Lords Sitting of 12 February 1866

MINUTES.
Several Lords took the Oath.

RAILWAY COMPANIES' BORROWING POWERS.—QUESTION.
THE EARL OF BELMORE, in rising to ask Her Majesty's Government whether it was the intention of the President of the Board of Trade to introduce during the present Session any measure to give effect to the recommendations of the Select Committee of that House (1864) on the subject of Railway Companies borrowing powers, said, the subject was one which, though not of any great popular interest, was nevertheless of considerable importance, and he desired to bring to their Lordships' recollection what had already taken place concerning this matter during the last three Sessions. In the Session of 1863, a noble Earl (the Earl of Donoughmore), who was unfortunately too unwell to be present that evening, brought to the notice of their Lordships the Special Report and Evidence on the West Hartlepool Harbour and Railway Bill, by which it appeared that the directors of that company had greatly exceeded their borrowing powers; and a Se-
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lect Committee was appointed by their Lordships
"To inquire and report as to what legislative measures are desirable for the purpose of restraining the directors of railway companies from exceeding the limits of the borrowing powers fixed by their Act of Parliament."
The Committee which sat in two Sessions, made two Reports, to the effect, that it was very desirable that railway companies should be compelled to make annual returns to some public officer, and that there should be a system of compulsory registration of railway obligations. As the Government did not take up the matter, and his noble Friend was prevented from following up the subject, he (the Earl of Belmore) took the liberty last Session, at the suggestion of his noble Friend, of introducing a Bill (the Railway Debentures, &c., Registry Bill), embodying the recommendations of the Commissioners. That Bill passed their Lordships' House, but went down to the Commons late in the Session, and was withdrawn after a first reading, as it was felt, notwithstanding that it had met with the approval of the then Lord Chancellor, who had added an important Amendment obliging companies to register all their obligations, that it would receive severe opposition from the powerful railway interest in the House of Commons. The objections were very fairly stated in a newspaper which devoted itself to financial questions. They were four in number. In the first place, it was said that a system of compulsory registration would give to railway debentures and obligations an apparent validity which they did not intrinsically possess, and that the registrar whom the Bill proposed to intrust with receiving the annual returns and registering the bonds could not possibly ascertain whether any bonds submitted to him were or were not within the limits of the borrowing powers of the company presenting them. All, however, that his Bill proposed to do was exactly what had been done for the last 150 years with regard to the registration of deeds relating to land in Ireland; every deed had to be registered in the Rolls Office in Dublin, and the deed took priority according to the date of registration. That was precisely what he had proposed to do with regard to the registration of railway obligations, and registration would no more make the debenture valid than would the registration of a false deed in Ireland make it a good one. The only object of his Bill was to show the numbers and

