HC Deb 04 March 1921 vol 138 cc2183-210

Considered in Committee, and reported, without Amendment.

Motion made, and Question proposed, "That the Bill be now read the Third time."

Major BARNES

When the Debate took place on the Supplementary Estimates, on which this Bill is founded, the Leader of the House made an appeal to one of my hon. Friends on this side that the discussion might be closed, as there would be two further opportunities of discussing this Bill—one on the Report stage, and one on the Consolidated Fund Bill. The Report stage, I think, was taken rather unexpectedly, and the Consolidated Fund Bill was introduced without a word. There was some misunderstanding between myself and the right hon. Gentleman, and I did not anticipate he was going to speak with such brevity that he was not going to speak at all, and the Bill passed the Second Reading without any comment. This is the last opportunity, therefore, of raising one or two very substantial points on a Bill affecting a very substantial sum. We are passing a Bill this afternoon which takes a sum of £21,000,000 out of funds raised by a levy upon the general body of taxpayers in this country, and we are doing that for the purpose of passing it over to a comparatively small number of persons who are the owners of the railways in this country. A transaction of that kind must always, and very properly, meet with comment and with consideration in this House, and there is no body of opinion in this House which is more critical of anything in the nature of a subsidy or a dole than the hon. Members who form the body of supporters of this Government. So I am quite sure they will not feel I am in any way departing from what is their normal practice by directing the attention of the House on this, the last possible opportunity, to what is taking place.

The Debate on the Supplementary Estimates concluded with a concurrence of opinion on the part of the right hon. Member for Peebles (Sir D. Maclean) and the Leader of the House that this question was one which should not be approached in a party spirit or under any personal prejudice, and it is entirely in that spirit that I want to couch the observations that I am about to make. I think it would be very difficult, indeed, to approach this matter in a party spirit. I cannot really see that anybody can make party capital out of it, except perhaps the party which is slowly aggregating upon the Benches on my left. So far as I know anything about the Railway Agreement, all parties—the Liberal party, the Labour party and the Coalition party—are implicated, or, if that is not the proper word, are involved in these agreements, and it does appear to me that if I were making the railway case, which I am not, I should lay stress upon the fact that these agreements are not only agreements on which all these three parties are involved, but which have run the gauntlet of four Governments, because while there may be many people in this country who might imagine that this claim is based upon an agreement, it is really based upon a whole series of agreements which have grown up with the passage of time, and with the passage of Governments. The whole structure, therefore, upon which the railway companies have built their claim is a foundation which has been laid over a period of years, and in which every Government since 1914 has been more or less concerned. So that it would indeed be difficult, if it were desirable, to attempt to meet this question in a party spirit.

I have been feeling very strongly, however, that this Bill should not pass through this House without making some observations on the connection of Mr. Walter Runciman with the agreements. In some quarters there is a certain amount of odium attached to agreements upon which the claim is based which we are meeting under this Bill, and as Mr. Runciman is no longer a Member of this House, and is not able to state his own position, it does seem to me to be incumbent upon anyone who is conversant with the facts that they should be put before the House and the country, and, of course, the original agreement, or the action of the Government then in power, and, in so far as the doctrine of collective responsibility applies, Mr. Runciman must take his share of that responsibility. But those who have studied the facts that are now open to the public will know that the terms of the original agreement were really settled between the 29th July and the 5th August, and they may also know that Mr. Runciman was not appointed President of the Board of Trade until 6th August, so that the original agreement was settled in its terms before the date of his appointment. It was submitted as finally settled at a meeting which took place on the 6th August, at which Mr. Runciman, then the President of the Board of Trade, was present, and at which was also present the Chancellor of the Exchequer. So that these agreements are, as I shall indicate a little later, really ultimately based upon Treasury sanction. The Board of Trade has been merely an instrument used by the Treasury for negotiation, so that in so far as any responsibility has been fixed upon any particular Department or any particular Minister, the responsibility, not only for the original Agreement, but the whole series of agreements, must be taken particularly by the Treasury.

