§ Order of the Day for the Second Reading read.1794
§ Moved, "That the Bill be now read 2ª."
§ THE EARL OE RAVENSWORTH,
in rising to move that in respect of this Bill the Standing Order No. 128 be suspended, said, at the outset he desired to state clearly that ho did not intend to call in question the value of that Standing Order. He believed, indeed, that it contained a most salutary principle, and that it was a considerable check on reckless railway speculation. It had been in operation for 36 years, and had been of great benefit to the country. He wished, however, in passing to observe that it was not quite equal in its operation as between the old Companies and the new Companies that desired to raise funds. All he intended to do by his present Motion was to ask their Lordships to take an exceptional view of the scheme contained in the Bill now before their Lordships, and he urged that exception on the ground of the vast interests, national, commercial, social, and financial, which were involved in it. The total share capital under the borrowing powers conferred by the Act of 1883 was, in round numbers, £10,500,000, which showed the greatness of the financial interests concerned. As a national and commercial undertaking the railway would be of vast importance; and it was also a very large scheme of Metropolitan improvement. On these two grounds he thought it was justifiable to ask their Lordships to take an exceptional view in regard to the prohibition contained in the Standing Order No. 128. This Bill was introduced in the House of Commons, and on the 1st of May, in spite of a strenuous opposition, the second reading was carried by 187 votes against 117. It then received a searching investigation at the hands of a Select Committee, which reported unanimously in favour of it. He now wished to describe the unsatisfactory position arising from a discrepancy in the procedure of the two Houses in the matter of the prohibition of the payment of interest out of capital. At the instance of the Chairman of Committees, the other House amended its Standing Order No. 167 relating to this question by adding these words:—And except such interest, if any, as the Committee on the Bill may, according to the circumstances of the case, think fit to allow,1795 So important was this alteration that the noble Earl at the Table felt it his duty to call the attention of that House to it on June 26, 1883. A debate ensued, and the noble Earl ended by moving to alter the Standing Order of their Lordships' House. That Motion was negatived, and an Amendment moved by a noble Lord opposite (Lord Auckland) to the effect that it was inexpedient to modify the Standing Order was withdrawn. The result was that the question remained in statu quo, and he thought that was rather an inconvenient position for so important a question to remain in. He would now state why he thought this great national scheme was entitled to be dealt with exceptionally. The proposed line would follow almost exactly the present course of the Regent's Canal, with one or two divergencies at the City end. It would be, in fact, a continuation of the Great Western Railway as far as the Victoria and Albert Docks, and the Midland and the Great Northern Railways would also obtain direct access to those docks. Those docks contained an area of 192 acres and had 40 miles of railway siding and tramway lines, while they afforded accommodation in 1881 for 6,367 ships, having a total tonnage of 2,569,000 tons. This accommodation was increasing and improving every day. One very important advantage that would result from this scheme would be that the Welsh smokeless steam coal would be brought to the steamers without transhipment, whereby great loss by breakage would be prevented, and the efficiency of the Mercantile Navy would be largely increased. The scheme would also involve a cheap railway service for the working men, who would be conveyed at the rate of one farthing per mile—one penny for four miles from the East and North of London Westward, where there were many admirable sites for the erection of workmen's dwellings. The line, in consequence of its proximity to the Canal, could be constructed at a comparatively cheap rate, and it would interfere in a very slight degree with house property, streets, or roadways, or with the mysterious underground system of gas mains, sewers, and water pipes. The strongest argument in favour of the Bill was that there was practically no opposition to it, Petitions having been signed in its favour 1796 by representatives of a population of 1,092,148. He had taken up this as a national and a commercial question, and he appealed to their Lordships not to allow artificial barriers to stand in the way of carrying on such a scheme as this. It might be asked, why could not the promoters find the money? The answer simply was, because they could not. He had no hesitation in asking the House to assent to his Motion.
§ Moved, "That Standing Order No. 128 (which prohibits the payment of interest out of capital) be dispensed with."—(The Earl of Ravensworth.)
