HL Deb 19 February 1872 vol 209 cc606-17
THE EARL OF AIRLIE

, in calling attention to the question of Railway Amalgamation, and to inquire, Whether Her Majesty's Government intend to appoint a Royal Commission or to move for a Committee for the purpose of investigating the question of Railway Amalgamation; or whether they intend to propose further legislation on this subject during the present Session? said, he thought he need hardly remind their Lordships that in one shape or other the question of railway management, so far as it affected the interests of the public, had engaged the attention of Parliament on many different occasions since the year 1846. In that year a Committee of the House of Commons considered the question of amalgamation, and recommended that— In all instances in which railway companies propose to take powers of amalgamation the rates and tolls of the amalgamated companies should be subject to revision. In 1853, another Committee of the Commons—that known as Mr. Cardwell's Committee—was appointed. On it were some of the most eminent men at that time in the other House of Parliament. Among the recommendations made by that Committee, was the following:— That working agreements between different companies, for the regulation of traffic and the division of profits, should be sanctioned under proper conditions, and for limited periods, but that amalgamation of companies should not be sanctioned, except in minor or special cases, when it clearly appears to the Standing Committee that the true and only object of such amalgamation is improved economy of management, and consequent advantage to the public. The recommendation so made by Mr. Cardwell's Committee had been allowed to remain a dead letter; for in the Report of the Royal Commission on Railways, issued in 1866, it was observed— That, notwithstanding the recommendation of the Committee against amalgamation, the three following years saw the amalgamation of the North Eastern lines of railway, the Lancashire and Yorkshire, and the Great Western with the Shrewsbury lines. Again, from a recent Parliamentary Return it appeared that between 1860 and 1872, 187 amalgamation Bills had been passed, which have added 5,316 miles to the system of the amalgamated railways. This was about a third of the entire railway mileage of the kingdom. A memorandum added to the Return stated that on the 31st of December, 1870, out of a total mileage in the United Kingdom of 15,537 miles, owned by 281 companies, 29 companies owned 13,639 miles. Thus, 29 companies out of 281 held more than four-fifths of the entire mileage of the United Kingdom. There was now before Parliament, besides Railway Bills of the usual character, a Bill for the amalgamation of two great railway companies. The aggregate capital of the two companies was £88,000,000, and the aggregate mileage 2,000 miles. Therefore, if this Bill were passed, a gigantic monopoly, practically controlling the traffic of the northern part of this kingdom, would be placed in the hands of a single company. This precedent, if successful, would probably be succeeded by others. Several other amalgamations, indeed, which had been proposed, had not, for some reason or other, come before Parliament this Session; but there was no reason to think that they had been altogether abandoned. He submitted to their Lordships, therefore, that the time had come when Parliament ought to consider on what terms amalgamations should be allowed to be made; and if amalgamations were to be allowed, the interests of the public ought to be protected. The first question which would arise, then, was—"Ought amalgamation to be permitted?" And ii that were answered in the affirmative, there followed the important inquiry—" What conditions ought you to impose in the interests of the public?" No doubt, if proper conditions were imposed, amalgamation might, in many cases, be attended with great advantage to the public as well as to the companies—but they might also be attended by great disadvantages. No doubt amalgamation, in fitting cases, would lead to great economy as regarded the staff; and it might afford the public facilities which they did not now in all instances enjoy—of passing from one place to another without being subjected to those inconveniences which sometimes competing companies wilfully permitted to interpose in the way of passengers coming from another company; but, at the same time, it should be remembered that amalgamation was the destruction of competition, and so of the advantages which competition gained to the public. He could not think that the Select Committees of the Houses of Parliament afforded an efficient tribunal for deciding as to the merits of proposed amalgamations and as to the conditions that ought to be imposed. He wished to speak with every possible respect of the Committees of their Lordships' House. Ever since he had the honour to become a Member of that House he had been in the habit of serving on them, and he willingly bore his humble testimony to the diligence and care with which their Lordships applied themselves to the work which came before the Select Committees; but it was impossible for a Select Committee to do what was required to secure the interests of the public in respect to travelling—they were fettered by Rules and Standing Orders—they were obliged to decide on ex parte statements; and, though a Committee might impose conditions, it had no power to make a company adhere to them. What a company undertook, and bound itself to do under an Act obtained this year, it might seek, and seek successfully, to be relieved from by a Bill of next year or the year after. It was easy to cite a case in point. For instance, not many years ago, a railway company obtained certain additional powers on certain conditions, one of which was that it was to reduce its rates. Two years after, it came before Parliament to get another Act, to authorize it to raise those rates again. He referred to these points for the purpose of showing that under the present system there was no security for the public. Railway companies had great powers. Two companies might be opposed for a time, but they would not go on opposing each other always. They had large staffs, able directors, and enjoyed the advantage possessed by all corporations—that they had no conscience and never died. In some quarters a strong opinion had been expressed in favour of the purchase of the railways by the State. A Commission on Railways in this country had pronounced against that scheme. A Commission on Irish Railways had pronounced