§ Order of the Day for the Third Reading read.
§ THE EARL OF HARROWBY
My Lords, I beg to move the Third Reading of this Bill, and in doing so I cannot but express my regret that my noble friend Lord Lamington, who was Chairman of the Committee by whom this Bill was considered, is not present this afternoon as he is kept in Scotland with his Yeomanry training. I am more particularly sorry at the absence of Lord Lamington because I understand that Lord Balfour of Burleigh proposes to move the rejection of this Bill. Should your Lordships reject 549 the Bill it will be a very unusual course to take. I believe I am right in saying that no Bill coming from a Committee upstairs has been rejected by your Lord-skips' House for more than forty years, and I venture to think that the rejection of a Bill such as this is justified only when matters of great principle are involved.
This Bill occupied no less than thirteen days in Committee, and we recognised fully the extreme importance of our decision. We spent many anxious days upon it. In fact, Lord Lamington and I frequently walked to and from the Committee discussing the Bill, and my noble friend himself went to Greenock to see the state of the harbours and the docks. What I feel is that it is almost impossible to ask your Lordships to express any opinion upon this Bill. No doubt you have received, as I have, petitions both for and against the Bill which are absolutely waste paper. Your Lordships cannot be expected, without hearing one tittle of evidence, to express an Opinion and to override the decision of those Peers whom you appointed to thoroughly investigate the case submitted to them. I find myself this afternoon in a position of great difficulty, because I take it that my duty to the House is to state in as condensed a form as possible exactly what passed upstairs before the Committee.
As to the principle involved, to which I understand Lord Balfour of Burleigh objects, I cannot help thinking that he imagines that it goes behind the ruling that no prior charge can be put before debentures unless there is a majority of three-fourths of the debenture-holders in favour of that course being taken. But I am sure my co-railway directors who are present this afternoon will agree with me that this Trust is not on a par with a railway or an ordinary commercial undertaking. On the one hand you have a body of men who are working in the interests of shareholders; on the other you have a Trust working in the interests of the community. I should like, if the House will allow me, to read an extract from a decision of the Lord President of the Court of Session in Scotland in the special case presented by the Greenock Harbour Trustees for judgment in 1887. The Lord President said—The work and property of the Trust are revenue producing subjects, and it is quite obvious that in 550 no event under those Acts of Parliament was it ever contemplated that a security should be created over the property and works of any efficacy.That means that this Trust has only a charge upon the dues of the harbour; it has no charge on the land or on the harbour itself. Objection is taken to the pm-vision in this Bill because it is thought that it will frighten the Money Market or the investors of this country. If I as a business man thought for a minute that the result of the passing of this Bill would be to shake the confidence of investors, I should not be standing here moving the Third Reading to-day.
I will now give your Lordships a short sketch of the history of this Trust. Prior to 1880 I believe it was a paying concern, though I do not think it paid high dividends. After that date troubles began, from what cause I cannot clearly make out, but I think partly owing to depression of trade and partly owing to the enormous expenditure on the famous James Watt Dock. It was stated before us in evidence that the Harbour Trustees made a great mistake in spending, I believe, £600,000 on this James Watt Dock, but it came out in evidence that had it not been for this expenditure the harbour to-day would be in a very much worse position, and the then trustees, as far as we could make out, were perfectly justified in incurring this large expenditure. In 1888 the financial difficulties were such that some action had to be taken. The then capital was £1,533,000, but I want to impress on the House that this was not ordinary debenture Stock; it was practically a mortgage on the harbour dues. An Act of Parliament was promoted and the capital was converted into A and B debentures—namely, £398,215 3½ per cent. A debentures, and £1,102,687 4 per cent. B debentures. That went on for a few years, but they got into deeper water.
In 1905 an Official Receiver was at last appointed. The duty of the Official Receiver was to protect the interests of the B debenture-holders, and it came out in evidence that, very naturally, he practically starved the harbour. There was no capital expenditure. The due-payers were all crying out for new works and new undertakings, for the deepening of the docks, for cranes, and other things, but practically nothing was done, and the harbour went from bad to worse. Then 551 we find that there was great friction on the Board. They were at loggerheads, all quarrelling with each other. Several large shipping firms had left, or were about to leave the harbour unless something could be done to meet their requirements. The position then was more or less intolerable, and the bondholders and the Harbour Trustees both admitted that something had to be done.
The outcome of that decision was that the Harbour Trustees and the bondholders each submitted a Bill to Parliament. I will deal first with the bondholders' Bill. They first suggested in their Bill that the docks should be bought right out by the Corporation of Greenock. The Corporation might have been perfectly willing to buy the docks right out, but they felt that Parliament would never consent to such a procedure unless there was absolute control. Parliament in the last few years had given out that all these undertakings should be managed by Trusts like the Port of London Trust or the Water Board, on which the various interests are represented. The bondholders' second proposal was that they should have the harbour absolutely in their own hands and they would spend what they thought would be necessary. We had a good deal of evidence on that point. We found that they could not raise money, and that if they had spent money on capital expenditure it would have had to come out of the income of the B debenture-holders. Their view and the view of the Harbour Trustees and of the Committee was that it was not a question of driblets of expenditure. We were all agreed that if the harbour was to be put on a proper footing it meant a large outlay to modernise the harbour.