We are really in the position to-day of being involved by administrative acts of the Treasury, and this first agreement from which all the rest of the agreements flow is not different in that respect. It was an agreement, the terms of which were settled before Mr. Runciman went to the Board of Trade, and were agreed at a meeting at which the Chancellor of the Exchequer was present, the Chancellor of the Exchequer of that day being, of course, the Prime Minister of this. I do not make this explanation with a view of any party advantage at all, but it does seem right and proper that the House and the country should be fully informed as to the nature of the personal responsibility, if any, for the original agreement. We are dealing with a large sum of money which is passing from the general body of taxpayers into the pockets of the shareholders of the companies. I want to say, as distinctly as I am able to say it, that, in my opinion, the shareholders of the railway companies are entitled to full compensation for any loss which they have sustained by the exercise of the powers of the Government during the War. They are clearly and fully entitled to that, and I would go further and say that, if there is any doubt as between the shareholders and the State as to any matter of compensation, I would give them the benefit of the doubt. After all, if it comes to a question of allocating burdens the shoulders of the State are broader than the shoulders of the individual, and where there is real doubt as to the side towards which the balance should be, I would be quite prepared to agree that the balance should be taken towards the side of the shareholder.

I should like to say a word or two about the representatives of the shareholders in their dealings with the Government, the chairmen of the railway companies and the general managers. There is some confusion on the point of the negotiations which led up to these agreements and also as to the instruments of negotiation. It is, perhaps, not clearly recognised that the chairmen of the railway companies were not compelled to join m these negotiations. They were associated together in the Railway Association. They were in the background. The people who were negotiating were the general managers. So you have really a picture of this kind: In the far distance you have the general body of the shareholders of the companies, in the middle distance the Railway Association, composed of the chairmen of the various companies, and in the foreground the general managers of the various railways making the Agreement and carrying on the administration. I should be sorry if anything I said in this House were held to be a reflection upon any of the chairmen of the railway companies or the general managers of the railway companies as individuals in regard to the matter of these railway agreements. In so far as I have been brought into touch with either general managers or chairmen of railway companies, either inside or outside this House, I have been left with the greatest admiration for their capacity and with great respect for their character. I realise that they were in an extraordinarily difficult position As chairmen of the railway companies they were not dealing with their own property, but with a body of property placed in their hands by the shareholders to be safeguarded. The general managers are still more in that position. If the chairmen were responsible to the shareholders, the general managers were responsible to the chairmen and the shareholders as well.

Any man is entitled to be generous in the disposal of his own property, but we feel and should feel that those are not qualities which he should display in the handling of the property of other people, If their property is entrusted to his care it is not that he should be generous with it, but that he should safeguard it and keep it. Any great detail of criticism of the action of the general managers of the railways would be blunted by coming against a defence of that kind. As individuals I am perfectly sure that all those who were concerned on the railway side with negotiations are entitled to claim just as much regard for their country and its interests as any other individual. What you had here in building up these agreements was not an individual instrument but a collective instrument on the railway side. It has very well been said that a company has neither a body to be kicked nor a soul to be damned. I think that means that when men act collectively the qualities of humanity fall away from them and you are really dealing with an administration. What followed, in my opinion, was that the bargains that were driven with the Government were hard bargains, very hard bargains indeed, and that in the bargaining full advantage was taken of the position, and that the agreements under which the claims are alleged, to meet which this Bill is passing, were agreements obtained under great pressure. In making that statement I am not making a statement which does not find precedent in the claims of the railway companies themselves, because they make an entirely similar claim with regard to the arrangement which was made in respect of war bonus. War bonus forms a part of the claim which the Minister has now to his charge. It is an item in the sum of £21,000,000 and the railway companies claim that the arrangement applying to war bonus was an arrangement to which they only agreed under very considerable pressure, and I am quite open to say that they honestly felt pressure was put upon them to which they had to accede. I am not going to say for the Treasury, as against the railway company, that there was any real differentiation in spirit in making these bargains. I think that those who were acting for the Government did the best they could to employ all the means that, were at their disposal, and, if they had leverage, used that leverage. So I am not makingg any distinction between the two parties to the bargain in that respect. What really was the case was that the railway companies were in a stronger position, and consequently able to make the better bargain. They had more prevision of what was coming so far ahead. That is not unexpected in view of the fact that they had special experience, and Treasury officials had not. Of course, they were not in the position in which they are to-day, confronted on the side of the Government with a body of such special experience as now exists in the Ministry of Transport. The interests of the State at the present time are decidedly advantaged by the existence of the Ministry of Transport, in so far as it is dealing with the question of the railway claims. I am not going to commit myself to any approval of any other proposal of the Ministry, for that would be outside the question we are here to discuss this afternoon.

