HL Deb 04 June 1866 vol 183 cc1772-91

in moving certain alterations in their Standing Orders relating to Bills authorizing the construction of Railways, said, he wished to recall to the recollection of their Lordships the speeches he had made on two former occasions with reference to the finance of Railway Companies. This subject, although of very great importance, had this advantage—that it was one their Lordships could discuss without being influenced by party feeling. The question, indeed, was one into which it would be highly unbecoming to introduce any private feeling whatever; and, for himself, his principle of action had always been never to introduce to the notice of the House any matter connected with the office he had the honour to hold with the slightest feeling of party spirit. In such matters he had invariably acted quite independent of what might be the feeling of the noble Earl the First Minister of the Crown, on the one hand, or of the noble Earl the leader of the Opposition on the other. In like manner, he trusted their Lordships would give a calm and impartial hearing to the subject, which, although not a very lively one, deserved their serious and careful consideration. The question, however, was a very plain and common sense one, and he thought their Lordships would without difficulty come to the conclusion that the Standing Orders on this subject required alteration. The question they had to consider concerned not only railways, but affected the whole financial interests of the country in every respect. When he called attention to this subject a short time since he was told that he exaggerated its importance; but he thought that the occurrences of the last few weeks must have satisfied their Lordships, and all who took an interest in the monetary affairs of the country, that the manner in which railway speculation had been carried on had conduced in no small degree to the embarrassments in which the country had been lately involved; and he thought that the failure of many of the finance companies and banking establishments, of which they had recently had so many, could be traced back in a great degree to the manner in which they had become involved in railway speculations. The great importance of the question arose from the amount of capital affected, for the amount of capital in- volved annually in railway speculations was equal to our ordinary expenditure in time of war, which, as they all knew, exercised a great effect upon the monetary concerns of the country. It was not, however, the mere greatness of the sum that created any difficulty (for he believed the resources of the United Kingdom were quite capable of providing an even larger amount), but the manner in which these sums were to be raised, and what was wanted was, that these undertakings should be based on sound principles, affording a good security; whereas, at present, many of the schemes that came before Parliament were based on no security at all. They came into the market merely as schemes, and with the exception of the lines promoted by existing companies they were too frequently started by persons who had not made the slightest provision for carrying them out. Their Lordships would remember that on a previous occasion he called attention to a particular instance of this, and he now held in his hand a copy of Evidence that had been given before a Committee of the House of Commons in relation to another of these undertakings The promoters, it appeared, when questioned on the matter, admitted that their undertaking had neither Chairman, Directors, or Secretary; that they had made no arrangements for raising the proposed capital of £1,000,000; that they did not regard this as necessary before bringing in their Bill; and that it was contingent upon the passing of the Bill through Parliament that these apparently essential arrangements should be effected. Supposing this Bill passed—which was not unlikely to be the case—the scheme would be launched into the money-market without any provision for raising a farthing of the capital. How, then, would the money be obtained? As everybody was aware, money could not be raised without any security on reasonable terms, and such an undertaking was in precisely the same position as a young heir who went into the market to raise money on his prospective estates, the money being, of course, lent on very disadvantageous terms. Millions were advanced in this manner on these speculations, and such a system had a very prejudicial effect upon the monetary concerns of the country. It was argued, indeed, "all this comes right in the end: the line is finished, and then the whole thing is settled." The thing, it was true, was settled; but the settlement was just like that made by an heir when he entered upon an estate which he had heavily burdened. He might be able, perhaps, to satisfy the claims made upon him, but he was left with an empty exchequer. A railway constructed in such a manner was involved in great embarrassments, and he could not select better instances of this than two great companies with which able speculators and contractors had been connected. He referred to the Great Eastern and the London, Chatham, and Dover Companies. He thought he might venture to say that the former certainly, and, he believed, the latter also, were at the present moment practically insolvent that was to say they were unable to raise a farthing on direct security and on their own credit. Now he must say that when they, sitting as Members of the Legislature, saw these things going on and took no steps to check them, and to base railway legislation on sounder principles, they were themselves to some extent responsible for the embarrassment and confusion from which the money-market had lately suffered. It would be asked what remedy he proposed? The remedy he proposed was that a certain proportion of the capital required for the carrying out of the undertaking should be raised in the first instance as a basis, and having this to start with there was a guarantee that the further sums needed would be obtained on fair terms. He regarded this as a very practical question, and he wished their Lordships to consider it on common sense principles. Suppose they had an application for the tenancy of a very desirable farm, and that the applicant, on being asked what capital he possessed to undertake it, replied that he had none, but that if they would let him have the farm he should be able to raise the capital—would they not tell him that the interest he would have to pay under such circumstances would allow no margin of profit, and that they preferred a tenant already possessed of capital, who could raise any further sum necessary on reasonable terms, and who was likely, therefore, to make the occupation a profitable one? That was clearly the principle on which these speculations should be conducted Let there be some capital to start with, and then whatever additional sum was required could be obtained on fair terms; whereas, if the promoters launched a scheme as a mere speculation, without any security beyond the undertaking it- self, it was evident they could only raise money upon it at exorbitant rates. It must be remembered that these practices affected every branch of industry, for persons who