We would not accept the bondholders' Bill, and we then dealt with the Harbour Trustees Bill. This Bill your Lordships have now before you in its amended form. It proposes that the Corporation of Greenock should find £100,000 for developing the harbour, and that they should split the B debentures into two parts and sandwich in their £100,000 between the two. The two parts would consist of one-third 4 per cent. B Preferred and two-thirds B Deferred debentures. The House will naturally ask what income the B debenture-holders at present receive. Taking an average of the last ten years, they only received £1 7s. 9d. per cent. Under the Bill the B Preferred debenture-holders 552 will receive £1 6s. 8d., only a little less than the income they receive to-day; but in addition to that they get the B Deferred debentures, which I am told and believe will be worth something in the near future. It is idle to suppose that if the Harbour Trustees are going to spend £100,000 on the docks it will not be remunerative and will not bring in a good income. There can be no question that the port and harbours, when trade is good, will be able to pay something on the B Deferred. At any rate the stock will be worth something.
There is another point which in justice to the Corporation and the Trust I would impress upon the House. It is perfectly possible for the Barbour Trustees to raise £90,000 of A Stock at a discount. Instead of getting £90,000 they would get about £55,000; but at any rate it is possible for them, if this Bill is rejected, to raise £90,000 of A Debenture Stock which will cost the B debenture-holders no less than 5s. 8d. The position would then be that they would only get £1 2s. 1d. as against this guaranteed amount of £1 6s. 8d. Supposing your Lordships reject this Bill, what is the alternative? I plead that this is an exceptional case. On the one hand you have the bondholders, who are objecting to this; on the other hand you have the Harbour Trustees and the Corporation, with 70,000 people absolutely dependent for the prosperity of the harbour upon getting increased capital. I cannot think that the House will reject this Bill and keep back the natural progress of the important centre of Greenock. I beg to move.
§ Moved, That the Bill be now read 3a.—(The Earl of Harrowby.)
LORD BALFOUR OF BURLEIGH
My Lords, I quite agree that any one who takes the course which I have indicated incurs a considerable responsibility, and I admit that the proposal to reject a Bill of this kind at this stage is one which the House should not lightly adopt. The noble Earl who moved the Third Reading told your Lordships that no Bill of the kind had been rejected for forty years, and he said that it should not be done except in respect of some point of public policy of great importance. I agree. But I think in this case there is a point of public policy of very great importance indeed, and I submit that if your Lordships pass this Bill exactly as it now stands you will be making a precedent which has never 553 been made before in the history of Private Bill legislation. It is not a question of a period of years; I venture to say, and I believe I shall prove without fear of contradiction, that this interposition of another interest of £100,000 before debenture-holders of this kind has never been done in the course of Private Bill legislation by Parliament without the consent of a proportion—I think it is three-fourths—of the debenture-holders.
I am not going to express any opinion on this Bill as regards the Harbour of Greenock. The noble Earl, who was on the Committee; has given a very lucid account of the circumstances which were put before the Committee. I do not think he has made any statement which it is necessary for me to traverse, but I shall venture to add one or two points to the history which he gave your Lordships. As I have said, it has been the invariable rule of Parliament that no alteration should be made in the position of debenture-holders except with the consent of three-fourths of the body. This Bill, as introduced, sought power to allow the harbour people to borrow £100,000 and to change the position of the B Debenture Stock, putting this £100,000 before four-fifths of it and behind only one-fifth. That was subsequently changed to two-thirds and one-third. But that does not alter the fact that if the House agrees to it you will be for the first time in the history of Private Bill legislation doing this particular thing. I am very averse to criticising the action of the noble Earl the Chairman of Committees, because I know very fully, perhaps as fully as anybody else can know, the great difficulty of the cases that are sometimes put before him. In this case, owing to the fact of there being competing Bills, the noble Earl thought it right to send them to the Committee; but I venture to suggest that it would have been at least wise if a caveat had been put in and the attention of the Committee had been specially called to the fact that if this Bill was passed in anything like its present form it would create a new precedent.
Very briefly I should like to supplement the history which Lord Harrowby has given to the House. As I have said, I have searched through the precedents and can find no analogous case. I have nothing to add to the history which the noble Earl has given as to the promotion 554 of this Bill, but I think it would have been just as well if the noble Earl had quoted some of the Committee's dicta in rejecting the one Bill and passing the other. It is clear to me that the Committee were not quite happy in their decision, because in rejecting the bondholders' Bill they said—The Committee are of opinion that it is not expedient that the Bill should proceed: but in view of the Greenock Port and Harbours Bill they are convinced that the constitution of the trustees should is altered, and are impressed by the grievances of the bondholders. This statement may facilitate parties to come to an agreement.I understand that negotiations, as they are called, were opened between the parties, but no settlement was arrived at. The parties did not take the wise hint which the Committee gave them, but stood to their pound of flesh.
