Lords Sitting of 14 June 1888

MINUTES.
PUBLIC BILLS—First Reading—Companies* (153).
Second Reading—Augmentation of Benefices Act Amendment (78).
Report—Land Law (Ireland) Act, 1887, Amendment (131).
PROVISIONAL ORDER BILLS—First Reading—Gas (No. 2)* (148); Local Government (Highways)* (149); Local Government (No. 7)* (150); Local Government (Port)* (151).
Second Reading—Public Health (Scotland) (Denny and Dunipace Water)* (136).
Committee—Report—Local Government (Poor Law) (No. 4)* (120); Local Government (Poor Law) (No. 5)* (121); Metropolitan Commons (Chislehurst and St. Paul's Cray)* (122).
Third Reading—Local Government* (113); Local Government (No. 2)* (114); Local Government (Poor Law)* (115); Local Government (Poor Law) (No. 2)* (116); Local Government (Poor Law) (No. 3)* (117), and passed.

AUGMENTATION OF BENEFICES ACT AMENDMENT BILL.—(No. 78.)
(The Lord Chancellor.)

SECOND READING.
Order of the Day for the Second Reading, read.
THE LORD CHANCELLOR (Lord HALSBURY), in moving that the Bill be now read a second time, explained that there were certain funds at his disposal, derived from the sale of certain livings, for the augmentation of benefices. The sum, unfortunately, did not now exceed £5,000. At present the amount which he could allocate out of this money in augmentation of a clergyman's income depended in each case upon the number of the population of the parish. The object of the Bill before the House was to abolish this condition and to enable him to augment livings which were below £200 a-year without paying regard to population. A clergyman, he held, ought not to be asked to undertake the work of any parish for a smaller income than £200. The Bill would enable him to augment benefices up to that amount.
Moved, "That the Bill be now read 2a."—(The Lord Chancellor.)
Motion agreed to; Bill read 2a accordingly, and committed to a Committee of the Whole House To-morrow.

OPEN SPACES (METROPOLIS)—THE LAW COURTS SITE; WESTMINSTER ABBEY (PARLIAMENT SQUARE); THE BRITISH MUSEUM.

  QUESTIONS. OBSERVATIONS.
  THE EARL OF MEATHsaid, he rose to ask Her Majesty's Government the first of three Questions with reference
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  to open spaces, and it was, Whether it was their intention within a reasonable period to build over the entire open space at present adjoining the Law Courts, and bounded on the Western and South-Western sides by King's College Hospital and Clement's Inn; and, if not, whether they would have any objection to lay out and maintain as a public garden such portion of the space as they do not intend to cover with buildings? Although this space was not a large one, it was one well worth preserving or allowing the public to use until it was built upon. It was the only spot from which the Law Courts could be well seen to advantage. The district was densely populated, and it was very badly off for open spaces. The experience of the Metropolitan Public Gardens Association was that the working classes could be trusted to maintain order among themselves and to preserve property of which they had the enjoyment. He understood the Government desired to build Bankruptcy offices in close proximity to the Law Courts; but that was no reason why this site should be left in its present dilapidated condition; nor would that be a necessary consequence of making a road through it if it were necessary to do it. It was two years since it was said that Bankruptcy buildings were going to be built, and yet nothing had been done; and if the land was not going to be appropriated at once the public might have the enjoyment until it was required.
  THE EARL OF WEMYSSsaid, there was an apparent inconsistency between this Question and the third on the Paper, in which the noble Earl suggested the planting of trees on the space near the British Museum, which trees would interfere with the public view of the building. It appeared that wherever the noble Lord saw an open space he desired to plant trees.
  EARL GRANVILLEsaid, that one or two trees would not destroy the view of either building.
  EARL FORTESCUEsaid, he would support the appeal of the noble Earl for permission to use the Law Courts space as a recreation ground, a privilege which, to judge from experience, would be greatly appreciated; the neighbourhood being densely populated, Lincoln's Inn Fields being unfortunately still

