SECOND READING. (Hansard, 2 July 1857)

§ LORD ST. LEONARDS

(who had previously presented three petitions from the holders of preference shares or stock against the Bill said, that although the Bill was one of a private character, it involved a question of great importance. Its object was, as their Lordships were no doubt aware, to provide for the loss caused by the forgeries committed by Redpath. That loss amounted to £220,000, and had been incurred in consequence of the neglect of the directors of the company, who had only to have opened the books to discover 757 the simple method by which these forgeries were perpetrated, namely, by placing a figure of 1 before any amount of stock transferred in the books of the company. Of course the directors were anxious to have that loss provided for; and when they discovered it, as they might have done long before, they made the proposal embodied in this Bill, which was to throw the whole loss upon the half-year's revenue of the company, as if it had been incurred in that half year. Now, there were different classes of shareholders in the company, some only of the ordinary description, and some preferential shareholders. Now, people invested their money in stock of the latter description, in the belief that their interest was guaranteed, and was as secure as if they had invested in the public funds. But if this Bill were passed, it would wholly deprive them of any interest for the half year ending in January last, because, while their loss was what he had stated, the revenue for that half year was a little above a quarter of a million, and as that would be nearly exhausted in meeting these losses, the preference shareholders would get no dividend. Now, there was no reason whatever why a loss which was discovered but not sustained in one half year should be charged exclusively upon the revenue for that period. If the loss had been discovered in the half year in which it occurred (as it might have been), it might have been paid without diminishing the receipts of the preference shareholders, while further loss would have been prevented. The preference shareholders, according to every construction of the contract under which they held their shares, had a right to be paid in the first instance, and they ought to be so paid; and then all the revenue above their claims, which under ordinary circumstances would have gone to the ordinary shareholders, should be applied to meet the loss to which he had referred. The propriety of taking this course was strengthened by the fact that, although frauds and forgeries had been committed, they did not legally bind the company, which was, in fact, merely paying the loss which had accrued out of policy, and in reference to the effect of a contrary course upon the dealings in shares on the Stock Exchange.