§ LORD BRABOURNE
said, he must make an earnest appeal in opposition to the Motion of his noble Friend (the Earl of Ravensworth), and he hoped that appeal would be the more forcible because it should be conveyed to their Lordships in a few sentences. His noble Friend desired to suspend a Standing Order which had been framed and supported by a great a weight of authority for one special object—namely, to secure, as far as possible, that commercial undertakings of this kind should be conducted upon sound financial principles. What his noble Friend and the promoters of this Bill wished was this—that if an undertaking was estimated to cost £80,000, Parliament should be asked to sanction the raising, not of £80,000, but of £100,000, in order that the odd £20,000 might be paid back to the subscribers in the shape of interest during the time of construction. But, surely, it was far better for those subscribers that their £20,000 should remain in their pockets from the first, instead of being paid back to them in driblets as interest, and the fair, open way was to ask only for the £80,000 which the work would actually require. There was one sure test of the necessity of the proposed alteration—namely, had legitimate enterprize been retarded or prevented in consequence of the existing Standing Order? Certainly not. During the last 40 years the capital spent upon railroads had risen from £200,000,000 to £750,000,000, and during the last 10 years there had been an average annual sum of from £18,000,000 to £20,000,000 expended upon railway construction. It was clear, therefore, that there was not the necessity for altering their Rule. His (Lord Brabourne's) noble Friend 1797 had dwelt at length upon the importance of the proposed scheme. But the more important it was, the more national its object, the more certain was it that it would attract the notice of the investing public; and if the promoters had been unable to obtain their money, it must be because investors—who could scrutinize these matters more closely than their Lordships could do in debate—saw something faulty or doubtful in the scheme, or distrusted its management. He (Lord Brabourne) spoke of investors who were able to look into and understand these matters; but there were a large class of investors who came within a different category, and who would be attracted by the assurance of 4 or 5 per cent during construction, and could not understand the unusual finance by which that would be paid out of their own money. It was for the protection of this class that the Standing Order operated, and it was universally admitted to be based upon a sound and salutary principle. His noble Friend spoke of old lines being placed by the law under more favourable conditions than new lines for raising capital. But ought it not to be so? Was it not reasonable that an old line, which had established itself, was in working order, and had conferred benefit upon the public, should be allowed facilities which it might not be well to give to a new line which had not yet proved that it was required to satisfy a public want, and might turn out to be altogether a failure? He (Lord Brabourne) would not speak of competing lines, or the injustice to thorn of allowing greater facilities to their new rival. He took his stand upon the general principle of the Standing Order; and as to the discrepancy between the Rules of the two Houses, if it was necessary to change, let that change be effected by legislation introduced by the authority of the Government, and not by making a particular exception in a particular case. He had promised to be brief, and he would keep his word; but this he must say—if their Lordships agreed to this Motion, it might indeed be that they would encourage enterprize; but what kind of enterprize would it be? Not that legitimate enterprize which flourished under the existing system, and did not require the fostering hand of their Lordships, or any other body, but an enter- 1798 prize produced by clever engineers, crafty contractors, and professional promoters, who were checked by this Standing Order. Their Lordships would give an impulse to bubble Companies and insecure speculations, and would strike a blow at a sound financial principle, which it was most desirable to uphold in the interests of sound commercial enterprize.
§ THE EARL OF SELBORNE
said, he held that if the general Standing Order was right, and, as he believed, it rested on a sound principle, it ought not to be dispensed with in this case, for no special reason had been shown for any such exception. The noble Earl had not rested his case upon any special and peculiar difficulties which had arisen in this undertaking, or upon any particular public advantage which was to be gained by relieving it from those difficulties. The argument was that this was an undertaking of national importance, and had only to be considered for people to see how valuable it was, and that at the present time people did not like to lock up their capital for four or five years without receiving interest for it. These might be very good reasons why the undertaking should be sanctioned on equal terms with other undertakings, and also why it should receive the support of the investing public; but they were not arguments in support of the application that the measure should be treated in an exceptional manner. It might be inconvenient that there should be one Rule in that House and another in the other House of Parliament. But what was now proposed was not the way to remedy that inconvenience. Let one House alter its Rules, or, by a conference between the Houses or by general legislation, some approach might be made towards that uniformity of procedure which might be wished for. He objected to the present proposal as a mere delusion.
