(No. 25.) SECOND READING. (Hansard, 26 March 1886)

LORD RAYLEIGH

, in moving that the Bill be read the second time, said, that it was commonly but erroneously supposed that electric lighting was a recent invention. The are light was, in fact, discovered at the beginning of the century by Davy, and might be recognized by its powerful character, which by contrast seemed to be intensely blue, but was really less blue than the daylight. Subsequently, the present Mr. Justice Grove, then an ardent experimentalist, showed how a reading-lamp could be constructed by passing electricity through a spiral wire at a red heat. The difficulty in the practical development of the art lay almost solely in the production of the electricity, which at that time could only be produced by batteries. But by the introduction of the dynamo machine the art of electric lighting attained a greater and greater development; and at the present time the dynamo had so nearly attained perfection that 93 per cent of the whole mechanical power was converted into the electrical form. The next difficulty was in employing electricity on a small scale; but the discoveries, almost simultaneous, of Edison and Swan, went far towards overcoming these difficulties. A period of speculation ensued. Electricity was supposed to be rapidly superseding gas, and gas shares accordingly became much depreciated in value. Then various schemes came before Parliament for the supply of the electric light, and the Act of 1882 was passed, which was termed "An Act for facilitating and regulating" the use of electricity for lighting and other purposes. But it was proposed to effect this object by more oppressive regulations than were ever before applied to an industrial undertaking. The burden of complaint lay in the 27th clause, by which Local Authorities should have the option of compulsorily purchasing undertakings for electric lighting after 21 years. In 4 the event of disagreement as to the price, the question was to be submitted to arbitration; and it was provided that the price to be paid for the undertaking, plant, &c, should be its value at the time of purchase—that was, when the machinery might be much worn or even obsolete—but without any addition in respect of compulsory purchase, or of goodwill, or of any profits. What was still more surprising was that when the Bill was first introduced into the House of Commons the period was seven years. It was, however, extended by the Select Committee of that House to which the Bill was referred to 14 years, and their Lordships further enlarged the time to 21 years. If the terms of purchase had been reasonable the mere shortness of time might not have constituted an obstacle to the working of the clause. But no capitalist would care to invest his money in electrical enterprises on such terms as the Act imposed. Those terms, in effect, were that if the enterprize failed the loss should fall exclusively on the capitalist; but if it should be successful the Local Authorities should have power to step in and buy the concern on utterly inadequate terms. How could such a clause permit the proper development of any scheme of electric lighting? The question arose, With what motive was the Act made so stringent? It had been suggested that the object really was to put a stop to electric lighting; and it was, perhaps, true that the powerful interest of the Gas Companies arrayed against electric lighting enterprizes had influenced the result too much. But he was unwilling to believe that Mr. Chamberlain, who was then President of the Board of Trade, was actuated by anything else than a desire for the public interest. It was a difficult and wide question how far Local Authorities could usefully enter into industrial enterprizes of this kind. He would not enter into that question, though he would remark that the electric light did not stand in the same position as water supply, which was an absolute necessity, or even as the manufacture of gas, of which almost as much was known as could be known. At the time the Act was passed it was generally supposed that the electric light would be a great success, and the Board of Trade desired that the benefit of that success should be shared by the public, and 5 that it should not go entirely to private Companies. It seemed to him that there was too much jealousy at the present day of a private Company making large profits. Most undertakings were more or less of a speculative character; and if some were great successes others were miserable failures, so that one ought to be balanced against the other. The promoters of the Act, in endeavouring to advance the public interest, really inflicted great injury on the public by preventing them from having any chance of getting the electric light for many years. Although he believed a great mistake was made at the time of the passing of the Act in 1882, he was willing to admit that the subject was one of considerable difficulty. The Bill was not seriously debated in either House of Parliament; but it had the advantage of consideration by a Select Committee of the House of Commons, under the Presidency of Mr. E. Stanhope. That Committee took the evidence of experts, and heard counsel who represented the various interests involved. He must go further and admit that some of the witnesses on behalf of electric lighting examined before