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Resolution

Volume 279: debated on Wednesday 6 June 1883

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Standing Order 167 read.

, in rising to move an addition to the Standing Order, said, he would state, as briefly as was consistent with the importance of the question, the reasons which induced him to make this proposal to the House. It would be well to consider for a moment what the history of this Standing Order was. Before the passing of the Companies' Clauses Act, 1845, Companies were regulated by a provision contained in special Acts; and those special Acts, from time to time, authorized the payment of interest out of capital. The first was carried in 1837. Only three Acts, however, were passed in that Session. In 1844 there were seven Acts passed; in 1845, 26; and in 1846, 92. The Standing Order was made in 1847. It was considered then that the number of Railway Acts which had been passed exceeded the disposable capital power of the country; and it was notorious that considerable distress was occasioned to many persons who had invested their savings in Railway specu- lations by reason of capital being called up too fast. It was in order to put a check upon the railway mania that it was considered that payment of interest during the construction of the railway should be stopped. Speculation, as everyone knew, was very high at that time, and it was thought necessary to put a stop to it. Hence the Standing Order of 1847, which prevented the payment of interest out of capital, was passed, and it had regulated the proceedings of Railway Companies in that respect ever since. It was with that Standing Order that he had to deal; and it behoved the House to consider whether railway enterprize was now such as to require the prohibition enforced by that Order, or whether, on the other hand, it did not act prejudicially in checking the development of legitimate railway enterprize, and whether the circumstances were not such now as required to be dealt with by further legislation. When he acceded to the Office which he now held, he found that his Predecessor, the right hon. Gentleman the Member for the Universities of Edinburgh and St. Andrew's (Sir Lyon Play-fair), had been in correspondence with the Board of Trade upon the subject, in consequence of several Bills having been before the House which proposed to set aside the Standing Order relating to the payment of interest. He found in that correspondence a letter from his right hon. Friend, in which he asked if it was a wise and sound policy to preserve unchanged a Standing Order which appeared to be systematically violated in practice? The President of the Board of Trade, in reply to that letter, stated that the Board were disposed to think that some alteration of the Order was desirable; and soon after that correspondence a Committee was appointed by the House to consider and report whether the Standing Order No. 169, prohibiting the payment of interest or dividend out of capital during the construction of a railway, should be retained or modified. That Committee was composed of a number of hon. Members of considerable experience and authority in the House, and his right hon. Friend the Member for Montrose (Mr. Baxter) was a Member of it. He regretted exceedingly that his right hon. Friend was unable to be present that day, and he regretted it even more on account of the cause; but the House would be satisfied that an inquiry conducted under the auspices of his right hon. Friend was a full and searching one. As regarded the matter, that Committee said—

"Your Committee consider that the prohibition of the payment of interest out of capital which is contained in Standing Order 167, in the Companies' Act, 1862, and in other statutes affecting public Companies, is in accordance with sound financial principles, and acts as a protection to the public. In special cases, however, your Committee recommend that it may be permitted to pay interest upon capital during the construction of railways or tramways, subject to the following conditions."
And then they defined the conditions under which they considered, in special cases, payment of interest out of capital might be allowed. Thus, they said that his Predecessor, the right hon. Gentleman the Member for the Universities of Edinburgh and St. Andrew's (Sir Lyon Playfair), recommended the amendment of the Standing Order, and that the Committee appointed to consider the subject recommended that, under certain circumstances, the payment of interest out of capital should be allowed—that that proposed change should be carried into effect. The then Chairman of Ways and Means, and the Committee, all recommended that this question should be dealt with. He observed that his hon. Friend the Member for South Durham (Sir Joseph Pease) had given Notice of an Amendment to his Amendment of the Standing Order. His hon. Friend proposed to follow the course recommended by the Committee; and he (Sir Arthur Otway) would frankly tell his hon. Friend that he should have been disposed also to adopt that course, were it not for a reason which he would state to his hon. Friend, which seemed to him (Sir Arthur Otway) to be conclusive. He found it would be impossible to effect this change by a Bill. He would ask any hon. Gentleman who had paid attention to the state of Business in that House whether there was the slightest chance of any Member introducing a Bill in, that House, and getting it passed during the present Session? He was confirmed in that opinion by the right hon. Gentleman the President of the Board of Trade, with whom he had communicated on the subject. What was the answer he found in the letter to his Predecessor, dated the 26th of February this year? The right hon. Gentleman said—
"As regards the amendment of Standing Order 167, which forbids the payment of interest out of capital during the construction of works, there would be so much difficulty in carrying a Bill in consequence of the strong opposition, such a measure would meet with, that I cannot entertain the question of introducing it."
If the change was to be effected at all, it was impossible to effect it in any other way than by the method he (Sir Arthur Otway) proposed—namely, by adding to Standing Order 167 the words of which he had given Notice. Now, there could be no doubt that when Standing Order 167 was proposed, it was essential, for the purpose of putting an end to the unhealthy state of things which existed in consequence of the wild speculations which existed. Speaking generally, he did not question the soundness of the principle contained in the Standing Order. While saying this, however, he must remark that in all foreign countries, so far as he knew, without exception, the payment of interest out of capital was allowed. Her Majesty's Government had sanctioned it in our Indian Possessions, and it had also been allowed in the case of certain Railways in England. Therefore, it was not to be supposed that this proceeding was altogether novel, or that it infringed a principle considered infallible. As he had said, this prohibition had been relaxed in several instances even in England. The Great Northern, one of the most important Railways in the Kingdom, was allowed seven years for its construction, and, by special Act, the Directors were authorized to pay interest out of capital at the rate of 5 per cent per annum; and he felt sure if the Great Northern had not obtained authority of that nature, that important line, in all probability, would not have been constructed. The most serious objection, to his mind, of this payment of interest out of capital arose from the encouragement it might sometimes afford to what were termed bogus Companies. He had no sympathy whatever with those Companies. He admitted there were instances where they had not only done great damage to existing interests, but where they had caused a great amount of distress; but he had endeavoured to meet the objection of those bogus Companies by the provisions which he had put in his Notice; and he thought the House, if it consented to his Motion, need be under no apprehension that henceforth encouragement will be given by it to Companies of this description, because, by the arrangements he proposed, it would be necessary to establish the bona fides of a Company. The Motion said—
(3.)"That payment of interest be not allowed to begin until the Railway Company have obtained a certificate of the Board of Trade to the effect that two-thirds, at least, of the share capital authorized by the Bill, in respect whereof interest may be paid, have been actually issued and accepted, and are held by shareholders, who, or whose executors, administrators, successors, or assigns, are legally liable for the same."
He hoped that requirement, strictly carried out, would answer the purpose they had in view; and he thought the House need be under no apprehension on that score. He had heard the hon. Baronet the Member for South Durham (Sir Joseph Pease) say that in dealing with this subject they must bear in mind the many clergymen, widows, orphans, and others, who, from time to time, had been deluded into putting their scanty savings into unsound undertakings—into these bogus Companies. Well, there had been a great deal of exaggeration about that; and he did not know that the House would feel specially inclined to go out of its way to take under its care those who were rash enough to go into those ventures. He felt sure the House would rest fully contented with the provisions he had inserted there. There was another thing to which he would call serious attention, as he thought it very materially affected the question. Notwithstanding the existence of the Standing Order 167, it was notorious that means were found to pay interest out of capital—that the law was evaded. Since he had concerned himself in this matter, he had had much communication, both in and out of that House with gentlemen of the railway world, concerning this Standing Order; and one of them said to him the other day—"I can evade, I have evaded, and I will evade your Standing Order whenever it is my wish to do so." He (Sir Arthur Otway) said, was it right that such a state of things should exist? Was it consistent with the dignity of Parliament that anyone should be able to address language of that kind to a person holding the Office of Chairman of Committees? If there were no other reason than that the Standing Order of Parliament was constantly evaded, that should establish a necessity for dealing with the matter. He had endeavoured to deal with this point in a manner which he thought would be efficient for attaining security in this matter. He would impose—if the House should consent to his proposal for the amendment of the Standing Order—in the rule allowing, under certain conditions, payment of interest out of capital penalties, summarily recoverable, upon all those who might hereafter set aside or evade the Standing Order. That, he trusted, if adopted, would be found an effectual means of stopping the evasions which, he thought, had brought great discredit on the Standing Orders of the House. He proposed also to make illegal and void any contract entered into by any Company, or by any Director of any Company, under which payment of interest on dividend prohibited by the Standing Order should be, directly or indirectly, provided for. Now, he admitted that this question was one of considerable difficulty, and one on which opinions were much divided; but he thought the House would agree with him, after what he had said, that it should now be dealt with. It was not fair that the large interests involved in these matters should be hampered or harassed by uncertainty as to the action of Parliament in this matter. He had no sympathy with those Gentlemen who, as it seemed to him, took a pleasure in opposing Railway Companies—who seemed to look on Railway Directors almost as if they were malefactors. There was no question in which railway interests were concerned on which those Gentlemen did not immediately collect together as an opposing force to the railway interest. With feelings of that kind he had no sympathy. He looked with the greatest respect on the railway interest. Take, for instance, the London and Northwestern Railway Company. It possessed a revenue greater than that of some European Monarchies, and conferred advantages and gave employment to thousands and thousands of persons in the country. He must say that his sympathies were far from being opposed to such a Company; on the contrary, he should consider the duty of Parliament even to do all it properly could to promote and assist and aid Companies who were conferring upon the community the benefits such as those great Railway Companies were conferring. Therefore, it must not be supposed that he had any feelings of a hostile character towards the Railway Companies in making this Motion. He believed the proposal he had to make would be found, in the main, far from prejudicial to the Companies. He felt it his duty to make this proposition, finding the question in a most unsatisfactory condition on taking the Office he now held. His Predecessor had had on the Paper for some time a Notice dealing with the matter; and, as he had said, a Committee had reported in favour of dealing with the subject—although they recommended a different mode of procedure to that which he now proposed. He could not hope that his proposition would be accepted by all; but he had brought it forward because he considered it his duty to do so, and he thought he had done it in a fair and equitable spirit. It was in that spirit that he commended it to the attention and approval of the House; and he trusted that if the House should think fit to sanction the Amendment he proposed they would find in it a final settlement of this question.

Motion made, and Question proposed,

To add, at the end of the said Standing Order, the 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, subject always to the following conditions:—
  • (1.) That the rate of interest allowed by the Committee do not in any case exceed four per centum per annum;
  • (2.) That interest be allowed to be paid in respect only of the time allowed by the Bill for the completion, of the Railway, or such less time as the Committee think fit;
  • (3.) That payment of interest be not allowed to begin until the Railway Company have obtained a certificate of the Board of Trade to the effect that two-thirds at least of the share capital authorised by the Bill, in respect whereof interest may be paid, have been actually issued and accepted, and are held by shareholders, who, or whose executors, administrators, successors, or assigns, are legally liable for the same;
  • (4.) That interest do not accrue in favour of any shareholder for any time during which any call on any of his shares is in arrear;
  • (5.) That the aggregate amount to be so paid for interest be estimated and stated in the Bill, and be not deemed capital within Standing Order 153;
  • (6.) That notice of the Company having power so to pay interest be given in every prospectus, advertisement, or other document of the Company inviting subscriptions for shares, and in every certificate of shares; and
  • (7.) That the half-yearly accounts of the Company do show the amount on which, and the rate at which, interest has been paid;—
  • and the Company shall be authorized by the Bill to pay interest accordingly, but not further or otherwise.
    "If in any case the Committee on the Bill do not think fit to allow any such interest, then there shall be inserted in the Bill provisions making liable to penalties, recoverable summarily, any director or officer of the Company who shall, directly or indirectly, pay or procure to be paid any interest or dividend prohibited as aforesaid, and making illegal and void any contract entered into by the Company, or the directors thereof, or any of them, under which payment of any interest or dividend prohibited as aforesaid shall be, directly or indirectly, provided for.
    "The Bill shall not be reported by the Committee until there has been laid before them a Report from the Board of Trade respecting any proposed payment of interest; and the Committee shall report specially to the House in what manner they have dealt with the recommendations or observations in the Report of the Board of Trade."—(The Chairman of Ways and Means.)

    Question proposed, "That those words be there added."

