, and that the Irish Members would have been away from the House. They hoped to put the matter through in the small hours of the morning, and that the history of the miserable transaction would not be exposed. It was, however, a matter that was far too serious to be allowed to slip by without protest, because it showed how Irish affairs were dealt with at Downing Street. Hon. Members were entitled to know who were the clerks and others who had kept from Parliament all knowledge of this unhappy transaction. Whether it was John Smith or John Brown, they ought to have the name of the man. These were the gentlemen who were lording it over Ireland. There must be some man with a name who was responsible for the transaction. Let the Treasury representative say who he was. He supposed it was somebody who had a C.B. or a knighthood. He repeated with all the emphasis he could use that they were entitled to know from the Secretary to the Treasury who was the individual 483 responsible for having kept such an unfortunate transaction from the knowledge of Parliament for at least five years.

§ MR. HOBHOUSE
said that the picturesqueness of the description of the hon. and learned Gentleman of this transaction was a little spoiled by the fact that the final part of the transaction was not concluded until the passing of the Midland Railway Act of 1907. Therefore, this was the first opportunity there had been of bringing the matter before the notice of the House, and there had in fact been no delay whatever in acquainting Parliament with the transaction. He wished to make it quite clear that as the representative of the Treasury in the House of Commons he and he alone, under the authority, of course, of the Chancellor of the Exchequer, was responsible to the House, and not the Treasury clerks, who had no opportunity of defending themselves in that Chamber. He repeated that this was the first opportunity the Treasury could have had of putting the facts of the case before the House. It was true that there had been a loss to the shareholders. There had also been a loss to the Treasury; but there had been no present at all to the Midland Railway Company. What were the facts? The line was worked at a loss and it was very liable, therefore, to collapse from want of funds. He could assure the hon. and learned Member that, as far as he could trace the history of the case, if the line, had been left to its own unaided resources it must have been closed down. That would have been a very regrettable thing from the public point of view, as well as, he should think, from the point of view of the hon. and learned Member. They must sympathise, of course, with those who regretted that what was once an independent Irish local line should have been transferred to a large British railway company. Still it was better, it seemed to him, from the point of view of the district itself that the railway should continue to be worked by a real live 484 company than that it should have been allowed to collapse altogether. He hoped that the explanation he had given would satisfy the hon. and learned Member.

§ MR. T. M. HEALY
May I point out that the Secretary to the Treasury is entirely mistaken. The true fact is that the Midland Company did not acquire the line in 1907, but in 1903.

§ MR. HOBHOUSE
said that the Midland Railway Act was not passed until last year. If the hon. and learned Member looked at Clause 4 he would see that it read— And whereas by the Midland Railway Act, 1907, an agreement for sale of the said railway to the Midland Railway Company, freed and discharged from all encumbrances, liabilities, contracts, debts and engagements of the Limavady and Dungiven Railway Company, for the sum of £2,000 was confirmed, and the said purchase money has since been paid. The agreement was not, therefore, confirmed until 1907, and the Act of that year obtained by the Midland Railway Company was really the one under which the transaction took place.