As I understand, in passing the Bill now before your Lordships' House the Committee stated that they thought that the interests of the bondholders were not sufficiently safeguarded under the terms of the Bill, and asked the promoters for suggestions for safeguarding them. Then came the question of giving two-thirds and one-third instead of three-fourths and one-fourth priority in respect of the new loan. But, even though that is done, you are now asked to interpose between the Preferred B Debenture Stock and the Deferred B Debenture Stock a sum of £100,000 authorised to be borrowed under Clause 143 of the Bill; and in addition to that there is to be set aside out of revenue a sum not exceeding £1,000 a year after a period of five years for a reserve fund to amount to a total not exceeding £10,000. It seems to me idle to pretend that the position of the debenture-holders is not prejudiced by action of that kind.
With regard to the practice of this House, through a friend I have had very careful search made over a considerable number of years, and I think I may state without fear of contradiction that there has never been a single case in any degree analogous to this case where the consent in writing of three-fourths of the bondholders affected was not obtained and recited in the Preambles. The noble Earl quoted the case that had been tried by the President of the Court of Session in regard to this very undertaking. But in the following year a Bill was promoted to give effect to the-decision, and notwithstanding the fact that there had been a decision of 555 the Court, in that year, 1888, the then Chairman of Committees of your Lordships' House took so strong a view about it that he demanded and secured that in respect of the Bill for that year as between the trustees and the bondholders of that day proof should be required that the Bill had been consented to by three-fourths in value of the bondholders, and the fact that such consent was obtained is recited in the Preamble of the Act of 1888.
In 1895 another Bill was promoted by the Greenock Harbour Trustees to postpone for ten years—namely, until 1905—the right conferred on the bondholders by the Act of 1888 of appointing a judicial factor; and although the Bill of 1895 did not affect the bondholders' rights and interests in any other respect than the postponement of their right of appointment of a judicial factor, even that was considered sufficient to necessitate adherence to the practice, and the then Lord Chairman required the consent in writing of three-fourths of the bondholders to the postponement of their said rights, and the fact that such consent was obtained is recited in the Preamble of that Act. It cannot be said that the promoters of this Bill were in any way ignorant of what I claim is the universal practice of Parliament. I know that there are cases where the Lord Chairman has allowed Bills affecting the rights of debenture stock-holders to proceed without this consent of three-fourths of them in writing being obtained before the Bill became law; but the ultimate obtaining of such consent after the Bill became law was secured by the insertion of a clause in the Bill providing that the powers of interference with the rights of debenture-holders should only be exercised after the promoters had obtained the consent of three-fourths of the debenture stock-holders either at a special meeting or in writing. There is no such provision in this Bill, and I have yet to learn that it is contemplated or will be assented to by the promoters of the Bill. If precedents are wanted for that course, I can give them in the case of the Mersey Railway Act, 1900, and the Cork Black-rock and Passage Railway Act, 1901. So much for what I claim as the universal practice of Parliament.
If I understood him rightly, the noble Earl, in moving the Third Reading of the Bill, said that this is the best thing that can be done for the debenture-holders, and that they would be very foolish not to consent to 556 it. The same sort of argument is put forward in the statement issued by the Trustees of the Port and Harbours of Greenock in support of the Third Reading of the Bill. In their statement they say—The priority of £100,000 over the Deferred B Stock is justified by the fact that, under their existing statutory powers (which the Bill repeals), the Trustees mar raise £58,000 by issue of the balance of the A Stock. It is conceded that on the basis of market value this could only he done by issue of about £90,000 of A Stock,and so on. The trustees go on to say—The proposal, therefore, of the Bill for borrowing the £100,000 and placing it in priority to a portion of the B Stock is a much more favourable financial proposition than would be the issue of the balance of the A Stock.If that is so, why not get the consent of the debenture-holders? If the proposals in the Bill are more favourable to the debenture-holders than the proposals as they now stand, I do not suppose that the debenture-holders would be so foolish as to be blind to their own interests in the future and not give their consent.
I am not speaking for the bondholders or for any particular body. As a matter of fact I have had a considerable number of communications from those interested in finance, from legal gentlemen in Scotland who represent the bondholders who are scattered about all over Scotland and in some parts of England. I am not going into the question of whether or not this is in the interests of the bondholders so much as to warn your Lordships that if this step is taken the House will be making a precedent. Supposing the Bill is passed and this £100,000 is put in this year and it should prove insufficient having regard to the state of Greenock harbour as described by the noble Earl? You will have made a precedent, and next year, or it may be the year afterwards, you may have a demand for the raising of another £100,000, and the property of the B debenture-holders will eventually be taken away altogether.