    , in rising to move, as an Amendment to the Motion of the Chairman of Ways and Means—

    "That it is not desirable to alter the effect of Standing Order 167 until a Bill has been passed to amend 'The Companies Clauses Consolidation Act, 1845,' and 'The Companies Clauses Consolidation (Scotland) Act, 1845,' so far as these Acts relate to the payment of interest out of capital by Railway or other Companies,"
    said, the hon. Baronet the Chairman of Ways and Means had stated, very accurately, that he (Sir Joseph Pease) had for some time taken a strong view in opposition to that which the hon. Baronet had enunciated. He felt that any alteration of this Standing Order would be attended with general detriment not only to the railway interest, but to the larger interest of the community in general. He had to thank the hon. Gentlemen the present and the late Chairman of Ways and Means for the opportunities they had from time to time afforded him of expressing his views on this subject. He would find no fault with the manner in which his hon. Friend (Sir Arthur Otway) had introduced this very important question to the House, although he must demur a little to some of his inferences and some of his historical facts. The hon. Baronet told them that this Standing Order was passed in order to put a stop to Railway speculations of an undue and unwholesome character; but he (Sir Joseph Pease) thought he could prove that it was passed at a time when speculation had not reached that culminating point which, in 1847, produced so much disaster in the country. The hon. Baronet had put the issues fairly before them. One of his points was whether Standing Order 167 put a stop to enterprize— whether it did not require to be dealt with; and then he had put before them what he (Sir Joseph Pease) had always considered an extraordinary argument— namely, that because the Standing Order was infringed it required to be altered. As to Indian Railways, the parallel the hon. Baronet had drawn was hardly a sound one. The State guaranteed interest in the ease of those undertakings, which he believed to be a right thing to do. This guarantee was given in order to induce capitalists to invest, and the State shared with the shareholders any profit there might be above a certain amount of interest. Then, again, in the case of Indian Railways, the State had power to buy them, which was not the case with English Railways, until 10 per cent had been paid. Standing Order 167 followed a Law of Parliament made in 1845—the Companies Clauses Consolidation Act, 8 & 9 Vict., c. 16. By Section 65 it was provided that—
    "All monies raised by the Company, whether by subscription of the shareholders, or by loan or otherwise, shall be applied—firstly, to paying costs and expenses incurred in obtaining the Act, and all expenses incident thereto; secondly, in carrying out the purposes of the Act"—
    that was, that the purposes indicated were the only ones to which money might be applied, not to re-funding shareholders' money already paid by them. Section 121 said—
    "That the Companies shall not make any dividend whereby their capital stock will be in any way reduced;"
    and another section—24—authorized payment of interest on monies paid in advance of calls until the time of actual payment. These were the laws which, for long years, had regulated this question in the Railway world, independently of any Standing Orders. They were embodied in almost all Companies Acts from that time to this, with very little exception. The Great Northern Act, it was true, was an exception. In that case power was given to pay interest out of capital; but there was no Standing Order of the character of Standing Order 167 in force when that Act was passed. About £1,000,000 was paid, he believed; therefore, the Great Northern shareholders had been mulcted from that time to this of the interest on that sum. They had received their own money back again in reduction of the amount which was paid to the Company. The declarations of Parliament on this subject were, as he thought, consistent with sound financial legislation. In 1862 they had an Act which authorized the construction of Limited Liability Companies. In 1864 there was another Act which dealt with the same subject. The Limited Liability Companies were prevented from paying interest out of capital during the construction of new works; and if the House was now prepared to alter the law, it would be doing that which would result in endless confusion and great commercial difficulty in this country, for they would have to authorize the Limited Liability Companies also to pay interest out of capital during the construction of works. In 1864 there was an Act passed for facilitating the construction of Railways, which gave the Board of Trade very considerable powers. That Act embodied the Act of 1845. Therefore, whatever Acts of Parliament had been passed, without exception, since that day, it was no longer a question of the Act of 1845, but the Act of 1862; and the two Acts of 1864 both reiterated the then feeling of Parliament, and their judgment 20 years afterwards, that the principle laid down in 1845 was correct and beneficial, and ought still to operate. Standing Order 167 was passed not at the end of the Autumn Session of 1847, but in the spring, before the great Railway financial crises came about. He had looked up the debate which had taken place on the Standing Order, and he found that there had been no feeling of panic to urge Parliament on in passing it. The debate had been a very instructive one, because it showed what the view was then of what he might call very high financial authorities—men who would be looked up to in all ages as the great financiers—he might almost say the fathers of finance in this country. Even Mr. Beckett Denison, a man whom many of them recollected as a man of great intellect and strong views, whilst he was Chairman of the Great Northern Railway, taking part in the debate, only said—
    "A number of deeds had been signed by parties a year or two years ago, in which it was stipulated that interest should be paid from time to time upon calls, as they were paid up; it was now proposed to compel Directors to break faith with such subscribers, and thus enable these latter to refuse to proceed. The practice complained of had been allowed and encouraged by Parliament in Bills it had heretofore passed. He would move, as an Amendment, to strike out the words 'in the present and every,' and insert 'introduced for the first time in any.'"—(3 Hansard, [93] 296.)
    Mr. Denison admitted in that speech that the principle laid down in the Standing Order was right, and said, in effect—"Do not let us interfere with what Parliament has already done; but let us take care that the Bills which Parliament may pass shall contain no such provisions now." Mr. Ricardo said he—
    "Considered the insertion of a clause allowing interest to be paid upon calls out of capital to be 'a delusion and a snare.' It only led people to believe that they were investing their money instead of speculating. He had always in Committee on any Bill struck out that clause. If it was left in a Bill, the effect only was that when Directors wanted to call for £2 10s. they called for £2 15s., and the shareholder paid so much more in order to receive part of it back again."—(Ibid.)
    Mr. Hume
    "thought the principle of paying interest on the capital of railways before profits could accrue was a fraud on the Legislature, and a bait held out to ignorant persons for the purpose of inducing them to engage in speculations which they would otherwise avoid."—(Ibid. 297.)
    Sir Charles Wood, the then Chancellor of the Exchequer, who had certainly a high character as a financier, said—
    "It was only within the last two or three years, since the construction of railways had become of a much more gambling or speculative character than before, that it had been found necessary for Railway Directors to obtain the power given by such a clause. In all other undertakings, whether in mining, agriculture, manufactures, shipping, or whatever their nature, parties received no interest on their investments till profits were realized; and there appeared to be no reason why an exception should be made in favour of railways."—(Ibid.)
    He might quote several other Gentlemen, whose names were familiar to them as matters of history, who took part in this debate; but he would not trouble the House. Finally, the Standing Order was carried, in a small House, by 70 Ayes to 27 Noes, or by a majority of 43. Sir Robert Peel, perhaps one of the most able financiers of modern times, voted in favour of the Standing Order, as also did Sir James Graham. The Standing Order was intended to guard, not so much against legitimate enter-prize—for that was able to take care of itself—but against rash speculations, financial irregularities, and bubble Companies, into which those persons described as parsons, widows, and people who are led away by prospectuses, were led away to invest their savings in railways to their own detriment, as he thought he could show, and also to the great detriment of the State. His experience of railways was pretty considerable, having began when he was comparatively young. The railway with which he was most connected was made on what he believed to be the most wholesome of all principles—it was made mainly by the men who desired to use it, and a large proportion were on the Board of Management. The railway turned out to be one that paid very well to the shareholders. This was owing to the fact that—as ought to be the case with all railways—the traffic senders were thoroughly well represented on the Board, and had some control over the management. There was another class of railway—and it was a considerable one—namely, Companies which had been honestly set up by Companies who had appointed their own Boards of Directors, who had spent the money in accordance with the wishes of the shareholders. Then they must confess there had been a third class of railways, which, he thought, had done a great deal of damage to the commercial interests of the country—namely, those got up by contractors and speculators, which had come to nothing, or had come to grief, or had been absorbed by older Companies, to the great detriment of the traffic senders on those older railways, as well as to their shareholders. The traffic senders had to submit to in- creased dues in order to pay interest on the increased capital. The House was told that because some speculators had broken through their rules the Standing Orders of the House must be revised. He had tried to find out to what extent this had been done; but these things having occurred in the past, it was difficult to find the figures. The President of the Board of Trade would hardly be able to find the statistics; but he believed that the amount of money expended on these rash undertakings had not been more than £8,000,000 or £9,000,000. That was a comparatively small sum of money, looking at the amount which had been invested in railway enterprizes in the country. But it was a most extraordinary doctrine to lay down that because the Standing Orders of the House had been infringed, therefore they ought to modify them. They might just as well say that because there were a great many pickpockets who were not caught and put into Newgate, therefore they ought to give up their laws and let out those pickpockets who were in Newgate. The question was this—was the law right? If it was, let them uphold it. They had better uphold it than repeal it. He begged to remind the House that the process sought to be introduced by the amendment of the Standing Order was not paying interest, but handing an investor back part of his capital. The system was very delusive to those who did not understand financial matters, as it led them to believe that they were going to get a substantial percentage on their money from the very first; but, in the long run, they found out their mistake. A payment of £1,000 in equal payments over five years would be reduced, at 1 per cent, to £913;therefore, if an investor had put £913 into the railway, and £87 into the Post Office, or any other savings' bank, he would be in the same position as though he had handed the £913 over to a Railway Company. It was in order to enable this transaction to be accomplished that the Standing Order was to be changed; and that proposition, he thought, should not be approved of on principle. The hon. Baronet the Chairman of Ways and Means, who had preceded him, had asked—"Does this Standing Order stop enterprize? "He (Sir Joseph Pease) would reply, undoubtedly, it did not stop legitimate enterprize, and that he could prove from a few figures which he would quote. In 1847 the railway mileage was 5,640;in 1882, it was 18,180; whilst, in 1847, the capital was £196,000,000; in 1882, it was £750,000,000, showing an average of £15,000,000 a - year. The amount expended in the United Kingdom during the past 10 years had been £200,000,000, and that in spite of the Standing Order. These facts spoke for themselves, and showed that the Standing Order did not stop legitimate enterprize. Would this bring back that reckless speculation which his hon. Friend had so much deprecated, and which he felt also every man in the House would as much deprecate? Three years ago people had began again to talk about proceeding upon the fallacy of paying interest out of principal; and in the Session of 1881 there were schemes which involved £4,000,000 of money brought before the House, and if any of them were passed it was in accordance with the Standing Order. In 1882, 10 schemes were brought forward, embracing a capital of £29,000,000;and in 1883—when the right hon. Gentleman near him had taken up the question, and it was understood that the Board of Trade was favourable to it—there were 46 schemes, the amount of capital being £78,000,000. It seemed to him, therefore, that there was great danger of bringing back that reckless speculation which his right hon. Friend would have been the very first to deprecate, and which he considered the House would be very wrong to encourage. Now, he had traced this thing back, he thought, to head-quarters—and he wished to speak on this matter with the greatest possible delicacy, as he had to refer to a railway to which, as sitting on another Railway Board, he was opposed—namely, the Hull and Barnsley Railway. This Company issued a prospectus, in which they promised 5 per cent interest during the construction of the works. Mr. Forbes, and others connected with the railway, had stated, when they went as a deputation to the President of the Board of Trade, that without that rate of interest they would not have been able to procure capital; but that, as it was, capital came in easily—every penny they wanted was subscribed during a few hours on the strength of that prospectus.

    said, he did not know that it was ever stated that without that prospectus they would not have been able to get the money subscribed.