in favour of it, but, perhaps, on Irish grounds. But it was a subject on which there was a considerable difference of opinion, even among commercial authorities. One of the hon. Members for Liverpool, a Gentleman of great eminence in the commercial world, had made a speech setting forth its advantages; and the other hon. Member for Liverpool, who was also a man of great commercial eminence, had been just as strong on the other side of the question. For himself, he would not, on the present occasion, venture to give a positive opinion on a subject regarding which such opposite views were taken by men whose opinions were entitled to consideration; but he would say that the financial aspects of the question ought to be carefully weighed before the State embarked in such an undertaking. It was clear that if one railway were purchased, all must be. But there were lines which did not pay the interest on their debentures; and he should like to know how a value could be placed upon lines which were worth less than nothing? There were other lines which were at present earning a good dividend, made up to a great extent of mineral traffic; but some of the mineral districts through which they passed had been worked to the full extent of their capacity, and were beginning to show signs of exhaustion. If the Government went blindfold into the purchase of such lines, without a careful preliminary survey of the districts through which they passed, they might find themselves in the position in which it was said some of the joint stock companies were which had been formed for the purpose of acquiring and working mineral properties, and which it was said had discovered that the late owners had had the cream of the estate, that the future profits were very doubtful, but that there was one part of the bargain about which there could be no mistake, and that was that they had acquired a damnosa hæreditas mortgages and obligation. Another objec- tion which had been raised to the acquisition of the railways of the country by the Government was the immense amount of patronage which the ownership of the railways would put into the hands of the Government. It might be well in all cases of amalgamation that there should be inserted in the Bill a provision, giving the Government an optional power of purchase—optional as regarded the State, but compulsory as regarded the company. It might, perhaps, also be worth consideration, whether companies which were likely to obtain a large pecuniary advantage from amalgamation should not pay a certain sum of money into the Exchequer. If some arrangement of this kind could be made, coupled with a considerable reduction of fares, the benefits of amalgamation would be shared between the railway companies, the persons who used the lines, and the general body of taxpayers, without the State having to run the risk inseparable from so large a financial operation as the purchase of the railways. It was impossible to provide for the interests of the travelling public by any general Act of Parliament. Unless control in this matter were given to some Department of the Government it was not easy to see how the desired object could be secured. But it might be said—"Are you going to take the management of the railways out of the hands of the railway companies; and to say how many trains a-day there are to be, and at what hours they are to run? It is impossible to do any such thing." He did not suggest that the Government should undertake any such responsibility, but simply that they should exert such a general control and supervision over the railway companies—that in the event of its being clearly shown that any company had neglected to give proper accommodation, or failed in other respects to perform their duty to the public, the Government might have the power to compel the company to do its duty, without relieving it of the responsibility which properly belonged to it, by pointing out how it was to be done. He would remind those who objected to State interference in the management of railways of the regulations imposed by the Board of Trade on the shipping interest. Certificates were granted to officers in the merchant service, and, after an inquiry into the circumstances of any accident, the Court which, held the inquiry withdrew the certificate of the captain or other officer if it thought fit to do so. Again, every seagoing vessel was inspected by the officers of the Board of Trade, and that Board imposed regulations as to the number of passengers which a vessel might carry. He thought it might be well to give a Government Board power to dictate certain conditions as to the terms on which amalgamation would be allowed. Perhaps some persons might be disposed to think that it would be going too far to intrust any Board with the power of imposing such stringent powers; but something very like this was recommended by Mr. Cardwell's Committee. After pointing out the difficulties which would attend an interference on the part of the Executive Government with the working arrangements of a railway, the Report of that Committee proceeded— Your Committee, however, think that it would be possible in certain cases, when the general convenience of a district was in question, to raise the dispute between the public and the companies in such a shape as that the interposition of the Railway Department might be effectually exercised. With the view of preventing this power from being rendered nugatory by the introduction of small objections of a practical kind, ingeniously created for the purpose of embarrassing the decision, it would be necessary that it should be conveyed in the widest terms. They went on to recommend that— The fact of wrong having been done by the company should first be substantiated before a public tribunal, and the aid of the Executive Government be afforded to that tribunal in framing its decisions with a view to their practical effect. He thought the suggestion in the Report was worthy of consideration. At all events, things ought not to be allowed to go on in their present state. We ought to learn something from what had occurred elsewhere. The power of the railway interest had become so great in America, that the railway companies returned Members not only to the local Legislatures, but to the central body of Representatives. He spoke in no hostility to the railway companies of this country; he had spoken in what he believed to be the interest of the public, and he hoped the few observations he he had made would elicit a satisfactory statement from Her Majesty's Government.