wanted to raise money for any legitimate purpose were affected by the state of the money-market, and this system tended to raise the rate of interest—and, indeed, had done so to such an extent that it was easier at the present time to raise money in France than in England, albeit the resources of this country were so much greater. The cause of this was over-speculation and the system of raising money without security, thus necessitating a very high rate of interest. Moreover, great expenses attended the raising of money in this way. He had received information from authority on which he could rely that the sum paid by the London, Chatham, and Dover Railway Company—he did not know in how many years—to the agents they had employed for raising money amounted to very nearly half-a-million. Now, the whole of that was added, of course, to the cost of constructing the line. Under the present system these companies had nothing to begin upon but what they could raise by borrowing, The last issue of the London, Chatham, and Dover was at the rate of £27 10s. for £100; and their issue of £2,270,000 at that rate only brought in £624,250. The consequence was that there was an enormous amount of capital for which no real money had been paid, and no one knew the real value of the property. He would now direct their attention to some of the objections that were urged against his proposal. First of all, it was said the introduction of the new system would lead to a pause in railway undertakings. He had received a pamphlet from a gentleman who was very well qualified to express an opinion on the subject, Mr. Coates, a Parliamentary agent, who stated that he thought it would be utterly impossible to carry on railway schemes if his (Lord Redesdale's) proposition was adopted. There was one sentence in Mr. Coates pamphlet which, he thought, gave the key to his whole argument. He said there were only two sources from which the want of railways could be supplied—first, the existing companies; and second, contractors' lines. Now, that was begging the whole question. Railways were formerly made by capital subscribed; and what was done formerly might be done again. With regard to the allegation that the plan he (Lord Redesdale) proposed would occasion the stoppage of large works, and throw a large number of persons out of employment; his reply was that he believed more navvies had been thrown out of work by the recent stoppage of two of the principal railway contractors than could ever be displaced by the enforcement of any such restrictions as his plan proposed. There were scores of schemes which had received the sanction of Parliament during the last three Sessions in relation to which not a single stroke of work had been done. If they could only find money, these schemes would be more than sufficient to employ all the navvies in England. It was said the old railway companies opposed the contractors' lines. No doubt they did, because they were not made for the accommodation of the original companies. It was the more desirable for a contractor to get up such schemes if they could be made to work hostilely to one or two independent companies. In that respect these lines were neither advantageous to the railway companies nor to the interests of the public. Railways were never so secure as when they were prosperous; but railway contractors could only save themselves by getting their lines taken off their hands advantageously by an independent company. Then it was said the restrictions he proposed would put an end to non-paying lines. But why should local schemes not have a secure capital in the first instance? Existing companies would then hardly ever oppose them, and they would be almost sure to obtain the sanction of Parliament. There were some lines, no doubt, that would not yield an adequate return to tempt speculators; but the requisite capital should in such cases be found by those to be locally benefited. Proprietors of settled estates were now enabled to charge them to the extent to which they would be benefited by a railway, and the proprietors in a district ought to act upon that principle. Let those raise the funds who were to receive the benefit of the scheme. Under the present system it might be necessary to go about and obtain money on pretences such as he had described; but it was not an honest way of obtaining money, and their Lordships were parties to the transaction. He thought that their Lordships for their own credit should look sharply into this matter, and he trusted that they would be of opinion that the only way in which security could be found for carrying on a sounder system was by requiring a certain amount of the capital to be provided beforehand—namely, two-thirds. This arrangement would give ample room and scope to the contractor, to whom the directors might make the offer of finding the other one-third. It had been objected that this was a proposal to adopt a new principle without communication with the other House of Parliament. All he could say was that nobody had done more to bring the Orders of both Houses into unison than himself, and if a joint action could be promoted in this or any other matter he should be most happy to assist in producing that result; but he felt it his duty to tell their Lordships that there were some influences in the House of Commons which made it difficult to carry any measure of this sort unless a little pressure was exerted for its consideration. The expediency of making deposits available for the construction of lines was recommended by a Committee of the House of Commons two Sessions ago, but that took place late in the Session and much delay was interposed, and the proposition was not carried out. He was, therefore, afraid that if their Lordships did not take a step in the matter themselves they would find a difficulty in inducing the House of Commons to come to a decision on the point—not from any unwillingness on the part of the other House, but because there were many ways by which a proceeding of this kind could be defeated by delay. It was said that what he now proposed amounted to a total revolution in respect to the principle of railway legislation. This he denied, for the subscription contract was the oldest principle contemplated by the Standing Orders on the subject, and was only given up because it was abused and evaded. His propositions consisted of a combination of what was formerly the universal practice—the subscription contract with the system of deposits; with this additional advantage, that interest was to be paid on the deposits. He certainly wished that their Lordships would adopt the Standing Orders which he proposed. He would remind their Lordships that a Standing Order was not an Act of Parliament, but could be altered at any time during the Session; and the advantage of agreeing to his Motion would be to make it necessary for the House of Commons to take some step in the matter. If his pro- position were adopted it would be quite open to modification, and he believed that what he proposed was the only practical way of bringing the question to any result. As to the proposal to refer the matter to a Select Committee, he believed that this was unnecessary, because they had perfect information in reference to the question already.