    said, he had the evidence taken before the Committee and the statement made to the President of the Board of Trade with him, and could, if necessary, furnish the hon. and gallant Member with quotations bearing on this point. It was not, however, essential for his purpose. He believed that the representations which had been made by the promoters of the Bill had been owing to an entire want of knowledge of the law. He could hardly understand his hon. and gallant Friend (Colonel Smith) and those who had acted with him, going into the scheme with their eyes open, knowing that the Standing Order and the law were both opposed to them. It was a great mistake. But what he wished to refer to was the deputation which waited on the right hon. Gentleman the President of the Board of Trade the other day. Amongst the Members of that deputation were his hon. and gallant Friend (Colonel Smith), Chairman of the Hull and Barnsley Railway, Messrs. Lucas and Aird, the contractors, Mr. Robert Baxter, solicitor to the Mersey Tunnel—which had a Bill before Parliament with this clause in it—and Mr. Cope, solicitor to Messrs. Lucas and Aird. Mr. Burchell, Parliamentary Agent to the District Railway Company, was also there; and last, but not least, was Mr. Forbes, who was so well known in the railway world for his great ability and his position as Chairman of the London, Chatham, and Dover Railway—a railway which, unfortunately, had never paid a dividend—and of the Metropolitan District Railway—which declared a dividend of ⅝in 1882. If the Hull and Barnsley Company had made a mistake, he, for one, should not for a moment object to their coming in a white sheet with a candle in their hands asking to be put right, after due inquiry, with their shareholders. He would not oppose them if they did that—he should pass no opinion on the Hull and Barnsley scheme as a railway enterprize; but he said this— if they had made a mistake by all means let them acknowledge it; and if the House would grant them what they wanted under the circumstances in which the prospectus was issued, he, for one, should offer no opposition. He said this, because, if the mistake had been made, he did not wish the Company to come here and agitate and beg the President of the Board of Trade and the late and the present Chairmen of Ways and Means to use their influence to alter an Order that ought still to be retained. Had this been a Free Trade policy—had his hon. Friend the Chairman of Ways and Means repealed the Order and said—"Raise your money on whatever terms you can—Caveat Emptor—whether at 4, 5, 6, 7, or 8 per cent," he could have understood it. It might then have been said that the shareholders would take care of themselves; but as that had not been done, Parliament must take care of the public. They did not in that House allow people to take care of themselves; but by a great many Acts they protected them in their trade and investments. His hon. Friend, and the great advocates of this change in the law, said—"Let us do it under safeguards." Everyone who had heard the right hon. Gentleman's statement that day would admit that he had taken great pains with his safeguards. But he (Sir Joseph Pease) would like the House to hear what they who had advocated the change had said about it. Mr. Rees, a Parliamentary Agent, was asked by the Committee on Standing Order 167—

    "Are you in favour of a repeal, or of an alteration in the present Standing Order?"
    And his reply was—
    "On the balance, I should say I should certainly not repeal it—I should amend it. In all cases where the interest of the public, as in the case of rates and tolls, and so forth, depends upon the way in which capital is dealt with, and promoters have to come to Parliament to obtain powers to levy those rates, I think it reasonable that Parliament should see, in the interest of the public, that there should be some control exercised over the issue and application of capital."
    Then Mr. Farrar was asked—
    "Are you in favour of the total repeal of this Standing Order?"
    And his reply was—
    "That is a difficult question, because it is so much entwined with the whole practice of Parliament, and with the Companies' Clauses Act, as well as with the practice of Parliament. The Companies' Clauses Act, which was passed in 1845, I think obviously contemplates that dividends shall not he paid out of capital. It has a clause which practically authorizes interest to he paid on capital which is not called; and, therefore, impliedly prevents its being paid on capital which is called; and I think it would be a question, if you had no Standing Order of this kind, and did not alter the Companies Act, whether the Courts of Law would not, upon the Companies Act as it stands, and the ordinary law, prevent the payment of interest out of capital; at any rate, unless specially sanctioned by the special Act."
    This gentleman was of the opinion that there should not be a total repeal, but that there should be an amendment of the present Standing Order. What were the conditions under which a Railway Company was to be allowed, during construction, to take 8½ per cent additional capital from its subscribers and pay it to them again? Why, the hon. Baronet's safeguards would make the thing worse for the various Railway Companies than it was at present. He first of all said that 4 per cent was to be paid. Why 4 per cent? A great many of these Companies might never in working pay 4 per cent, yet the shareholders were to have 4 per cent during construction. The railways might not pay 2 per cent. He believed that at this moment there was £37,000,000 of railway capital upon which no percentage at all was being paid, and the average on the rest was very little over 4 per cent; and yet here, when not 1d. was being earned, but during the time of construction, 4 per cent was to be paid to the shareholders. But that was to be done during the time of construction of works. He never could see why it could be confined to during the construction of works. If right then, it could not be wrong after the works were completed, because really the principle was the same. Only when the works were completed that there was more chance of a dividend, before the completion there was none; and, therefore, it was only to carry the thing to a reduetio ad absurdum in paying money out of capital in the shape of interest, and this going forward would bring the whole concern to a standstill. Then the right hon. Gentleman would cast upon the Board of Trade the responsibility of certifying as to the bona fides of two-thirds of the shareholders. How was the President of the Board of Trade to know whether the names submitted by a number of clerks were those of bonâ fide shareholders or not—how was he to know that the clerks in an attorney's office who signed the contract are bonâ fide shareholders, or that they were not acting under the guarantee of someone else?

    said, the legal liability of the people put forward might be found to amount to very little, the household effects of each probably amounting to no more than £5 or £6 in value. Then he wished to point out particularly to the House that, by abolishing this Standing Order, they were beginning again that which had failed them in the past—namely, subscription contracts. He was old enough to have seen a great many of these, and they were found to be so utterly delusive as to be no standard of liability before Parliament; and yet, in order that a shareholder might receive his capital back in the shape of interest, the hon. Baronet the Chairman of Ways and Means proposed that they should go back again to that system. Then a Committee of the House was to be the judge of the future prospects of the line— as to whether 4 per cent was to be paid during construction or not. Surely the Committees of the House had enough on their shoulders without being asked to say what dividend Railway Companies could pay, and what might be the character of their competition with neighbouring or adjoining Companies. If duties of this kind were put on Parliament they would not be discharged. Would they, for the sake of doing so little, put so much on the shoulders of the Board of Trade and the Committees? It was a very grave objection that, by adopting the Motion, they would at once place on the Committees of the House the responsibility of giving a Parliamentary sanction to the payment of this rate of interest—to the payment of a dividend which was no dividend at all, but only a repayment to the shareholder of a part of his money. The debentures of these railways would get into the market, and trustees under wills and settlements would be constantly pressed to invest their trust money in these schemes sanctioned by Parliament—in these speculative Companies —for they would be nothing better than speculative Companies. The Committee reported—

    "Considering, however, the bearing of these proposed changes upon the existing law, and the desirability of obtaining uniformity in legislation, your Committee are of opinion that it would be better to proceed by a general public Bill, instead of a mere modification of Standing Order, No. 167."
    Sir Francis Reilly was of opinion that if this Standing Order was altered, to give it effect it would be necessary that the Act of 1845 should be repealed by special provision in every Act of Parliament containing a clause allowing interest to be paid out of capital, or the Act would have to be altered. The hon. Member for Stroud (Mr. Brand), amongst others, was strongly of opinion that it would be inconsistent with sound policy to put clauses in Acts of Parliament only to be repealed afterwards by their Committees in detail. With regard to what he would call the philanthropic argument, many investors would take advantage of a Railway Company' offering interest from the commencement of the undertaking, in order that they might be saved the trouble of putting the amount on which they desired to live during the construction of works into savings banks. In this way the offer of interest during the construction of works deceived the poorest class of investors— Clergymen, Independent, Baptist, Methodist, and the poorer class of shopkeepers—who knew nothing of the real merits of the undertaking they wont into. He did not wish to refer specially to the Hull and Barnsley shareholders; but it was fair to point out that the average amount subscribed by individual shareholders to that undertaking was only £250; whereas the average amount invested in the railways of the United Kingdom was between £1,500 and £1,700. This showed that the terms offered by the prospectus drew into it a large number of shareholders. The Hull Savings Bank, in its Report last year, derdored the falling-off of de-posits, attributing it to the fact that many of the depositors had transferred their savings to the Hull and Barnsley Railway, the amount withdrawn for that purpose being estimated at £20,000 in one year. He mentioned this to show that in altering the Standing Order as proposed they would be drawing in that class of investors who ought to be protected—if our laws were to be protection at all—as they were the least able to take care of themselves. The general position of railways in the country was hardly understood by those who would alter the Standing Order. In 1881 there was £276,000,000 of ordinary Railway Stock, of which £36,500,000 paid no dividend at all; £6,250,000 paid 1 per cent or less, and £15,250,000 paid 2 per cent or less—that was to say, £58,000,000 paid under 2 percent. His hon. Friend asked that the Committee of the House of Commons should decide whether these people should have 4 percent at the time that their money was going into the hands of the Railway Company. Hera-path stated that in 1881 £95,500,000 only earned 2½ per cent or less. Only £1 10s.d. on an average was paid on £95,000,000. Only £3,250,000 earned more than 8 per cent. In 1870–1 the average dividend paid by the Companies was 4·74 per cent, and in 1880–1 it was 4·29. The arrangement proposed would enable new undertakings to pay 4 per cent before anything was earned; whilst it was shown that the average of established, sound undertakings was only 4·29. The Great Eastern paid £1 12s. 6d.; the Lancashire and Yorkshire, £5; the Manchester, Sheffield, and Lincolnshire, £2; the Metropolitan, £5; the District, 12s. 6d.; the North Staffordshire, £2 10s.; the Caledonian, £4 2s. 6d.; the Highland, £4 5s.; the North British, £3 2s. 6d.; giving an average for the English Railways of £4 15s., and for the Scotch, £3 2s.; whilst the average for the Irish Railways was £3 3s. 6d., or a general total of £4 9s. Looking at these figures, looking at the amount of money invested in railways and the small return, and considering the small amounts which would probably be earned by future railways, he would ask, had the time come when the House could, with anything like propriety, repeal a law which for so long had been in operation, not only without detriment to railway enterprize, but to the advantage of the country and the protection of the weak class of investors? One word more about the cost of railways—and he had gone into this matter rather carefully, and the facts he had ascertained were worthy of the attention of the House. The lowest cost of an agricultural line was £15,000 per mile; and this, to satisfy the requirements of the Board of Trade and the requirements of the public, and to pay 5 per cent, must earn £15,000 per mile per annum. The York and Don-caster, which was an example of this kind of line, earned, locally, £400 per mile per annum, which, instead of being able to pay 5 per cent, was not worth 1¼ per cent; and so it would be for the lines that were to be made under this Standing Order. They were either to compete with existing lines, or, if agricultural lines, they had to be on practically these terms. If they considered the matter from the traffic senders' point of view, they would bear in mind that every unnecessary line added to the charges on his goods. These new small railways were thorns in the sides of the larger Companies, and they bought them up, and the dividend of those larger Companies were maintained, there being no reduction on the charges, which otherwise there would be, to the traffic senders in the district. Therefore, from the traffic senders' point of view, the construction of these lines, stimulated and fostered as they would be by the proposed change in the Standing Order, would be in the highest degree detrimental to the commercial interests of the country. Was there any difficulty whatever in raising money for railway purposes when those purposes were perfectly wholesome and legitimate? None whatever, in the present state of the railway market; £200,000,000 raised for railways during the past 10 years answered that question, which capital, with the exception of a very small amount, had been subscribed in accordance with the present Standing Order of the House. Would the proposed alteration stop fraud? Certainly not, for, if it had been resorted to in the past, it would still easily get round the Standing Order. He considered that 4 per cent would not, probably, answer a good many of the speculators; and if fraud had been adopted in order to get around the Standing Order, what was the difficulty still of allowing, as in a certain case before the Master of the Rolls, something more to the contractor per yard, in order that the 4 per cent might be made 5 or 6 or 7 per cent? A man who went round the Standing Order now for the purpose of raising his money because he could not raise it in the open market on the bonâ fide character of his undertaking, would still go behind it. He felt very strongly that the proposal would do more harm than good. Those who had gone before them had been well aware of what they were doing, and what they had done, he thought, had been for the commercial health of the country. He would only say this, in conclusion—that he believed there would be some difficulty in moving the Resolution of which he had given Notice; therefore, he would confine himself to the more simple plan of merely giving a negative to the alteration proposed by the hon. Baronet.