But the point I really want to make to the House is that it is a serious matter to create a precedent whereby any public body can come to Parliament and relieve itself of its obligations to its debtors, Where is this to stop? Any corporation. finding it hard to pay 4 per cent. may say in future it will only pay 3½ per cent. Bondholders are an isolated body, and it takes a great deal of difficulty and involves large expense to organise them for opposi- 557 tion. A corporation, whether a public body or a trading body, can use its funds for promoting a Bill in Parliament; and if you allow this sort of thing to go on it seems to me that You are putting an obligation upon bondholders to look after their interests whereas up to the present time they have been able to rely on the practice to Parliament to protect them. This is not a small matter. I venture to say that if you do this you may shake the confidence in this class of loan, and if you do that you will raise the interest to all the borrowers who want to get loans of this kind.
This is not a matter domestic to Greenock. I agree that the prosperity of the harbour is a matter of the highest importance to Greenock and to the 70,000 people about whom the noble Earl spoke; but if the improvement of the harbour of Greenock is of this interest to Greenock, then I say it is a matter which is domestic to Greenock, and Greenock ought to raise the money and improve the property on proper terms. If the bondholders have made a bad investment, I do not expect the Greenock Corporation to come to their rescue and do for them more than natural laws would do. But it is a very different thing for Parliament to allow a body to interfere between itself and its own debtors and artificially depreciate the security upon which the loan has been obtained. I know too well the difficulties, and I. shall wait until I hear what the noble Earl the Chairman of Committees has to say before I actually make up my mind to ask the House to go to a Division. I could not, however, propose an Amendment to the Bill. The only way in which the question could be raised was by giving the Notice which I have given, and it was simply to raise the general question and to let the House know what was being done that I took a course which I quite admit is rather a hold one anal one which requires justification, which I have endeavoured to give it.
To leave out ("now") and add at the end of the Motion ("this day six months").—(Lord Balfour of Burleigh.)
§ LORD INVERCLYDE
My Lords, I venture to address the House in support of Lord Balfour of Burleigh's Amendment. Probably there is no one more interested than myself in the prosperity of Greenock and the whole of the Clyde, for the business which I represent is the largest ratepayer in Greenock. At the same time, in sup- 558 porting Lord Balfour's Amendment I prefer to put away from my mind the fact that we are dealing with a Bill concerning Greenock, because the question is not a local one but one of public importance. The noble Earl who moved the Third Reading of the Bill stated that the trustees of the port and harbour of Greenock were in a different position front a railway company. I quite admit that the harbour of Greenock is in a unique position, but as far as this question is concerned of getting the consent of three-fourths of the bondholders I think the noble Earl's point is a distinction without a difference. The public have not much opportunity of knowing what provisions may be inserted in Private Bills which come before Parliament, and therefore it is our duty to very carefully safeguard their interests so that nothing should be introduced into Private Bills which should create a precedent for all time. I look upon the clause in this Bill which authorises the raising of another loan of £100,000 to the disadvantage of the existing bondholders as a serious precedent to establish.
But whether this Bill becomes an Act of Parliament or not, I think it right that your Lordships should know that it is not a final settlement as to the future of the harbours and docks of the Clyde. For smile time past considerable attention has been drawn to the question of the control of the Clyde. I do not think it is generally known that there are seven different authorities which have a say in that control. Take, for instance, a steamer coming to the Thames. She pays one set of dues which cover everything. But if a steamer goes to the Clyde she has not only to pay harbour dues but Clyde lighthouse dues in addition; while the steamer going to the Thames, having paid dues to the general lighthouse fund, is free from that further imposition. I venture to take the opportunity of this Bill coming before your Lordships to draw the attention of His Majesty's Government to this question in order that the Department concerned should have the matter brought before them and should consider whether the control of the Clyde should not be the subject of an inquiry so that an Act of Parliament might be passed bringing all these seven different bodies under one control. I find that it is impossible to get any of these bodies to act singly, because the settlement of their respective claims 559 is a very difficult question. I believe it can only be done by His Majesty's Government taking action, and therefore I trust that, whatever happens to this Bill, something may evolve which will bring the Clyde under one control.
THE CHAIRMAN OF COMMITTEES (THE EARL OF DONOUGHMORE)
My Lords, I do not think your Lordships would desire that I should go in any detail into the facts of this case, more particularly as they have been fully gone into by the noble Earl who moved the Third Reading and by Lord Balfour of Burleigh. I say at once that I do not think there is anything in their recital of the facts with which I should have any quarrel. Your Lordships have also, of course, had the usual statements circulated to you by the two parties. I have not myself received one from Lord Balfour's supporters, but I have received the promoters' statement, and having read a great part of the 700 pages of the proceedings before the Committee upstairs I think it is an exceptionally fair description of the position in which the Bill now stands.