§ MR. T. M. HEALY
did not blame the Secretary to the Treasury in the least for the inaccuracy, but he was entirely mistaken. He (Mr. Healy) debated the matter in the House when the right hon. Gentleman the Member for East Worcestershire was Chancellor of the Exchequer, and the right hon. Gentleman to the best of his recollection became Chancellor of the Exchequer in or about the year 1904. At any rate the right hon. Gentleman was Chancellor of the Exchequer when he (Mr. Healy) debated the matter with him. The Act under which the Midland Railway Company acquired the line was passed as far back as 1903. There was no doubt about it. He would not oppose the Bill at that hour of the morning, and he had no hesitation in saying that the Secretary to the Treasury was free from responsibility in the matter. He was not attacking the hon. Gentleman, 485 but the system which was altogether at fault. Why on earth did these great Treasury experts, whose names were never mentioned, delay five years before bringing this matter before the notice of Parliament? Of course, the hon. Gentleman had a complete answer to him. He said that the officials were not responsible to Parliament, but to the heads of the Department. He (Mr. Healy) knew the hon. Gentleman's statements were inaccurate having regard to the true facts, but he did not care to enter into a controversy with him on that score. The hon. Gentleman was wrong, but did not know it. He was quite bona fide. There must, however, be some person in the Treasury who was individually responsible for the matter, and they should know who he was, even though, as the hon. Gentleman said, he was not directly responsible to Parliament. Somebody must have made the suggestion of foreclosing on this little line and selling it to the Belfast and Northern Counties Railway for a mere song. He would like to know who made that suggestion to the Treasury. Then the idea of the bargain with the Midland Railway Company must have existed in somebody's mind. What he wanted to know was this: why five years had been allowed to elapse before the matter was brought to the attention of Parliament? Why was it not brought before them last year? This Government were in office last year. They were as ignorant of the matter last year as they were to-day, and, therefore, quite as competent to deal with it. He respectfully protested against the system, and said that every Public Works Loans Bill covered a job. This had been the case ever since he had been in Parliament. These Bills were brought forward year after year by the Treasury clerks, who pretended to be great experts and who lorded it over Ireland, as well as over England and Scotland. In future he would try to peel the mask oft the face of these 486 gentlemen, and when this sort of thing occurred again he would demand to know who was the individual responsible for it.

§ MR. FORSTER
said he was not conversant with the details of the question under discussion, but he rose to make an emphatic protest against the speech of the hon. and learned Member for Louth, whose appearances in the House were all too rare. The hon. and learned Member had seen fit to make a gross and unfounded charge against the Treasury officials. It has been his (Mr. Forster's) happy lot only a few years ago to serve at the Treasury and he said emphatically that no permanent official of that Department was open to the grave charge which the hon. and learned Member had formulated. Anybody who knew these gentlemen would ridicule the suggestion that they could in any way be associated with a grave and scandalous job. The hon. and learned Gentleman had been a Member of the House long enough to know that if he had any charge to bring against any official of the Treasury, that charge must be directed against the representative of that Department in the House of Commons. The Secretary to the Treasury had told them that the operative date in connection with this transaction was in the year 1907.

§ MR. T. M. HEALY
It was not.

§ MR. FORSTER
I said the operative date. The Secretary to the Treasury has read the clause in the Bill.

§ MR. T. M. HEALY
I adhere to my statement. The Bill was passed in 1903.

§ MR. FORSTER
said that the Bill might have been passed in 1903, but clearly the operative date was not until 1907. All he had risen to do, however, was to protest against the action which 487 the hon. and learned Member had seen fit to take that night, an action which he thought was not usual with gentlemen who represented Nationalist constituencies in Ireland. He was sure that on calmer reflection, the hon. and learned Member would see that his protest should have been directed against the representative of the Treasury on the Government bench, and not against the permanent officials who were not there to defend themselves.

§ MR. AINSWORTH (Argyllshire)
said that he and several other hon. Members who were interested in railways thought it was highly desirable that, if possible, they should have exact information of what had happened. The Treasury appeared to have lost £17,601 which they had advanced to this railway. They all agreed with the hon. Member who had just spoken, that whatever was done, the Government in power at the time and not the permanent officials of a particular department, were responsible. Having advanced £17,000 to the railway in question, the Treasury eventually foreclosed, and there was no doubt that they were perfectly justified in doing this.

§ MR. HOBHOUSE
They lost £17,601.

§ MR. AINSWORTH
said the point to be borne in mind was that the Treasury foreclosed and became the owners of the little railway which they had been told was ten miles long. Then it appeared that the railway was sold to the Belfast and Northern Counties Railway Company for £2,000. Everybody, either in that House or out of it, who was acquainted with the working of railways knew that the rails alone in this case were worth a great deal more than £2,000. They could only suppose that if the railway was sold for that ridiculously small sum there was some arrangement whereby it should be worked for the convenience of the public. They ought to be told what that arrange- 488 ment was. The small railway was eventually sold to the Midland Railway Co., and nobody would deny that each railway company was bound to make the best bargain it could for itself. What they wanted to know was this: The railway, having been parted with for a scrap-iron price, what quid pro quo was given for it? Was it to secure advantages for the public that this sacrifice of public money had been made? He hoped that if the Bill passed through Committee that night the Secretary to the Treasury would undertake to give them exact particulars of the transaction on the Report stage.