    said, that perhaps he might be allowed to congratulate the hon. Member for Durham (Sir Joseph Pease) on the very able and forcible speech he had made on this occasion. At the same time, however, it did seem that an answer might be given to his arguments on several of the points he had raised, and that there were considerations connected with this question which the hon. Baronet did not altogether touch upon, or did not altogether dispose of. The main objection to the proposed moderation of the Standing Order was that it would lead to the getting up of bogus Companies, which would be prejudicial to the public interest to a certain extent, and still more prejudicial to the interests of the Railway Companies. He (Mr. Gregory) doubted very much, however, whether the operation of the Standing Order, as modified, would affect speculation in railways to any appreciable extent. No doubt, the intention of the Act of 1845 was to diminish speculation; but he did not think it had had that effect, as a great deal of speculation had taken place in the years 1847 and 1848, and, indeed, the figures which the hon. Member himself had given as to the extension of railways within the last 20 years was almost an answer in that respect. What, in his (Mr. Gregory's) opinion, was likely to check speculation, and had already tended to check it, was the better understandings which were being arrived at between the great Railway Companies themselves, and the engagements which they were entering into that they would not promote lines merely for the purpose of speculation, or with the sole object of attacking each others' interests. This, in his opinion, was a greater check to speculation than anything they could do by Standing Orders. He could not help thinking that the proposal of the Chairman of Committees would have a good effect in checking "Contractors' lines." A contractor took up the greater part of the shares in a line, being allowed to charge his own prices in the contract which he entered into with the Railway Company, and getting such prices in the form of shares. It appeared to him that it was much better to get the capital from the shareholders in a legitimate way than to have a line made in such a manner as this. Under the Standing-Order, as it was proposed to be amended, the shareholders would receive a moderate rate of interest for any money which might be found by them in anticipation of calls; and, this being so, Railway Companies, in a great many instances, would be enabled to obtain bonâ fide capital for the construction of their works instead of having to rely upon the contractors. It might be said, "It is quite true that the contractor does not receive interest;" but he received a very large premium, so that really the operation of the Standing Order in the case of contractors' lines came to nothing at all. Just let them see what was proposed by the Standing Order. What was contemplated was that shareholders should receive moderate interest on the money they advanced on calls. Let them first see what that amounted to. The shareholder was liable for the full amount of the capital he subscribed; any person who took a share became liable for the full amount of the calls upon such share. Therefore, all that he did by making this advance was to pay a liability which would fall due at a certain time. The payment of the 4 per cent interest was nothing more than an allowance, at a moderate rate of discount, for the payment of future liability. It was an every-day mercantile transaction. No man would pay a debt which was not secured unless he had some allowance for doing so. That was just the position in which a shareholder was placed by the Standing Order which was now proposed. He was certainly liable for the full amount, and by paying his calls he paid off so much of his liability. Was he not entitled, under such circumstances, to a moderate consideration for anticipating his liability? That was really all that was asked and contemplated, and, as he had just said, it appeared to him to be purely and simply a mercantile transaction. Remember, that the interest to be given was a very moderate one. It was confined to 4 per cent, and various conditions were imposed for the protection of the Company and shareholders. A certain amount of capital must have been actually issued, and must have been taken out; and, after all, it was provided that it should be in the discretion of the Committee to say whether they would or would not allow any interest whatever to be given, and, therefore, any party which applied for such a power would have to make out a substantial case for what they asked. Under those circumstances, it appeared to him that this was a very fair and moderate proposal. He could not think that it would materially affect the interests of the great Railway Companies, nor did he think they ought to stand in the way of the proposal, if in itself it was a fair and legitimate one. He did not think the Standing Order, in its present form, or the Act of 1845, had had the effect of checking speculation. Speculation would go on in spite of all safeguards, if the occasion arose for it; and if there was a great plethora of money, or if there was great commercial prosperity, speculation would break out in one form or another. Speculation of late years had been somewhat checked by the bad seasons which they had had to encounter; but six or seven years ago it was in full life. It took the shape of investments in railways, and investments in Joint Stock Companies of various kinds; and, whatever they did, they did not check it. When the winding up of all those Companies took place, they saw what had been going on. It was then, however, too late to apply a remedy, and there was nothing the Legislature could have done which would have had any good effect. In conclusion, he had only to say that, considering that this allowance of a small discount upon the payment of a debt, which matured in the future, was purely a commercial transaction, and was one which was carried on every day, and having regard to the very little effect of the Standing Order which was already existing, or the Act of 1845, he could not help thinking that the proposed alteration was one which ought to receive the sanction of the House.

    said, he was not a Railway Director; but he wished to make a few observations in the interest of the Standing Order as at present framed. In his opinion, it would be most disas- trous not only to Railway Companies, but to the public at large, if the Standing Order were altered in the way proposed by the Chairman of Committees. The hon. Baronet (Sir Arthur Otway) had said it was not likely that Parliament would be so rash as to take under its protection widows and orphans. He (Mr. Carbutt) did not ask Parliament to take under its protection widows and orphans; but he asked them not to offer them a system whereby they might find in three or four years that a good portion of their investment was gone. Parliament did protect the interests of minors; and, although he did not ask it, he did not see why they should not protect widows and orphans. They heard a great deal about encouraging natural thrift, and they were told the people of this country did not save money like the French. The French had invested their money in land, and our people ought to be encouraged to invest their money so as to have a chance of getting some proper return. He believed, the proposition of the Chairman of Committees was wrong, because it would enable people to be paid interest on money during the construction of a line which, when worked, might not pay 1d. of interest. At the end of a few years the poorer class of investors would have no more money to go on with; they would find their shares at a great discount, falling into the hands of the capitalist. The proposed Standing Order would be of great advantage to the large capitalists, but of no advantage whatever to the small capitalists. Small men would be persuaded to go in the undertaking by the presence of the larger capitalists; they would get their interest for the first four years; they would spend it, and at the end of that time they would have to sell their shares. His own impression was, that if railways were required at the present time the right thing was for the capitalist to make them. At the present moment there was invested in the railways of the country something like £752,000,000. That represented an investment of £21 per head of the population, and the opinion formed by railway men and others conversant with the subject was that they could only earn £ 1 per head per traveller. Generally speaking, a new line received its traffic by taking it from old lines, and it might be years before it could earn 1d. of dividend. It was not for the Legislature to encourage small investors to go into speculation, speculation which ought to be carried out by large capitalists, who could afford to wait for some return for their money. If it was desired to encourage railways—and he had no doubt this proposition was made with that view—the best thing to do was to decrease the duty on the passenger traffic, and thus allow Railway Companies to earn dividends which would enable them to reduce fares. What did they find in the case of the larger lines—those lines which were earning fair dividends? They were always attempting to reduce their fares; and he found it stated by Mr. Moon, Chairman of the London and North-Western Railway Company, that at the present time the earnings of that Company were something like 1s. 2d. per train per mile less than in 1867. There was thus a reduction of 25 per cent of earnings, and all that reduction had gone into the pockets of the passengers. It was clear that the only way to encourage railways was to give them every facility for earning money, and not to allow them to pay dividends which they had not earned. Upon examination hon. Members would fined that the railways of England cost in construction something like £40,000 per mile, but that, on the average, the railways all over the world only cost £18,000 to construct. If they were to pay dividends during construction the capital account would be very materially increased—if they were to add the sum of money expended upstairs in obtaining Parliamentary sanction, which in the case of many of the small lines amounted to 16 and 17 per cent of the capital, and if they added the 20 per cent to be paid during construction, financial matters would be rendered serious in the extreme. The Prime Minister was doing all in his power to reduce the National Debt; but he was doing it at the expense of the taxpayers. If they allowed this 20 per cent to be paid during construction the capital account of the railways would increase at an enormous rate; and when, in future years, it' might be necessary to say that the Railway Companies should not pay more than a certain percentage, all this extra capital would have to earn dividend before they could come to any arrangement of the kind. In this case it would be absurd to abrogate the law because it was evaded. The Chairman of Committees had said the law was evaded every day. Were they going to do away with the Law of Murder because murders were not always detected? He hoped the House would hesitate before they agreed to the proposition of the lion. Baronet. In the interest of the working classes he opposed the Motion. He asked the House not to persuade the working classes to invest their money in undertakings in which, for the first few years, they would obtain certain interest, but in which ultimately they would lose their money.