The Ministry of Transport at first, if it was an advantage to anybody, was likely to be an advantage to the railway companies rather than to the State. I am not going to give my right hon. Friend the Minister of Transport any credit for having set up this Ministry to deal with these agreements. I look upon him as like Christopher Columbus who set off to find India and bumped into America. The Ministry of Transport was set up for one purpose and after a while it bumped up against these railway agreements. It was a useful discovery and the country is going to be advantaged in the negotiations that are going to continue on these agreements owing to the existence of the Ministry. My main point is that I think that the negotiations are bound to go on, and, after all, what we are really dealing with here this afternoon is a running claim.

This £21,000,000 is only a payment on account, and, in dealing with it, we have to bear in mind that we have payments to make in future, and that the extent of those payments will very largely depend upon the success of the negotiations between the railway companies and my right hon. Friend. A day is to be set aside for the discussion of the Colwyn Report, and obviously it would be unwise of me to attempt to deal with it in any way this afternoon, but there have been statements in the Press to the effect that something in the nature of a settlement may be reached before that discussion, and in any negotiations that may be made, the Minister of Transport should have the full support of this House, for he is in the position of looking after the interests of the general body of taxpayers. This House is not concerned primarily with the interests either of the railway shareholders or the railwaymen, though they are both concerned, because this amount of £21,000,000 cannot be said to be earmarked for dividends; it is going into the railway pool out of which wages as well as dividends will be paid. I fully recognise that, and one may regard it as in the interests not only of the shareholders but of all those engaged in this great industry. A settlement is more likely to be made if the Minister of Transport can feel that he has the support of this House in resisting any attempt that may be made to secure terms unduly favourable to the railway companies. The House should have drawn to its notice as evidence of the kind of thing that the Minister is likely to have to meet in dealing with the claims that have arisen, and which will continue to arise, a statement that was made by the chairman of the Caledonian Railway Company, which appears to me to run very near an infringement of the privileges of this House. The chairman of that company, speaking about the claims with which we are dealing this afternoon, said: The extent of these claims may be enormous. It is evident that these claims of the railway companies will be increased or diminished according as the measures taken by Parliament in the next Session prove to be more or less adequate for our needs. Therefore, the claims will not be formulated until the nature and effect of those measures is fully known. It seems to me to be a very improper statement to make, that the claims of the railway companies are to be based upon the action which this House takes. If they move in one direction, the claims may augment, and, if they move in another direction, the claims may diminish. It appears to be an attempt to apply that sort of pressure which this House has been always disposed to resent from whatever quarter it came, whether from hon. Members on this side of the House or from any other quarter. I merely quote that statement this afternoon as indicating the kind of spirit with which my right hon. Friend will have to deal, and I do suggest that he should be able to feel that in this matter he will have the support of the House in resisting any manifestation of the spirit indicated in that quotation. We are not in this position on account of any action of this House. It is not by reason of any legislative measures passed by this House that we have to pay during two years a sum of nearly £100,000,000 into the funds of the railway companies. We are in this position to-day as the result of a series of administrative acts, some of them by Treasury officials and some of them by the Cabinet, but in no case by the action of this House. The position of the Minister would be very much strengthened if he could give the House the assurance that the settlement of this claim would depend ultimately upon the sanction of this House. We have to recover control over finance, and it is perfectly obvious that it is no use coming here day by day and fighting hard over Supplementary Estimates, trying to cut down expenditure by a few thousand pounds of all the time officials can commit us to the expenditure of millions of pounds, and if afterwards we are to be told that these agreements have been made and all that we have to do it to pay. I suggest that the Minister would find it an advantage if he gave this House an assurance that the settlement to be made with the railway companies would be submitted to this House for its sanction.

Sir D. MACLEAN

I desire to assure hon. Members who may wish to take part in this Debate that I only propose to intervene for a few minutes. I wished to ask the Leader of the House a question if he were here. But meanwhile I would like to say this with regard to what my hon. Friend (Major Barnes) has just indicated in his concluding remarks. It is not a matter of hope or request that this House shall have the last word in these matters. The House must have the last word, and whatever arrangements are made by the Minister of Transport, or any other official, the right and duty of Parliament to see that everything relevant comes under its review and receives its final sanction is undoubted. That I am certain will be duly carried out. I do not presume to offer advice, but I should like to say one thing to the railway managers and chairmen, and if my right hon. Friend the Minister of Transport will allow me to tender him also a word of advice I will include him in it. I wish to point out to them all that they will never have a better opportunity than this Session affords of arriving at a final con- clusion of this much vexed question. If it is deferred till next year a General Election may intervene and there may be a great change in the circumstances. A new set of men may be brought in who have not been in touch with the trend of our discussions or with the atmosphere in which the whole matter has been brought within the purview of the House. Once a question of this kind drifts into litigation it really means that discussion takes place at the point of the bayonet. Immense amounts will be wasted, not only of money, but of effort and time, both of the officials of the Government and of the officials of the railway companies, and that time might be devoted to other and more fruitful objectives. It would be a sad waste so far as public and private interests are concerned.