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  closed, and only a narrow strip of embankment garden at all within reach.
  LORD HENNIKERsaid, the Bankruptcy offices were to be built chiefly upon a part of the site of Clement's Inn acquired by the Government last year. Part of this open space might also be wanted for these offices and part or all of it might also be required—and it was impossible to say how soon—for the extension of the Royal Courts of Justice, which he was told by the First Commissioner was desired by the noble and learned Lord on the Woolsack. At the present time there were many demands upon the Office of Works for new buildings, as, for instance, the War Office and Admiralty buildings, and others, and it might be some years before the Treasury would grant all the money required for the improvements of the Royal Courts of Justice. If in the meantime any expense were to be incurred in making the land available for recreation, such expense ought to be borne by the Metropolis rather than by the funds provided by Parliament, inasmuch as the benefit was of a local kind, and not one which should be paid for by the Imperial Exchequer. If the Metropolitan Board, the local Vestry, or the Metropolitan Gardens Association, over which the noble Earl presided, desired to adapt the land temporarily as a recreation ground, the Office of Works were perfectly willing to consider any scheme that might be submitted to them, subject to the imperative condition that the liberty of the Government to deal with the land for their own purposes at any time should not be in any way prejudiced.
  THE LORD CHANCELLOR (Lord HALSBURY)said, it seemed to him an extraordinary proposition that land purchased at great cost for Courts of Justice should be devoted to other purposes. Of course, he had nothing to say to any temporary use of it that might not interfere with its ultimate destination; but the administration of justice to clamouring suitors was hampered by the want of Courts to sit in, and in these circumstances it was impossible for the Government to commit itself to devote a piece of land bought expressly for Courts of Justice at a high price to any other purpose whatever. As to the inconvenience of the Courts of Justice, it was only just to remember that they were
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  planned for one system of administration and were used for another, and if any inconvenience resulted it was not the fault of the architect or of those who adopted the plans; but, speaking from personal experience, he did not find there was much inconvenience, and he certainly thought that the new Courts were an improvement upon the old ones.
  EARL NELSONsaid, he thought the site in question was originally purchased for the rebuilding of one of the churches in the Strand—St. Clement Danes—when it was taken down for the widening of the Strand.
  LORD HERSCHELLsaid, he hoped that no Government would ever contemplate building upon the whole or the greater portion of the site in question; it would spoil the view of the existing buildings if they did. The public would benefit much more from leaving the land as an open space than from occupying any portion of it with buildings. There was always a temptation if you had a vacant piece of land to build upon it. He should like to see so much of this land as was really necessary to preserve the view of the present buildings from obstruction definitely devoted to a purpose that would render it in the highest degree unlikely that it would ever be built upon.
  THE EARL OF MEATHbegged, on behalf of his Association, to thank the noble Lord (Lord Henniker) for the offer he had made on behalf of the Government. He wished, further, to ask Her Majesty's Government, whether they would permit the public to enter during the hours of daylight the small enclosure facing the Abbey and the Houses of Parliament, in which the statue of Canning was situated? He did not think that there was any necessity for further open spaces in the neighbourhood of the Houses of Parliament. There were several in the district around; but there was no spot where a foreigner or any individual who visited the Metropolis could sit down in peace and quiet and contemplate and study carefully the architectural beauties which surrounded Parliament Square. He thought that a few seats should be provided. The Association with which he was connected had placed seats in the open space in front of the Abbey, but no view of the Houses of Parliament could be had from them. All he asked was