    said, he very much regretted that his right hon. Friend the Member for Montrose (Mr. Baxter), who was Chairman of the Committee upon which he (Mr. Salt) had the honour to sit last year, was not at present in the House, so that he might have had the advantage of conferring with the right hon. Gentleman as to the course that he would wish to be taken on this occasion. The hon. Baronet the Chairman of Committees, who had moved the Resolutions before the House, had said that the Chairman of the Committee was in favour of the proposal. It would have been an advantage to other hon. Members of the Committee if they had had the opportunity of conferring personally with their Chairman as to the reasons which had brought him to that conclusion. Failing the advantage of a conference with their Chairman, he felt that he was bound in loyalty to the Committee to maintain, so far as his voice could, the lines that were taken by the Committee. He was bound to say that the hon. Baronet the Chairman of Ways and Means had most loyally adopted in his Resolutions the recommendations that were made by the Committee to which he referred. With nearly all that fell from the hon. Baronet he agreed; but he doubted whether he could go the whole way with him. The difficulty was one which was very peculiar. It was a matter on which it appeared to him the arguments on one side and the other were so evenly balanced —there was so much to be said on both sides—that no one ought to complain that anyone else took a view contrary to his own. Now, the difficulty, as had been explained, had arisen from rather a peculiar circumstance. The broad principle upon which the House might be invited to act might be invoked with equal propriety and equal strength either for or against these Resolutions. It might be said, with perfect truth, that capital ought to be left, as far as possible, to take care of itself. That was a broad principle upon which all men would agree, and many would say that any interference, under any circumstance whatever, with the ordinary course of capital by any legislative power would not only be foolish, but mischievious. But then, on the other hand, he might allude to another principle which was equally true, and which he thought would be equally acceptable, and it was this—that interest, by its very nature, was something that was to be earned by capital; that it was almost a confusion of terms to say— "You authorized the payment of interest on capital, when that capital was not in a position to earn any interest at all." So that if they proceeded on broad and general principles, he thought he had quoted two instances which illustrated what he ventured to say just now— namely, that this question was a question of great difficulty, and that its merits on one side or the other were most evenly balanced. Let them go one step further, and he would mention a fact which he thought would apply to almost all commercial and monetary Statutes, and it was this—that money was like water; enterprize founded upon money was like flowing water. If they tried to dam it up in one direction it would find an outlet in some other direction. They could not dam it up altogether—it must flow, it must go on, it must in some way or other find a legitimate outlet for the occupation which belonged to it under particular circumstances; and that was exactly what had happened, and that was exactly what had led to the difficulty which they were discussing to-day. Many years ago— in the year 1847—Standing Order No. 167, with which they were now well acquainted, was passed, and the effect of that Standing Order was to prohibit the payment of interest upon capital before the interest was earned. Now, the result of that had been that side by side with the Standing Order had grown up a system—sometimes winked at, but unauthorized in the mind of Parliament— of paying interest by means of dealing with the contractors of railways, and that was well known to hon. Members, and was well illustrated by the evidence given before the Committee last year. That had been carried on to the extent of many millions of money during the last 30 or 40 years. But, suddenly, that was checked; it was checked in the year 1881 by a decision in the Courts of Law, making it difficult and risky, if not impossible, to carry on that operation further; and after that decision was given certain Companies took what was a most proper course—they came to Parliament, stated their case, and applied to Parliament for power to override the Standing Order No. 167. And the question now arose, how was Parliament to deal with the matter? Were they to cause that outlet, that unauthorized outlet, for the employment of money which had been going on for many years, and which had been partially acknowledged and winked at, to be stopped up; were they, when difficulties arose, to alter at once, even to a moderate extent, a Standing Order on which the transactions of railways had been based for many years past? That was a question which it was rather difficult to answer. When considering the position of railways they must look upon railways not in the same light as they did in the year 1845, or 1846, or 1847, when this particular Standing Order was passed. At that time a great speculation was going on, which was creating a system of railways that had not at that time been developed. There was now a largely-developed system of railway communication supplying, and well supplying, every important town in the country; and the question was, how far it was fair to Railway Companies to alter, without due consideration, the Standing Order upon which all their transactions had been based? Railway Companies had, for the last 35 years, been acting upon that Standing Order for what it was worth. He said advisedly for what it was worth; because the Standing Order might not have been worth very much. No matter, however, what its worth was, the railway system of the country developed in a most remarkable degree; developed to the great advantage of the country at large. The expressed opinion of Parliament had declared in favour of this Standing Order, and it was a very serious thing that an attempt should be made to alter it without very strong reasons; and he was inclined to think that with regard to any enterprizes of the nature he had just been mentioning, and which had been well illustrated by what had been said in the House, and what had been stated before the Committee, if the Standing Order was not altered some means would be found for carrying out those enterprizes, he hoped for the advantage of the country. This matter was not one of small importance; and, moreover, it was a matter that ought to be dealt with without any great delay, because the decision of the House was a decision for which a very large number of the promoters of enterprizes were waiting, and upon which the expenditure of millions of money depended. In a Return which reached him that morning, he found it stated that in 1880 there was one Company representing £3,000,000 of capital, and with large borrowing powers, which applied for leave to pay interest upon its capital during the construction of the works; that in 1881 there were 10 Companies, the share capital of which was £22,610,000, and the borrowing capital £6,810,000; and that in 1882 no less than 46 Companies, with share capital of £60,492,000, and with borrowing powers of £18,670,000, asking for power to pay interest during the construction of their lines. That showed that the question was not a very small one, and, moreover, that it was a question which required early and clear decision. These sums of money, even in this country, were very large sums to be strung up in a state of uncertainty pending the decision of Parliament. As he had said just now, his right hon. Friend the Chairman of Ways and Means fairly and frankly adopted the views which were suggested by the Committee upon which he (Mr. Salt) had had the honour of serving. Those views were shortly these. That, under the circumstances, some check was desirable; that it would be well if, as a general principle, the rules laid down by the Standing Order 167 could be adopted, and better still if they could be adhered to; and that probably they would be more strictly and generally adhered to if some regulation could be made so that, under peculiar circumstances, a concession could be granted with regard to the payment of interest. That, briefly, was the opinion of the Committee, and he took it to be the opinion of his hon. Friend the Chairman of Ways and Means. But the question arose, how was this to be carried out? He (Mr. Salt) was bound to say that he had some doubts whether the Resolutions of his hon. Friend could always be carried out, and whether they could rely upon every Committee before whom any Railway Bill came for discussion adopting the clear and definite and consistent views embodied in these Resolutions; it was very uncertain whether the House could fairly expect the decision of one Committee to be quite consistent with the decision of another Committee in a matter of that kind. He believed that, if carried out, not only would these Resolutions, in practice, be beneficial as meeting the necessities of the moment, but he believed that they would prove a far greater check upon speculative enterprizes than the Standing Order 167 had ever proved to be. He would remind the House that the Committee of last year recommended that the alterations of the Standing Order should be made, not by a new Standing Order, but by a Bill. By that recommendation he thought it was loyal and right to stand. He might say that this recommendation was founded upon very high opinion indeed; it was founded upon the opinion of none other than Sir Francis Reilly, contained in a Memorandum put before the Committee. There was another reason why he was inclined to think that the House should proceed by way of a Bill, instead of by mere Resolutions, and he was sorry to say it was the very argument which the hon. Baronet the Chairman of Ways and Means used in favour of proceeding by Resolutions. It seemed to him that the argument which the hon. Baronet used for proceeding by way of Resolutions in this matter was the very strongest argument that could be possibly advanced for proceeding by way of a Bill. The hon. Baronet had said, very truly, that it was difficult to pass Bills at the present time; but there was now a very powerful Government in Office, and a very able Minister at the head of the Board of Trade, so that he (Mr. Salt) did not make much of the difficulty. The hon. Baronet went on to say that if the proposals were put forward in a Bill, that Bill would meet with the very strongest opposition. It seemed to him (Mr. Salt) that the fact that there would be very strong opposition to these Resolutions, if in the form of a Bill, was the very greatest argument that could possibly be adduced in favour of proceeding by Bill. It must be remembered that the Standing Order had existed now for 35 years, and that its efficacy had come into question, not by any fault of its own, but because certain commercial transactions entirely outside the scope and intention of it had failed, and had been decided against by a Court of Justice. Therefore, they ought to consider very carefully, they ought to give every Member in the House, and every interest in the House, the very greatest and the very amplest opportunity for discussing and challenging and amending any change that was to be proposed in a system which had lasted so long. He would advance another argument in favour of proceeding by way of Bill. Because these Resolutions were proposed by the hon. Baronet the Chairman of Ways and Means, whose opinion and experience was so valuable in any matter of this kind, he (Mr. Salt) was inclined to receive them with favour; but he could not agree that it was prudent and wise to effect such a change as was proposed by a series of Resolutions upon which only one Motion could be made. Such a difficult problem as that could only be settled by repeated discussion, by repeated inquiry, and by giving the opportunity of considering time after time, either in the House or in the country, in detail as well as in principle, the proposals that were to be put before the House. That could only be done by the machinery which the custom of the House afforded with regard to a Bill. If his hon. Friend persisted with these Resolutions, he (Mr. Salt) could only hope that they would effect their purpose. If the hon. Baronet did not now proceed, and it was found desirable that some Member of the Government should introduce a Bill on the subject, he (Mr. Salt) would be disposed to support the Bill, if reasonably and fairly drawn, as he had no doubt whatever it would be. Failing that, he owed some loyalty to the Committee upon which he served; and in pursuance of the reasons he had stated in favour of dealing with a matter of this importance by way of a Bill, he could not vote for these Resolutions in their present form, though possibly he should not feel an inclination to vote against them. He trusted that the hon. Baronet would be brought to the conclusion that, in this matter, procedure by way of Bill would be preferable.

    said, it now became his duty to make a few observations to the House in reference to the proposed alteration of the Standing Order 167; because he could not conceal from himself the fact that the proposed alteration owed its inception to matters in which he was personally, and the Company over which he so unworthily presided, were concerned. The object of the Standing Order had been clearly explained by the Chairman of Ways and Means. It appeared that in 1837—which was the year in which railways were introduced into this country—there was one Act passed which granted the power to pay interest during construction. In 1839 there were nine Acts passed containing similar powers; in 1842, three; in 1843, two; and in 1844, seven. And then commenced a period which had been alluded to by various hon. Gentlemen, when a considerable increase took place of enterprize in railway matters, and in the year 1845 26 Acts passed containing the power in question, and in 1846 there were 92 such Acts passed. In all, 300 Acts were passed in which there was a clause granting the power to pay interest during construction. In 1847 the Standing Order was passed, but four or five Companies received power to pay interest during construction before this Standing Order was made, and in every Bill which had come before Parliament since the passing of the Standing Order such power had been disallowed. He did not quarrel at all with the statement which had been made as to the object and origin of the passing of the Standing Order. He thought it was exceedingly probable that it arose out of the railway mania of that day, and out of a necessity which seemed to exist in the mind of the House, that as undue speculation was on the increase it was the duty of Parliament in some measure to check it. Personally, he considered that on account of the provisions contained in the Act of 1845 the passing of this Standing Order was entirely unnecessary. He thought it would be seen that the Companies' Clauses Act of 1845 contained provisions that were amply sufficient for the purposes of checking unwise speculation, which Parliament had in view. The Act of 1845 contained a provision that all monies raised by a Company, whether by subscription or by loan, should be applied to meet the expenses incurred in carrying out the purposes of the Company. And then followed Section 121, which provided that a Company should not pay any dividend whereby their capital was reduced. There were other provisions in the Act which more or less elucidated these two points. For his part, therefore, he could not see that there was any necessity on the part of Parliament — nor was it shown in the debates at the time—why this Standing Order should be made to enforce the carrying out, as it were, of the provisions of an Act already existing, and which could be enforced by proper authority. Notwithstanding the passing of the Act, it must be remembered that in that very year, 1845, no less than 26 Acts were passed which contained permission to pay dividend out of capital, and that in the following year no less than 92 such Acts were passed. The House ought to consider what the effect of the Standing Order had been. It seemed to him that the inevitable result which followed all extreme and stringent regulations had followed in that case—that was to say, that the law breaker had followed the law maker. In order to carry out works which Parliament had sanctioned, provisional Directors, or Directors of Companies, had been obliged to resort to every species of evasion of the law. There was only one other thing they could do, and that was to run the risk of having the provisions of the Act of 1845 and certain penalties enforced against them. Of course, that was a risk they could very largely avoid, and in very many instances it had been avoided by the very simple means of, as it were, drawing the teeth of those who were opposed to them. If an independent Company, or a Company which desired to be independent, wanted to pay interest out of its capital, it had only to sacrifice its independence and say to one of the large Companies—"Will you work us; will you buy us; will you do anything so that you may have some control over us?" It was the easiest thing in the world for a great Com- pany to have its teeth drawn. In this way many new Companies came out. No doubt allusion had been made during the debate to himself personally, and to the Company over which he presided. The Hull and Barnsley was an independent Company. Did any hon. Member suppose for a moment that if they had been willing to sacrifice their independence, if they had been willing to be worked by the Manchester, Sheffield, and Lincolnshire, or the Lancashire and Yorkshire, or any other of the great Companies, an Injunction would have been brought against them before the Master of the Rolls? Nothing of the sort. They would have hoard nothing of it. An evasion of the law was practised in their case; but the matter was contested, and contested, as he firmly believed, by those who were interested in preserving the opposition traffic. He asked the House to allow him to mention some of the evasions, and to show how they were carried out. He had in his possession a few prospectuses, which had been issued at various times from 1864 to the present date. Some of them he was sure the House would see related to exceedingly important undertakings. The Metropolitan District Railway, which had proved an unquestionable benefit to the public, paid 6 per cent interest during construction. He ought, perhaps, before giving examples, to say that, practically, there were three ways in which evasion could be carried out. One was a very common one—namely, that a certain amount of Consols were placed in the hands of Trustees for the benefit of the shareholders; and in the prospectus issued it was stated that a certain a, mount of Consols had been placed in the hands of Lord So-and-so, the weight of the gentleman's name and the position of the Company being, no doubt, guarantees that the Consols had been placed as stated, and that they would be available. But whore did the Consols come from except out the capital of the Company? A more barefaced evasion than that could not possibly be imagined. Another form of evasion was a very simple one, and one which, he believed, had not yet been contested. It was possible for a contractor to construct the works of a railway, and to undertake in his contract to hand them over to the Directors of the Company, receiving only in return what was termed the mere actual outlay which he had made. Did any hon. Member suppose that the contractors did not add to the actual outlay the interest on the sums of money expended by them, and which had been advanced by them for the purpose of the construction of the works? There was not the smallest doubt in the world that the contractors would charge interest upon the advances. He (Colonel Smith) submitted, under legal advice, that this was a legal method of evasion. But when practised, he knew full well that the contractor would say —"I will do the work and take shares; you shall pay me in paper the actual outlay plus the interest on the advances made." Speaking under correction, he maintained that if this was a legal evasion, still it was an evasion, and an unworthy one, and one which ought not to be allowed, though its perpetration would be continued if the Standing Order was not altered. The Metropolitan, and St. John's Wood, and the East London Railways, paid 5 per cent during construction by means of the terms come to with the contractor. During the construction of the North Wales Railway 6 per cent was invested in Consols; and in the case of the Brighton and Dyke Railway, the first prospectus of which bore the name of his right hon. Friend the Chairman of Ways and Means, 6 per cent was paid by the contractor during construction. In the case of the Forth Bridge Railway 5 per cent was paid by the contractor, and this was an extraordinary instance. Why was not the legality of the proceeding contested in this case? Because, no doubt, the names of the Chairman of I the North British, and of a Director of the North British, and of other influential railway people appeared upon the prospectus of the Forth Bridge Railway. No wonder the legality of the proceeding was not contested by anyone when persons of such weight connived at the evasion, and allowed their names to appear on the prospectus. The Scarborough and Whit by Railway, and the Swindon and Cheltenham Extension, paid interest during construction—the former 5 per cent, and the latter 6 per cent. It had been said by the hon. Member for Stafford (Mr. Salt) that since the case of the Hull and Barnsley the practice of evading the law had very largely stopped. That, however, was not the fact. The action against the Hull and Barnsley was brought in the spring of 1881, after the prospectus, offering to pay 5 per cent during construction, was issued. In 1882, however, the Brighton and Dyke Railway paid 6 per cent; and in the same year the Swindon and Cheltenham Extension paid 6 per cent. In both cases this took place after the action had been successfully brought against the Hull and Barnsley. There was now also a Colonial Railway, the Chairman of which was Lord Brabourne, the Deputy Chairman of the South-Eastern Railway, which proposed to pay 6 per cent during construction. The Cleveland Extension Minerals paid in 1882 5 per cent, and the case of the Southport and Cheshire Lines Extension brought the House down to July, 1882. This was a railway of undoubted importance; and in its prospectus the General Managers of the Manchester, Sheffield, and Lincolnshire, and the Midland Railways recommended the people to invest their money in the new undertaking. He found that here again, in 1882, the law was evaded, and interest at the rate of 5 per cent was paid by the contractor. Why, he asked, was no Injunction brought in the case of the South-port and Cheshire Lines Extension? Because the Manchester, Sheffield, and Lincolnshire, and the Midland and the Great Northern Railways had jointly agreed to work the line.