THE PRESIDENT OF THE BOARD OF TRADE (The Duke of RICHMOND and GOKDON)
observed, that in the other House of Parliament the Bill had been brought in with a provision that interest should be paid out of capital, and after some discussion the subject of paying interest out of capital was referred to a Select Committee. That Committee had reported that the prohibition which existed was financially 1799 sound in principle, and acted as a protection to the public, but that there were special cases in which payment out of interest ought to be allowed. They accordingly recommended that, subject to certain limits of time and rate of interest, a Bill should be passed to carry out their recommendations. This, however, had not commended itself to the Government or the other House of Parliament, and the matter remained subject to the Standing1 Order. On the second reading of this Bill in the other House, the then President of the Board of Trade had supported the Bill, and its second reading had been carried by a majority of 187 to 117. Ono of the special objects contemplated by those who had supported this Bill was that in the present condition of the poorer classes of the Metropolis it would find employment for a considerable time for a great portion of those who were now in a very depressed condition from want of labour. He had looked into all the matters relating to this proposal of the noble Earl, and had come to the conclusion that the views taken by his Predecessor on the subject were correct, and that their Lordships ought to give this measure a second reading.
said, he thought that no special circumstances had been shown in this case which justified the suspension of what was generally regarded as a salutary Standing Order. A large amount of extraneous matter had been introduced into the discussion, but nothing had been said in connection with this Bill which ought to lead their Lordships to suspend the Standing Order. During the three years since this Bill had been passed no attempt had been made to raise the capital in the ordinary way, and he thought that it was au extraordinary thing that they should be asked to give the promoters of this undertaking such unusual assistance as was now suggested. He had no wish that their Standing Orders should be quoted throughout the country as interfering with the possibility of relieving distress; but he could see no cause that had as yet been shown strong enough to justify the suspension of the Standing Order, and he would feel bound to vote against the proposal.
§ THE MARQUESS OF SALISBURY
said, that this was no Party question; but it was one upon which 1800 he was unable to take the same view as the noble and learned Lord opposite (Lord Bramwell), although that was probably the view of the majority of the House. He confessed that he viewed with some alarm the tendency to make their Standing Orders unalterable as the laws of the Medes and Persians, which never must be touched no matter how much industry might be arrested or how much misery might he caused. This matter had been carefully considered in the other House of Parliament; and, although he was not disposed unduly to exalt the authority of the other House above that of their Lordships' House, he thought that no one would deny that it was in that House that they would find men who were most conversant with trade, commerce, and financial matters, and if they, after a considerable controversy upon the matter, had by a large majority come to the conclusion that that system should no longer be allowed to stand in the way of the industry of this country, were they not in their Lordships' House taking a rather large responsibility upon themselves in saying from their own knowledge that this particular Rule was an absolute necessity in order to protect legitimate industry? There was no doubt that this Rule discouraged the employment of capital, and that but for its existence work would go on which it now stopped. The Standing Order must justify itself. It was supposed to protect foolish investors, and to prevent persons from investing in any enterprize which would not yield them a good interest on their money. If he were asked which of two things he would choose, whether he would refuse to protect investors from the result of their own incaution, and set up an obstacle to the expenditure of capital in order that men might be able to invest their money without inquiring into the real character of the enterprize in which they placed it, or whether, on the other hand, he would incur the inconvenience of stopping the expenditure of money in support of labour at a time of extreme and almost unprecedented calamity and distress, he confessed that he would feel that the consciousness that he was sustaining a Standing Order of their Lordships' House would be no satisfaction to him when he reflected that by doing so he was preventing many an honest man 1801 from getting his