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amount of the securities issued by the company, so that proposing lenders might be able to ascertain what was in priority to them. The second objection was that the Bill would take from the directors of railway companies the sense of responsibility which they were now supposed to possess; but the writer himself went on to say that he knew something of the borrowing operations of railway companies, and that directors often did not know the extent of their responsibilities, and the same objection might be urged against any Bill proposing to restrict the powers of railway companies. The third point was that the Bill if carried would interfere with the proper conduct of business. He would be the last to propose anything which would interfere with the action of railway companies in conducting their business, or obstruct trade in any way; but he was of opinion that (he increased value of their securities would have gained if the proposed Bill had become law, would have more than compensated them for any minor inconvenience they would suffer. The fourth objection was that these debentures would take a priority over other debts to which they were not entitled, and which the shareholders had never supposed that they possessed. The law provided, however, that certain borrowing powers should not be exceeded, and it might fairly be presumed to have been the intention of Legislature that those who lent their money under the several Acts were entitled to priority over other obligations. He believed it had been decided that the holder of Lloyds' bonds, so long as they were bona fide, that was to say given in payment for work done, could enter an execution against all the effects of a railway company. The whole subject was a matter of great importance, so much so that he thought it should not be taken up by a private Member of their Lordships' House, and he hoped he should hear from the Government that the President of the Board of Trade intended to introduce a Bill on the subject, and the more so, because he understood that when the Registry Bill was in the House of Commons last Session, the President of the Board of Trade had (he did not say in his plan, because there was no discussion on the Bill), informed the noble Lord who had charge of it in that House that he should probably deal with the subject. He would now ask, Whether it is the Intention of the President of the Board of Trade to introduce, during the present Session, any Measure to give effect
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to the Recommendation of the Select Committee of this House (1864) on "Railway Companies' Borrowing Powers;" and 2, Whether, if such a Measure should be introduced, it would be framed so as to meet the Case of the Obligations of Joint Stock Companies generally?
EARL RUSSELLwas understood to say that he had consulted his right hon. Friend the President of the Board of Trade, who had informed him that he was engaged upon the subject, but was not prepared to say that he would at present bring in any measure dealing with it this Session.
LORD OVERSTONEsaid, he regretted to hear the answer which had just been given by the noble Earl at the head of the Government upon that subject. By the Legislature of the country power was given to railway companies to borrow, under certain conditions, large sums of money on the security of their bonds. But the investors in the bonds had no means of verifying whether or not those conditions had been complied with, and, consequently, whether the security thus offered was not utterly worthless. That was not a mere theoretical objection. It was one which had actually been realized upon several remarkable occasions. If he was not mistaken, even since the question had last been under the consideration of their Lordships an important case had arisen, in which a great company had gone far beyond its legal power of borrowing, and the directors had defended their conduct by alleging that they were driven by pressure to adopt the course they had followed. They were under an obligation at a certain period to meet a large amount of claims on them, whatever might then be the state of the money market, and they thought it desirable to raise money beforehand in an easy state of the money market, so that they might be prepared to meet their engagements. Fresh bonds were accordingly issued beyond their legal powers; and upon that a seriou9 question might arise whether the security had not thus been invalidated. Under these circumstances, it was reasonable that the public should look to the Legislature to afford them the means of exercising that precaution with regard to the validity of those securities which the Legislature itself had made necessary. They had had a Committee of that House sitting upon the subject; that Committee had examined witnesses, who represented some of the largest railways in the kingdom, and those wit-

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nesses made no objection to the adoption of such a measure as that suggested by the noble Earl opposite (the Earl of Belmore); but, on the contrary, they expressed themselves ready to welcome it. They had also had before them the solicitor to the Bank of England, which establishment is supposed to be a large investor in those securities, and he had expressed a similar opinion. The Committee themselves were all but unanimous in favour of the proposal, the only dissentient being the noble Earl the President of the Council. He hoped that the attention of the President of the Board of Trade would be directed in a more serious and earnest manner to the matter, and that he would be prepared to grapple with its difficulties before the conclusion of the present Session. He was certainly sorry that a more satisfactory answer had not been returned by the noble Earl.
THE MARQUESS OF LANSDOWNEsaid, he wished to express his belief that a measure of the kind suggested by the noble Earl (the Earl of Belmore) would not be injurious to any company that conducted its business upon legitimate principles.

