§ Further Proceeding on Third Reading
§ SIR FITZROY KELLY
said, he regretted that he did not see before him any 624 Member of Her Majesty's Government who had taken a part in this important Bill. But before he said a word upon the subject, or proposed for the consideration of the House the two clauses which, he had to suggest, even at this late stage, should be added to the measure, he must set himself right with the House upon a matter which was personal only to himself. The Bill, as he was informed, was brought before the House, not at a late hour last night, but at an early hour this morning; and as he was not in his place, he had to ask pardon from the right hon. Gentleman the Chancellor of the Exchequer (he wished he were present) and the House, for any apparent neglect of his public duty, in not being in his place. He must take upon himself the entire blame of his absence; but what he had to state was this: He left home at an early hour in the morning, before the Votes were delivered; he was detained the whole day before the House of Lords; he was prevented by an accident from being present at the debate upon the Motion of his hon. Friend the Member for the University of Dublin (Mr. Hamilton); and it was not until he read the proceedings of the House in this morning's papers that he was aware of the Bill being on the paper for last night. He understood it was stated by the right hon. Gentleman the Chancellor of the Exchequer that he had been in his place in the course of the evening. It would, therefore, have naturally followed that his departure from the House would lead to the inference that he had no further remarks to offer in respect to the Bill. But the right hon. Gentleman was entirely in error. He was not in the House, and he knew nothing of its proceedings, either in the evening or in the morning. The right hon. Gentleman was undoubtedly quite correct when he stated that he had, upon a former evening, declared that he would not object to the Bill being brought on at any period night or morning that would be convenient, provided due notice was given; but it must be admitted that, looking at the vocation of many Members, it was an inconveniently short notice that was only given in the Votes of the same morning, especially as the Votes were often not delivered until ten, eleven, or twelve o'clock in the day. The consequence was that any Gentleman leaving home before those hours received no notice at all. He must again express his great regret that no Member of Her Majesty's Government was now present, 625 because he had to call the attention of the House to certain clauses which he intended to move, involving questions of great importance, which seemed to him to require the attention of Her Majesty's Government. He must, however, proceed to discharge the duty imposed upon him, lest he should he thought, if he took any other course, to be a participator in anything that might lead to further delay. He quite agreed with the right hon. Gentleman the Chancellor of the Exchequer that it was important there should be no delay in a measure of this kind; but he must say, at the same time, it was possible there might be too much despatch, and he thought be should show sufficient reasons for arriving at the conclusion that the Bill had been prepared, and had been passed so far through that House, without that due consideration, to which, from the magnitude of its subject, it was entitled. There were two points upon which he had clauses to move. [The Chancellor of the Exchequer here entered the House.] The object of the first was to effect a limitation of the amount of stock to be created under the alternative No. 2 of the right hon. Gentleman's scheme—the 2½ per cent stock—to the sum 10,000,000l. The other clause was intended to make certain provisions concerning the assent of persons beneficially interested in stock, where it stood in the name of trustees.
§ The CHANCELLOR OF THE EXCHEQUER
said, his hon. and learned Friend the Solicitor General, who was not now present, had drawn a clause for the purpose of meeting the case of parties beneficially interested in stock in respect to the trustees; and he would suggest that the hon. and learned Gentleman opposite should defer his own clause until that of the Solicitor General was before the House.
§ SIR FITZROY KELLY
said, that course would expose both himself and the House to great difficulty, whilst it certainly presented another reason for complaining of the undue precipitancy with which the Bill had been carried through. Thus, at the last moment, when it was competent for him to propose an Amendment to protect persons beneficially interested in stock against the imprudent and perhaps wanton acts of trustees, he was told that Her Majesty's Government had prepared a clause calculated to meet the objection he had raised. But he was in this difficult situation—he must propose his clause now or not at all. The Government had not theirs 626 ready; whereas by the course suggested, the necessity of his own being proposed depended upon theirs, of which he knew nothing. He suggested, therefore, that the right hon. Gentleman should inform him of the precise terms of the Amendment which the Government meant to propose, and then he would state whether they met his views.
§ MR. SPEAKER
said, the hon. and learned Gentleman might move that his own Clause be brought up, and then the Chancellor of the Exchequer would state what were the terms of his Amendment. The rule of the House was, that all the clauses should be added to a Bill before considering the Amendments.
§ SIR FITZROY KELLY
Then I will move pro formâ the Clause I propose to introduce; but I presume that that Motion will not disentitle me to address the House in the course of the debate.
§ MR. SPEAKER
The hon. and learned Member will have the opportunity of addressing the House upon the several questions that the Clause be read the first time, the second time, and also the third time, and also upon the question that it be added to the Bill.
§ SIR FITZROY KELLY
I assure you, Sir, I wish to address the House but once, and that for a very short time.