My business experience has taught me that nothing militates more against the success of our great railway undertakings than litigation, especially in the Committee Rooms of Parliament on private Bills. General managers, departmental managers and chairmen, spend months of the best time of the year in fighting Bills, and meanwhile the whole administration of the railways is suffering. Suppose that occurs in connection with this question and there is litigation on this tremendous issue. The railway companies will be damaged, the public will be damaged, and the country will suffer. Everyone will suffer, including the Government, and therefore I would urge all concerned in this most troublesome and difficult question to combine all their energies to get a settlement of it this year. Everybody will benefit thereby. I see the Leader of the House is here now, and I should like to ask a question to which I think the House is entitled to have an answer. Statements have appeared in the Press in the last two or three days, and particularly so this morning, which seem to indicate that the Minister of Transport may speedily resign his office and the whole railway question be again thrown into the melting pot, and some fresh policy undertaken in regard to it. I think we are entitled to know whether there is any truth in those statements. Quite soon we shall have before us the Estimates from the right hon. Gentleman's Department, and previously to that I imagine we shall have a Debate on what is known as the Colwyn Report. I should therefore like my right hon. Friend to tell us what truth, if any, there is in these statements, and, if they are well founded, what course the Government propose to pursue?

Mr. BONAR LAW

First of all, with regard to what my right hon. Friend has said as to the railway dispute, I can give him a definite assurance. I quite agree with the view he has expressed, that it is not in the interest either of the State or of the railway companies that the dispute should be prolonged. Like myself, my right hon. Friend has been a Member of the House of Commons for a considerable time. In the old days, whatever Government was in power, I used to think there was an inclination to treat the railway companies not quite fairly in regard to private Bills. Everyone knows that railway conditions in this country are vital to our trade and industry. I can assure the House that, so far as the Government is concerned—I have not gone into this question on its merits—while we must safeguard the interest of the taxpayers, it will certainly be our desire to deal fairly with the railway companies on any question which arises. If negotiations take place, as I hope they will, my right hon. Friend will understand, of course, that it will be the duty of the Minister of Transport to keep the House in touch, as far as possible, with everything done. But it must be obvious that while negotiations are going on, we cannot publish what is happening. I can give this undertaking that the Government will commit themselves to nothing which the House has not the power to revise. I find a little difficulty in answering the last question put by the right hon. Gentleman, because it is to a certain extent personal. I have read with great surprise myself the statements which have appeared in some newspapers to the effect not only is my right hon. Friend giving up office, but that he is giving it up because the Government will not let him have his way in regard to railway policy. There is not a word of truth in those statements.

Mr. SWAN

How can he do the work which the Department was set up to do if the money intended for it is taken away? There was money set aside for development. It has been taken away from the Minister of Transport, and what is the use of his holding on to office now?

Mr. BONAR LAW

My hon. Friend really raises a very big question on which I should have thought all parties in the House, and even hon. Members on the Labour Benches, would have taken the same view. We have to consider in connection with the expenditure of money, not merely whether it will be of advantage to the country, but also what is the state of our finances at the time, and I do not see how such a matter as this can be pressed now, the financial condition of the country being what it is. As regards the other question my right hon. Friend the Minister of Transport has been working for two years on this railway problem. It is a very big problem. What has happened during the War, while the railways have been under control has had this result, that it can safely be said you cannot hand the railways back to the companies without an attempt being made to arrive at some method of dealing with them which will be good for the railways and good for the country. If you were to hand them back without doing this, I believe the Government would fail in its duty. I believe we must face it. My right hon. Friend has submitted his proposals to the Cabinet. A Cabinet Committee is now examining them, and I have no reason whatever to believe that we shall not be able to agree upon some plan which we shall submit to the House of Commons.