    , rising to Order, said, it must be within the hon. and gallant Gentleman's knowledge, if not he would inform him, that as soon as the attention of the three Companies mentioned was called to the mode in which the Southport and Cheshire were raising their capital, they sent a distinct protest against it.

    said, he was not aware of that fact; he heard it with pleasure. But he was not aware that that protest had had the effect of causing the Southport and Cheshire to alter their tactics; because, up to December, 1882, they continued, and he believed they would continue, to issue prospectuses having in their provisions one or other of the well known modes of evading this Standing Order. He thought he had shown that the Standing Order had been evaded continuously, and that it had boon evaded since the Hull and Barnsley case. He was at one with the Chairman of Ways and Means when the hon. Baronet said he was of opinion that Railway Companies would continue to evade the Standing Order; and he asked if this was a position in which Parliament ought to be placed? He thought not. The Committees upstairs sat for days together over the Railway Bills introduced; they took, to his knowledge, the greatest possible pains to inquire into the bona fides of the different undertakings; and when the Bills came back from the Committees, they, as a rule, received the sanction of the House, though of late there had been a tendency to interfere with and alter the decisions of Committees upstairs, in the immutability of which the House had been taught to believe. What had been the result of some of the evasions? Let them take the case of the Metropolitan District Railway. He knew of no railway of greater importance to the traffic of London and the suburbs than that. The short history of the District Railway was that, after struggling for many years, it had to issue an enormous amount of 6 per cent debentures which would hang round its neck for ever. The financial difficulty in which the railway found itself was such that it would take many years of struggling to overcome. That was a case in point. The House would consider carefully, he was sure, what was the effect of perpetuating this old system. Its effect was to cripple legitimate enterprize; to drive Companies into the hands of contractors; to increase the cost of the lines, and ultimately to diminish the value of the shares. The hon. Member for South Durham (Sir Joseph Pease) knew perfectly well that contractors did not intend to be philanthropists; it would not be right to expect that they should be. They were entitled to receive proper remuneration for their services. He knew little of the undertakings started this year; but one of them he regarded of great importance—namely, that for making a considerable length of railway in Scotland. The Bill brought in to authorize the construction of the line was, he understood, rejected by a Committee of the House. There remained, however, before Parliament, one or two very important schemes involving the raising of many millions of capital. Notably there remained the scheme for the Manchester Ship Canal. Did the House suppose that anyone connected with the construction of that Canal could go into the City—for that was where money was obtained—and raise money for that scheme without paying interest during construction? As one who had had to do with raising money he asserted that not one 6d. could be raised except upon the undertaking that interest would be paid during construction. They had to consider many important schemes which had been sanctioned—among them the Regent's Park Railway. The Company had been able to raise a certain amount of their money, and why? Because they were able to offer to the shareholders a net revenue from an already going concern from the Regent's Canal which they had bought; but they had not raised the whole amount for that very important undertaking. Then there was the Inner Circle Completion scheme, and also the Metropolitan Outer Circle; and in reference to those railways, which were specially concerned with London, he would call attention to this. In 1863 a Select Committee of the House of Lords was appointed to consider various schemes for the construction of railways in the Metropolitan district, and in their Report they said it would be desirable that an Outer Circle should be formed in the Metropolitan district, intersecting and communicating with the principal lines of railway North of the Thames. That had been authorized by both Houses of Parliament. It was the same with the Regent's Canal scheme. These were two schemes recommended and authorized by Parliament for which, so far as he knew, the money had not been raised, and which were hanging up in Parliament, although Parliament had said they were to be constructed. He knew that the promoters of those schemes intended to carry them out within the powers Parliament had given them; but was Parliament going to insist on the Canal Company raising the capital by evasion, or that the Metropolitan Outer Circle should be forced into the hands of contractors against the judgment of the Company and the shareholders? He would, upon this question, allude to language used by one, to whose words everybody would listen with respect, the late Master of the Rolls, who, in the course of the application for the In- junction obtained against the Hull and Barnsley Railway, said—

    "I should think this case would lead to some improvement in the wording of this clause"—
    alluding to the usual prohibitory clause—and, later on, he said—
    "If a man lays out £1,000 in "building a house, at the end of that time he reckons that the house costs him not only the money laid out, hut fair interest on the money laid out. Why the same doctrine should not apply to railways I do not understand."
    Let it not be supposed that railways, who were so much opposed to the alteration of the Order, were paragons of perfection; or that they did not, in one form or another, do very much the same thing as they complained of in the new undertakings, and which by the retention of this Order they desired to perpetuate. The ways in which Railway Companies got their capital were simply these. Of course, a railway was in a satisfactory position for getting capital, or it was in an unsatisfactory position. In the latter case, the practice was to issue Stock at a discount with deferred payments. He could not see the difference between issuing £100 Stock at£80, or issuing it at par, and paying £5 per cent interest over four years, which would come to the same thing. It seemed to him that that was a power which only applied to existing Companies. In some measure he admitted that if that power could be applied to new undertakings it would be a relief, but only a partial relief; and he did not think it a very desirable plan to follow. As a matter of fact and of law, it was not possible for new undertakings to issue Stock at a discount; there was a distinct prohibition of that process in the Companies' Acts. If a Company was in a satisfactory position, the plan Railway Companies had was to issue Stock at a premium, carrying the premiums to a reserve, and undertaking to pay interest during construction out of such reserve. That was done in the case of the Metropolitan Railway, which got power to carry certain premiums to a reserve, and subsequently got power to pay interest on calls out of this reserve. The Metropolitan Railway Act of 1877 authorized the Company to form a fund, called the Reserve Fund, and to—
    "Carry to such fund all premiums payable in shares and stock which the Company have at their disposal, and the Company may, from time to time, invest the Reserve Fund and the annual income derived therefrom, and may, from time to time, apply such fund for any purposes connected with their undertaking, except the payment of dividends or interest on stocks and shares."
    But in 1880, under the pressure of difficulty consequent upon the necessity of obtaining further capital to complete their undertaking, they obtained in another Act power to—
    "Apply these funds to the payment of interest on calls in the capital issued,"
    thus completely evading the provisions of Standing Order 167. He was quite aware that there were many possible objections to be urged against altering this Order, though he did not think the effect of the alteration would be to tempt unthinking persons into investments. In regard to the Hull and Barnsley shareholders, the hon. Baronet (Sir Joseph Pease) alleged—he did not know upon what authority—that the average Stock held was £250; and he stated that he had gathered that from a shareholder. He might, perhaps, inform the hon. Baronet that no shareholder had access to the register which showed the amount of shareholders' Stock. He had a right of access to the names and addresses of shareholders, but not to the register. What sources of information the right hon. Baronet had he did not know; but, so far as he was aware, this information could only be obtained from the Company. The hon. Baronet also said that some of these unthinking persons were tempted to invest in the Hull and Barnsley Railway by a promise of so much interest during construction, and that some of them were working men who took their savings from the banks for that purpose; but if the hon. Baronet had only thought for a moment he would have seen that that argument could be turned against himself. Did he suppose that the working men of Hull would have taken their savings from the bank and invested them in the Railway if they had not known that there was good reason for the prosecution of the Railway, and that for years they had been suffering under the monopoly and tyranny of the Railway Company of which the hon. Baronet was a Director? Was not that an absolute proof of the bona fides of the undertaking, and a refutation of his argument that unthinking persons were tempted to make unwise investments? Another objection was that this permission would allow railways to be made and interest to be paid by the contractors—or rather, the works to be handed over to contractors and interest to be paid by them— and yet no works would be constructed. He admitted that that was possible at one time; but it was impossible now, because shareholders were possessed of a complete defence against it. In these days shareholders would not go to half-yearly meeting after half-yearly meeting and receive their dividends while they knew that the works were in the hands of the contractors, and yet not a spade had been put in the ground. It had been said that the position of railways was not the same now as it was in 1837, or in 1847. The country was pretty well covered with railways. The Company of which the hon. Baronet was a Director was the owner of something like 1,400 miles, which had been brought together until the system had become a gigantic and, on the whole, an excellent affair. He had heard it said that in Westminster there were engineers and lawyers who would take advantage of this change. He knew, and nobody knew it better than he, that there were engineers and lawyers at Westminster; but there were engineers and engineers, lawyers and lawyers, and he did not think there was any intention on their part to take advantage of this provision, if it was altered, in order to establish a system of bogus Companies. Nobody would deprecate the formation of bogus Companies more than he; and he hoped he should be able to show that the provision proposed would prevent the formation of such bogus Companies. The Amendment proposed by the hon. Baronet was to be withdrawn, he understood.

    said, he merely proposed to negative the Motion of the hon. Baronet the Chairman of Ways and Means.

    said, what he understood to be proposed was a return to the old system. The Act of 1845 contained full powers to prevent interest being paid. It was thought desirable to supplement that Act by the present Standing Order; but he thought he had shown that that was quite unnecessary, and that it had been, and would be, evaded. That was not a position in which Parliament ought to be placed. What was wanted was an increased mode of carrying trade. The rate of interest was 4 per cent, and he thought that a wise provision. The House must remember that it had placed it in the hands of the Committee to say whether there should be interest, and, if so, what rate of interest, not exceeding 4 per cent. If 6 per cent were paid it would be very wrong. The hon. Baronet said, in the first place, that he did not agree in the view that people must take care of themselves; and then, in the next breath, he said he objected to the fatherly care of the President of the Board of Trade. He thought the hon. Baronet was inconsistent; and he hoped this Motion would be passed, as he firmly believed it would aid in the carrying out of works which had been sanctioned and were awaiting construction, and would give an impetus not to bogus or speculative concerns, but an honest and reasonable impetus to trade in a direction in which it was needed.