§ The CHANCELLOR OF THE EXCHEQUER
said, that so far as he was able to gather the import of the Clause, it appeared to introduce new matter, which he did not understand to be comprised in the views of the hon. and learned Gentleman when this point was last discussed. The suggestion which was then made from the other side, and very properly made, with regard to providing sufficient securities in the case of trust money, was met by himself and his hon. and learned Friend the Solicitor General by the statement that, in their view, it would be very proper to place the proceedings of trustees under the control of a Judge of the Court of Chancery. That proposal he understood to be entirely acceptable to Gentlemen on the opposite side; it was certainly so spoken of; and he understood it had been accepted by the hon. and learned Gentleman himself. Under these circumstances he had not conceived it necessary—there being no question remaining except the words to be prepared for the purpose—to print the words by which it was proposed to carry out that suggestion. He was very sorry that, owing to business, his hon. and learned Friend 627 the Solicitor General was not in his place; but the effect of the Clause of the hon. and learned Member for East Suffolk differed from the proposition of his hon. and learned Friend the Solicitor General, and of which he had not been before apprised. It was not usual in Bills of this nature to require the consent of all the parties who might be beneficially interested in trust monies; and the necessity for special provision in this instance arose from the fact that one of the options proposed by the Bill appeared to give a greater benefit to the person at present in enjoyment of the trust, and another of the options a greater benefit to the person or persons who would follow him. It was right, therefore, that special control should be placed over the exercise of control of trustees, not as between them and their trust, but as between one portion of the trust and another. It appeared to him, he confessed, that there could be no difficulty about it, and he thought the introduction of the control of a Judge of the Court of Chancery the proper mode of meeting such cases. With regard to compulsory conversion, therefore, the discretion of the trustee would be placed under the control of the Court of Chancery, and the same principle would apply as to voluntary conversion. The clause which his hon. and learned Friend proposed provided that no trustee, executor, or administrator should be allowed to make a commutation into the new stock without applying for, and obtaining, the approbation of the Judge of the Court of Chancery in England or Ireland, or of the Court of Session in Scotland.
§ SIR FITZROY KELLY
said, he had listened with great attention to the Clause, and it appeared to him that it affected stock in which lunatics and others had a beneficial interest, and that it was identical with his own proposal. But his objection to the addition was, that the right hon. Gentleman's proposal exposed families to the expense of an application to the Court of Chancery when all parties were agreed as to the expediency of commutation. All were agreed that if the Bill passed it was their duty to give effect in the best way to the intention of Government as far as that intention agreed with the feelings and wishes of the country. He would ask attention to what he considered to be the intention of Government, and how far that intention agreed with his own views. He would, however, in the absence of the hon. and learned Solicitor General, postpone the 628 consideration of this Clause, and come to the consideration of the Clause of which he had given notice. The Clause was to limit the creation of 2½ per cent stock (proposal No. 2) to 10,000,000. He limited the sum to 11,000,000 l. (10,000,000 l., with 1 per cent added), because the notice respecting options to be submitted to the holders of South Sea Stock was limited to that amount. He considered that the proposal was a bad bargain for the country, and he was content therefore to limit his Resolution to the sum, in case the holders of South Sea Stock should consent to accept the terms offered. The grounds on which he proposed to limit the stock, he should state as briefly as possible. He would venture to remind the right hon. Gentleman that the principle of the Bill was not only unusual, but unprecedented. It was in order to call the attention of the House to the Bill, as a financial precedent, that he would trouble the House with a few brief remarks. The effect of this operation, which by themselves would be made a precedent, would substantially be this—to create a new stock to the amount of somewhere about 100,000,000l. sterling. He did not say that, with the provision now accompanying the present Clause, any addition was to be made to the national debt, but he said that the effect of this proposal, if accepted to the full extent, would be to substitute for loans now existing, and under which existing stock had been made, a new loan of 100,000,000l. sterling. The question, therefore, was, as the Government desired to effect a new loan, what is the course—he would not say the usual, but the invariable course—the only course that, consistently with justice to the State, the Chancellor of the Exchequer can take in the matter? Why, it was to submit to public competition the bargain between the State and the public, to demand tenders of the terms on which the contract could be made, and to accept the tender most advantageous to the country. That that had been the course invariably pursued, he might state without fear of contradiction, believing that the right hon. Gentleman would not be able to show that a loan of money, to be effected by the creation of stock, had ever taken place on terms not submitted to public tender, but, instead, fixed by the Financial Minister of the day. If this sum of 100,000,000l. were to be raised by tender, Government would see, from the offers of capitalists, what was the smallest amount 629 of dividend, what the shortest period of guarantee, with which the capitalists would be contented, and then creating their 2½ per cent stock, they would create it on the very best principle that a Government could; for it was certain that in this way no wrong could be done to the capitalists, who would not tender to their own injury; and it was certain that the Government had the best possible bargain, because it had accepted the most advantageous terms the public would offer. In 1844 a large amount was paid off by the then Chancellor of the Exchequer. The only question was, what benefit should be given to parties who were paid off at par when stocks