VISCOUNT HALIFAX

said, he would not go into all the topics discussed by his noble Friend who had just addressed their Lordships (the Earl of Airlie). In the early days of railroad legislation, Parliament determined on giving full scope to competition, as affording the best security that the interests of the public should be duly cared for; and a Committee of the House of Commons has since reported generally in favour of that system. Nevertheless, the amalgamation of various railroads had been carried to a considerable extent, and it was doubted by many persons whether, without amalgamation, the railway companies might not, by arrangement amongst themselves, keep in their own hands the complete control of all the accommodation conceded to the public. There was, however, a considerable difference in the character of different schemes of amalgamation. He believed that, as regarded the smaller railways, amalgamation had been found to be attended with advantages both in the economy and the efficiency of management; but amalgamations on a large scale, such as those proposed in the Bills before the House, and alluded to by his noble Friend, were a very different thing. For instance, three different companies had independent lines of railway from London to Leeds. In such cases the public might fairly think that competition gave them whatever advantages could be given by railroads, and they would have an interest in seeing that the effect of amalgamation was not to put them in a worse position than they were when the companies were competing. As to the cases more prominently before the public at that moment, they differed in some respects—one was little more than extending to Glasgow a line from London, which already went to Carlisle; but that of the London and North-Western and the Lancashire and Yorkshire Companies would place all the communications of Lancashire in the hands of one great company. He concurred with his noble Friend that such amalgamation should not be allowed without considering whether something should not be done to protect the interests of the public. Such a gigantic monopoly must be viewed with caution. What the Government proposed was, that there should be a Joint Committee of the two Houses—if the two Houses approved the proposal—to consider whether amalgamations on such a large scale should be sanctioned, and, if so, what securities should be taken for the inte- rests of the public. A deputation which had waited on his right hon. Friend the President of the Board of Trade a few days before, stated its opinions that the appointment of such a Committee would be very desirable, and added that such a Committee would have greater weight than would be possessed by two separate Committees—one of each House. If the House approved of his course, his noble Friend behind him (Earl Cowper) would move for the appointment of their Lordships' portion of the Joint Committee. From the labours of such a Committee the Government expected material assistance.

