§ Order of the Day for the Second Beading, read.
§ THE EARL OF REDESDALE (CHAIRMAN OF COMMITTEES)
said, that, with regard to this Bill, he had thought it desirable to call their Lordships' attention to its special character, in order that he might take their Lordships' opinion upon it. All their Lordships must be aware of the difficulties in which a great number of persons had been thrown by the failure of the City of Glasgow Bank, and by the various transactions which were connected with that matter. In consulting with the Chairman of Committees of Ways and Means as to the measures which it might seem desirable to enter upon in the first instance in this House, that Gentleman had very earnestly desired that this Bill should commence in their Lordships' House, in order that there might be an opinion expressed upon it by persons of high legal authority for the purpose of directing the attention of Parliament to questions necessarily raised in connection with the failure. As it appeared to him, it was a Bill not entirely without some sort of precedent; but still it was not quite in accordance with the practice of Parliament. The first Bill of this nature was promoted for apparently the same purpose as was intended here—that of the Albert Life Assurance Company in the year 1871. It was brought into Parliament at that time, when, on account of an accident that happened to him (the Earl of Redesdale), he was not in attendance in the House; and, consequently, he had no share in the proceedings connected with that Bill. Since that time there had been the European Assurance Company's Bill, which was also an exceptional Bill. On both these, occasions arose for the action taken, owing to the state of the law. The only other Bill exceptional in its nature that he knew of, which was of any importance, was that of the London, Chatham, and Dover Railway, which was a Bill, as their Lordships knew, instituted because it could not be ascertained when and by what means that Company's affairs could be settled. They were, therefore, obliged to apply for an Act of Parliament. In the pre- 110 sent Bill there were, no doubt, many provisions of considerable importance; and he thought it was desirable that the House should have some opinion on the subject before it adopted the principles of the Bill. But their Lordships would remember that in the present case the matter was very large, and that was made the chief excuse for the promotion of that measure. But, it might be asked, what was there in that case that made its settlement, contrary to that of almost every other affair, more expedient by proceeding under a special Act of Parliament than by coming under the ordinary proceedings of a Court of Law? He thought it was therefore more desirable that the House should act with discretion in the matter, and not too readily accede to the proposition. It was one of the provisions of the Bill that there should be the appointment of an Arbitrator instead of proceedings in the Courts of Law; and it was provided that the Arbitrator might settle and determine all matters by that Act referred to his Arbitration, not only as regarded the legal or equitable rights of the parties, but upon all actions, and in such manner, in all respects, as he in his absolute and unfettered discretion might think to be equitable and expedient, as fully as might be done by Act of Parliament. That was a most extraordinary power to give to any arbitrator, and their Lordships must feel that to give such power to any man to determine questions whether according to law or not according to law, but entirely in accordance with what he might think fit, was giving him a very wide power, which might not be considered in all cases by the parties affected by a decision to be in accordance with the justice of the case. He might also say that up to the present time, as far as he knew, the Courts of Scotland had found no difficulty in dealing with the matters brought before them. He believed that they had already given their judgment in a certain number of cases of large amount, and that the Courts had not found any difficulty in arriving at their conclusions. Under these circumstances, he thought their Lordships should consider well before they gave their assent to the principles of the Bill. He did not propose at the present moment to give an opinion upon it, and he would like to have some assistance from the House in directing the course that would be pru- 111 dent to adopt in determining this question.