were up to 102? The benefit decided upon was by giving parties a guarantee that the stock should not be paid off for a certain number of years. But on this occasion Government desired to create a loan to the extent of 100,000,000l., that is, they were about to effect a bargain with stockholders or capitalists, to the effect of guaranteeing the holders of 100,000,000l. of stock a large interest yearly, 2½ per cent for forty years, and then to pay them off at par. Two ways were open to Government to effect this object—the best of which was by inviting capitalists to tender for the loan at the shortest period, and at the lowest interest. If this course were adopted, no injury or injustice could be done to the stockholder, as there was no compulsion to come forward to accept the new stock. This would be the best bargain for the public, and also for the stockholder. But Government, instead of taking this course, had chosen to fix the terms, and to do away with the advantages of public competition. The certain result of this course must be this—if the terms were too low they would not be accepted, and the Bill would become nugatory; whereas, if too high—that is, if less than 2l. 15 s. might be obtained for the exchange—the Chancellor of the Exchequer had exposed the country to the proportionate loss by this bad bargain. The Chancellor of the Exchequer had assumed that he knew the lowest terms on which the bargain could be effected, and this, too, without any reliable elements on which to base his calculations. If the Chancellor of the Exchequer had any means of knowing what would be the result of his 100,000,000l. proposal, he ought to disclose them. He (Sir E. Kelly) asked the right hon. Gentleman to pledge himself to prove, that if he invited all the capitalists to come forward and tender for the bargain, 630 the stock could not be changed except on the terms named—namely, at forty years, and on a guarantee of interest at the rate of 2l. 15 s. per year. But if capitalists could be found to come forward to take the bargain at 2l. 10 s. or 2l. 12 s. 6 d., or for a term of twenty years instead of forty, then the Chancellor of the Exchequer would have wronged the State to the amount of the difference. Either the right hon. Gentleman had some data which he had not disclosed, or he was advancing blindly into the money market, and making a bad bargain for the country. In the present condition of the money market it would be unwise to state what would be the value of the interest of money at any future period, and, therefore, it was all the more indefensible on the part of the right hon. Gentleman to fix a certain amount of interest and a certain period, as the lowest terms on which the new stock might be created. He urged on the right hon. Gentleman, therefore, to do as had been done by his predecessors—submit his proposal to public competition, and then the country would have the advantage of the lowest terms on which such a bargain could be effected. He had done his duty in stating' his strong conviction that this was a bad and disadvantageous bargain for the public, and also that it contained a vicious precedent that ought not to be recognised. He begged, therefore, to move the insertion of the clause.
That nothing in this Act contained shall be deemed to authorise the creation of any greater amount of Two Pounds Ten Shillings per Centum Annuities, than the sum of eleven millions of Capital Stock.
§ Brought up, and read 1°.
§ The CHANCELLOR OF THE EXCHEQUER
Sir, there is this preliminary objection to the proposal of the hon. and learned Gentleman—that if the clause he has proposed were to be introduced into the Bill, the effect would be that there would be two clauses directly contradicting each other, one clause allowing 30,000,000l. of this stock to be created, the other allowing only 11,000,000l. These two clauses would be in diametrical contradiction one to the other. The hon. and learned Gentleman has on this occasion made use of an argument which it certainly appears to me would have belonged more appropriately to the Motion of last Friday, and the question that he has raised, as far as depends on his argument, is a repetition of what what was then de- 631 cided in a full House by a considerable majority. The hon. and learned Gentleman finds fault, not only with the particular terms on which it is proposed to create this 2½ per cent stock, but likewise with the whole mode of proceeding the Government has adopted. He says it is strange, unusual, and impracticable. He states that the only course the Chancellor of the Exchequer could with any propriety pursue, would be to borrow money in the market, and, I presume, apply it to the extinction of the existing stock. The hon. and learned Gentleman stated that that was the usual, invariable, and only course. He said he stated it without fear of contradiction. Now, Sir, I cannot analyse the human mind, and, therefore, what the hon. and learned Gentleman may fear I do not know; I presume he does not fear contradiction; but this I know, that he will not state that in this House, while I sit here, without contradiction. My duty is to give the most unqualified contradiction to his statement of former proceedings of this kind, the fact being, in direct opposition to his statement, that I am pursuing the course invariably pursued in cases of the conversion of stock. It is perfectly true that in a new loan you go into the market and invite tenders, and it is perfectly true that in dry law these stocks we now create are new contracts and new loans; but if the hon. and learned Gentleman will refer to the Act of 1844, or any of the former Acts of Conversion, he will find that they proceeded just in the same way as we do—cancelling the old stock, and then creating the new loan. The old stock passed out of existence, and the new came into it; but in no instance has the Chancellor of the Exchequer proceeded as the hon. and learned Gentleman says he invariably does, and of all the cases of conversion there has not been a single one where one and the same course of proceeding has not been pursued. As far, indeed, as regards the creation and raising of the Exchequer bonds, there exists a difference, which I recognise and admit. I propose in this instance to create Exchequer-bonds which are entirely new, and, as far as they are to be used for the purpose of raising money, I do propose, not fixed rates, but what we can get in the market for them. We do propose to obtain the power of selling the bonds in the market on the best terms; but, mainly, this is an operation of conversion, and as a conversion I speak of it, when I say that 632 there never was such a thing heard of as raising money