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  that the spot to which his Question referred should be thrown, as it were, into the roadway, just as they saw such places in Continental towns, and that the grass and shrubs should be left and seats placed there.
  LORD HENNIKERsaid, that the Question of the noble Earl pointed to the Square being thrown open to foreigners and strangers. The First Commissioner of Works had considered the question carefully, and he was of opinion that it was impossible to reserve an open space such as was proposed for any particular class of persons, and he did not consider that this spot of ground was a suitable one to which the general public should be admitted.
  EARL GRANVILLEsaid, he did not understand that the Question had been put in the form in which the noble Lord seemed to think it had—namely, as to whether this open space should be reserved entirely for foreigners and strangers, which was obviously impossible. The object was to have the spot thrown open for the benefit of all.
  THE PRIME MINISTER AND SECRETARY OF STATE FOR FOREIGN AFFAIRS (The Marquess of SALISBURY)said, that reference was made by the noble Earl (the Earl of Meath) to contemplative persons. He was afraid that the small boys of London would infest and take possession of the Square if they threw it open, and their occupations would not favour that æsthetic contemplation which the noble Earl desired to see.
  EARL FORTESCUEsaid, he hoped the noble Lord would reconsider his decision. He thought that there were places in the Square where seats could be placed under the trees. If the existing railings were moved a few feet back, behind the seats, the houses would be effectually protected from annoyance.
  LORD HENNIKERsaid, that he thought there would be no difficulty in placing seats in Parliament Square if desired. There were many reasons which he had not thought it right to trouble their lordships with, such as the question of which the noble Marquess—the Prime Minister—had spoken of, injury to property, and so on, which would result upon the throwing open of this spot.
  THE MARQUESS OF RIPONasked, whether the noble Lord would undertake that seats should be placed in Par-
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  liament Square where it was possible to do so?
  LORD HENNIKERsaid, he would undertake to submit the matter to the First Commissioner of Works.
  LORD STRATHEDEN AND CAMPBELLsaid, he was of opinion that the Government had come to a sound decision not to throw this space open to the public. Such a change would be injurious and unjust to vendors and purchasers of property.
  THE EARL OF MEATHasked Her Majesty's Government whether they would at the proper season plant some trees in the open space in front of the British Museum? He thought that if trees were more generally planted, as they were in America, where in some places everyone planted a tree on a particular day, it would be an excellent thing. Their Lordships were well aware that trees added not only to the beauty of the Metropolis, but also to the health of London.
  THE EARL OF WEMYSSsaid, he certainly had no wish to stop the planting of trees in the Metropolis; but he thought that they could have too much of a good thing. Care should be taken not to plant the trees too close together, and allowance ought to be made for their rapid growth, as it was very undesirable that views of the Parks should be shut out by them.
  LORD HENNIKERsaid, that he could not then give an answer to the Question put by his noble Friend, because the matter was at present under the consideration of the Trustees of the British Museum, who had not yet conveyed their views to the First Commissioner of Works.

COMPANIES ACTS.

  BILL PRESENTED. FIRST READING.
  THE LORD CHANCELLOR (Lord HALSBURY), in rising to call attention to the Companies Acts, and to present a Bill to the House, said: Your Lordships may remember that in the Gracious Speech from the Throne at the opening of the Session, it was intimated that a measure would be introduced dealing with the question of Limited Liability Companies. I am afraid, however, that the prospects of Business in "another place" render it impossible for us to deal with the whole