THE MARQUESS OF SALISBURY

concurred in the course proposed by the noble Viscount as that most for the interest of the railway companies, and most for the interest of the public also. He would not go into the general question of amalgamation which had been raised by the noble Earl (the Earl of Airlie), because to do so might be to prejudge the question; but, he thought, that some expressions used by the noble Earl gave too large an importance to the question. The noble Earl had spoken of a "gigantic monopoly" and "competition." Now, he must observe that the word "competition" was sometimes applied in a manner which very much misled the public. Where the field was a very wide one, the word was applicable in its ordinary sense; but when the "competition" was between only two or three persons, or two or three companies, there was great danger—to use the words of Lord Dalhousie—that "competition" would become "combination." After a time, when they found there were no other companies to interfere with them, there was a practical agreement to share the business between them. They adopted the same times of starting, the same times of transit, and the same scale of fares, and the only result was that in which, perhaps, those who entertained the same feelings as the noble Earl might rejoice—a loss to each company. But the public might be sure that no loss was inflicted on a railway company that the company did not manage to make the public pay the half of. His noble Friend the Chairman of Committees, who had a lively idea of railway companies, and looked upon railway directors as locusts, thought that they contrived to make the public pay even more than the half of any loss they had to suffer. He approved the proposal for a Joint Committee; but he hoped the Committee would not be regarded in the light in which so many Committees and Commissions had been viewed—as a contrivance for shelving the question, and for relieving the Government of all responsibility. The charges against railway companies were serious, and constantly repeated; but the companies had also suffered deeply from the oscillations of Parliamentary policy; on their side they were prepared to bring a heavy bill of indictment against successive Governments and the Legislature for the manner in which they had been treated—for the uncertain manner in which they had been dealt with. One injustice of which they complained was this—that Parliament had never adopted and maintained one principle, either that of competition or that of monopoly, but had floated between the two. Sometimes it used the language of competition, other times it employed that of monopoly. The question, which principle was to prevail in the particular case, had always had to be fought within the walls of the Committee-room. The consequence had been the misfortune of non-paying branch lines, which all railway companies had felt, and which had brought ruin on some of them. There was a line from, say, centre A to centre B. The inhabitants of the country through which this line ran wanted a branch line, and could not get it. They went to a solicitor and engineer, and some other gentlemen willing to promote companies, and a new line was projected to run through the same centres. Rather than see this, the old company consented to make the branch line, though knowing it would not pay. This was the cause of political lines fighting lines which had never paid interest, but which had been imposed on railway companies as blackmail to prevent lines from being run through their centres. While in other countries some lines had paid a fair commercial interest, and others as much as 12 and 13 per cent. taken as a whole the capital invested in the railways of this country had not paid the ordinary interest of 5 per cent. The question of amalgamation had forced itself to the front, and must be decided. He only hoped, that when it was decided it would be in no vague terms. He hoped it would be in such, decided terms as would give the shareholders in railway companies, and the public, a knowledge of what they had to expect, and not add another to the many evils that had already resulted from indecision in the character of railway legislation.

THE MARQUESS OF CLANRICARDE

fully concurred with the noble Marquess who had just spoken, as to the evils which had resulted from the undecided character of our legislation in respect of railways. Owing to the monstrous system adopted in 1843–44 by bold and clever adventurers, and the absence of any efficient laws, a loss had been involved of upwards of £200,000,000. It was a mistake to say that the loss had fallen on the shareholders, for it had fallen on the public, and whole families had been ruined, and the general community had suffered to a degree which was shocking to conceive. Its results had been felt even more severely in Ireland than in this country. He hoped the inquiry would be a general one, and that it would lead to still more searching investigations. What was wanted was some modification of the laws affecting railways—a question which successive Governments had been too timid to face. These laws should also be codified, so as secure uniformity, which would save a great deal of money which was now being thrown away.