Your Lordships will have noticed that Lord Inverclyde almost entirely, and Lord Balfour to a very large extent, argued this question as apart from a Greenock question. They were entirely within their rights, of course, in doing so; but I would remind your Lordships that this is a Greenock question and a very important Greenock question, and I hope you will not allow the public difficulties and considerations which undoubtedly exist to hide from you the fact that this must be considered in its relation to Greenock and to the harbour of Greenock, with which the prosperity of the town is very largely bound up. Greenock harbour is a public undertaking not carried on primarily for profit but carried on for the benefit of the public of Greenock, and as such we must regard it in deciding anything to be done in reference to this harbour. That something must be done I think any one who reads the evidence which was given before the Committee will readily see.
The position of the port of Greenock is this. It is practically bankrupt, and has been so since the Act of 1887. There are £630,000 of arrears of interest due to the debenture-holders. These B debenture-holders who have been entitled to a maximum of 4 per cent. dividend have received, the noble Earl said an average 560 of £1 7s. 9d. in the last ten years, but I believe that as a matter of fact the average for the whole period since the Act of 1887 is £1 10s. The port is starved, and the credit of the port is gone. Obviously, therefore, something must be done to carry on this public undertaking. It is impossible for us to fold our arms and say, as we could say if this were an ordinary industrial company, "Let it go bankrupt; what does it matter?" This is a public undertaking and must be carried on, and in that light I feel that it demands special consideration from your Lordships.
What was the position at the beginning of this session? Two schemes were introduced as Orders and brought to Parliament as Bills, and they were both absolutely unprecedented. I agree with the noble Lord that this Bill is unprecedented. The other Bill which was submitted to the Committee upstairs was equally unprecedented. That was the reason why I thought it my duty to let this question as well as the rest of the Bill go to the Committee. The noble Lord said he was sorry that I did not utter a caveat to the Committee that this Bill was unprecedented. I wonder what reply I should have got if the noble Lord himself had been Chairman of the Committee and I had tried in any way to influence his decision. But apart from that, it was quite unnecessary. Proceedings could not have been going on for a quarter of an hour in the Committee room upstairs without the Committee at once realising that both Bills were unprecedented; that in view of the special condition of affairs in Greenock Parliament was asked to do something unprecedented, and the Committee were invited to choose between the two schemes.
The bondholders at present have a representation on the Harbour Trust of six out of twenty-one. They proposed that in future they should have a representation of six out of eight; that thirteen of the present members should be done away with, and only two retained. Therefore you will realise that their Bill proposed to put the bondholders into complete control of the harbour, which they have not got now and to which they are not entitled, because they are not in the ordinary position of debenture-holders—that is to say, the debenture-holders in the case of Greenock have no power to come down and seize the undertaking if their interest is not paid. What happened was this. 561 The Bill was heard for six or seven days, and the Committee were obviously so impressed that it would not do that they threw it out at the end of the promoters' case. That disposes of one of the two alternatives that were suggested to the Committee. The Committee were satisfied that to carry on this public undertaking something must be done. Thereupon the Committee entered upon the hearing of this Bill, and the Bill was considerably amended in Committee in the direction of giving the bondholders better terms, though I admit at once that they are not satisfied now and were not satisfied before.
There seem to be two alternatives before your Lordships. It is, of course, a practicable step to throw out this Bill and to say that nothing is to be done at any rate this year. What would be the result of that The result would only be that the present state of stagnation—and it is proved up to the hilt that the present is a state of stagnation—would continue and go from had to worse. It seems to me that the only possible solution of this question is that the harbour should be put upon its legs by everybody making some sacrifice, and that is what this Bill really does. One would think from the statements that have been made that the debenture-holders are being asked to make a sacrifice and that everybody else, at any rate if they are not receiving a profit, are to be left more or less where they are. That is not so. The Corporation have hitherto had the right of appointing the Chairman of the Harbour Trust. Under the scheme of the Bill they will lose that right. They lose four representatives in all, and they will be called upon to guarantee the interest on £100.000 coming after one-third of the existing B Debenture debt. They are asked, therefore, to take some risk. The traders lose one of their representatives and they are to pay increased rates. Lastly, the debenture-holders are to lose their arrears of interest. But I think they will gain the practical certainty—this, of course, is only an opinion, but it seems to me from the figures that it will be so—of the continuance of the amount of interest which they have hitherto obtained. They secure also the possibility of a betterment of their position in the fact that if the £100,000, to be spent on the highest engineering advice, results in earning more than 5 per cent.—and your Lordships' experience will suggest to You that it is more 562 than possible, judging from similar cases, that this may happen—the extra benefit will go to the Deferred B debenture-holders.