Moved, That the Standing Orders be considered in order to their being amended:—

Standing Order No. 184. Sections 2 and 3:— 2. That in the Case of a Railway Bill authorizing the Construction of Works by other than an existing Railway Company incorporated by Act of Parliament, and which has during the Year last past paid Dividends on its ordinary Share Capital, a Sum not less than Eight per Cent, on the Amount of the Estimate of Expense (or in the Case of substituted Works of the Amount by which the Expense thereof will exceed the Expense of the Works to be abandoned), and in case of all Bills other than Railway Bills a Sum not less than Four per Cent, on the Amount of such Estimate or of such Excess as aforesaid, shall, previously to the Fifteenth Day of January, be deposited with the Court of Chancery in England if the Work is intended to be done in England, or with the Court of Chancery in England or the Court of Exchequer is Scotland if such Work is intended to be done in Scotland, and with the Court of Chancery in Ireland if such Work is intended to be done in Ireland; and if the Bill is for the Purpose of Establishing a Company for carrying on any Work or Undertaking, the Persons in whose Names any such Deposit is made must be Subscribers to the Undertaking, and their Names must appear as such in the Bill. 3. That in Cases where the Work is to be made out of Money to be raised upon the Security of the Rates, Duties, or Revenue to be created by or to arise under any Bill under which no private or personal pecuniary Profit or Advantage is to be derived, a Declaration stating those Facts, and setting forth the Means by which Funds are to be obtained for executing the Work, and signed by the Party or Agent soliciting the Bill, together with an Estimate of the probable Amount of such Rates, Duties, or Revenue, signed by the Person making the same, may be deposited, and in such Case no Deposit shall be required.

to be omitted, and the following Sections substituted:— 2. That in the Case of every Bill of the Second Class for creating a Company to construct any Work, or for enabling a Company already created to construct any Work, when such Company shall not have regularly paid during the Two preceding Years Dividends on their ordinary Share Capital, or when the Share Capital required for the proposed Work shall equal or exceed their existing Share Capital (and if the Company shall have more than One Second Class Bill before Parliament the Capital proposed to be created by all such Bills shall be reckoned together for the Purposes of this Provision), a Subscription Contract be entered into by Twenty Subscribers at least for Two Thirds of the Share Capital proposed by the Bill, whereby every Subscriber shall bind himself, his Heirs, Executors, and Administrators, to accept and pay the Calls on a specified Number of Shares in the Undertaking, and every Subscriber shall pay, as a Deposit thereon, One Eighth of the Amount of each such Share.

That every Subscription Contract be by Deed, and contain the following Particulars:—

  1. 1. The Names, Description, and Residence of every Subscriber.
  2. 2. The Amount of each Share, which shall not be less than Ten Pounds.
  3. 3. The Number of Shares taken by each Subscriber, and the Sum paid up in respect thereof.
  4. 4. The total Number and Amount of Shares subscribed for, and the total Amount paid up in respect thereof.