As regards my right hon. Friend's continuance of his office, it is a fact—and since it has appeared in the Press he agrees there is no object in postponing the anouncement—that he is giving up his position in the Government at the end of August. I ask the House to bear in mind that it is at the end of August that railway control comes to an end, and therefore there is ample time for him to deal adequately with the problem as to his giving up his office. There is really nothing new in that. It was, as I have said before, the desire of my right hon. Friend, before the Election of 1918, to resign his position then, but the Government felt that the state of the whole of the transportation question in this country was one of the most difficult subjects with which we had to deal, and we had confidence that my right hon. Friend was capable of dealing with it. The Prime Minister and I used all the influence we possibly could to persuade my right hon. Friend to undertake that task. He was not willing to do it, and that is rather a curious commentary on the idea which some people have had that he was making a post for himself, and that he was full of megalomania in undertaking something which he was going to do for the rest of his life, when he was really doing his best in the public service in difficult times. He agreed to stay for two years, and that was all the promise we could get from him. When he came towards the end of the two years he wished to go, but we thought he was a valuable asset to the country, and should stay till the period of control ended, and he agreed to do so. It is a very unpleasant thing to say nice things about a colleague in the Cabinet at any time, and still more unpleasant for me to say them, because it is like praising oneself. I am bound to say that I am convinced that we could not have got any other Minister who would have tackled this problem with the same energy and skill, and, I hope it will be found, with success. At all events, he does understand the problem. He has devoted his whole heart to it, and even the House of Commons will recognise this, although for some time he was not one of the most popular figures on this Bench.

Sir D. MACLEAN

He has always been that.

Mr. BONAR LAW

I do not think so When he told us definitely at the end of last year that he must go at the end of August, I said to him, "I venture to think you are making a great mistake; and if you are not careful, you will soon be one of the most popular men in the House of Commons." There is no disagreement between him and the Government. In my sincere view he has rendered a great service to the country. People who like myself are more or less professional politicians have a right to expect to be attacked and do not much mind it, but I have always felt it was a little hard that men who were not doing the work for any motive of ambition, but with a desire to the best of their ability to serve their country should be attacked. My right hon. Friend has done that, and I think the House of Commons will realise that he has done it.

Mr. INSKIP

With regard to what the Leader of the House has just said, the only thing I should like to say is that I agree with what he has said as to the great earnestness, sincerity, and zeal in the public interest of the Minister of Transport. I have had the honour of serving under him in a very humble capacity before, and I am able to state that all those who have had anything to do with the right hon. Gentleman have nothing but admiration for the way in which he has discharged his duties. I do not understand what the object of the hon. Member for Newcastle (Major Barnes) was in making his observation about the past history of the railway agreements. The hon. and gallant Member's view is well known because it was stated in the Colwyn Report that when he thinks an agreement has been obtained under pressure it should be departed from on the ground that it is not equitable. Those are not the principles upon which great British industries and confidence have been built up. The last thing I wish to do is to criticise Mr. Runciman, who had very difficult duties to fulfil, and we all know the circumstances under which he was brought into this railway business.

The hon. and gallant Member went on to suggest that railway companies drove hard bargains with the State. If the suggestion is that, because those were hard bargains the Government ought not strictly to fulfil them, I desire to protest against any such suggestion. I do not think the position is anything like that which has been described by the hon. and gallant Member. The Government has been well served during the War by a number of eminent civil servants who advised the Government at every single stage in regard to these agreements, and they sometimes forced upon the companies agreements which the companies would have preferred not to make. When the suggestion is put forward that the companies drove hard bargains at the time, and that it is no longer equitable that they should be carried out, I hope-such opinions will find no response in any section of the House. There is some sort of suggestion that the railway companies have benefitted very largely out of these agreements. It is true that large sums have to be paid. It seems to me that the position of the hon. Member is like that of the golfer who, having made a number of fortunate shots, indicates what a good score he would have made had he not made so many misses. The Government secured immense benefits from the operation of this agreement, both financially and in connection with the general conduct of the War, and it is not fair to suggest that, because in some connection the railway companies secured benefit on their side, those benefits should be treated as having been improperly obtained. As a matter of fact, as I have already suggested, Sir William Plender advised throughout. As it turned out, at a certain date the interest swung round and some profits accrued to the railway companies. It is not the case, however, that the railway companies drove a hard bargain, but it was because they accepted the advice of Sir William Plender that they secured whatever benefit may have resulted from the agreement. I want to suggest in agreeing with the right hon. Gentleman the Minister for Transport, and with the Leader of the House, and I think, with the majority of hon. Members, that in such questions as these the proper way to avoid litigation—and I hope the Minister of Transport will give me his attention—is to make it clear that the Government, notwithstanding the invitation held out to them from some quarters, intend to adhere to the bargains so far as they can read and construe them in their strictest possible sense.