that Committee seemed to think that 21 years might possibly suffice as a minimum period, not, however, in conjunction with such terms of purchase at the end of the period as those embodied in the Act. From another point of view he thought they need not altogether regret that something in the nature of a wet blanket was thrown by the Act over the feverish speculation at that time. But during the last two years he thought the Act had done a great public injury. Experience had been gained in many mills and large ships which had been lighted by electricity; and the last two years would have been a very favourable time in other respects. Labour had been cheap, and capital could easily have been obtained on reasonable terms. As soon as it became clear that matters were at a deadlock, endeavours were naturally made to obtain some relaxation of the very stringent provisions of the law. At the suggestion of Mr. Joseph Chamberlain, who was then at the Board of Trade, a Committee was appointed, of which a noble Lord opposite (Lord Thurlow) was Chairman, and among its Members were Sir Frederick Bramwell and others, who were well qualified to advise in matters of that kind. 6 The present Bill was, in fact, the outcome of the deliberations of that Committee. When they considered in what direction it would be possible to obtain a relaxation of the present law, the most obvious one that suggested itself was a prolongation of the period of 21 years, more particularly if that prolongation could be accompanied by some less unfavourable terms of purchase. This was the view of the matter which had commended itself to his noble Friend (Viscount Bury), who had contributed the second Bill to the trio now before the House. If the question were merely one of raising a large amount of capital in order to start an enterprize of this kind once for all, it was likely enough that such a relaxation as he had spoken of would meet the circumstances of the case. But they could not shut their eyes to the fact that, in so experimental an enterprize as electric lighting must be for many years, it would be impossible for a Company to lay out a large sum in the first instance, in the full confidence that they would obtain a fair remuneration for their outlay. They would establish the system on a comparatively small scale at first, and then would gradually extend it. In that case it was obvious that a comparatively small capital would be required in the first instance; but from time to time they would have to go into the market in order to raise fresh capital. In what position would the Company be to effect that object? After a considerable fraction of their term had elapsed they would be in such a position that it would be impossible for them to attract fresh capital to the enterprize. Moreover, the interests of the public would be by no means well served during the latter part of such a term. During the later years the Company would hesitate greatly about embarking on any improvements or extending the area of their operations. After considering the objections which he had endeavoured to place before their Lordships, the Committee came to the conclusion that a solution of the question could not be found in that direction; and they proposed that the two competitors, lighting by gas and lighting by electricity, should be put on the same footing in respect not only of privileges, but also of obligations. The obligations imposed by the Bill were more severe than anything in the existing law. One of 7 the clauses relating to the compulsory supply of electric light provided that the Company should be required to supply electric light at any point within 25 yards of their mains. The important question of the raising of additional capital was provided for by the adoption of the corresponding provision from the Gas Acts known as the Auction Clauses. The object of securing to the public part of the benefits of the undertaking was, to a great extent, obtained under the provisions of the Bill by the adoption of what was known as the sliding scale of the Gas Acts. If a Company were able to supply light at a lower rate, then in accordance with that they would be at liberty to increase the dividends paid to their shareholders. By this arrangement a Company would have every inducement to consider efficiency and economy; and, at the same time, if circumstances were favourable, both the public and the Company would be benefited. At the present stage of the question he did not wish to commit their Lordships further than to the opinion that the obstacles should now be removed which practically forbade the attempt to supply electricity publicly on a large scale uncle the Act of 1882. If the suggestion of the noble Viscount who had another Bill on the same subject were adopted, the exact form of that remedy might be well left to a Select Committee of that House, or of both Houses of Parliament. What he particularly wished to emphasize was that too much time had been lost already; and it would be a matter of great regret if further delay was allowed to intervene, so as to prevent a fair chance being given to this most interesting application of modern discovery and invention, which promised to do much to relieve the gloom and un healthiness of life in our great cities The noble Lord concluded by moving that the Bill be now read the second time.