    wished to say a few words on behalf of the public. Everybody ought to be very much pleased with the fatherly care which the hon. Member for Monmouth (Mr. Carbutt) proposed to throw round the public to prevent them from squandering' their money; but he thought the public had a totally different interest, which was that reasonable railway enterprize should not be checked by the influence of two or three large Companies. Nothing, in his judgment, could be more unlikely to carry conviction to people's minds against this Motion than the fact that the statement which had been circulated in opposition to it contained the signatures of three gentlemen whose position was well known. They were gentlemen of high standing in their Profession, and they were the legal representatives of the London and North-Western, the Midland, and the Great Western Rail-ways. They were the only persons who had, circulated reasons against this new Standing Order; and if a reason why hon. Members should not attend to the suggestions in the Circular were wanted, it would be that the only persons who appeared in the foreground to carry out this opposition were the representatives of those three great Companies. The public were very much indebted to those Companies for the accommodation they had provided; but, having gone through all the infant troubles connected with Railway Companies—having had the measles, scarlet fever, and, perhaps, cow-pox — they wanted to stifle other railways in their birth. What was the interest of the public in this matter? He thought caveat emptor might well be applied to the subscribers in these new undertakings. Railway Companies were not so new to the British public that they needed any great protection on that score. His chief objection to the Order which it was proposed to repeal was that it tended to evasions, as the hon. and gallant Member (Colonel Gerard Smith) had shown. Was it necessary for the public good, in relation to the question of railway accommodation extension, to keep this restriction in force any longer? He should have thought that on a subject of this kind the opinion of the Chairman of Ways and Means would have gone very far to carry conviction. In considering the terms of the Standing Order which the hon. Baronet proposed, it seemed to him that many of the difficulties and objections which might be started were obviated by the careful way in which the new provision was proposed to be carried out. He thought the provision erred on the side of restriction rather than of laxity. That, however, was a matter upon which he thought the hon. Baronet who filled so worthily the position of Chairman of Ways and Means was a better judge than he. He only referred to that to show the extremely judicious way in which this arrangement was to be carried out. They had not only to convince a Private Bill Committee that power ought to be given in each particular case, which was a matter of very great importance, but there were limitations as to the payment of interest, and as to when that interest should run, and as to whether interest should begin until the Company had obtained the requisite certificate that a large proportion of the capital had been subscribed. There was also the provision that notice should be given by advertisement stating when the interest was intended to be paid. He thought the Conditions 4 and 7 in this new Standing Order conceded all that was reasonable and necessary; but, however that was, it Was hardly necessary to quarrel with an excess of care in drawing these restrictions. If one looked at the objections which were made to this proposal in the document signed by the throe solicitors of the great Railway Companies, he would be startled to find that they would take us back to the speculative period of 1846. Many hon. Members could remember the wild character of that speculation, when a newspaper could hardly be taken up which was not covered with railway prospectuses. This existing Order had its origin, no doubt, in that wild and maniacal speculation; but so far from that being an argument in favour of the retention of the Order, it was against the Order, because the circumstances having disappeared the law ought to go with it. He found in this Circular what the real grievance of the great Railway Company was. They saw that independent Companies had now some chance of existing, and that the number of Private Bills proposing to pay the interest for capital was increasing. That meant that railway enterprize was more energetic than it had been, and the public must get some benefit out of that; and, therefore, when it was proposed to assist that enterprize by a relaxation of the rules under which the House had acted in regard to private legislation, these great Railway Companies said they must endeavour to get Parliament to be as staunch and as stiff as ever in reference to the rule against interest being paid out of capital. It was not necessary to go into a dialectic discussion as to what was the meaning of paying interest from capital, and whether it was moral or not was out of the question. It seemed to him to be a trifling sort of infringement of the great principle that you must not pay interest from capital to say that a Railway Company, during construction, should be able to say to their subscribers that they would so arrange that the money should not be absolutely unproductive, and so that there should be no impediment in the way of a bonâ fide subscription. Paying interest from capital in that way did not make a subscription less bonâ fide than it would be under other circumstances. On the contrary, the most careful and most cautious investors might look upon that as an expedient to which they might well resort without being open to the remark that they were entering into a speculation and deserved to lose their money. It seemed to him that this was an important matter to those who, like himself, were not large holders of Railway Stock. He happened to hold Stock in one of the Companies that had given a guarantee; but that was under peculiar circumstances, and was not within the rule of Parliament. It was very desirable, in his opinion, to allow this liberal extension.

    The Standing Order 167 was passed under exceptional circumstances and for a specific purpose in 1847. From 1837 to 1845 the railway practice was to allow payment of interest on capital, and in the year 1846 nearly 100 Acts, representing £40,000,000 of capital, were passed with authority to pay interest during construction. What principle is infringed in allowing interest during construction? If the hon. Member for South Durham (Sir Joseph Pease) were to spend £50,000 in the construction of iron furnaces, would he not in his books debit the cost of those furnaces not only with the £50,000 actually expended, but also with the interest of the money which he drew from other sources and placed in the furnaces till they became productive? It is just so in a railway, whether the money representing interest comes out of the pocket of the shareholders or out of the banking account of the Directors. The true and actual cost of construction is the capital employed plus the interest which remained unearned during the period of construction. If the shareholder prefers that this interest should be paid to him through the Directors, rather than keep an account and add it to his capital account in his own books, that is a mere matter of convenience. Order 167 was passed not on account of any principle involved, but as a means of checking the railway mania of 1846. No doubt it had the desired effect, and largely checked railway speculation. The times have now changed. A network of railways spreads over the whole country, but they are chiefly in the hands of the great Railway Companies. These Companies do not always see it to be to their interests to construct branch lines into the neighbouring localities. These localities, however, do desire railway communication, and are anxious to procure it for themselves. They come to Parliament and got Acts, obtaining the capital by a circumvention of the Standing Order, for the contractor pays the interest on capital while it lies idle. The hon. Member for South Durham tells us that the holdings of Stock on the great railways average £1,700, and that in railways such as the Hull and Barnsley, which was got up by a contravention of Standing Order 167, it was only £250. Is not this a proof that the question at issue is one between the great capitalists and the general public? The general public desire to promote railway enterprize in their own way, and are willing to subscribe money on terms most convenient to themselves. The hon. Member for South Durham is a great railway magnate and capitalist, and scarcely appreciates the interests of small capitalists, who would subscribe their £200 for a railway undertaking, and, under the benevolent purpose of protecting clergymen and widows, would refuse them permission to participate in railway undertakings. I believe that the securities of the new Standing Order will give a far more efficient protection to these classes than the opposition of the hon. Member, for the effect of its refusal will be to throw these clergymen and widows again into the hands of the speculative contractors, as at present, instead of giving them the securities of a bonâ fide undertaking. The hon. Member for South Durham tells us there is no call for such a relaxation. He says that for any undertaking that is sound there is capital enough coming forward. But, in his next sentence he himself demolished his own argument, for he said that while in 1881 there was only one scheme for a railway with a capital of £4,000,000, as soon as it became bruited about that it was in correspondence with the Board of Trade as to relaxing the Standing Order in 1882, 10 schemes arose for £29,000,000, and in 1883 there were 46 schemes, with £78,000,000 of capital. Could anything be more conclusive as to the fact that capital has been strangled by this restrictive Order, and that as soon as it is likely to be relaxed new capital is ready to flow into railway enterprizes? I do not think that it is consistent with the dignity of the House to have a Standing Order which is systematically evaded. It is far better so to modify it that fair play may be given to small as well as to large capitalists in the construction of railways. The Chairman of Ways and Means has surrounded his proposal with safeguards, so that only legitimate enterprizes will be encouraged; and with this belief I heartily support the proposed changes in the Standing Order.

    said, that with all that the right hon. Member for the University of Edinburgh (Sir Lyon Playfair) had said he entirely concurred, and he thought the House was greatly indebted to the right hon. Gentleman for having come forward to champion the project of which he was the original author. There had been in this debate a tendency to ignore what would be the fate of these unwary investors and small capitalists even if the Standing Order were not altered. Those people had money which they put into some speculation or investment, and at the present time the operation of the Standing Order was to say that "The only investment in which you shall not put your money is a small English railway. You may put it into any foreign undertaking you like, and there are plenty of foreign Governments who will guarantee you interest, not only during construction, but for many years after the line is made." English capitalists who chose to be tempted by those directions were not to be blamed; but there could be no question that an immense amount of English capital, ready to be invested, had been driven from this country to foreign countries. The English Government themselves, in their Indian Possessions, made a practice of guaranteeing interest which he believed was paid during construction; and he, therefore, did not think that that lofty commercial Phariseeism which had been seen during this debate was altogether appropriate on the part of Members who were always ready to support the Government. He could illustrate this by an experience of his own which was rather instructive. He had the honour to be the Chairman of a Railway Company in a foreign country, and also of a small English Company. When the foreign Company invited subscriptions, the invitation being fortified by an Imperial guarantee, they received applications for five or six times the number of shares they had; but when the English Company invited subscriptions, they only got applications for two-thirds of the shares. That, he thought, was a very clear proof of the unfortunate effect of the existing legislation with regard to the employment of British capital in the making of new British railways. He did not wish to blame the great Companies, who, in fact, had all the benefit of the course which they now condemned, for the line they had taken. They had got something which was very like a monopoly in the railways, and it was very natural that they should wish to keep it. But it had been suggested by the hon. Member for Stafford (Mr. Salt), and in some degree by another hon. Member, that it would be better that a matter of this kind should be dealt with by a Bill, than by a proposed alteration in the Standing Order. But how were they to get rid of the present Standing Order? They could not technically deal with that by a Bill; and if they passed a Bill, that would seem to be an entirely inappropriate proceeding. If they brought in a Bill, that would still leave the Standing Order on the records, although it might conflict with the Act. Sooner or later they must come to the question of amending or repealing the Standing Order, and the proper way of dealing with the Order was by amendment or repeal. The Act of 1845 was in operation, and it was because that operated only with regard to undertakings which had not a special Parliamentary Charter, that this House had supplemented it by this Standing Order. Each and every railway scheme when legalized became as much the law of the land as the Act of 1845; and, therefore, it seemed to him, if they were to deal with the question at all, they must deal with the Standing Order, and not with the Act. One point had been put with great force by the last speaker, and that was the dictum, of the Master of the Rolls. If a man was going to purchase £100 worth of Stock in a railway, from which he knew he could not receive any interest for four years, he paid £120 for his Stock. The proposal of the Chairman of Ways and Means would have exactly the same effect, but in a manner which would probably be more convenient to the parties. The matter had been so completely thrashed out to-day, that he had very little more to add; but he thought he might say that he had it on very good authority—taking the example of one of the largest undertakings ever before Parliament — that by the Manchester Ship Canal Bill the promoters proposed to charge £623,394 for interest at 4 per cent during construction on their capital of £5,633,924; and he believed it was a matter of common notoriety that unless they were able to give effect to that particular clause in the Bill their scheme would have to drop, and that the great attention now being bestowed upon that Bill by a Committee upstairs, and the large attention which it would probably receive in the other House, would probably be all thrown away, if the promoters were barred from an essential and necessary step before they could carry out their scheme. He hoped the House, having regard to the fact that this proposal was that of the Chairman of Ways and Means, who he knew had given special attention to the subject ever since he assumed his Office; that it only carried out the recommendations of an extremely able Committee last year; and that it had been supported by every hon. Member who had spoken except those who represented the great Railway Companies, would pay on this occasion more attention to what had been shown to be the interest of the public, than to any invitation to sacrifice those interests, as they had been sacrificed in the past, to the demands of private Corporations.

    As some allusion has been made during this debate to the communications between myself and the late and the present Chairman of Ways and Means, I should like to add a few remarks. In what I have to say I am expressing not the opinion of the Government as such— for I believe it would be unusual for a Government to take part in any proposal to alter a Standing Order— but I am expressing my own personal opinion, which, I think, is that of my Colleagues, and notably that of the Prime Minister, who is not, I think, an inconsiderable authority on what constitutes safe finance. I think the House will agree that we have to thank the Chairman of Ways and Means for having brought this subject before us. It was a difficulty which had grown very much in the time of his Predecessor; and I think it is only in accordance with his official duties that he has thought it necessary to call attention to the difficulty, and, if possible, get over it. On the merits of the case it appears to me there are two questions to be decided. In the first place, there arises a question as to the feeling of the proprietors of the great existing lines, and the promoters of new lines. The action of the existing lines is, of course, quite intelligible. It is not their interest to promote or increase competition. I cannot help pointing out that in some cases those great lines obtained their capital by the evasion of this very Standing Order upon which they are now desirous of insisting. Having passed over the bridge they are now rather ungraciously trying to break it down, in order to prevent any other person crossing. Their very interest is so very self-evident that it is not necessary to point it out; but, after all, their interest is not the interest of the public. They assert that what they desire is not to discourage enterprize, but to discourage bogus Companies. I should like to know what is bogus enterprize in the matter of a railway undertaking? Is it enterprize which is not likely to be a good undertaking to the shareholders? Then, if that is the definition, the London, Chatham, and Dover, and the Metropolitan District, and even the Great Eastern Railways were bogus undertakings. I take these three Companies, and I do not believe that from their first establishment up to now they have paid more than an average of 1 per cent, if so much. But, although these investments have not been particularly satisfactory to the shareholders, they have been of the greatest advantage to the public; and if we are to protect investors at all I am less inclined to protect those investors whose losses are of the greatest benefit to the general public. You cannot protect the unwary. The widow and the clergyman, who are supposed to be weak-headed, will find some other means of investment if you protect those in this particular way—in British mines or foreign Stocks; and in these forms of investment there will be no compensation whatever in any advantage to the general community. Having regard to the impossibility of protecting investors as a whole and in all respects, this is a direction in which you should least of all attempt to protect them. Then you have a Standing Order which is evaded by people whenever they have an interest in evading it. Believing the moderate proposals of my right hon. Friend are likely to be beneficial, and seeing that they have the support of three successive Chairmen of Ways and Means, and that they carry out the re-commendatios of the Select Committee, I hope the House will see its way to adopting them.