That the aggregate of the Sums paid as aforesaid shall, previously to the Fifteenth Day of January, be deposited with the Court of Chancery in England if the Work is intended to be done in England, or with the Court of Chancery in England or the Court of Exchequer in Scotland if such Work is intended to be done in Scotland, and with the Court of Chancery in Ireland if the Work is intended to be done in Ireland; and the Persons in whose Names any such Deposit is made must be Subscribers to the Undertaking under the Subscription Contract, and their Names must appear as such in the Bill.

That in every Bill, in respect of which a Subscription Contract is required as aforesaid, the following Clauses be inserted:—

  1. 1. A Clause providing that no Transfer or Agreement for the Transfer of any Share or Portion of a Share so subscribed for shall have any Validity or Effect unless at the Time of such Transfer or Agreement Three Fifths at least of the Amount of such Share is paid up in answer to Calls made thereon, including the Amount paid as a Deposit.
  2. 2. A Clause authorizing the Payment out of Capital of Interest not exceeding Four per Cent. on the Deposit Money and on all Calls made on the Shares so subscribed for until they become transferable; such Interest to commence on the Deposit from the Fifteenth Day of January and on the Calls when the same are paid.
  3. 3. A Clause to the following Effect, viz.:—

Whereas pursuant to the Standing Orders of and to an Act of the Ninth and Tenth Years of Her present Majesty, Chapter Twenty, a Sum of Pounds, being One Twelfth of the Amount of the Share Capital authorized by this Act, has been deposited with the Court of Chancery in England [or with the Court of Exchequer in Scotland, or the Court of Chancery in Ireland, as the Case may be], [or Exchequer Bills, Stocks, or Funds to the amount of Pounds have been deposited or transferred, pursuant to the said Act, as the Case may be] in the Names of being Subscribers to the Undertaking under the Subscription Contract required by the Standing Orders aforesaid in respect of the Application to Parliament for this Act: Be it enacted, That notwithstanding anything contained in the said recited Act, the said Sum of Pounds [or the said Exchequer Bills or other Funds, as the Case may be] so deposited [or transferred] as aforesaid, or the Interest or Dividends thereof, shall not be paid or transferred to or on the Application of the Person or Persons or the Majority of the Persons named in the Warrant or Order issued in pursuance of the said Act, or the Survivors or Survivor of them, unless the Company shall, previously to the Expiration of the Period limited by this Act for the Completion of the Works hereby authorized, prove to the Satisfaction of the Lords of the Committee of Her Majesty's Privy Council for Trade and Foreign Plantations that the Company have paid up One Half of the Amount of the Capital by this Act authorized to be raised by means of Shares, and have expended for the Purposes of this Act a Sum equal in Amount to such One Half of the said Capital; and if the said Period shall expire before the Company shall have given such Proof as aforesaid to the Satisfaction of the Lords of the said Committee, the Sum so deposited as aforesaid, and the Interest and Dividends thereof, shall immediately from and after the Expiration of the said Period be forfeited to Her Majesty, and be paid and transferred by the Officer or Person in whose Name they shall then be deposited or invested to the Account of Her Majesty's Exchequer, and when so paid and transferred shall be carried to and form Part of the Consolidated Fund of the United Kingdom of Great Britain and Ireland. The Certificate of the Lords of the said Committee that such Proof as aforesaid has been given to their Satisfaction shall be sufficient Evidence thereof.

Proposed Addition to Standing Order CLXXX. Sect. 1. Page 27.; after the Word "Intention" in the 13th Line of Section 1. insert—

And if it be intended to apply for Powers to amalgamate with any other Company, or to sell or lease the Undertaking, or to purchase or take on Lease the Undertaking of any other Company, the Notices shall specify the Company, Person, or Persons, with, to, from, or by whom, and the Terms and Conditions on which, it is intended to be proposed that such Amalgamation, Sale, Purchase, or Lease shall be made.

Proposed Sections to follow Sect, 8. of Standing Order CLXXXIX. Page 43—

[Note.—The Words printed in Italics are proposed to be inserted.]

9. That a Clause shall be inserted in every Railway Bill, prohibiting the Payment of any Interest or Dividend in respect of Calls under such Bill (except the Interest allowed on the Deposit and Calls made on Shares in the Subscription Contract under the Provisions of Standing Order No. 184., and except the Interest by way of Discount on Subscriptions prepaid, agreeably to 8th Vict. c. 16.s. 24.), out of any Capital which they have been authorized to raise, either by means of Calls, or of any Power of Borrowing.