It might be argued ad nauseam as to which of these three classes gets the better of the Bill and winch makes the greater and which makes the smaller sacrifices. That is practically what has been discussed by the Committee upstairs for thirteen days. The keynote of the matter is that this harbour must be carried on. If the Bill is rejected you can look forward to nothing better than the present state of stagnation containing, and there is no earthly reason to my mind why it should not go from bad to worse. I have had no communication, any more than any of us have, from His Majesty's Government, and I do not know whether there are any plans in the minds of the Government for dealing with the Clyde such as those to which Lord Inverclyde referred, which might perhaps embrace a consideration of the state of affairs in this harbour of Greenock. But failing that, I feel that there is no remedy before your Lordships in the existing state of affairs which gives me any alternative but to advise your Lordships to pass the Third Reading of this Bill. The Bill is unprecedented, I know, and I do not pretend that I like the Bill or what we are doing. But in the exceptional circumstances of the case I feel that there is nothing else practical that, we can do than to pass the Third Reading, and hope that the result of this Bill may be to put this harbour on its legs and restore its prosperity to a state which it certainly has not enjoyed for a great many years, and which has been unquestionably to the great disadvantage of the town of Greenock.
The noble Lord who moved the rejection of the Bill stated that he had followed the only course which was open to him in putting down this Amendment. I am sure he knows far better than I do that. it would have been quite open to him to move to any clause an amendment which he thought would improve the Bill, and I confess I would have been very pleased indeed if he had seen his way to give us the benefit of his assistance in that direction. But as he has not thought fit to do so I am forced to the conclusion that no amount of further consideration would very Much improve this scheme as it is before us, and for that reason I think your Lordships would do well to let the Bill pass and go down to another place.
THE LORD PRIVY SEAL AND SECRETARY OF STATE FOR INDIA (THE MARQUESS OF CREWE)
My Lords, it is, perhaps, desirable that I should say a word on this Bill and on the situation generally on behalf of His Majesty's Government. I have no personal knowledge of the subject beyond such as I have derived from hearing the speeches which have been made and from reading the two statements for and against which have been circulated to your Lordships. But it appears to me that there are three main considerations which ought to weigh with us in coining to a decision upon the action which we ought to take. In the first place I am sure it is the wish of the House generally, as it certainly is of His Majesty's Government, where possible to support the conclusions of Committees of this House upstairs who have had full opportunity of observing all the arguments both for and against a particular measure; and also it is our desire, where we are able to do it, to support the view which the Lord Chairman takes in a matter of this kind. That is one consideration. The second consideration is one which was touched upon by the noble Earl the Lord Chairman—namely, that it is necessary to think deeply of the local interests involved in this Bill, interests which would be compromised by its rejection. It is impossible, therefore, altogether to follow the lead of Lord Balfour of Burleigh and to treat this as a purely Parliamentary matter and as a simple question of precedent. It is necessary also to think of what would actually happen at Greenock if this Bill failed to become law.
In the third place, I confess I was impressed by a statement in the case for the promoters of the Bill to which Lord Balfour alluded but only to pass it by. It is there stated that as the Bill now stands the interests of the B bondholders are not, in fact, seriously compromised, because under the existing powers of the Trust it would be possible for the trustees to go into the market and raise a sum, I think, of £58,000—a sum considerably short of what is required for harbour development, and also open to the objection that it would cost in the present state of the market a sum of £90,000 to raise. Therefore the position of the B bondholders would be that in that case the £90,000, being part of the A Stock, would stand in front of their security, 564 whereas the £100,000 of the Bill would stand after the Preferred portion of the split stock and in front only of the larger Deferred portion. On that the noble Lord opposite merely said that he could not conceive that the bondholders could be so unwise, if the facts were as stated, as not to do something which it is apparently in their interests to do; and there, no doubt, we are bound to leave it. We cannot penetrate into the minds of these bondholders. But this consideration, which I cannot help thinking must have weighed somewhat with the Committee in the conclusion at which they arrived and which was described with such admirable clearness by the noble Earl, Lord Harrowby, is in no way dealt with in the case for the opposition to the Bill. On these various grounds I find myself in agreement with the Lord Chairman that we have no alternative but to agree to the Third Reading of the Bill.
Although I quite concur that we ought to he exceedingly careful in establishing precedents in our Private Bill legislation—and upon that my noble friend the Lord Chairman has spoken firmly and clearly—yet it must be remembered that if this Bill, or Act if it becomes an Act, is to be used in future as a precedent for dealing in a similar fashion with the property of debenture-holders, those who desire to quote this Act in aid will have to show that the circumstances of the Bill then in question are precisely similar, or at any rate closely analogous, to those of the present measure; and I think it would be found in at least nineteen cases out of twenty in which there was a question of thus interfering with the property of debenture-holders, that no such analogy could be traced. Therefore I am less frightened than the noble Lord opposite at the nature of the precedent which seems likely to be established if this Bill is turned into an Act.