    said, he should occupy the attention of the House but a very short time. A great deal had already been said on that side of the House, and on the other side also, against the proposed alteration of the Standing Order, and he should confine his remarks to a document which had been published presumably by the supporters of the proposal, and which appeared to contain a concentration of the arguments on which they relied. He found it stated in this document that one of the reasons why the Standing Order ought to be modified was that it had been in force since 1846. He did not exactly see the force of that argument; nor was he disposed to admit the accuracy of another of the arguments used—namely, that unless the proposal of the Chairman of Ways and Means were agreed to it would be impossible to raise the capital required for the construction of railways throughout the country. He believed that, considering the large amount of capital in this country on which very low interest was being paid, there was no speculation which could be proposed that would not be well supported. They had been treated to a very remarkable dictum by the supporters of the proposal— namely, that the question could be solved in a moment, because the Resolution was in accordance with common sense. His common sense taught him that it involved a false principle to spend by anticipation what was expected to be derived from the usufruct of property. Whether it was an orchard that was planted and the trees of which were not yet grown, or a railway which was yet to be constructed, it was dangerous and speculative, until some fruits were seen or some earnings were made, to anticipate, and spend by anticipation, what profits were expected to be obtained. His right hon. Friend the Member for Cambridge University (Mr. Raikes) had entirely lost sight of the great distinction which existed between the present case and that which he had referred to. His right hon. Friend had compared the railways which would come under the operation of this Stand- ing Order with the great railway in the Brazils, in reference to which an enormous amount of capital had been raised, because the interest was guaranteed by the Brazilian Government. But this guarantee by the Government made all the difference. Such a guarantee transformed the speculation into an investment, and the investor became the creditor, not merely of a Railway Company, but of a powerful Empire. It made all the difference whether they regarded the matter in the light of an investment or as an adventure, and whether the people who advanced their money were to be considered as partners or speculators. He most submissively asked his right hon. Friend the Member for Cambridge University to believe that, without being at all interested in any Railway Company, one might not unreasonably take exception to what he (Mr. Hubbard) regarded as the exceedingly dangerous financial policy which the right hon. Gentleman had enunciated. Nothing ought to be relied upon as the fruit of expenditure until it had been actually obtained; and, whether the Resolution were carried or not, he thought his hon. Friend the Member for South Durham (Sir Joseph Pease) had done good service in bringing before the House a question of great importance. Although the House might not be able to prevent evasion of the Rule which it had laid? down, it was most important that it should not give its sanction to a false principle; and he entirely agreed with the views which had been expressed by the hon. Member for South Durham.

    said, he had heard many strange propositions brought forward in that House; but the strangest that had ever come under his notice was that which had been propounded that day—namely, that because a Rule or a law had been evaded it ought to be modified or got rid of altogether. The Standing Order of the year 1847—he believed it was No. 167—was, he believed, speaking from memory, made because as many as 92 Bills had been introduced which provided for the payment of interest during the time of the construction of the line to which they related. The simple question now before the House was this—Was the House prepared to sanction the payment of interest out of capital? For his own part, he could say, in reply to the remarks which had fallen from the hon. Member for Londonderry (Mr. Lewis), that he held no shares and had no interest whatever in any Railway Company. Speaking, then, as an independent man and as an independent Member, he could never sanction the payment of interest out of capital. All the bogus Companies that came before the public were got up on this principle; and, although they might not be there to protect the widow, or the spinster, or the married woman, especially after the new Married Women's Property Act had become law, he certainly thought they ought not to encourage speculations of the kind which he knew would arise if, this proposed modification of the Standing Order were agreed to. What, at that moment, was the value of 4 per cent, taking any debenture or any Preference Stock in any respectable Bail-way Company? It would be found that 4 per cent stood at 108, 109, or 110; and yet it was proposed to offer, through the Railway Companies, that which the public would understand to be a perpetual 4 per cent. What would those unenlightened country people who bad been referred to know about the matter? ["Oh, oh!"] An hon. Gentleman said. "Oh!" He would ask that hon. Member to consider for a moment what would be the result if this proposal were agreed to. Many of the bogus Companies guaranteed a certain percentage. A woman, or some inexperienced person, looking at the announcement of one of those Companies, would say—"This is guaranteed. It is perfectly safe, and I shall get my 4 per cent; whereas, if I were to go into the market and buy bonâ fide Preference Stocks, I could not get them under 108, 109, or. 110." Under such circumstances, he did not think the House would be doing its duty if it sanctioned this payment of 4 per cent. A Committee had inquired into the subject, and that Committee had presented a Report to the House. Why should they not accept the Report of that Committee? Why did not the Chairman of Ways and Means, and the other Gentlemen who were acting with him, accept that Report? He considered that the proposal before the House was one which was quite unprecedented, and which ought never to have been made.

    said, he thought the discussion had been of a somewhat instructive character. An hon. Member, and the Railway Company with which he was connected, appeared to have got into some little mess with regard to a Railway Bill of theirs; and they, the House of Commons, had been asked to discuss that question through the long-hours of that Sitting to the exclusion of an Irish measure of the greatest importance, which had been put down for today after several days' discussion in that House. The Government were well aware of this, and had, in fact, been asked not to bring forward to-day this question of a private railway adventure. They had, however, placed it upon the Paper, knowing that it would lead to a long discussion; and they had gone through the form of putting down also an important Irish measure, for the discussion of which exactly 20 minutes now remained. This was treatment the Irish Members could not for a moment put up with. They had called their Colleagues over from Ireland, and some of them had come to London at considerable inconvenience, to discuss this important Irish Bill, which had been before the House now for seven years; and yet the whole of the Sitting had been given up, not to the discussion of that Bill, but to a matter which was certainly of no very pressing nature. An hon. Gentleman — he did not know whether he should call him hon. or right hon., but he had spoken from the Treasury Bench — [Cries of "Question!"] He was explaining why he proposed to move the Adjournment of the Debate. In his opinion, it was monstrous that the House of Commons, the Legislature of the country, should he called on to waste its time upon such a discussion as had taken place to-day— a discussion raised, not in the public interest, but simply and solely for private interests. If the debate had been allowed to close within any reasonable time, so that the Irish Members could have brought in their Bill, he should not have objected, but the whole of the Sitting had been taken up; and, as a protest against this misuse of the time of the House of Commons, he begged to move the Adjournment of the Debate.

    Motion made, and Question proposed, "That the Debate be now adjourned." —( Mr. Molloy.)

    said, he could not but express his acknowledgments to his hon. Friend (Mr. Molloy) for the very timely protest he had made. When they considered the position of the hon. Baronet the Chairman of Ways and Means, and his recognized connection with the Government, they could not acquit the Government of the responsibility of having deliberately chosen this day for the discussion of the matter which had occupied their attention for so many hours. It was all the more necessary that they should mark their sense of the action of the Chairman of Ways and Means in this matter; because future Wednesdays, which should be devoted to Public Business, might her appropriated for the discussion of Private Bills, in the same manner as to-day had been. He saw that the right hon. and learned Gentleman the Home Secretary was in his place, and they might regard him as the Leader of the House in the absence of the Prime Minister. He wished to ask the right hon. and learned Gentleman whether it was the intention of the Government, through their Chairman of Ways and Means, to appropriate every Wednesday when an Irish Bill stood as first Order of the Day? If that was their intention, they ought to announce it at the earliest possible moment, so as to give the Irish Members an opportunity of making such arrangements as would save many of their Colleagues the trouble of undertaking a useless mission to that House from their homes and businesses in Ireland. It was perfectly well known that many hon. Gentlemen, who would not otherwise have been present in the House, had come from remote parts of the Kingdom to be in their places during the discussion of the Irish Bill which stood as first Order of the Day. But it was not merely those interested in this Irish. Bill who had cause to complain. He noticed that the second Order of the Day was a Bill in the hands of his hon. Friend the Member for Scarborough (Mr. Caine), who was anxious to make the extraordinary proposition that actions for breach of promise of marriage should be abolished. He (Mr. O'Connor Power) regretted that, owing to the action of the Chairman of Ways and Means, he would not have the opportunity of voting against that proposition. He begged to ask the Government for an ex- planation of the course they had adopted; and he was glad that his hon. Friend (Mr. Molloy), by the Motion he had moved, had afforded them an opportunity of giving such an explanation.

    said, he would at once respond to the appeal which had been made by the hon. Member who had just sat down. All he could say was that he had asked the Chairman of Ways and Means, and some of his Colleagues, whether the Government had had anything to do with the bringing forward of the question which had occupied the attention of the House during the greater part of the Sitting) and he found they were not responsible for it. The hon. Member for Mayo (Mr. O'Connor Power) had spoken of the Chairman of Ways and Means as if he were an official of the Government. But, as had been explained over and over again, that was not the case. He was the Chairman of the House. He (Sir William Harcourt) could assure the hon. Member for Mayo, in perfect good faith, that the Government had nothing whatever to do with what had taken place; but he would point out that the only result of carrying the Motion for the Adjournment of the Debate would be that another Wednesday would be occupied with the discussion which had been already carried on at such great length. The hon. Member for King's County (Mr. Molloy) had spoken of the Government having fixed the first Order of the Day. Everybody knew that the Government had nothing to do with the fixing of the Orders of the Day on Wednesday, and that they had really no hand in the arrangement of Business on that day. Under these circumstances, he hoped the hon. Gentleman (Mr. Molloy) would withdraw the Motion for Adjournment, and allow the House to come to a division on a matter which he would not say had been discussed at too great length, but which, at all events, had been fully and fairly discussed.

    said, he should certainly support the Motion for the Adjournment of the Debate, and for two reasons. The first was that he might enter a protest against dealing with a subject of such great importance by means of a simple Resolution of the House in the 'form of a Standing Order. The question was one upon which men of authority and experience in that House were evidently so much divided that it ought to be dealt with, if at all, by legislation. His other reason for Supporting the Motion for Adjournment was to protest against what he might almost call the barefaced argument which had been made use of by the right hon. Gentleman the President of the Board of Trade (Mr. Chamberlain), who said that the Standing Order should be done away with, because it had hitherto prevented inexperienced people from falling into the hands of adventurers, and that he was perfectly content that the widow and the orphan should sacrifice their investments if only the public benefited by their so doing. That certainly was not a proposition which should have been brought forward in support of the modification of a Standing Order.

    said, he wished merely to confirm what had fallen from his right hon. and learned Friend the Home Secretary. No communication whatever had passed between any Member of the Government and himself on the subject. He regretted extremely that the discussion had led to the postponement of other Business, and more especially to that of the Bill which was in charge of the hon. Member for Mayo (Mr. O'Connor Power). But what was his position? The question with which his Resolution dealt was one which it was absolutely necessary to settle. He had already put the Motion down on four or five different days; but on each occasion he had been appealed to to withdraw it. The Session had, in the meantime, progressed so far that, considering that it was necessary to discuss it properly, he had considered it advisable to bring it on to-day. He must point out that, if the hon. Member opposite (Mr. Molloy) thought fit to persevere in his Motion for Adjournment, the only result would be that he should be obliged to occupy another Wednesday. He (the Chairman of Ways and Means) could not allow the question to remain in the position in which it now was; and, in all probability, unless a division were taken to-day he should select next Wednesday for the resumption of the discussion. Therefore, he earnestly hoped the hon. Member would withdraw his Motion, and allow them to proceed to a division.

    said, he rose merely for the purpose of making an appeal to his hon. Friend the Member for King's County (Mr. Molloy) to withdraw his Motion. He had not intervened in the discussion, because he had not wished to talk against the Bill which stood first on the Orders. He was quite sure the Chairman of Ways and Means (Sir Arthur Otway) had no notion that the discussion upon his Resolution would occupy the whole day when he put it upon the Paper. At the same time, no change in the Standing Orders of the House would be more useful in Ireland hon. that which was embodied in the Resolution; and he appealed to his hon. Friend to withdraw his Motion, and allow the House to proceed to a division.

    Motion, by leave, withdrawn.

    Question put.

    The House divided:—Ayes 131; Noes 123: Majority 8.—(Div. List, No. 117.)

    House adjourned at five minutes before Six o'clock.