10. That when by any Bill Powers are applied for to amalgamate with any other Company, or to sell or lease the Undertaking, or to purchase or take on Lease the Undertaking, of any other Company, the Company, Person or Persons, with, to, from, or by whom, and the Terms and Conditions on which, it is proposed that such Amalgamation, Sale, Purchase, or Lease shall be made, shall be specified in the Bill.


said, he agreed with the noble Lord (the Chairman of Committees) that the transactions connected with the railway system must have an effect on the commerce, trade, and financial condition of the country; but he asked, considering the picture which the noble Lord drew at the beginning of his speech, whether their Lordships supposed that they could deal properly with such vast transactions by passing merely a Standing Order?—though that course of proceeding might have the effect of driving capital into other channels and impeding the progress of the railway system. What reason was there why peculiar legislation was more requisite for railway companies than to any other companies? There were only two reasons why railways could not be constructed without a Private Act with the same freedom of trade as other branches of industry were carried on—one being, that railway companies required compulsory powers to take private property, and the other that validity must be given to their bye-laws, by which their business, as public carriers, and other transactions might be beneficially carried on. When Parliament conferred these powers on railway companies they were bound to take care that the companies provided the public with sufficient accommodation in return; but if their Lordships were to undertake to say what the management of railways should be as between the speculators in such schemes and those to whom they intrusted their money, they undertook a task which it was impossible they could satisfactorily accomplish. How could a speculator, be he contractor or engineer, who applied for powers to construct a line of railway of twenty or 100 miles, tell at the outset what might be the expense of its construction, what the cost of going before Parliament, what the changes which might take place in the price of materials or of labour? His noble Friend had, he thought, omitted to touch in his speech on a point which was of the greatest importance—he meant the interest of the public as involved in the question with which he asked the House to deal. He had stated how the Directors of railways had mismanaged, and something more than mismanaged, their own affairs; but he had neglected to point out the results to the country of that which they had accomplished. What had been the results as regarded the public? How many rail- ways, he should like to know, had been made by the use of Lloyd's bonds that would not have been constructed without their aid? Would it not be a monstrous thing to lay down the doctrine that a great public work should not be carried out, because the capital which might at first be deemed necessary for its construction should afterwards be exceeded? The cases of three railways had been specially pointed out in illustration of the argument of his noble Friend—one the Stafford Railway, in the centre of England, another a railway on the southern coast of Ireland, and the third a railway in the metropolis. But what, he would ask, were the facts with regard to those lines? His noble Friend himself had on a former occasion admitted that the Stafford line was a good and useful line; and was it not for the advantage of the country, he should like to know, that that railway should have been made? Then came the case of the Cork and Youghal line, which had been alluded to as the worst of all, and to whose Directors it was imputed that they had been guilty of something worse than mis-management, inasmuch as, having received £150,000 in Lloyd's bonds, and having applied to the shareholders for powers to raise £150,000 to pay off those bonds, and having got the money did not pay off those bonds, but applied the money to other purposes. How could misconduct such as this be prevented by means of Standing Orders? Such cases must be referred to the Law Courts of the country, and could be prevented for the future only by some general Companies' Act. But what he wished to point attention to was the result to the public. The railway company in question ran from end to end of their line four trains a day, while no less than fifteen trains a day ran on the branch to Queens-town. The line, moreover, was not of benefit to Youghal and the district immediately surrounding it only; it was of advantage to the whole Empire, inasmuch as the postal communication with America was carried by this very line. How, then, in the case of that line—the grossest case of all—had the public so suffered that their Lordships should in consequence be induced to adopt his noble Friend's proposition? There had been mis-management, also, it was alleged, in the case of the London, Chatham, and Dover; but how was their action in that respect to be controlled by means of a Standing Order? There were, he found, sixteen down and fourteen up-trains on that line every day—an amount of accommodation being thus furnished of which he was sure no noble Lord would like to see the public deprived. The Returns of receipts on that line for last week were £12,775, showing a total of between £600,000 and £700,000 for the year. If, then, such results were produced under the existing system, he must ask his noble Friend to pause before he placed such a barrier as he proposed in the way of railway construction. It would be, he contended, a complete misapplication of a Standing Order to meddle between shareholders and directors, as his noble Friend sought to interfere, and he hoped their Lordships would not, by acceding to his suggestion, give encouragement to a system of monopoly which he could from his own experience state would operate most prejudicially. This was illustrated by the case of two railway companies in his neighbourhood, which, having a dispute as to the construction of a short line which would be of great advantage to the district into which it was proposed it should run, agreed to refer the matter to arbitration, the result of which was an award to the effect that the line should not be constructed by either. That, he thought, was not a decision which ought to induce the House to give monopolies to railways. Was it to be supposed that, when all their other Standing Orders had been evaded, the proposed Standing Orders would not be evaded also? There was, moreover, another objection to their proceeding in that manner without consultation with the other House of Parliament, which was that their Lordships would be undertaking to make what would be neither more nor less than a law—if it had any effect at all. They would throw the whole railway world, and not merely those who were interested as projectors and speculators, into great confusion if they insisted on one day that there should be a large deposit of money, while on the next day it might be taken out. The matter was one which ought to be more fully inquired into. Nobody was more alive than he was to the necessity of the regulation of railways; and there were matters which they might not be able to regulate by Standing Order, and those matters ought to be regulated by Bill. Among them he referred to the protection of life and property upon railways. He found from a Return that in the year 1864 no fewer than 220 persons were killed and about 800 injured by railway accidents. The proposal of the noble Lord was made avowedly with the view of stopping the progress of railways; but if that course were taken they would be going back to the policy of the Committee of 1825, which rejected the first railway between Manchester and Liverpool. He begged their Lordships, if they took any step to check railway speculation and the management of companies by their directors, to do so by an Act of Parliament, and not by a Standing Order, of which the only effect, if it had any effect at all, must be to arrest the progress of the wealth and commerce of the country.