THE LORD CHANCELLOR
said, his attention had been called to this Bill by the noble Earl who had just spoken, and he was quite prepared to lay before their Lordships the observations that occurred to him to make upon it. But, in the first place, he must express his deepest sympathy with everyone who in any way was connected with the affairs of the City of Glasgow Bank, whether as shareholder or as depositor; and he was sure that in saying that he was not saying more than all their Lordships felt, and that if any course were open for assisting in accordance with what was the practice in such cases, by which relief could be given to those unhappy persons, Parliament would be very happy to give that relief. But their Lordships must carefully consider what was the proposal which was made by this Bill. Now, this Bill proposed at once, and with some violence, to terminate that which all the ordinary Courts of Law would determine. The proposal of the Bill was to take away from all those who at present had resorted to those Courts, who might be satisfied with those Courts, the right to continue those proceedings, and to substitute in place of the ordinary Courts of Law the authority and the decision—the absolute authority and the unappealable decision—of some individual to be named in the Bill, and who was to be called the Arbitrator, but who really was in the position of a despotic Sovereign, entitled to decide everything connected with the Bank in any way he thought fit. Now, it was said that there were precedents for taking this course. He would refer, in a moment, to those precedents; but he must first say, with regard to the Glasgow Bank, that although he believed it was a case almost without a parallel as regarded the magnitude of the liabilities which would have to be provided for, still, as far as he understood it, it was not a case in which there was any peculiar or special difficulty as to the legal aspect of the case. There were certain legal questions which arose, which would have to be determined; but the circumstance that the determination involved the question of several millions of money did not render the case in any way peculiar as regarded other cases in which the stake was much 112 smaller. The question of the importance of raising money, so far as he had heard, was not in any way peculiar. Now, one of the cases which had been mentioned as examples was that of the London, Chatham, and Dover Railway; but that was a case which really had no application to the present one. That was a case where the share capital of the London, Chatham, and Dover Railway had become so involved with claims between the different sections of it, that it was absolutely impossible to extricate the case from the confusion in which it stood through the acts of the Courts of Law. Some provision had to be made which would sacrifice legal rights entirely, and substitute for them fair provisions of a different kind. That was done through the medium of a private Act of Parliament; but it was thought that it could be done more conveniently through the intervention of certain Arbitrators who could act as if they had the power to make Acts of Parliament. Accordingly, they exercised that power, and their award really was in the shape of a private Act of Parliament. The next case was the case of the Albert Arbitration—and what he had to say with regard to that would apply equally to the European Arbitration. Both of these cases were alike. There was a gigantic Insurance Company breaking up, which had swallowed up some 15 or 20 other Insurance Companies, and there were involved questions of the greatest intricacy with regard to those different Insurance Companies and their shareholders as against each other. In the case of the Albert Insurance, the winding-up of all these Companies had been going on in the Court of Chancery for, he thought, nearly a space of 18 months; a very large sum had been expended in costs, and the result of all those proceedings had been absolutely nil. He was speaking only from memory; but he thought that there had not been a single list of contributories in any one of the Companies settled by the Court of Chancery. The intricacy of the case was so great, and the appeals before the Court were so numerous, that not only had the Court not got to the point of making a decision, but they had not settled the list of contributories. In addition to that, the Judges of the Court had themselves declared that it was impossible, as far as they saw, that the litigation 113 ever should end; they said, if the Court did nothing else but take the cases of the Albert Arbitration, they had more than enough to do. In addition to that, the shareholders in the Companies, and the policy holders, had manifested in very large numbers—and in this respect he would ask their Lordships' particular attention to the present Bill—their desire to be emancipated from the technicalities of proceedings in the Court, and to have their affairs settled through the medium of friendly arbitration. In that state of things, a Bill was introduced to Parliament, and it received the assent of Parliament, and the Albert Company was wound up. The European, also, was in the course of winding-up, and he believed it was very nearly completed. In the present case, the state of things, as their Lordships knew, was this—The City of Glasgow Bank failed, as far as he remembered, in the month of October last, and the liquidation commenced in the month of November. Now, the liquidation of the City of Glasgow Bank was not what was called a liquidation by the Court; it was a liquidation as a winding-up under the supervision of the Court—that was to say, by certain persons being appointed by the creditors and shareholders to be the liquidators of the Bank under the direction and supervision of the Court. When any question of difficulty arose, the Court was appealed to, and it decided the question. They were now in the month of March, and he was bound to say that the activity which had been displayed was extremely creditable to all the parties concerned, because he found that the list of contributories had been settled; he found that a call had been made upon the contributories, and a sufficient sum of money had already been got in to justify the payment of the first dividend. It was to be hoped that the dividend would be as much as 6s. 8d. in the pound—that was to say, one-third of the debt of the Company. Now, in order to accomplish this result, the Court of Session had shown, as it seemed to him, its very great power of dealing with the cases; because he was told that the Court of Session had decided, not all the cases that had arisen, but what were called all the "representative cases" that had been raised. A great number of cases had been raised that it was not necessary to allude to; but as representative 114 cases, the decision of them would govern others, and of those so decided, 10 had been appealed to their Lordships' House. The Court of Session, however, had decided in that short time all the cases which were required to be decided as representative cases, and, as he had said, 10 of these had been appealed to this House. One day next week their Lordships would commence the hearing of those appeals. Now, so far as regarded the action of the ordinary tribunals, what he had stated to their Lordships would show that there was no excuse for saying that the ordinary tribunals were not able effectively and speedily to deal with the questions that arose in the case. But then, he would ask, who was it that solicited interference with the ordinary tribunals of the country?—and there it seemed to him there was a difference between this case and those that had come formerly before the House. He was told that this Bill was promoted by two shareholders, and there had not been, as far as he was aware, any Petition to their Lordships' House by other shareholders, or any meeting held, or any manifestation or desire by other shareholders that this legislation should take place. He had no doubt that those who promoted the Bill had acted with the best possible motives; but what was desired was that there should have been some manifestation of the wish of the mass of shareholders and others for an interference with the ordinary tribunals of the country. Under those circumstances, he must say he should regret if their Lordships were to see in this case another instance for this very strong and high interference with the ordinary Courts. The instance in which they were now asked to act, as it seemed to him, had none of those peculiar features which the former cases had. In the observations which he had made, he had tried to describe the case as he understood it to be at the present moment. It was possible that it would assume a different aspect hereafter. It was possible that there might be delays and difficulties which he did not at present see any reason to anticipate. Of course, their Lordships would not actually dismiss the Bill at present. He thought, therefore, that their Lordships might be right in adopting this particular course—that they should not actually reject 115 and dismiss this Bill, but adjourn it for a certain length of time in order to see whether hereafter a state of things would occur different to that which he anticipated. If their Lordships thought it right to adopt that course, the Bill might possibly be put off for a period of a couple of months, and in that time they might see whether any of those difficulties which the promoters of the Bill had suggested which had not yet occurred should occur. Under the circumstances of the case, the course he had to recommend to the House was to defer for two months the second reading of the Bill.