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  subject in the way which would be most satisfactory. By the most satisfactory way, I mean by introducing something in the nature of a Consolidation and Amendment Bill at the same time. At the same time, it is a subject which would be properly dealt with in that manner; but, as I have said, it is impossible from the state of Business in "another place" to assume that any Bill of that character would have any chance of passing in the present Session. The Government have, therefore, been compelled to take what they believe to be the most prominent points which require immediate amendment, and to place them in a comparatively short and small measure, and to invite your Lordships to agree to it. Of course no one would suggest that there should be anything in the nature of restriction on the various industrial associations, called by whatever name they may be, upon which so much of the commerce and industry of this country is dependent. Your Lordships will probably remember that in 1856, Mr. Lowe, then a Member of the other House and now a distinguished Member of this House, introduced a Joint Stock Companies Bill; and one particular branch of it he treated in a somewhat light-hearted way. I think the then existing law was passed in pursuance of the recommendations of a Select Committee; and Mr. Lowe—I will not say as his manner was, but as certainly sometimes occurred in his speeches—indulged in a certain amount of sarcasm on those who had previously dealt with the subject, suggesting that the Select Committee, which had set for a very long time, seemed to be rather composing a sensational novel than legislating; because in their Reports they referred to the systematic plunder which had been carried on and the fate of the unhappy victims, and he asked what became of the knaves. No doubt a great many of the subjects which the Committee dealt with pointed very much to the existence of that class of persons. I am afraid it is not possible now to deal with the existence of the class of persons who get up Companies to defraud numbers of unwary people; and, undoubtedly the existence of such a class and their success operate injuriously in more ways than one. A great amount of capital has undoubtedly been employed since the passing of the
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  Limited Liability Act with advantage to the State; but it is also true that to the State a great amount of capital has been lost and has passed into the pockets of fraudulent persons; and it has sometimes been the experience of those who sit in the Courts of Law that the fraudulent promoter of one period of the year is the wrecker of the next period of the year; and that he may turn up in a third character as the promoter of a company which is to rise, Phœnix-like, from the ashes of the Company which he first founded and then destroyed and took from its assets all that it possessed of any value. Under these circumstances, it has been strongly urged from various parts of the country that some measures should be taken, if possible, to prevent the fraudulent initiation of Companies—not, indeed, to protect people from rash adventure. I entirely agree with the argument of Mr. Lowe on the occasion to which I have referred, that you cannot protect people from the consequences of rash speculation. They must look out for themselves. But you can try to prevent the machinery which the State has invented from being made use of for improper and fraudulent purposes; and it is in that direction that the legislation to which I invite your Lordships' attention is intended to operate. The principal machinery which is intended to work in that direction is by introducing a system of provisional registration, which will impose on those who initiate Companies the necessity of taking on themselves the responsibility which they now too often thrust on other persons, and will secure that there shall be some kind of guarantee that the Companies themselves have some kind of foundation—solid foundation—as evidenced by the best test that can be applied—namely, that there shall be a certain amount of capital actually in hand, and that those persons shall be made responsible who are putting forward the Company—who are the promoters, in fact—a word which is very easy to use and understand, but not always so easy to define when you come to a Court of Law for the purpose of attaching responsibility. The provisional registration having been obtained, it will be an essential condition of the Company's obtaining incorporation that certain conditions shall be complied with; one of them being, as I have said, the necessity