An Amendment moved, to leave out from ("That") and insert ("a Select Committee be appointed to consider how far it is expedient to amend the Standing Orders relating to Railways.")—(The Marquess of Clanricarde.)


said, that if the railways under the existing system had been properly laid out there might be some weight in the argument of the noble Lord who spoke last as to the impropriety of impeding railway enter-prize. But not one-half of them had been so laid out. With regard to the question of the subscription contract, the proposal now made seemed to him to be necessary, and he thought it would have a salutary operation on the construction of railways, without being unduly restrictive. If it made the progress of these works a little slower than it had been, it would be a benefit rather than an injury to the country.


said, he was astonished at the statement which the noble Lord the Chairman of the Committees, with his experience, had made with regard to the issue of capital by the London, Chatham, and Dover Railway Company. The noble Lord, as he understood him, had said that the Company had issued the first capital at a discount of 42, and the second and third capital at a discount of £27 10s.


explained that he had said there was an issue of £1,100,000 additional capital of the Company when they gave £40 fully paid up stock for £21, and subsequently an issue of £2,270,000, when they gave £100 for £27 10s. He had no doubt that that was issued by the contractors. He had seen the terms advertised. That capital was for the company's metropolitan line.


said, the fact was that a certain amount of capital was required to be raised for what was termed "the Metropolitan Extension" of the London, Chatham, and Dover Railway Company. The arrangement made was the same as that which had been adopted in many-other cases, and which had been most successful, in regard to the Great Northern Railway—namely, that there should be a division of shares. B shares were put out at par, and some of them were held as a guarantee by the contractors. It was afterwards found necessary to make a fresh arrangement, and some C shares were issued. The contractors found that they required other money, and shares were issued which came as a third charge on the line, and which, consequently, were put out at a considerably lower rate. The contractors got the money without inconvenience, and the shareholders were aware of what had taken place. It was a greater advantage to the contractors to get that money without paying interest upon it than to have raised it at a higher rate. The London, Chatham, and Dover Railway consisted of different portions, and had a separate capital, which had nothing to do with that for the Metropolitan Extension. It had to do with the original line. It was a great disappointment to the directors that the capital invested in the line had not hitherto proved reproductive, but at the same time it did not follow that the shares would remain at their present market value. The shareholders must wait, as on other lines, until the railway could earn money enough to pay a sufficient dividend. The original stock did not exceed £700,000, and nearly £600,000 was bought by the holders at a small sum above £35; so that if the line met with the success for which the directors hoped the shares might yet be worth what they had cost. The London, Chatham, and Dover Company had its origin in a railway company formed some years ago to accommodate the district between Canterbury and Chatham. That district being unable to obtain the accommodation it required from the South Eastern Company, determined to make a line for itself of twenty-five miles in length to connect the towns of Chatham and Canterbury. They were subsequently encouraged by the Duke of Wellington's opinion of the military importance of the line to go on to Dover. They were again unable to induce the South Eastern Railway to give them the accommodation they required, and a separate and independent access to London was accordingly made. A portion of the line—the western extension from Becken-ham—was actually a paying line. He should be exceedingly glad if a cheaper mode of constructing railways could be secured, but the proposal of the noble Lord the Chairman of Committees would have a most prejudicial influence upon railway enterprize, and would injuriously affect the public interests.


