RAILWAY COMPANIES DISSOLUTION BILL. (Hansard, 4 May 1846)

The EARL of DALHOUSIE
, in reference to a discussion in Committee on this Bill, said he had no objection to grant a power of pre-emption to the parties who were opposed to the dissolution of a company; he did not think the right would be of any great value, as copies were deposited with the Board of Trade, at the Private Bill Office, and in the Parliament Office of the House of Lords, and from the last two tracings and copies could be taken; still he had no objection to give the right to purchase at a price to be fixed by the scrutineers. Another point suggested was the possibility of making an attempt to prevent the practice of purchasing scrip, with the view of operating to the dissolution of a particular company; and a noble Lord had recommended that every person on giving a vote at the meeting, to be called under the provisions of the Bill, should make an affirmation that he was possessed 3 of the scrip on the 31st of March anterior to the meeting. If the practice of purchasing scrip for such a purpose should exist, undoubtedly it would be a great abuse; but after making every inquiry, and consulting with persons of experience, he felt it his duty to object to the introduction of such a clause. He did not believe that the requirement of any such affirmation would ensure the object, whilst he was of opinion that it would inflict injustice upon other parties. That scrip would be purchased for the purpose which had been described he did not doubt, but he had great doubts whether the practice could be carried to such an extent as to influence materially the existence of any trustworthy and important company.

§ EARL GREY
said, the statements of the noble Earl confirmed him in the conviction that this Bill would work very great injustice to many parties who were deserving of the consideration of the House. There were lines projected to accommodate districts through which no railway passed, and which would pay a good dividend, yet such lines, under this Bill, might be abandoned because a majority of the projectors might have gone beyond their means. Such persons would be relieved by allowing them to wind up the company; but their associates, the prudent men, those who had gone into a legitimate speculation upon the faith that they were joining men equally prudent—these persons who were able to pay the calls, who were ready to go on, and who could establish before a Parliamentary Committee that the line would be remunerative, were compelled to sacrifice the money they had already spent, and to render the property entirely valueless. And this was done by an ex post facto law; for when they embarked in the speculation, the law did not give the power to dissolve; on the contrary, the subscription deed contained an express stipulation to proceed. So that on these people there was first imposed the expense of "getting up" the company, and then the cost of winding up, which he apprehended would not be very light. That House never adopted a measure more calculated to strengthen the monopoly of existing companies than this; for it would give to them the power of getting rid of the competition by buying up the shares. The fact was, the noble Earl (the Earl of Dalhousie) has confined his attention exclusively to bubble companies in the preparation of this measure, and omitted all concern for the bonâ fide schemes; 4 at all events, if the Government had looked into this subject properly at an earlier period there would have been no difficulty in doing justice to all. He repeated, that something should be done to guard those which were bonâ fide from injustice. It would contribute to this object if all scrip purchased since the 31st of March were excluded from voting, for a great proportion of the shares bought since that period had been bought with the view of making a profit out of the winding-up. The noble Earl said this was impracticable, and that false declarations would be made. He (Earl Grey) could not assent to that conclusion. He had rather a better opinion of railway speculators than the noble Earl; and it was his belief that the great majority of them would hesitate before they ventured upon making a false declaration. He believed if a small penalty of, say 5l., were awarded for a false affirmation, there would be no danger of the risk being incurred to a considerable extent; but the noble Earl said such a course would be unjust; he would, however, remind their Lordships that the whole principle of the Bill was to do a great injustice to the few in order to do what they thought was just towards the majority. Did the noble Earl mean that the Bill would operate unjustly towards the minority who had entered into the scheme with a bonâ fide intention of paying up their shares, and who were still ready to earry the project into execution, if allowed? The principle on which the Bill was founded was, that the difficulties of the present state of things were so great, that though a hardship was inflicted upon some individuals, they were obliged to inflict that hardship for the sake of the greater good that they would thus do to the majority. He only asked them to deprive persons who became possessed of their shares since the 31st of March of the right of voting for the dissolution of the companies, because he had no doubt but that the major part of these purchases had been made under the expectation and with the intention of sharing in the dividends that might be, made after a dissolution. He asked them to apply the same principle to these cases that they adopted with regard to the Parliamentary franchise. A man might become possessed of the oldest estate in the kingdom, and yet his purchase would give him no vote for a twelvemonth afterwards. That provision had been made because Parliament had found that the former system had been used in an improper manner 5 in preparing for particular elections. The noble Earl said that many of the scrip-holders who would thus be excluded were so by inheritance or by marriage; but still did not the same principle apply to such persons who were not permitted to hold the Parliamentary franchise? With respect to the other right to which the noble Earl had adverted—namely, the right of purchasing plans, he would only say that he had never attached the slightest value to what was called the right of pre-emption in the plans. The plans themselves were of no real value whatever: but what he wanted was to give to the minority—to those who really wanted to go on with the project, the advantage, in some shape or other, of the money that had been already expended. A very large sum of money had been paid away, and that money would be altogether wasted if this Bill were allowed to pass into law. What he did think, and what he still thought would be fair and reasonable, was that those persons who wished to keep the company together, should, after the retirement of the dissentients, be able, if they could, to fill up the ranks in the list of shareholders, and to come before Parliament in another year, with some preference, at all events, over new opponents. If these were not permitted, existing companies that now in so many instances opposed these schemes, could, after breaking them up by the purchase of their shares, in order to acquire votes against them, come before Parliament the next year with the very plans which they now sought to destroy. He could not help repeating that it was his opinion, if the Government had applied themselves to the past, and confined themselves to the real difficulty which they were called upon to meet, that they could have devised some means of mitigating the evil.

§ LORD REDESDALE
supported the Bill. He could see no grounds why the minority of a dissolved company should be allowed a prior claim over any particular tract of country, for to this he considered the proposition of the noble Earl came. With regard to the suggestion of putting restrictions on parties who had purchased scrip since the 31st of March, he did not think that the plan was practicable, and besides, he thought it would not be just. Though they gave powers to these parties, it should be recollected that they also gave powers to the other scripholders which they had not before possessed. It should not be forgotten that the persons whom it was 6 attempted to deprive of the right of voting, would not have given such high prices as they had paid for their scrip; and, therefore, their Lordships would be committing a greater injustice against them, by depriving them of a right which they would otherwise possess, of being placed on a footing of perfect equality with other shareholders, than the injustice to which the noble Earl had alluded. Besides, even if the proposition of the noble Earl were agreed to, and if these parties were not allowed to vote at the meetings, they would, if their object were to injure the company, have an opportunity when the Bill passed of returning directors who would not permit the works to go on.

LORD KINNAIRD
said, he thought the best answer to the noble Lord who had just sat down would be found in the case of the London and York Railway, where a minority of those who had been before Parliament last year were permitted, with a number of new scripholders who had since joined them, to come again before Parliament with the same plans. He was not very sanguine as to the success of this Bill in materially lessening the number of schemes to be brought before Parliament.

The EARL of DALHOUSIE
replied. He said he would not fatigue their Lordships by a repetition of arguments which had been so often urged upon their attention. He should, however, remind the noble Earl, who had argued as if the Bill were to affect only the four hundred and odd schemes now before Parliament, that there were upwards of 500 projects that had not their Bills pending, and in all these the scripholders were anxiously waiting for this Bill to enable them to dissolve their companies. The noble Earl, in arguing for the rights of the minority, appeared to forget that there was another party, namely, the public at large, deeply interested in the dissolution of these schemes; and while they would not do any injustice to the minority of which they could have a right to complain, it would be doing considerable good to the community generally. As to the clause of pre-emption, he would not press it, if their Lordships were opposed to it.