Speaking from my own experience, which I think is the experience of the majority of hon. Members, I have found that, if two men enter into a bargain and that bargain is not clear and explicit, the best way to provoke litigation is for one of them to suggest that because the bargain is not clear and explicit he does not propose to be held by its terms, but that he proposes to remake his contract or to make a new contract. But if the two parties meet and agree that, so far as they can agree on the construction of a contract, they will abide by its terms to the last letter of that contract, there will be a spirit and a feeling on both sides which will be to the interests of the parties concerned. I hope that the Minister of Transport, in his responsible duties to this House and the country, in working out the effect of this agreement, will let the railway companies know that we shall not accept the invitation of the hon. and gallant Member for Newcastle (Major Barnes) and those who think with him, but that the Minister is going to give the railway companies credit for having acted in a proper manner during the War, and that he will adhere to the bargains made both in the letter and in the spirit, and that, to show the anxiety which I am quite sure he personally feels, no suggestion shall ever be made that the Government evinced any intention or desire to depart from the bargain. One of the great objections to nationalisation is that in the dealings of Government Departments with industry there is a difficulty sometimes of getting them to hold to their bargains. They are too apt to take an advantage which power gives them to depart from the bargains made. That is one of the dangers of nationalisation. In this particular case the Minister of Transport has a great opportunity, and the greatest testimony which will be given to him when he leaves his position—if he is able to earn it—will be that he has conducted negotiations in a conciliatory way—as I am sure he will— with the railway companies, and not in the spirit of those who wish to depart from the strictest letter and spirit of a single one of the terms of the agreement.

2.0 P.M.

Sir J. HARMOOD- BANNER

The speech of the hon. Member who has just spoken so very fully bears out my views when I listened to the speech of the hon. and gallant Member for Newcastle (Major Barnes) that I do not propose to add very much to what the hon. Member for Bristol (Mr. Inskip) has so ably said. I do think, however, that it wants a little bit of application as regards the somewhat hard speech which we have heard from the hon. and gallant Member for Newcastle (Major Barnes). First, I should like to congratulate the company to whose services, I presume, the Minister of Transport is preparing to return—

The MINISTER of TRANSPORT (Sir Eric Geddes)

No, Sir; I wish to correct that statement at once. I am returning to no railway company.

Sir J. HARMO0D-BANNER

I am sure we should be very sorry to lose the right hon. Gentleman. The success of the company for whom he so ably acted as general manager before he came here is evidence of how far we ought to trust him in the interests of the railway com- panies. During the whole of his remaining term of office between now and August I hope he will take a very generous view as regards the position which ought to be taken up by the railway companies towards the immense number of trustees holding debentures and preference stock, and the shareholders who have entrusted their moneys to the railways in the past, and who now really are in a terrible state of anxiety, as can be seen by the heavy fall in railway shares in consequence of the Colwyn Report and in consequence of the strictures in the Press. No doubt they ought not to be paid more than that to which they are properly entitled, but we have to remember that we have to keep up the credit of the country, which has expended its money in the building of these railways and in the promotion of them to the immense advantage to the State. It is a fact that the insurance companies, the widows, the orphans, and the trustees of every sort are hardly knowing which way to turn or how to act towards the beneficiaries on whose behalf they have invested moneys owing to the conditions in which the railway companies are placed.

I would venture to reproach the railway companies a little, because I think they have allowed this matter to go on too long. Look at the position of the railway companies in 1914. They were growing, they were doing their work, and they were doing it successfully. When the War came they gave up their right to improve their revenue, to improve their capital, to improve their expenditure, and they have been stunted ever since. In 1914 they had every element of progress and every chance to acquire further capital at very moderate terms. They had every chance to make such a success as had been achieved by the right hon. Gentleman the Minister for Transport when he was holding the position of general manager of a railway company. Then the State came in, and for the purpose of the War took the railways over, and ever since they have been stunted. In 1914 they gave the very best of their services; men like Sir Herbert Walker, of the South Western Railway, and all the managers. The hon. and gallant Member for Newcastle (Major Barnes) tried to put it on the directors. The directors are very efficient men, but it was not the directors but the managers who were placed on the Executive Com- mittee and who conducted the affairs of the railway companies in such a brilliant manner that, whereas in the old days, you had to send goods from Carlisle to Woolwich, or Dover, or Southampton with all sorts of difficulties of transhipment, traffic arrangements were altered in such a way that those of us who wished to send goods were able to send them straight from the place of manufacture to the place of embarkation. That assisted the country materially in conducting the War. The audit accountants, the engineers, their shops, and everything connected with the railway companies, were placed at the service of the State, and, as I have said, their progress was stunted and stopped. As to the question of increased wages, I understand that the hon. Member says that there were special Committees who gave those wages and that he had nothing to do with it. All of us who observed this question of wages, however, saw boys who were receiving 10s. put up suddenly to the level of £3 10s., and getting more wages than the station-masters at small stations. We saw all sorts of extravagances, so that it was impossible that any railway company, without enormously increasing its rates, could pay on the increased wages. When to that is added the increase in cost of material, one can see what the railway companies had to meet. The hon. Member for Newcastle talks about their making a hard bargain with the State. I happen to be a railway auditor and to know a little about these matters. The total expenditure, in the case of a railway company with which I was concerned was £9,000,000 to the end of 1919, while in 1920 it was £13,500,000; and yet the railway companies are attacked for not having made the progress which they should have made. They have not [...]een given extra rates and extra facilities in order to meet this enormous increase of expenditure. It reminds one of the sweep who went into the confectioner's shop, put his thumb into a tart, and then said, "How much for this damaged tart?" That is exactly what has happened in the case of the railway companies. You have damaged the railways by putting on them this enormous extra cost of wages, a great' part of which was unnecessary, and then you do not give them facilities in order to make it good.