One word as to what fell from Lord Inverclyde. It is quite true that the navigation of the Clyde river is in a somewhat confused, one might almost say anarchical, condition owing to the fact of there being no less than seven authorities concerned in its conduct. The Board of Trade certainly would have no objection whatever to the institution of a regular inquiry on the subject parallel to that which was held not very long ago in relation to the Humber, but it would, of course, be necessary for them to consult. 565 all the seven different authorities and know their views. A great number of interests are involved, and the promotion of a Bill for the purpose would no doubt be a complicated and a difficult matter. I do not think, therefore, that your Lordships will be of opinion that it would be at all necessary, or even in any sense advisable, to defer the question of this Greenock business until the whole matter of the Clyde can be settled; and there is no reason why if this Bill is passed there should be any interference or difficulty in regard to the conclusions at which such a Commission of Inquiry might arrive. But I should like to repeat once more that the Board of Trade are fully cognisant of the difficulties in relation to Clyde navigation and would be far from sorry to see such an inquiry instituted.
§ THE MARQUESS OF LANSDOWNE
My Lords, it is not without diffidence that I add a few words to this discussion. I feel very strongly how difficult it is for your Lordships within the space of an hour to pass in review the proceedings of one of your own Committees which has been laboriously dealing with a question of this kind week after week upstairs. I came to the house this afternoon with an absolutely open mind. I had received, as I suppose most of your Lordships had received, a document containing the most plausible reasons for supporting the Third Reading of the Bill, and another document containing what appeared to be equally plausible reasons in support of the Amendment which has been moved by my noble friend Lord Balfour of Burleigh. In these circumstances one can only look at the matter in the broadest possible way.
It is, I think, conceded by those who support the Bill that in some respects it contains provisions of a very unusual character. In the statement against the Bill we are given no less than seven particulars in respect of which the holders of these B debentures are prejudicially affected by the measure which we are discussing, and it is also pointed out with great force, and the assertion has not been disputed, that these provisions have been given a place in the Bill without the previous consent of the persons whom they most affect. My noble friend Lord Balfour of Burleigh is in these circumstances justified in calling your Lordships' attention to what he regards as a new, and to some extent a dangerous, departure, and I think 566 my noble friend the Lord Chairman, in the speech to which we listened a moment ago, realised as completely as did Lord Balfour that there was a certain amount of danger in the course which we are asked to pursue.
On the other hand it does seem to me that we have been given this evening reasons why these objections need not be pressed too far. In the first place I think your Lordships will be impressed by what has been said as to the urgent need of this measure in the interests of the port of Greenock. We were, if I remember aright, cautioned against allowing local interests to weigh too much when we were dealing with a matter which might have effects of much more than a local description. Now I rather doubt whether it is quite fair to regard the question of the port of Greenock as a purely local matter. I need not dwell on the importance of the Clyde but it does seem to me that it would be something more than a local misfortune if anything were to happen to affect seriously the prospects of that most important port. I was also impressed by what has been said—it was said with great force by the noble Marquess who leads the House—as to the extent to which these holders of B debentures are really prejudiced by the provisions of the Bill. It is quite clear that their investment has not been a very lucrative one. The Lord Chairman told us that these debentures had paid something like an average of 30s. per cent. during recent years. In these circumstances the sacrifice which the debenture-holders are asked to make is, perhaps, not a very serious one; and it must be borne in mind that they are not the only parties who will have to make sacrifices if this Bill is to become law.
Our position, then, seems to me to be this. We cannot really re-hear the whole of the case which has been tried by our Committee, and I venture to think, if we are in any doubt, that the doubt should be given in favour of the Committee. I am strengthened in that because while we generally desire to support our own Committees it has been my experience—and my experience is becoming a rather long one in this House—that the house generally endeavours to support not only the Committee but also the view taken by the Lord Chairman when he is good enough to give us his advice. In these circumstances if my noble friend Lord Balfour 567 goes to a Division I shall feel constrained to vote against his Amendment.
THE EARL OF CAMPERDOWN
My Lords, I do not rise for the purpose of continuing this debate. I think your Lordships have gone into the matter at considerable length, and I individually should be prepared to support what the Leaders and the Lord Chairman have proposed. But I rise to ask a question of the Lord Chairman. It is admitted that the procedure which it is here proposed to approve is without precedent. I have not seen the Bill, but I would ask the Lord Chairman whether, this being confessedly a new departure, it would not be possible to insert in the Preamble some words which would show that this departure is approved of in the case of Greenock on account of the exceptional circumstances of Greenock. Possibly hereafter a similar claim may be made and then in that case it would be competent to the counsel, or whoever the persons were who were dealing with that Bill, to refer to this measure and point out that it was only under the very exceptional circumstances of Greenock that this was done.