§ MR. T.M. HEALY
said it was not to be supposed, if the Treasury had been frank about the matter when the Midland Railway Company were negotiating for this railway, that Parliament would have allowed the transaction to go through in the way it had done. The Midland Company got this line costing £50,000 for £2,000, so that at the very smallest computation they were making £48,000 on the deal. The British Government allowed the Midland Company of England to get hold of that valuable bit of property for £2,000, concealing from the House of Commons the fact that there was due to the nation this money. England as well as Ireland, the English taxpayer as well as the Irish, was being swindled. He only raised the question because he knew the facts and he wanted to know why in 1903 when this vigilant watch-dog of the Treasury was standing sniffing over the cash and when the Member for Sevenoaks was—he did not know what he was, he never paid any attention to what any man in the Government was, they were all the same to him, "a row of jealous individuals," as the late Mr. Biggar said—when the Member for Sevenoaks was at the Treasury which he so eloquently defended, he concealed, if he was responsible, the facts. The Member for Sevenoaks said 489 that he (Mr. Healy) ought to attack him. He did not know what the Member for Sevenoaks sins were, but he would like to be told why that transaction was not revealed to the House of Commons in 1903. They had on the Treasury Bench great zealots of economy, and the matter did not affect the Liberal Party; they were entirely free from it, because the Tory Government was in office. Was esprit de corps so strong with regard to a transaction like that that the present Government would shield the Treasury Clerk responsible from exposure and in the meantime, for all they knew, were distributing C.B.-ships and baronetcies and knighthoods and all that kind of thing, old-age pensions perhaps? A Gentleman in the House of Lords was so strongly opposed to old-age pensions that he took £2,000 a year for himself. Let that be as it might, he asked why this Government, in regard to a past transaction where not one of them was concerned and not one of them was affected, stood over this transaction, covering up the conduct of Gentlemen who were their predecessors in office? It was really a serious matter. The First Lord of the Admiralty used to be Secretary to the Treasury. He understood the transaction. He was now a member of the Cabinet. Was it not a pretty example to Irishmen to know that an Irish line worth £50,000 could be sold for £2,000 to an English railway Company, and a debt of £17,000 left to the British Government; and if a humble Irish Member with a memory of the transaction had not raised it, the Bill would have passed smack-smooth and without the Treasury making a single comment. The Treasury put the Public Works Loans Bill into the hands of the right hon. Gentleman who was now Secretary. He did not know a bit about it. There ought to be a phonograph on that Bench. He (Mr. Healy), asked the Financial Secretary last night, and he knew absolutely nothing. And yet such 490 was the system of legislation in the House of Commons that he was put forward to pass this transaction, and they were supposed to give their great respect to him. He was doing the Treasury's job. It was really extraordinary that not one single member of the bench responsible for that transaction raised his voice in condemnation of what was done eight years ago.

§ MR. HOBHOUSE
said he really thought the language which had been used and the insinuations which had been made by the hon. and learned Member were absolutely and entirely unjustifiable. What took place? The line was attempted to be made by private subscription, but it could not be so completed, and the promoters came to the Treasury for a loan. That loan was eventually made, nominally £20,000, actually rather less. When the line was completed it was never worked by the company as many small lines were never worked by the company which constructed them. It was worked by the Belfast Northern Counties Company by arrangement. The company had never from the first moment paid a single penny of interest upon the money advanced by the Treasury. That very clause which wiped off the principal had to wipe off the whole of the interest which ought to have been paid in return for the loan.

§ MR. T. M. HEALY
Why were we not told this six or seven years ago?