in the market in order to offect the extinction of stock. Would it be reasonable so to raise money? You have a stock of 30,000,000l. here to be paid off. The hon. and learned Gentleman proposes that we should raise this in the market, and then pay off the holders of stock; but can it really be supposed that any Government, Chancellor of the Exchequer, or House of Commons would adopt such a plan, which, with great resspet to the hon. and learned Gentleman, I must call irrational? Why, the effect would be that the Chancellor of the Exchequer, by a purely artificial and totally unnecessary operation, would go into the market to cause a scarcity by raising 30,000,000l., and then, having borrowed so much, and created that 'artificial scarcity, would go again into the market and create an artificial glut. It would be applying artificial stimulants first one way and then the other; and not only would the public lose by it enormously, but the Chancellor of the Exchequer would thus make the market tight and close when he wanted to borrow, and would have flooded it when he least wanted it flooded. I am quite sure this House would never approve of such a scheme. But the Motion of the hon. and learned Gentleman has a narrower scope—to reduce to 10,000,000l. the quantity of this 2½ per cent stock that may be created, as that, as he says, would completely cover the 9,500,000l. of minor stocks subject to conversion under this Bill. Now my objection to that proceeding is this. In the first place, this House has adopted a general arrangement, under which, it is to be recollected, there will be no increase of the capital of the debt whatever in consequence of the creation of this 2½ per cent stock, because, at the time when it becomes liable to redemption, the funds accruing from the provision made by this House will have reduced the debt more than this additional capital will have augmented it. But the proposition of the hon. and learned Gentleman is to create this new stock, but to create it to the extent of 10,000,000l. or 11,000,000l. only; to which the practical objection is, that that is too small an amount to test the operation, the consequence of creating such a small stock being that the transactions in it are few and limited, and that the price of such stock, relatively to the interest it bears, is considerably lower than would be the case 633 with a larger stock. I do not state this merely as my own opinion, but refer to very recent and high authority, that of the hon. Member for Huntingdon (Mr. T. Baring), who, the other night, supporting the proposal for cutting this stock off altogether, said that even the amount of 30,000,000l. was too small to test fairly the value of the stock. He said that if such a stock was to be created, then it ought to be created on a scale which would fairly test its value. To that proposition I hope the House will assent, and not, after having agreed to the creation of such a stock, resolve to create it under such conditions as must render it insignificant in amount, and prevent their ever ascertaining its fair value in the market. Having said thus much, I consider that I have said enough. I have shown that the course we take is according to precedent, and neither unusual nor extravagant, whilst as to the creation of this 2½ per cent stock, the principle being admitted that it is to be created, it surely must be perfectly plain that it ought to be created in such a manner as may give a fair trial to the important experiment which we are making.
said, he could not think that the hon. and learned Gentleman's proposal was the safe and proper course for the Government to take. He thought the experiment should he limited to as small an amount as possible; but, at all events, the right hon, Gentleman the Chancellor of the Exchequer should try to obtain the amount on terms as low as possible.
§ MR. SPOONER
said, the question as to the mode of raising the money was not really before the House. He concurred with his hon. and learned Friend (Sir F. Kelly) that the bargain was a bad bargain for the State, and too greatly in favour of capitalists. He would, however, allude to the Motion, which was grounded on the fact that the Government had made an improvident bargain. He was prepared to say he did think it was a bad bargain. He would beg to call the right hon. Gentleman's attention to a statement he made the other night, when the question respecting the 2l. 15 s. and the 2l. 10 s. rate was under discussion. The right hon. Gentleman then said that an eminent actuary had assured him that the bargain in both respects was perfectly equal. Now, he (Mr. Spooner) had obtained the opinion of eminent financiers, who had calculated the ef- 634 fect of the two propositions—that of giving 2l. 15 s. and 82l. 10 s. capital, or 2l. 10 s. and 110l. capital. The two rates, according to the terms proposed by the right hon. Gentleman, gave a difference of 7 per cent in favour of the capitalists. This result had been verified by two actuaries. Therefore, he maintained, that the bargain was a bad one, and formed one of the reasons which induced him to support his hon. and learned Friend's Amendment. The right hon. Gentleman the Chancellor of the Exchequer said there was no addition to the public debt, and gave an explanation to that effect. But he differed entirely from that opinion. The right hon. Gentleman expected to be a gainer either way; but if accounts balance on both sides, he was at a loss to understand how there could be any gain. And yet that was the argument of the right hon. Gentleman. Another point pressed on his mind very strongly, that we ought to limit the time. Forty years was too long a period for any Chancellor of the Exchequer to bind the country. If there was all the asserted prosperity in the country, and that prosperity was increasing, what would be the effect? Why, to reduce the rate of interest; and yet, under such circumstances, the Chancellor of the Exchequer proposed to tie up Parliament for forty years.
§ MR. WILKINSON
said, that if the hon. and learned Gentleman (Sir F. Kelly) divided the House, he would unwillingly divide with him on the question of the limitation of the stock.
§ MR. W. WILLIAMS
said, the hon. and learned Gentleman (Sir F. Kelly), in his proposed Amendment, overlooked the difficulty which the Chancellor of the Exchequer had to contend with in effecting the reduction of a debt of 500,000,000l. He did not expect that any Chancellor of the Exchequer would see the time when he could deal with it as a whole, and give the twelve months' notice which was required for the operation. If the Chancellor of the Exchequer could effect even an impression on the debt, he would do good.