§ LORD JOICEY
My Lords, before the Lord Chairman answers the question just put to him I should like to express my thanks to Lord Balfour of Burleigh for bringing this matter forward. Like himself, I am very averse to going against the decision of a Committee, but there are cases where a Committee deals with a special principle which applies generally to any legislation that may take place on similar questions in your Lordships' House. That being so it is absolutely necessary that attention should be called to the special departure in this case. I look upon this question as a very important one. At present ill this country many millions of money have been raised on the security of debentures. These millions of money earn a smaller interest on that account, the reason of that being that the security is, of the very first quality. If you begin to alter that or give the impression that it is possible for Parliament to interfere and to alter the security on the application of a conservancy or a municipality, we cannot tell to what lengths that may b carried. I hope that the appeal which has just been made by Lord Camperdown may make some impression upon the noble Earl the Chairman of Committees, so that it may be made perfectly clear that what is done 568 in this case is not to form a precedent in connection with general legislation. In these days it is very necessary that we should be most careful in dealing with these securities. I am afraid there is a feeling abroad that securities may be altered at any time if it should be in the interests of the community that they should be altered. After all, is it in the interests of the community? Is it wise to give the community an idea that by applying to Parliament they may get rid of their legal obligations and be able to push aside the security given in order to borrow on better terms? I hope that before the House agrees to pass a principle of this kind it will recognise how necessary it is that there should be some protection given in the matter so that what is done now should not form a general precedent.
§ THE LORD CHANCELLOR (VISCOUNT HALDANE)
My Lords, the speech of the noble Lord who has just sat down makes me wish, before your Lordships come to a decision in regard to this Bill, to say a few words upon the nature of the question which we have to decide. There is an impression in the minds of many of your Lordships that this is a question simply of interfering with the contract of the creditors. If that were so I should share the apprehensions of the noble Lord who has just sat down. Anything more mischievous in the way of placing obstacles against the raising of capital and in shaking the lender's sense of security could not be conceived.
This is not a Bill designed primarily, or I think really at all, to interfere with creditors' rights. It is true that incidentally the rights of part of the B debenture-holders will be interfered with. But why? When you look at the Bill you see that it is really a Bill for liquidation for purposes of reconstruction, to borrow a phrase from the Companies Acts. Creditors' rights are interfered with when there is liquidation, but public undertakings like this cannot be liquidated under the provisions of the general Companies Acts. They depend upon Statutes. The result is that machinery which would be perfectly simple if you were working under the provisions of the ordinary Companies Acts becomes liable to misinterpretation when you come to the machinery of a special Statute. This Bill, as the Lord Chairman has stated, contains a large number of provisions in addition to the one in question. It sets 569 out in the Preamble that the interest due on the B Debenture Stock is in arrear, and it is plain from an examination of the Bill that unless there is a large expenditure on the harbour and unless improvements are effected the trade which conies to Greenock harbour will fall off and the interests of the debenture stock-holders be still further imperilled.
The constitution of this body is a peculiar one. It is a public Trust, and the trustees have raised their money by the issue of Debenture Stock which is a charge on the revenues; and when the revenues fall and when improvements are needed which require an alteration of the constitution of the corporation, instead of being able to proceed, as they would if this were a Joint Stock company, by liquidation and reconstruction, they have to take another course. If this had been a case under the Companies Acts your Lordships would have had no apprehension about the interference with the rights of existing creditors. An examination of this Bill shows that it is really a Bill for reconstruction, not necessarily liquidation because there is no such thing as liquidation in the case of a. public statutory company of this kind; and it is incidentally that the rights of creditors are affected, as they would incidentally be affected by liquidation under the Companies Acts. Therefore we have to look at the substance and not the form; and looking at the substance it may well be that in the interests of the Deferred B debenture-holders themselves this is the very best thing that could be done. I only rose to suggest to your Lordships that in considering this Bill we must be careful to look at substance and not at form; and looking at it from that point of view I feel myself in complete sympathy with the attitude which the Lord Chairman has adopted.
THE EARL OF DONOUGHMORE
In reply to the question put to me by Lord Camperdown, I confess that the idea had occurred to me whether we could not suggest something in the Preamble which would make it clear that this is an exceptional case. We have done our best during the past twenty-four hours to think of some suitable drafting for this purpose, but have utterly failed in our endeavour. To put in "Whereas exceptional circumstances demand," or something of that kind, would be quite meaningless. Exceptional circumstances exist in every case 570 where a Private Bill is brought forward. Therefore I hope the noble Earl will not press his suggestion. There has not been a single speech in this debate in which the word "exceptional" has not been used over and over again, and Hansard will remain as a complete record of the feeling of your Lordships in this matter.
LORD BALFOUR OF BURLEIGH
My Lords, after the discussion which has taken place I do not think it would be expedient for me to ask the House to go to a Division, but I hope your Lordships will not think that I frivolously or carelessly troubled you with this discussion, because it appeared to me that the matter was of such importance that it ought not to be passed in silence. I suggest to the Lord Chairman the insertion in the Preamble of these words: "Whereas we have grave doubts whether this thing ought to be done, we are going to do it." That is the nearest description of the actual state of the facts. I beg to withdraw the Amendment.
§ Amendment, by leave, withdrawn: Then the original Motion agreed to: Bill read 3a accordingly, and passed, and sent to the Commons.