THE DUKE OF RICHMOND

cordially concurred in the recommendation of his noble Friend opposite (Viscount Halifax) regarding the appointment of a Joint Committee; but, at the same time, he would venture to suggest that the terms of reference to such a tribunal should be very explicit—because he fancied in a question of this kind there not only should be a decided explanation of the views of the Committee, but also that they should be obtained as rapidly as possible. In that view it would be very unwise and inconvenient to travel over such a wide field as that foreshadowed by his noble Friend (the Earl of Airlie), including, as it did, the purchase and management of the railways by the Government. That was a gigantic scheme, and one which he did not think would come fairly within the province of the Committee. The proper course would be to have terms defined, so that the Committee should not be allowed to travel over such an extensive field of inquiry, but bring their labours on the point referred to them to a speedy solution.

LORD REDESDALE

said, he differed from all the noble Lords who had spoken on the subject. He thought the proposed inquiry not only unnecessary, bnt absolutely useless. Parliament had inquired over and over again, and from further inquiry nothing would result but delay. The recommendations that would come out of such an inquiry would have no effect in removing the difficulties spoken of. The thing which was really wanted—even in the interests of railway companies themselves—as much as in that of the public—was an efficient Board of Control. He did not think such Board ought to be a Department of the Government; but should be empowered to supervise matters arising out of traffic and other details on which it would be preposterous to legislate. What he would suggest was, that every Session each House of Parliament should appoint a Controller—though the appointment would be renewed each Session, the same persons would probably be appointed year after year. The two Controllers thus appointed by the Legislature would constitute a Board unconnected with the Government, and he believed they would inspire more confidence on the part of the companies than any Board of Control connected with the Government could succeed in doing. He was induced to think so from observing that the system under which the Chairman of Committees was appointed in their Lordships' House, and the Chairman of Ways and Means was appointed in the Commons, seemed to work well. He believed that the decisions of a Board of Control appointed by the two Houses of Parliament would be generally satisfactory to railway companies. He would not allow the Board to regulate the working of lines in the first instance, but he would give it the power of interposing on complaint being made by the public of the manner in which the traffic was worked. The orders of the Board would be reported to Parliament, and the Controllers would, in their respective Houses, give such explanations as might be required, answering as independent Members, and not claiming official support. He thought that such a Board would do the companies a service by scuring them more traffic. It would prevent such an occurrence as a passenger seeing the train by which he wished to continue his journey leave the station at the moment when the one which was supposed to meet it entered, and being obliged to wait there for perhaps three or four hours. He thought that the provision of Mr. Card well's Act for having such questions decided by the Court of Common Pleas, had proved inoperative from the delay and cost attending any proceeding in a Court of Law. No conditions made by Act of Parliament at the time of an amalgamation could be effectual for the future protection of the public, because new lines of traffic might come into existence after amalgamation, and improper arrangements persevered in without remedy, if there was no authority to act as circumstances arose. It was expected that out of this inquiry there was to come knowledge; but in most cases all it would be productive of was local information. He was not unfavourable to amalgamations, and had no desire to speak against railway companies—he wished they were all prosperous. He believed most of them were managed in such a manner as left very little ground for complaint. For instance, he believed very little fault could be found with the London and North Western, and that a Board of Control would seldom find a reason for interfering in its management; but, still, he held that a Department to act in the manner he had indicated was essential, and that one constituted in the way he had described would be the most likely to have the confidence of the railway companies.

EARL COWPER

hoped that as speedily as possible a decision would be arrived at with regard to this question. There were many noble Lords in the House who had taken a deep interest in the matter, and were perfectly cognizant of all its details, and it would be a great mistake to miss an opportunity for obtaining their assistance and co-operation. He objected to the officers suggested by the noble Lord the Chairman of Committees—the experiment was too novel and untried to be adopted without careful consideration.