living. He would go a step further. He did not believe in the system, of protecting the foolish investor at all. In his opinion, all of their Standing Order legislation erred grievously in that direction. It was the business of investors to protect themselves, and to examine for themselves the soundness of the enterprizes in which they embarked. If they failed to do so they were generally in a condition of life in which they might fairly be expected to take the consequences. It was wholly unreasonable to provide securities for investors at the cost of stopping the flow of that capital by which alone the life and prosperity of industry could be maintained. It was a general error in the Standing Orders of both Houses of Parliament that they had bound industry up too tight in order that improvident and careless investors should be protected. It might be said that, whatever the General Rule might be, it ought not to be relaxed in any case when the Rule itself had not yet been taken up for the purpose of alteration. He believed that the General Rule ought to be altered; but why should they wait until the formality and technicality of alteration were observed? A great obstacle was opposed by the Rule to the action of enterprize and industry, and he believed they would do wisely in dispensing with it unless they thought it should be maintained, and that it ought to be maintained against the decision of the House of Commons, in which all the special knowledge on this subject existed. Unless their Lordships were of opinion that the Rule should be permanently upheld, bethought they would do wisely by dispensing with a mere technicality for the purpose of benefiting industry and relieving the depression which existed in a particular place. The Rule was not only bad in itself, but it dealt very hardly with this particular case. For two or three years past he had been informed that the capital for this enterprize could not be raised on any other terms. It seemed ridiculous that people would not subscribe except on the terms of a certain amount of their capital being given back to them in the name of interest in the first two or three years of the enterprize, during which nothing could be earned; but they must take human nature as it was, and human nature was averse to arithmetic; and, as 1802 a matter of fact, in times of depression, when capital was not superabundant, they could not raise money for many a great and perfectly sound enterprize except by giving this inducement to investors. No one who was conversant with business in the City of London would deny that at the present time the fact was as he had stated, and he thought their Lordships would be inflicting great harm upon a number of innocent people if, for the sake of a mere technicality, they refused the Motion of his noble Friend.
§ THE EARL OF WEMYSS
observed, that he had every desire to forward the interests of working people in accordance with the principles of sound commerce, and in a sound and healthy way. Certain Rules had been laid down by the House to prevent bogus Companies springing into existence, and the noble Earl who had brought forward this Motion had admitted that they worked in a salutary manner in acting as a check upon reckless speculation. The noble Marquess who had just spoken disapproved the Rule; but, if it were wrong, the Rule should be suspended completely and as a whole. The noble Marquess, however, proposed simply to suspend the Standing Order in this particular case, and that on eleemosynary grounds, because there was, he regretted to say, distress in London. Had the noble Marquess considered whither such a precedent and principle might lead them? So, also, the noble Duke the President of the Board of Trade had said that he had, in assenting to the suspension of the Standing Order, only adopted the view of his Predecessor in Office. Now, he (the Earl of Wemyss) would like to know if he had adopted other views held by his Predecessor? How as to "ransom?" As a landowner, he was anxious to know if ransom was to form part of the Conservative programme? But he saw no reason why the Rule should be suspended in one case, only for the purpose, as it was said, of meeting temporary distress.
§ LORD BRAMWELL
said, he wished to explain why he was going to vote against this Motion. The noble Earl who made the Motion was in favour of the Standing Order, while the noble 1803 Marquess opposed it altogether. There was a good deal to be said in favour of the Standing Order. One of its objects, he took it, was to prevent the statement of what was not in reality the actual fact. When people applied for an Act of Parliament, and issued a prospectus declaring that they would pay interest at 5 per cent, it was doubtless very attractive, and induced the public to think that the investment was a good one.
THE EARL OF EAVENSWORTH
pointed out that the rate of interest in that case was confined to 4 per cent.