There is one way in which the railway companies could make good something, and that is my adapting some of their work to motor lorries. The outsider is adapting motor lorries, but the railway company cannot do so because there are laws passed by this House which interpose and tell them that it is not within their powers. Therefore, one source by which they might make some return is denied them; and that is the case all along. The position, therefore, before us is that we have got to meet the railway situation, and to meet it in a fairly generous spirit towards those people who put their money into railway preference and debenture stock. I think the railway companies charged nothing for all the soldiers that they carried. If the fares of those soldiers had had to be paid, there would have been a large increases in the funds available for the purposes of the railway companies. The railway companies carried free enormous quantities of material for the Government, and did their work, as I have said, through their managers, engineers, audit accountants and so on, in the most thorough way without any chance or possibility of reward, and, save in one or two exceptional instances, without any increased dividend from 1914 to the present time. What industry has been content to live from 1914 without being allowed the privilege of paying Excess Profits Duty? The railway company had no chance of paying Excess Profits Duty, or of doing anything except living upon this poor miserable fact that in 1914 it received so much money, and may, perhaps, by the grace of God and of this House, get so much money up to a certain date. That certain date has now arrived, and to everyone it looks as though there was not going to be any reward, but a penalty. The ordinary shareholder is going to go without any dividends at all, and the preference shareholders and debenture holders, and the immense number of people who invested trust money, are to receive no consideration or reward whatever. I rather blame the directors and chairmen of the railway companies for not having attempted to agree with their enemy quickly while they were in the way with him, because, to continue the Scriptural phrase, if he hales you before a judge, then you have to pay your uttermost farthing. That is a principle which is being acted upon, and which was ad- vocated by the hon. Member for Newcastle. I remember that, during the strike last year, I saw an outside porter talking with one of the railwaymen who had gone out on strike, and saying, "It is all very well, but you are ruining our work, and the shareholders who have put their money in." The railwayman at once consigned the shareholders to a place which was not Heaven, and that appears to be the spirit in which the hon. Member for Newcastle spoke. I would appeal to the Minister to try and meet the chairmen of the companies, to ask them to come to him and propound a scheme which will save the situation. That scheme should be published and made known as early as possible, so as to console and help and give some satisfaction to all those widows, orphans and other people who put their money into the railway companies, and who are now in a state of great anxiety and distress.

Mr. SWAN

I will not follow the hon. Member who has just spoken into the questions of costs and losses to which he referred, nor comment upon his remarks as to the extravagant wages received by the workers. I regret to hear that we are likely to lose the Minister of Transport, although I am pleased that the collective opinion in this House is so far changed to-day that his services are beginning to be acknowledged. A very short while ago no epithet was considered bad enough to throw at him both by Members of this House and by influences outside. However many of us looked upon the Department and the Minister at its head, especially in the Labour party, as being able to make great progress and to co-ordinate the service to the advantage of the whole nation, and one regrets, after serving on the Ways and Communications Bill with the Minister, to see that the railways have got to be handed back and, as part of the bargain, this amount of £21,000,000 has to be paid to them because many of us shuddered as to the state we should all have been in had the Government not taken control of the railways. It is common knowledge that they absolutely failed to function, and hence the State had to step in and control them.

