REPORT. (Hansard, 27 June 1862)

§ LORD REDESDALE
said, that as this measure stood, he believed there would be great legal difficulty in interpreting its terms. It was very desirable the agreement between the Government and the Company should be put into a clearer form.

§ THE EARL OF CAMPERDOWN
had expected that the precedent of a former measure of this kind would have been followed in this instance, and that the contract between the Treasury and the Telegraph Company would have been inserted in a schedule appended to the Bill. That, however, was not the case, and instead of a contract they had a very different thing —namely, the "Heads of an Arrangement," which he was informed by legal authorities would be binding upon the Treasury, but not equally binding upon the Company. Nearly £2,000,000 of public money were involved in this matter, and, surely, such a sum ought not to be granted away without a regular contract being produced between the Government on the one side and the Telegraph Company on the other.

THE DUKE OF ARGYLL
said, he had been in great hopes that the arrangements which had been made with respect to this Bill would have satisfied noble Lords who had objected to its form on previous occasions. The Government had bound themselves under the agreement of 1858 to pay 4½ per cent upon the whole amount of capital bonâ fide expended for the purpose of the Company's undertaking; while the Company, on the other hand, having once completed their line, were under no obligation to keep it in working order. Accordingly, after the expenditure of their capital, the Company, having failed in working the line, were not inclined to throw good money after bad, and 1121 according to the terms of the agreement they were entitled to receive their dividends, and sit still. Under these circumstances Government might have paid the £800,000 and taken the cable into their own hands. But after full consideration, they determined against that course, thinking that any attempt on their part to raise the cable would involve a risk which they were not justified in incurring. In this state of things a new Company came forward, and said, "We don't ask for any money or for any guarantee; but we ask you to transfer the property in the cable by Act of Parliament from the old Company to us, and allow us to try and restore it. If we succeed, we ask you to allow us to derive the profits from the cable up to 25 per cent upon our outlay, and above that return the profits will go to reimburse the Government." As this proposal did not involve the risk of a single farthing to the Government, they determined to accept it, and thus, as they thought, to make the best of a bad bargain; and he submitted that next to the folly of throwing £800,000 to the bottom of the sea, would have been the folly of allowing £800,000 to remain at the bottom of the sea when you could get anybody to try and fish it up for you. The transfer of the property in the cable from the old Company to the new one was not complete until the passing of this Bill. It was true that an agreement to that effect had been come to between the two Companies; but he believed that, legally, the property in the cable remained in the old Company till an Act of Parliament was passed sanctioning its transfer to the new. As to the new arrangement with the old Company, it was completely set forth in the Bill. There was the transfer of the property, and in exchange for it the conversion of an annual payment of interest into an annuity which would be more negotiable. The noble Earl doubted whether that agreement would be binding upon the Company, but he (the Duke of Argyll) apprehended that as it was identical with the prospectus of the new Company, and as every shareholder had therefore had his attention directed to it, a court of law would enforce its observance. With regard to the performance of the conditions by the new Company, it was directly their interest to raise the cable; for unless they did so, they would not get a farthing of return upon their expenditure. He was glad to learn that their operations so far 1122 had been attended with considerable success. They had restored the cable up to a point called Djubal on the Red Sea, whence they were able to send messages and anticipate by some hours the advices from India, receiving already for this service a small amount of revenue. He submitted that the form of the Bill was not open to objection; that in substance it was the best arrangement which could be made; and he hoped, that as the time for carrying out the arrangement was short, their Lordships would pass the Bill without further delay; otherwise the faith of the Government would be seriously compromised. No Vote had been taken for the annuities due to the shareholders, it being expected that the Bill would shortly become law; and unless it quickly passed, there would not be time for the Bank of England to make arrangements for paying the money at the proper period.

§ THE EARL OF CAMPERDOWN
understood the Bill to involve the payment of an annuity by the Government for forty-six years of £36,000, which would amount to the sum he had before stated. Besides this, it appeared in the "Heads of Arrangement," in the schedule, that in the event of the Company's failure to restore the line or maintain it in working order, the Commissioners of the Treasury were to have power to take it into their own hands again on repaying the capital actually expended by the new Company. There was therefore an annuity payable of 4½ per cent on £250,000 additional capital, which might or might not be expended by the new Company. It was obvious that the country was exposed to new and unknown liabilities in this matter. The directors of the new Company were pretty nearly the same as the directors of the old Company, and from the manner in which they had behaved in the past he had no great confidence to repose in their future arrangements. The contract ought certainly to be stated in the Bill. The Treasury should not spend money without entering into a legal contract.

THE LORD CHANCELLOR
considered that they were under this Bill making the best of a bad bargain. The question had been raised on the failure of the old Company, whether the Government, having paid so large a sum of money, acquired any lien upon the property of the old Company. He thought they did not. The House of Commons had appointed a Committee on the subject, and they came to 1123 the conclusion—it was their conclusion entirely—that the old Company was entitled to have from the Government a guarantee for their dividend. That guarantee the old Act of Parliament gave effect to; but that guarantee, and the agreement with Government on which it was founded, did not entitle the Government to any lieu on the property of the old Company. Well, then, the property was left in the old Company in a manner in which it could be applied to no useful purpose. Accordingly, an arrangement had been made with a new Company. The objection of the noble Earl (the Earl of Camperdown) was founded on this; and that objection, in his opinion, was, to a certain extent, rightly founded. The noble Earl said that there was no contract between the Government and the Companies set out in the Bill. It was, however, set out in the schedule. The noble Earl then asked where was the obligation thrown on the new Company to perform the conditions they had entered into? He (the Lord Chancellor) certainly thought the Bill deficient in that respect, and he should therefore suggest to his noble Friend who had charge of the Bill at the end of the first section, which concluded thus— "that the agreement of the 18th November, 1858, and all covenants and conditions contained therein, shall be deemed at an end," to add these words— "but the New Company shall be bound to fulfil the agreement contained in the Schedule to this Act." He thought the New Company would then he bound and rendered capable in law of performing the agreement.

§ LORD OVERSTONE
thought the Government in this case were perfectly right, and were proceeding upon an arrangement founded upon a reasonable consideration, and with a proper regard to the public interests.

§ EARL GREY
admitted there was no objection in substance to the agreement. The Bill was at first objectionable from the vague manner in which it was drawn; but in its amended shape, and with the addition proposed by the noble and learned Lord on the Woolsack, it was substantially unobjectionable. He, however, still thought that it would have been better if there had been a clear contract made with the Company and set forth in the Bill.