§ LORD BRAMWELL
said, that certainly 4 per cent was not so tempting as 5 per cent. He was not one who was disposed to protect people who really had not the good sense to protect themselves; but he thought that if the actual truth were told to [the shareholders in the prospectus, that they were to have a return of part of their own capital, they would not be attracted in the same way. The Standing Order, he believed, was valuable, in that it tended to prevent the passing of Railway Acts which were not really wanted, but which were only Contractors' Acts. He thought it was a good thing that it should have that operation, because, when a needless railway was made, so much of the national wealth was wasted. If they put two railways side by side, and the two carried no more than one of them did before, the money spent on the second railway might almost as well have been thrown into the sea. It had been said that that was not a matter for the nation, but that it only concerned the shareholders. But surely the wealth of the community was made up of the wealth of individuals. He did not believe that the Standing Order had ever prevented a line from being constructed that was really wanted. It was alleged that money could not be got for those enterprizes, and it was suggested that there was a lack of capital. That must be a mistake, because he read in the newspapers that bills were discounted at ¼ to ½ per cent, and the Bank rate of interest was about 2 per cent per annum. Capital was really seeking employment in every way, and why should it not be invested in that Company, unless it was that the capitalists felt there was no probability of its being a paying concern? It was said that at present there was a great 1804 want of employment among the working classes. He was afraid that that was so; but let them see what the argument came to. To this—that people should be tempted to join mischievous Companies in order to give work to labourers. If the Standing Order was a bad one, let them get rid of it. If it was a good one, he trusted that their Lordships would adhere to it.
§ THE CHAIRMAN OF COMMITTEES (The Earl of REDESDALE)
pointed out that the vote which their Lordships were now called upon to give was not one on the second reading of the Bill, but whether they would maintain the Standing Order or not.
THE EARL OF KIMBERLEY
observed, that in the year 1883 the noble Marquess did not take the same view of that matter as he had done that evening. In 1883 a proposal was made to the House that they should adopt the same course as had been adopted in the other House, and then the noble Marquess did not show so much respect to the authority of the late President of the Board of Trade, but spoke rather hardly of his views. He said that the matter required the gravest consideration, and he thought it was not desirable to alter the Standing Order.
§ THE MARQUESS OF SALISBURY
I said not without consideration and inquiry, and there have been consideration and inquiry in this case.
THE EARL OF KIMBERLEY
said, that nobody would have supposed then that the noble Marquess regarded the getting rid of that prohibition as one of high policy, and the noble Marquess then spoke of "bogus" railways, and of the injury to the main lines by bringing into existence contractors' lines, which would not otherwise be made; and he brought forward many arguments in favour of the Standing Order. It certainly did greatly surprise him to hear the noble Marquess now express so very decided and extremely strong an opinion against the maintenance of the Order. What he desired particularly to point out, however, was that this was not a question of the ordinary general law, but of granting special privileges to Companies to take land for enterprizes of that kind, and Parliament was not precluded from looking into the question whether lines were promoted by real investors, or were only "bogus" lines. 1805 The question now before their Lordships was whether they were to put aside the Standing Order in that particular case. The arguments of the noble Marquess were no doubt worthy of consideration; but nothing could be worse than for their Lordships' House to have a Standing Order which was supposed to be for the protection of the public generally, and then, because a little popularity might be obtained thereby, to set it aside in particular cases.
THE EARL OF MILLTOWN
remarked, that the Committee to which the Bill would be sent would investigate the question whether the scheme was a sound one or a "bogus" one. If they should be satisfied that it was a good scheme, and their Lordships should then pass it, he believed that an immense benefit would be conferred on the toiling masses who were seeking employment.
§ On Question? Their Lordships divided:—Contents 46; Not-Contents 37: Majority 9.
§ Resolved in the affirmative.
§ Then Bill read 2ª (according to order), and committed: The Committee to be proposed by the Committee of Selection.
§ House adjourned at a quarter past Six o'clock, till To-morrow, Eleven o'clock.