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  of proving that they have that proportion of their capital paid up, that there are such and such a number of bonâ fide shareholders, and that the persons who are taking upon themselves the creation of this new legal venture under the Joint Stock Acts shall themselves be persons who have a substantial interest in the concern. In 1867 the defective state of the law, with reference to the class of persons to whom I have referred and the familiar machinery of fraud which was being constantly employed, induced the Legislature to pass an Act amending the former Acts and to pass what we know as the 38th section of that Act. It is as well that I should call your Lordships' attention to the provisions of that section. It provides:—
  "Every prospectus of a Company, and every notice inviting persons to subscribe for shares in any Joint Stock Company, shall specify the dates and the names of the parties to any contract entered into by the Company, or the promoters, directors, or trustees thereof, before the issue of such prospectus or notice, whether subject to adoption by the directors, or the Company, or otherwise; and any prospectus or notice not specifying the same shall be deemed fraudulent on the part of the promoters, directors, and officers of the Company knowingly issuing the same as regards any person taking shares in the Company on the faith of such prospectus, unless he shall have had notice of such contract."
  Now, I cannot congratulate the draftsman on the mere language of the section; but, apart from the drafting, the difficulties that exist under that section are such that it is impossible not to know that almost every Court has expressed a different opinion on the effect of the section. First, as respects contracts entered into by the Company itself, every contract for everything, for a sheet of paper, a pen, or a bottle of ink, of course, is included in those general words; and when you come beyond that to the portion of the section which follows, and which requires the disclosure of the particulars of any contract entered into by the promoters or trustees before the issue of the prospectus or notice, the words are so general as to comprehend every contract entered into by them. I have no doubt that the draftsman had in his mind that some limitation ought to be placed on them, as, for instance, that the contracts were to have relation to the business of the Company.
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  There was the absolute difficulty of putting any such limitation upon it, and finding, I suppose, that difficulty, he got rid of it by omitting any limitation at all, and has left it to the Courts of Law to find out what limitation they could impose. The Courts of Law vainly endeavoured to do so. I only point to this as establishing this proposition that some provision of this kind, some check of this sort upon what the promoters do, is necessary. This, of course, raises the difficulty as to what a promoter is. The difficulties of the Courts in their construction of the term have been such that I think it is very obvious that some alteration of the law is required. It is, of course, easy to criticize and to point out that there is a defect; it is not always so easy to supply a remedy. I do not mean to say that the provisions, to which I shall invite your Lordships assent, will conclusively get rid of the difficulty, because it is inherent in the nature of the thing. The iron framework of a definition is not capable of the elasticity of the Common Law, and the moment you have caught the promoter by some kind of language, the moment you have something like a definition of a specific description of the persons of the class referred to, they immediately set themselves to get outside the exact wording of the clause and perform the same operation which has been prohibited in a different way. There is one other class of provisions to which I invite your Lordships' attention. One of the great complaints made has been the mode in which the assets of the Company are represented in its accounts. Your Lordships know that Banking Companies, under a specific provision, are compelled to submit the accounts to an auditor and to publish them. That provision does not apply to joint stock banks generally, and it has been brought to my attention that in a great many instances, particularly in the North of England, companies have been started with alleged capital in which worn-out machinery is represented as being of prime value and at cost price. That was said to be one of the great sources of the frauds committed by persons who get up companies, buying old worn-out machinery, suggesting that it is new and valuable, capable of turning out a large amount of produce. When, however, the con-

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  cern comes to be worked by a great number of poor and ignorant persons, who place their savings in undertakings of this kind, it is found out in a very short time that the whole affair is insolvent, and has been founded on the wreck and ruin of what was a former company. One expedient to check such proceedings which was suggested was this. It is that it should be compulsory on the companies to furnish something like a balance-sheet and account of their assets, and from time to time a revaluation of their assets, so as to give information to those who are anxiously inquiring into the concern. A great difficulty, of course, exists in providing a balance-sheet which shall be applicable to every form of industry. Some balance-sheets would exhibit the particulars required in a form which would be perfectly intelligible if applied to one particular business, but if made compulsory upon all companies would be obviously unsatisfactory. We have thought it right, therefore, that provision should be made for making a balance-sheet compulsory and satisfactory to some Government Department—the Board of Trade, most naturally. Those were the general lines of the Bill, and I invite your Lordships to read it a first time.
  Bill to amend the Companies Act, 1862—Presented (The LORD CHANCELLOR).
  LORD HERSCHELL: I am satisfied that an endeavour is about to be made to meet the evils to which the noble and learned Lord has referred. At the same time I think experience shows that it is easier to see what the disease is than to find out a remedy for it. However elaborate your amending provisions may be, it is possible that they may form an obstacle and an impediment to those whose enterprize we do not wish to hinder, while at the same time they will be walked round or walked through by the very persons whom it is our interest to shut out. A measure of this description depends entirely on the details. Whether the scheme is one which will meet with the approval of your Lordships I cannot of course say, but I do not feel that it is possible, after the statement just made, to go further now than to express my wish to give all the
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  assistance I can in meeting the evils brought before the notice of your Lordships.
  Bill read 1a. (No. 153.)
  House adjourned at a quarter before Six o'clock, till To-morrow a quarter past Ten o'clock.