§ SIR FITZROY KELLY
said, that seeing the feeling of the majority of the House to be opposed to him, he would not trouble them to divide.
§ Motion made, and Question, "That the said Clause be now read a second time," put, and negatived.
§ SIR FITZROY KELLY
then proposed another clause, for the purpose of preventing the acceptance of this stock by trus- 635 tees without the consent of the cestuique trusts, or without the consent of the Court of Chancery, in cases where the parties interested were under legal disability.
That nothing in this Act contained shall be deemed to enable or authorise any executor or executors, or other person or persons holding any Stock in trust, to accept in lieu of such Stock, or to commute such Stock into any new Stock or Exchequer Bonds to be created or issued under this Act, without the consent in writing of all persons beneficially interested in such Stock; or if such persons be infant, lunatic, or under coverture, or under any other disability, or if any yet unborn may become beneficially interested in any such Stock, then without the authority of the Court of Chancery.
§ Brought up, and read 1°.
The SOLICITOR GENERAL
said, that he had prepared a clause upon this point, which he hoped would meet with the concurrence of his hon. and learned Friend and of the House. It was to the effect that, in all cases in which any trustees, executors, or administrators, shall be possessed of or entitled to any part of the capital stock now proposed to be paid off and redeemed upon trust for the benefit of any persons having limited interests, or being under any legal disability, no such trustees, executors, or administrators shall be at liberty to commute such stock into any new stock or Exchequer bonds to be created under this Act, without the consent in writing of all persons beneficially interested in such stock, if competent to consent; but if such consent is not given, or any such party is under any legal disability or beyond the seas, or if the trust is such that persons yet unborn are interested in it, then in all or either of such cases every such trustee, executor, or administrator, shall commute the stock so held by him in such manner, and in such manner only, as a Judge of the Court of Chancery in England or Ireland, or of the Court of Session in Scotland, shall direct.
§ MR. MITCHELL
said, he gave the right hon. Gentleman the Chancellor of the Exchequer credit for the courage he had shown in giving the death-blow, by his scheme, to the currency laws of 1819 and 1844 of the late Sir Robert Peel. He believed his scheme would be of great benefit to the commercial as well as to the landed interest of the country, and he believed that if the right hon. Gentleman were to reduce the interest on the whole of the Exchequer bonds to 2 per cent, they would be at a premium in a month.
§ MR. STUART WORTLEY
said, he 636 must beg to warn the House that the effect of the clause proposed by the hon. and learned Gentleman (Sir F. Kelly) might be much more extensive that they imagined. There was an enormous amount of stock in the hands of trustees, and if it was made necessary to have the consent of all the cestuique trusts, or of all the parties interested in trusts, and in case of a difference of opinion between the parties if it was made necessary that an application should be made to the Court of Chancery—a course which would be ruinous in the case of nearly all the small trusts—the imposition of such conditions must greatly limit the conversion of such stock. There was a middle course, however, which he would suggest for the consideration of the House. Under somewhat analogous circumstances a Bill which was recently passed for disentailing property in Scotland, provided that no trustee or tenant in tail should disentail any property without the consent of a certain limited number of persons interested in it, and that condition was thought to be a sufficient security against estates being rashly and inconsiderately disentailed.
§ SIR FITZROY KELLY
said, he believed that there was no substantial difference between hon. Members on either side of the House upon this important point. The object of the proposition that he had originally made was, that where the stock was held in trust, the trustees should not have the power to exchange the stock without the authority of all the parties who are beneficially interested in it; and with regard to the case of lunatics, infants, persons beyond seas, under coverture, and the like disabilities, he had provided that any stock held in trust for such persons should be commuted by the trustees under the authority of the Court of Chancery. A clause to effect these two objects, he conceived, must be entirely unobjectionable. There could be no undue expense and no injustice in such a provision; but with respect to cases in which all the parties interested did not agree, he did not think that there should be any application to the Court of Chancery—a proceeding which he quite concurred with the right hon. and learned Member for Bute (Mr. S. Wortley) would be attended with heavy expense. He would suggest to the right hon. Gentleman the Chancellor of the Exchequer, that it would be better to defer the further consideration of this Bill till to-morrow, and in the meantime he (Sir F. Kelly) 637 and his hon. and learned Friend the Solicitor General might agree upon the language of a clause for effecting the object in the desirableness of which they were all agreed in principle.
The SOLICITOR GENERAL
said, that those who objected to an application to the Court of Chancery should remember that that tribunal had been very much altered, and that the application which he had suggested would be made to a Judge sitting in chambers, and would cost only a few shillings, whilst it would not interpose more than possibly two hours delay. His hon. and learned Friend (Sir F. Kelly) and himself were quite at issue upon the point, whether the Bill should require the trustees in every case to obtain the consent of all the parties interested. The condition proposed by his hon. and learned Friend would assuredly operate as a clog and an impediment that would render the conversion of any considerable portion of stock held in trust wholly impracticable.