said, that while he felt disposed to support the Motion of the noble Marquess for a Select Committee, he entirely differed from him as to the grounds for that proposal. The noble Marquess was quite right in saying that the Legislature ought to take no steps the effect of which would be to check the formation of railways; but the present state of things prevented the country from getting the accommodation it required. Railways were proposed by persons having no real command of capital wherewith to construct them. Their object was to make a profit from the passing of the Bill and the construction of the line, and then to get rid of the line before it was completed. He was far from saying that it was the business of Parliament to prevent the shareholders in these concerns from losing their money. He fully recognized the principle that individuals could take better care of themselves than Parliament could take care of them; but when the Legislature gave power to a company to construct a railway, it did two things—it empowered them compulsorily to take the property of other persons, and it gave them a virtual monopoly of making railways in that district. What was wanted was practically to secure that the railway should be judiciously planned and that it met a real want on the part of the public. He believed that the lines which were usually denominated "non-paying lines" were of great importance to the country, and ought to be encouraged. The main lines of communication had already been made, and the railways now required were of a minor character, and were not calculated to return more than a moderate interest upon the outlay of their construction; the principal advantage of such railways was to be found in the increased value of the districts through which they passed. These were the lines that they ought as far as possible to encourage, and they ought especially to hold out inducements which would lead to the construction of such railways by the people who would derive the greatest benefit from them when completed. With this view two years ago Parliament passed an Act which enabled the owners of estates to come forward in support of railways which would improve the district in which their property was situated. At present Railway Bills were chiefly promoted by contractors and persons who sought their remuneration chiefly from the expenses which attended the progress of the Bill through Parliament; it was to these persons a matter of comparatively little importance whether the line was needed, or whether it was judiciously planed, or whether it would be likely to make a return to the shareholders. Oftentimes their object was simply to compel existing companies to purchase their interests at extravagant rates. He believed that the requirement that a considerable portion of the capital should be really raised before a line was undertaken would be an advantage to the public in the end, because while that was not done there was no security for the construction of a line, and owners of property were left in a state of uncertainty as to whether the compulsory powers of the Act would be exercised or not, and another evil was that the money for completing lines was raised on disadvantageous terms to the detriment of undertakings of a better character. Parliament ought, as far as possible, to take care that compulsory powers and exclusive possession of the line of railway should be given to those only who had the means of carrying on their undertaking, and that the powers granted by Parliament should not be employed purely for the exclusion of others. The present system, instead of tending, as his noble Friend supposed, to the promotion and construction of railways in the best manner, and in those parts of the country where they were most needed, had precisely the contrary effect. It tended rather to discredit the whole system of railway enterprize in the public mind, and to make people unwilling to advance their money for the furtherance of such schemes.


said, the question was not whether the London, Chatham, and Dover Company was paying or not, or whether the Great Western wished for an additional line, but whether the remedy proposed by the Chairman of Committees was the right one to adopt in order to meet the evil which had been brought under their notice. It seemed to him that the wiser course would be to send his noble Friend's proposal to a Committee upstairs, where it could be carefully considered by those of their Lordships who had given attention to railway matters, when such Standing Orders might be framed as would meet the emergencies of the case. He placed no faith in the opinion that anything which Parliament did would act as a check upon speculation. He was old enough to remember what took place in 1825 and 1826, when people squandered their money as they had done since, although there were no railway schemes in which they could invest their capital. The existing Standing Orders were framed for the protection of those whose property was to be compulsorily taken; and having taken care that they were sufficient for that purpose it was now their duty to see what could be done to protect shareholders. There were, it seemed to him, several defects in the Resolutions proposed by the noble Lord, which would require the attention of a Select Committee. For instance, it might, perhaps, be advisable not to allow any company to apply to Parliament in the same Session for more than one second-class Bill; but he thought it would scarcely be advisable to make it necessary that a subscription contract should be entered into by at least twenty subscribers. In many places the lines constructed were short, and purely local in their character. It would, therefore, he thought, be unwise to require so many subscribers when a few good and substantial men would often be willing to undertake all responsibility. As many subscribers only agreed to take shares in the proposed schemes on certain conditions, he thought that such conditions ought to be stated, and that an order making this necessary should be framed. He objected to Clause 2, because it authorized the payment of interest out of capital. A particular Act of Parliament permitted the payment of 4 per cent interest out of capital under certain circumstances; but the clause to which he referred authorized a further payment of interest out of capital. Turning to Clause 3 he found that the money to be lodged was not to be laid out on the works necessary for the construction of the line until half the amount of the capital had been paid up.