THE BRITISH MUSEUM.—QUESTION.
LORD HOUGHTONrose to ask Her Majesty's Government, Whether they intend to introduce any measure respecting the administration of the British Museum and the disposition of its contents? He was induced to put the Question in consequence of two events which had lately occurred. One of these was the resignation of the Principal Librarian of the British Museum, who was really at the head of the whole of that establishment, and was the life and soul of its administration. That resignation, he believed, had taken place several months ago, and yet the vacancy had not been filled up. The other consideration by which he was influenced was the existence of a rumour that certain proposals had been made by the Government to the Trustees of the Museum for a change in their constitution, but which had not been accepted. With regard to the first of these points, he should say that the resignation of Mr. Panizzi must of itself lead to considerable changes in the constitution of the British Museum. When that gentleman was appointed to his office, several years ago, he (Lord Houghton) called attention to that appointment in the other House, and he did so because, notwithstanding the respect which he entertained for the character and abilities of Mr.
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Panizzi, he thought that in the present dearth of honours and emoluments for literary men in this country such an office ought to have been conferred by Her Majesty's Government on some gentleman not of foreign extraction. He still adhered to that opinion, although he believed that the administration of that gentleman had been one of considerable efficiency. He was also aware that a great deal of heart-burning and discontent had prevailed among the officers of the establishment during the period of his administration, and that his resignation was not regretted by those gentlemen. The question of appointing his successor could not be much longer delayed, and he hoped that among the officers of the establishment some gentleman would be found for the office in whom the country would place confidence. He believed that the delay in filling up the vacancy had been caused by some distrust in the present administration and constitution of the British Museum. The question had not only been frequently discussed in the other House, but scarcely any question had been discussed with so much unfairness and injustice to individuals. In 1847, a Commission, on which he himself had the honour of being appointed, went into the subject at great length, but he could only regret that their labours had been futile, and that no action had been taken by the Government upon their recommendations. That Commission proposed that a Chairman, a person of distinction—should be appointed by the Crown, four members should be elected by the Trustees from among themselves, and two members should be paid by the Government, one of them being a man of high literary, and the other of high scientific attainments. He should add, however, that he believed those suggestions would at present require considerable modification in consequence of the great additions which had of late years been made to the establishment. He thought that a fair trial had been given to the present constitution of the British Museum; he also believed that there could not be a body of men more honourable or more desirous of doing good service to the literature and science of the country than the present Trustees; and if the constitution of the Museum was still unpopular, it was only natural to suppose that the time had come for effecting in it some alteration. The noble Lord concluded by asking Her Majesty's Government, Whether they intend to introduce any Measure respecting the

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Administration of the British Museum and the Disposition of its Contents?
EARL RUSSELLcould only say, in answer to the noble Lord, that he had a short time since made certain suggestions to the Trustees of the British Museum, which he thought would conduce to the better conduct of the establishment; but the Trustees themselves did not think it desirable that those proposals should be adopted, and they had declined to carry them into effect. No regular official communication had passed upon the subject, and he would rather not enter further into the details of the question. As matters at present stood it was not the intention of the Government to introduce any measure of the kind to which his noble Friend had referred. With regard to the appointment of Mr. Panizzi, to which the noble Lord had referred, he believed that it was a wise appointment. He was a man of great ability and acquirements, and had conducted the affairs of the Museum, as far as they belonged to his department, under the direction of the Trustees, very much to his own credit and to the advantage of the public. He had been obliged to tender his resignation in consequence of the state of his health; that resignation had been accepted, and he (Earl Russell) believed that very little delay would now elapse in the appointment of his successor.
LORD TAUNTONsaid, he scarcely thought it consistent with the famed hospitality of this country to object to a gentleman of ability on the ground that he was a foreigner. Although a Trustee of the British Museum, he was by no means wedded to its present system of management. Having regard to the enormous magnitude of the collections and the difficulty of arranging them, and the likelihood of that difficulty being increased by the scientific researches in contemplation, it might become necessary to consider whether the affairs of the British Museum might not be managed more efficiently than they were at present, and he had no doubt that some important alterations might be advantageously introduced. He might add that it was not the fault of the Trustees that sufficient space was not provided for their various collections, and that the difficulty in that case arose from the fact that the House of Commons refused to grant the necessary supplies for the purpose. Any changes to be made must be dealt with in a large spirit and must embrace the whole administration of the Museum.
EARL STANHOPEsaid, he also desired to bear his testimony to the great merits and services of Mr. Panizzi. He thought it was impossible for any man to have applied himself to the duties of his office with more zeal, more ability, and more unremitting attention than that gentleman had done. He should add that he could not but think that in the selection of such an officer all that the Government had to do was to look out for the most competent person, and that the fact of a man being a foreigner ought to be no reason for not accepting his services.
LORD HOUGHTONsaid, he did not call in question the merits of Mr. Panizzi, but he still thought that the appointment ought not to have been given to a foreigner. It had been said by a celebrated Frenchman that a Government that attempted to appoint a foreigner to the management of the Bibliothèque Impérial at Paris could not stand for a day.
EARL STANHOPEinquired whether the noble Lord wished them to suppose that the management of the Bibliotheque Imperial was a perfect model of liberal administration?
House adjourned at a quarter before Six o'clock, till To-morrow, half past Ten o'clock.