§ LORD HATHERLEY
thought a primâ facie case had been made out by the noble and learned Lord on the Woolsack why the House should hesitate at the present moment to proceed with the Bill. He (Lord Hatherley) had endeavoured, but unsuccessfully, to discover who were the promoters and who were the opponents of the measure. He had no knowledge of the parties; but the Bill was of such a description that it ought not to be passed unless with a large consensus of approval from the shareholders on the one hand, and the creditors on the other. The proposal to postpone the second reading was, in his opinion, a very judicious course, and, therefore, he should support it.
THE EARL OF ROSEBERY
said, that the statement just made by the noble and learned Lord on the Woolsack would be received with great gratitude by his unfortunate fellow-countrymen in Scotland. He was quite aware—and he thought the Lord Chancellor had very clearly put the point before the House—that the course pursued by the promoters of this Bill was unusual; but it was equally certain that the catastrophe which brought about the measure was unprecedented in the annals of this country. There was one statement in the speech of the noble and learned Lord which was not entirely correct. The noble and learned Lord said the Bill was promoted only by two shareholders, and that, so far as he knew, no meeting had been held in regard to this Bill. It might be technically true that only two shareholders appeared as promoters of the Bill; but it was also true that two meetings of shareholders, representing at least one-eighth of the stock of the City 116 of Glasgow Bank had been held, and at those meetings resolutions had been passed unanimously in favour of the Bill. At the outset of his speech, he understood the noble and learned Lord to recommend the summary dismissal of the Bill, and he was proportionately delighted to find from his concluding remarks that he only recommended its postponement. He was quite sure that with the extreme soreness of feeling in Scotland, and the unexampled destitution that prevailed in all ranks, from the highest to the lowest, any summary dismissal of this measure, which was rather a Petition than a Bill, would be very ill received in that country. Now, when the noble and learned Lord spoke of this Bill as not at present being necessary, he thought the noble and learned Lord had forgotten the great case of the Western Bank, which, though not by one-half as great as the Glasgow Bank, took 19 years to liquidate, and had then to be finally wound up by an Act of Parliament. At the end of 19 years, the liquidators had to apply to their Lordships' House for that very remedy which the promoters of this Bill were anxious to provide at the threshold of their proceedings. A great factor in the case was the immense expense that was going on. The interest on the enormous deficit of £12,000,000 entailed an annual expense of from £100,000 to £200,000; and he did not think that the period of liquidation could be put at a less time than in the case of the Western Bank. So it was easy to calculate the enormous expense that would fall upon the unhappy shareholders and others concerned in the liquidation of the Glasgow Bank. There was another circumstance which ought not to be lost sight of in considering this question. There were many manufacturers in Scotland who held shares in the Bank, who were placed in a very uncertain position by this liquidation. In fact, they did not know their position. All they knew was that they had to go on working for the benefit of the creditors of the Bank. Many of these individuals were men with families, and some of them were advanced in years, and from one day to another they had to go on working in ignorance of their real position, except that they were working for the creditors of the Bank, not for their 117 own families. He could only thank the noble and learned Lord for the course he had recommended to their Lordships, and sincerely hoped that when, two months hence, the subject came again before the House, they would not summarily dismiss the Bill.
§ Order discharged, and Bill to be read 2a on Tuesday the 29th of April next.