said, that the regulation referred to was identical with that contained in the existing Standing Order.


said, that by Clause 10 it was provided that when in any Bill powers were applied for to amalgamate with any other company, or to sell or lease the undertaking, or to purchase or take on lease the undertaking of any other company, the company or persons with whom such agreements were to be made and the terms and conditions of such agreements should be specified in the Bill. In the event of such a clause being inserted Parliament would have no power to alter the terms of those agreements. He thought the whole question should be sent before a Select Committee.


said, he thought it would be highly objectionable that one House of Parliament should legislate as it were upon the future conditions upon which railway companies were to be entitled to come to Parliament. The Resolutions were framed upon the principle of securing prudence in lending money for the construction of railways, and in the carrying out of such undertakings; but it did not appear to him that those were matters in which Parliament ought to interfere, any more than they ought to interfere with the management of any other commercial transactions. He thought the best course that could be adopted with regard to the question would be to send it before a Select Committee, when the opinion of the leading Members of the other House who took an interest in railway legislation could be ascertained as to whether subscription was the best mode of insuring the bonâfide character of the railway schemes brought before Parliament, and that by so doing they would thus avoid the danger of adopting Resolutions which they might afterwards have to abandon in consequence of the House of Commons refusing to join in their views. Subscription as a test of that kind had been abandoned because it had been found impossible to insure that the subscription list was bonâ fide. The principal point they had to insure was that the persons whose lands were compulsorily taken under the powers of the Railway Acts should have some security that the lines should be completed, and as long as that security was obtained he saw no reason for throwing impediments in the way of lines promoted by contractors, who frequently projected and constructed through mineral and other districts railways which were of the greatest advantage to the localities. He hoped the noble Lord (Lord Redesdale) would not object to the whole subject being sent before a Select Committee, and thus ascertain, at any rate, how far his propositions were likely to receive the assent of the other House of Parliament, and not unnecessarily interfere with the prosecution of undertakings which were of great importance to the country.


thought the subject was one for the House to determine. It would be useless to send the question before a Select Committee composed of Members holding different and even hostile views.


said, he was sorry to hear the noble Duke who had just sat down raise any objection to the matter being sent before a Select Committee. He was certainly not prepared without having further information upon the subject to agree with the noble Lord who proposed the alteration as to the extent of the evil he complained of, or as to how far it was possible to deal with that evil, and as to how far the alteration he proposed was the best method of extirpating it. He should be sorry to force the House to a division upon a subject which involved no party feeling, especially as the Government was greatly indebted to the noble Lord for the assistance he had so frequently rendered them in matters connected with the regulations of the House. He thought it would not be advisable to adopt these Resolutions without any communication whatever with the other House, and he hoped the noble Lord would not object to the appointment of a Select Committee.


said, he felt himself placed in a difficulty. He feared that if he acceded to the Amendment of the noble Marquess, the object he had in view would be defeated. He had no objection to some arrangement being come to whereby an opportunity might be afforded of taking the opinions of leading Members of the other House upon it. At the same time he feared that at this late period of the Session if a Select Committee of their Lordships were appointed, in the terms of the Amendment, to consider generally how far it was expedient to amend the Standing Orders relating to railways, it would be impossible to obtain the concurrence of the other House. He would be willing to withdraw his Motion if he were allowed to propose the appointment of a Select Committee, to consider how far it was right or expedient to assent to the amendment of the Standing Order No. 184 which he proposed. In this case he would have the appointment of the Committee in his own hands, and not leave it in the hands of a Peer who was opposed to any change in the Standing Order. He believed that the change would prevent immature schemes being brought forward in November for the next Session; and in that sense so far from impeding the progress of the railway system, it would really promote it. He thanked the noble Lord the Chairman of the London, Chatham, and Dover Railway Company (Lord Harris) for confirming his statement.


said, he was willing to accede to the terms of the noble Lord.

Amendment (by Leave of the House) withdrawn.

Then the Original Motion (by Leave of the House) withdrawn; and a Select Committee appointed to consider Alterations in Standing Order No. 184, proposing that a Subscription Contract shall be entered into in certain Cases by the Promoters of Second Class Bills.