§ MR. MULLINGS
said, he did not object to the clause proposed by the hon. and learned Solicitor General, but he doubted if it would have a good effect. He did not consider the expense attending an application to a Judge of the Court of Chancery in chambers would be so insignificant, or the course of such a proceeding so expeditious, as the hon. and learned Solicitor General would have the House to suppose. As a practical man he knew that in every case where the parties interested did not agree to the conversion of the stock, they would apply to their solicitors to prepare a petition, and very considerable expense and delay must necessarily be the consequence. The clause of the hon. and learned Solicitor General would enable the trustees to act in opposition to the wishes of the parties interested—a principle to which he thought that House ought never to assent. This was a very serious matter, and deserved more attention than it had yet received. He therefore hoped the discussion would be deferred till to-morrow to allow the clause to be printed with the Votes.
§ MR. SPOONER
said, he would also recommend the postponement of the clause in order to give time to frame it, so as to obviate all objections.
§ SIR JAMES GRAHAM
said, he entirely admitted the great importance of this question, and considering the immense interests involved in it, he should certainly be most happy to advise his right hon. Friend the Chancellor of the Exchequer 638 to consent to the proposed delay if both sides of the House were agreed upon the principle to be embodied in this clause; but, as he understood it, there was a very great difference of opinion upon both sides of the House. It was contended by hon. Gentlemen opposite that there must be a unanimous consent of all the parties beneficially interested in a trust. Now, if they gave effect to that doctrine, and at the same time objected to the intervention of a judicial tribunal in any case where such a unanimous consent did not exist, he was satisfied that the practical result of that course would be to bar the operation of the Act altogether. If a common consent was required amongst the parties, and in the absence of that consent they laid down the principle that no judicial arbitration would be allowed, he believed that, speaking generally, they would frustrate altogether the objects of this measure. He had certainly been much engaged during the last twelve months in an honest endeavour, with the hon. and learned Solicitor General and the right hon. Member for Oxfordshire (Mr. Henley), to introduce improvements into the Court of Chancery; and the recommendations of the Commission on which he had the honour of serving were adopted by the Legislature. He could not say that he was so sanguine as to believe that that tribunal had now become altogether inexpensive; but the hon. Member for Cirencester (Mr. Mullings) in alluding to the expenses heretofore incurred must have had reference to the expenses in the Masters' offices. Now, the great object of the measure of last year was to put an end to the expensive process before the Masters in Chancery. A great change had certainly been introduced, the power of application to a Judge in Chambers had been given, and all the expensive proceedings before the Masters had been abolished. A simple process had been proposed, power had been given to the Judge to determine the matter upon affidavits and without the attendance of counsel, and at a cost which had been greatly reduced. Now, he could not conceive a greater slur cast upon the judicature of this country, than by the assertion that in the case of a trust with many parties beneficially interested, and they not agreeing, the expense of obtaining judgment would be ruinously great. If that were so, all their attempts hitherto to reform the Court of Chancery had been vain and nugatory. He did not believe that they had been nugatory; but 639 if that really was the state of the law and practice, it would show that further reforms were indispensably necessary. Yet he confidently believed that the measure of last Session would produce more beneficial results than the hon. Member for Cirencester anticipated from it. But to return to the point before the House, he could not conceive anything more just or equitable than the provision of his hon. and learned Friend the Solicitor General, that in the absence of a common consent among the parties beneficially interested in a trust, an appeal should be made to a judicial tribunal; and, unless they wished indirectly to defeat the operation of this measure, he hoped that the House would agree to that provision. The suggestion of the right hon. and learned Member for Bute (Mr. S. Wortley) with regard to Scotch entails, where the decision of the minority in certain cases bound the majority in a question of succession, was deserving of attention. That might be a somewhat novel principle to apply to trusts in England; but what he contended was, that in the absence of a common consent among the parties, an appeal to a judicial tribunal was the only resource that was possible.
§ MR. HENLEY
said, that he had had the honour to act in conjunction with the right hon. Gentleman (Sir J. Graham) in attempting to improve the practice and procedure of the Court of Chancery, and he thought that the measure of last Session enabled parties to obtain the intervention of that Court at much less cost and delay than had hitherto been the case; but, with all deference to the right hon. Gentleman, that was entirely foreign to the subject now before the House. The principle laid down by this Bill was, that if five parties were interested in a common fund, and one of them, however trifling his interest might be, wishing to do something with it, that person would have the option of dragging the other four into an "amended tribunal," and of exposing and ripping up all the circumstances of the trust. Because it might happen that the Court would not be able to form a correct judgment as to whether that fund should be so delt with or not, without having all the complicated interests of the parties before it—proceedings of such a nature possibly that it would not be easy to conduct them through that Court even in its reformed state. He contended that what was now proposed was in direct opposition to the known and recognised principle of the law, 640 that where it was not necessary that anything should be done, parties should be left to themselves in the event of a disagreement of opinion. Upon what ground, he asked, did the Government seek to depart from that principle in the present case? It was said, that, to refuse trustees and persons beneficially interested in property held under trusts, the power of appealing to a judicial tribunal, would virtually defeat the measure; but he did not believe it would have any perceptible effect one way or the other; and, for his part, he did not see, if the clause under consideration should be adopted by the House, where they were to stop in their future dealing with trust property. He was convinced that the effects of the proposed departure from the known and recognised principle of the law would be to create a great deal more harm than good. At all events no measure of public good would be gained by it, and, therefore, he entreated them to adhere to the old doctrine, that where there was no necessity for parties to do anything, if they did not agree to do it, they should be left alone.