§ MR. HOBHOUSE
said he was not on that bench seven years ago. He was now explaining the actual, not the imaginary facts to the House. If it was the desire of the hon. and learned Member that no money should ever again go to an Irish loan, nobody would be better pleased than the Treasury. Whether that would prove to the satisfaction of hon. Gentlemen sitting on the other side of the House below the gangway 491 he was not quite certain, but as Secretary to the Treasury he would second his endeavour. Returning to the actual facts of the case this company, as he said, failed to pay a single penny of interest and therefore not only the principal, but a large sum of interest had accumulated in arrears. The hon. Member who sat for Argyllshire said: "What a bad bargain the Treasury made!" Again look at the facts. The Treasury tried to get £5,000 for the railway. Nobody would pay it. The best they could get for it was £2,000. They were informed at the time the sale took place that at least a sum of £8,000 would have to be spent on sleepers alone. On the report on which the Treasury acted, he asked would any Member of the House have advanced any large sum such as that which the Member for Argyllshire suggested ought to have been advanced upon a railway which was worked at a loss, whose permanent way was in so bad a condition that a sum of £8,000 for sleepers alone would have to be spent on a line ten and a quarter miles long which had not paid a single penny of interest from the day it was constructed? The only alternative to taking the sum which the Treasury eventually accepted would have been to break up the whole line with great detriment to the district concerned. Though a larger sum would have been realised to the Treasury he thought that course would have been harsh and ungracious.

§ MR. AINSWORTH
said his hon. friend did not see his point. Whatever the line was worth, it was worth the value of the rails. Everybody must see that the rails of a line ten and a quarter miles long must be worth more than £2,000. The hon. Gentleman's predecessors were perfectly right in helping the line if they could, but the point was, how much public money were they to sacrifice to do that? What were the terms of the bargain? He did not say they were not justified in handing over the line to the Befast 492 and Northern Counties Railway for £2,000, but what guarantee did they get that the line would be worked in the interests of the public and at reasonable rates? Would the right hon. Gentleman bring that up on Report?

§ MR. HOBHOUSE
said there was nothing to bring up on Report further than the explanation which he thought he had offered at great length. The Treasury, as he had told the House, could have got a sum of £6,000 if they had broken up the line. That was what they were told they could have got if they had broken up everything and carted it away. They preferred to take a smaller sum and keep the railway for the inhabitants. The bargain was that they got £2,000, and the railway instead of being dead was now alive, and being worked for the benefit of the inhabitants.

§ MR. MARKHAM (Notts, Mansfield)
said he objected to the Secretary to the Treasury giving information to the House unless he had verified that information. He had stated to the House that the sleepers alone for the line would cost £8,000. A railway did not take more than 2,000 sleepers to the mile. The cost would not at the most exceed 3s. 6d. per sleeper, and the total cost of the sleepers could not in any case come to more than £3,500. How did they get the balance of £4,500?

§ MR. T. M. HEALY
said he did not blame the present Secretary to the Treasury, personally. What he did was simply to expose the Treasury tricks and methods. It was nothing to him; no doubt the line was a good line, and he wished its possessors joy of it, but why were the facts concealed from the House of Commons for seven years? Why was this in the Bill of 1908 only?

§ THE DEPUTY CHAIRMAN (Mr. CALDWELL)
Order, order. The hon. 493 and learned Member has repeated that several times.

§ MR. T. M. HEALY
But I never got an answer.

§ THE DEPUTY CHAIRMAN
The hon. and learned Member cannot go on repeating it.

§ MR. T. M. HEALY
All I want is an answer. I do not want to keep the House of Commons up, but I do respectfully submit that we are entitled to know who is the person responsible for having kept from the House of Commons the facts for over five years. Why not have put it over for another five years?

§ The DEPUTY CHAIRMAN
The Secretary to the Treasury has stated that he is responsible for whatever fault is in the Treasury. The hon. and learned Member has got his answer that the Treasury Bench accept full responsibility. Obviously, there can be no further answer.

§ MR. HUDSON (Newcastle)
asked how long the rails on that line had been laid down, and how many locomotives the line possessed. Surely locomotives would be required on the line.

§ MR. HOBHOUSE
said he had already explained that a very small line had been worked by the Belfast and Northern Counties Railway Company, and therefore, they required no locomotives but their own.

§ *MR. HUDSON
said there was the line at least, and there were stations and buildings and some railway stock of some description. There were the land, stations and buildings, and even if two-thirds of the estimated cost as 494 mentioned by the Secretary to the Treasury was necessary to re-sleeper the line, that line would at least be worth three times as much as the amount in question, and therefore, the transaction on the face of it bad been a very bad one indeed. He was really astonished at the explanation which had been given. To put it at its lowest value the railway was worth ten times as much as it had been given away for.