My chief objection to this to-day is because the powers which the railway companies possess are possessed in order that they might function for the benefit of the community. The manner in which they have neglected to carry out their obligations to the community is very deplorable. In fact, I have been deluged with requests, because of that very fact, to hold up every measure that is introduced. The last speaker suggested the great cost of taking goods from Carlisle to Woolwich. Owing to the negligence of the railway company in putting a line a matter of 12 miles through the area I represent, and also Mr. Speaker's Division, we are going to have a whole deserted area. Goods have to be taken hundreds of miles round, where if they carried out their duty to the State and laid a line, where there are no engineering difficulties, there would be an enormous saving to the State, it would open up valuable areas and enable the community to retain the services of men, develop uncultivated land, and enable the people, in that part to work minerals which cannot be done to-day except at a loss. In fact, mines and quarries have had to be closed owing to the huge cost through want of railways, and it seems strange in the light of this negligence that they should have paid to them a matter of £21,000,000. Where they failed, the Ministry of Transport was set up. Everything was set aside for that Department in order that where required the Minister, with an officer of the Board of Trade, should set about to construct lines. In spite of enormous expense to the State and the taxpayers, nothing has yet been accomplished. They could have done the work, and many of us who served on that Committee expected that when the Government set up that Department it was in earnest, and did not intend to waste the ratepayers' money in having such an expensive Department. But we find, owing to financial influences inside and outside, that the Minister of Transport has not a penny to lay these railways, whereby men could be found employment, and resources which to-day are lying dormant might be developed. There is no hope that if the railway companies go back to the old times they will function any better than they did in the past. The passenger service today is inadequate, and they are making no attempt whatever to construct convenient lines so that industry in this country will be able to hold its own with the industries of other nations. It would be a great blunder for the nation to hand them back, and the bargain which has been made is far in excess of what they need, because they absolutely failed, and had the Government not taken control of them the whole of this nation possibly would have gone down.

Sir E. GEDDES

I hope the House will now allow me to have the Third Reading of this Bill. I should like, however, to make one point clear in reply to what my right hon. Friend opposite put to me. He said that no settlement of these outstanding matters with the railways ought to be come to without the cognisance of the House. That the Leader of the House has agreed to as far as is possible. With that I entirely agree. The one outstanding satisfaction to me in to-day's Debate is that I feel that I am getting the support of the House in this matter. The House is realising, possibly as it never realised before, that I am representing the interests of the community and doing the best for the community in a very big and intricate financial transaction. If I feel that I have the House behind me, that I have its support and the interest of Members of the House, it will enable me to conduct the negotiations with much greater success and much greater confidence. That being my attitude I desire to the fullest possible extent to keep the House advised and I desire that the House should know of every relevant settlement which is come to before we are irrevocably committed I must have the House with me in this matter. There are very large sums involved.

There must be no misunderstanding on this point. It has been said by responsible or irresponsible people that the railways have never yet submitted claims. The speech of the chairman of the Caledonian Railway was read by the hon. Member for Newcastle, in which they said their claim would be put forward. The claim is put forward every month. It is a progressive claim. It is a running account, and I should be misleading the House if I left them under the impression that nothing which is in dispute under this arrangement can be paid until the House has had an opportunity of discussing it, because if I stopped items of large magnitude because I disputed them the railways would come to a standstill. Some of them are not strong enough financially to enable them to make the deductions which I think are open to doubt, and at the same time continue paying their running expenses. So that the most I can do—and I do it with the fullest possible desire to meet my right hon. Friend—is to say I will consult with him and with any of his friends and any other Members who are interested in order to see how I can keep the House in touch with these very large claims month by month. It is impossible to publish statements in the Press which deal with the whole story. I cannot make them fully intelligible. The subject is too big. If my right hon. Friend will help me to that extent and will meet me, I will see what I can give the House so that the House may know how this money is going, and it is going, rightly or wrongly I will not say, in millions every month. This very high state of the expenses of the railways is due to the fact that we are overtaking arrears. They are spending money under the agreement. These claims come in every month. Whether they are justifiable or not, it is very difficult to hold them up or you wreck the finance of the railways. I should like to consult my right hon. Friend and others interested as to how the House can be kept in touch. There is nothing I desire more than to have the fullest confidence of the House, and give it the fullest information. I hope with that assurance the House will now pass the Third Reading.

Sir D. MACLEAN

We quite understand that any meticulous particularity with regard to what is happening with regard to my right hon. Friend and the railways would not only be detrimental to the public interest, but would be a waste of time. Perhaps my right hon. Friend might have it in his mind that the House would like as far as possible a monthly statement as to what progress has been made in this matter and what sums are being paid out.

Sir E. GEDDES

I will see what I can do.

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