§ MR. CARDWELL
said, he thought the right hon. Gentleman who had just sat down had taken a very mistaken view of the question before the House. They had already sanctioned an arrangement by which they proposed to make a change in the position of the public debt, and were now discussing the expediency of offering an inducement to certain parties to accept their terms. If it was not the interest of those parties to accept the terms offered them, the whole operation would, of course, fall to the ground; but he apprehended that such a result would not be satisfactory either to the House or the country. The right hon. Gentleman put the case of five persons under a trust, one of whom might consider it for their interest that the trustee should accept the terms; but among the others a difference of opinion might exist as to whether the terms should be accepted or not. In such a state of things, said the right hon. Gentleman, it would not be proper to give any of the parties the power of appealing to the Court of Chancery, Now, the party was entitled to assume that the proposed operation would be successful, and that it would benefit those who might take advantage of it. But if the trustee would net accept the terms unless they all consented, they would be in a worse position, because they would be left to be paid off at a more disadvantageous time. That House had 641 already sanctioned the measure, and he war bound therefore to regard it as one of a beneficial description. That being so, it appeared to him right and proper that every facility should be given to parties willing to accept the terms offered by the Government, and certainly he saw nothing wrong in the proposal to give persons whose property was held in trust, and the trustee who was responsible for the whole body, the where common interests of all might the power of appealing to a judicial tribunal, be reconciled. To refuse to grant such a power would be highly prejudicial to the persons on whose behalf the right hon. Gentleman opposite had addressed the House, and would have the effect of enabling one individual to frustrate the wishes of a majority. The question just amounted to this: were they to allow persons free from trusts to accept the terms offered by the Government, leaving those whose property was placed under settlements to remain as at present, until some future and perhaps distant period, when they would not be able to make so good a bargain for themselves as they could do now? If it was for the interest of persons free from trusts to enter into the proposed arrangement, it followed as a necessary consequence that where there were a number of persons under trust, a majority of whom desired to accept the proffered terms, power should be given to make application to the Court of Chancery in order that the trustee might be placed in a position to act for the interest of the whole body.
§ MR. NEWDEGATE
said, the right hon. Gentleman had begged the whole question. The sum to be dealt with was limited, and they could not apply the same reasoning to it as if they were dealing with the whole amount of the funds, and were offering propositions which the parties must accept or decline. He should vote against the clause, because he did not think it was necessary to the proposed operation, while it would cause a vast amount of useless and expensive litigation.
§ Question put, "That the said Clause be now read a Second Time."
§ The House divided:—Ayes 61; Noes 128: Majority 67.
Provided always, that in ail cases in which any trustee, executor, or administrator shall hold or be entitled to any part of the Capital Stock of
any of the Three per Centum Annuities by this Act proposed to be paid off, commuted, or re-deemed upon Trusts for or for the benefit of any person having a limited interest, or under legal disability, no such trustee, executor, or administrator shall be at liberty to give notice of his assent to receive in lieu of such Capital Stock the aforesaid new Stock of Three and a Half per Centum Annuities, without the consent in writing of all persons beneficially interested in such Stock, if competent and willing to consent; but if such persons shall not agree, or if any of the parties shall be under legal disability, or if the Trust be such that persons yet unborn may become interested under the same, then and in any or either of such cases every such trustee, executor, or administrator shall commute the Stock so held by him in such manner only as a Judge of the Court of Chancery in England or Ireland, or of the Court of Session in Scotland, shall direct: Provided also, That all applications for such purpose as last aforesaid, and every other application hereby authorised to be made to the Courts of Chancery in England and Ireland respectively, and to the Court of Session in Scotland, may be heard and disposed of in such manner, on the attendance of such parties, and on such evidence, as the Judge shall think fit, who shall have power to direct in what way the costs and expenses of such applications respectively, shall be borne and defrayed.
§ Brought up, and read 1°, 2°, and amended, by inserting after the word "proposed," in page 1, line 5, the words "or enabled."
§ SIR FITZROY KELLY
said, he rose with great regret to offer objections to this Clause, and he could not but feel astonished that, however desirous it might be to introduce a clause of this kind into the Bill, the House should be called upon finally and irrevocably to determine not only upon the substance but also upon the precise language of the Clause, without sufficient time duly and properly to consider its terms. He might at once call the attention of the House to the fact that a difficulty arose even on the very first words of the Clause, which commenced by stating that "in all cases in which any trustees, executors, or administrators shall hold or be entitled to any part of the capital stock of any of the 3 per cent annuities now proposed to be paid off, commuted, or redeemed;" and so on. Now he would ask his hon. and learned Friend the Solicitor General, not what he intended by these words, for it was evidently the intention of the Government to apply the Clause to the whole of the 3 per cent stock of every description, and not merely to the 10,000,000l. of South Sea and other minor stocks, but whether he did not think the Clause as it stood would involve trustees and families, beneficially interested in property held under trusts, in an immense 643 amount of litigation? It was quite true that it was the intention of the Government to pay off, commute, or redeem the South Sea and other minor stocks; but the Clause appeared to be applicable to the whole or to any integral portion of the 3 per cent Consols and 3 per cent Reduced stocks, and he was, therefore, anxious to know whether it was proposed to deal with the whole of the 500,000,000l., or with any portion of it by this Clause. With respect to the main point arising out of the Clause, he wished to state to the House, that here was a measure under which it would be competent to the holders of Consols or of Reduced stock, to the amount altogether of 100,000,000l. sterling, to effect a commutation or exchange for a corresponding amount of any one of the three new stocks which were to be created under the Bill. Now, the question as to which of the stocks parties ought to prefer, would prove to be one not only of great importance, but also of considerable difficulty and complexity, even as regarded individuals possessed of stock in their own right; but the case was much stronger when applied to trustees representing persons who had an almost infinite variety of different and even conflicting interests. It would be the interest of a tenant for life, for example, to exchange his stock for the proposed 3½ per cents, which would yield an annual interest larger and more immediately available than either of the other two descriptions of new stock for the space of forty years; while, on the other hand, it would be equally for the interest of the person next in succession to exchange into the 2½ per cents, because he would have an increased capital when he came into possession. What, in these circumstances, was the trustee to do? It was impossible he could act so as to please both parties. But the Clause empowered him to apply to the Court of Chancery; and the right hon. Baronet at the head of the Admiralty (Sir J. Graham), to whom the country was deeply indebted for his labours in the cause of law reform, had stated that in consequence of recent improvements, in which he had borne so useful and prominent a part, the Court of Chancery was no longer to be dreaded as it might and unquestionably would have been at an earlier period. That was true to a great extent; but did the right hon. Baronet mean to say that, under any improvement that could take place in the Court of Chancery, it would be right to dispose of the property of the 644 tenant for life, of the remainderman, and of all who were entitled to any interest under a trust, without giving them an opportunity of being heard by themselves or by counsel? The Bill now upon the table authorised any one, or any number of persons beneficially interested in stock held under trust, to call upon the trustee to effect its conversion, thus probably forcing the other parties into a protracted and expensive Chancery suit, and all because the right hon. Chancellor of the Exchequer wished to try a financial experiment. He could not but think that full justice would be done if the House enabled trustees, where they had the consent of the whole number of persons beneficially interested, to effect a conversion, but did not compel persons who were content that their property should remain in the stock in which it had been placed by those from whom they received it, to become involved in expensive proceedings in the Court of Chancery.
§ The CHANCELLOR OF THE EXCHEQUER
said, that in order to remove the objection of the hon. and learned Member as to the wording of the clause, and to limit the application of the clause to the stocks affected by the Bill, he was willing to introduce a restriction to that effect.
said, he would suggest that the best way of saving expense to parties would be by requiring the Judges in the Court of Chancery to give their decisions free of cost.
§ MR. HENLEY
said, he was afraid that the suggestion of the hon. Member for Montrose, even if carried into effect, would be comparatively worthless; for, although the Judges might deliver their judgment gratis, the Chancery Court practitioners could hardly be expected to do their part of the work for nothing. With respect to the clause now before the House, he thought if the Government had tried to contrive machinery for the purpose of dragging all the unfortunate persons who were possessed of property held in trust into the Court of Chancery, which even in its reformed state was not a desirable place to get into, they could not have succeeded more effectually than they would do if this clause were adopted. But he especially objected to the haste with which the Government were endeavouring to pass this Bill through the House. Here was a new clause, which nobody had seen in print, which had evidently not been considered with the care it deserved, and which perhaps the most competent person in that 645 House would declare to be ambiguous and doubtful in its terms. He trusted the right hon. Chancellor of the Exchequer would not press the clause, but delay further proceedings until to-morrow.
§ SIR FITZROY KELLY
said, he wished to move an Amendment declaring that an appeal to the Court of Chancery should not be competent in the case of a mere disagreement of opinion amongst parties.
§ Amendment proposed, "To the Clause in page 2, lines 1 and 2, to leave out the words' not agree, or if any of the parties shall".
§ MR. WHITESIDE
said, he would suggest that the law officers of the Crown should in all cases attend before the Court and argue the cause gratuitously.
§ The CHANCELLOR OF THE EXCHEQUER
said, he thought that the Amendment proposed by the hon. and learned Gentleman opposite (Sir F. Kelly) merely renewed the question which the House had just decided, namely, whether the consent of the parties should be required to the commutation, and, failing that, whether resort should be had to the Court of Chancery.
The SOLICITOR GENERAL
said, that the effect of the Amendment would be this, that in every case, if any one of the parties interested should disagree to the commutation, the amount of stock in which the parties were interested would be exempted altogether from the operation of the Act. The object, therefore, of the Amendment was to render the Act inapplicable to a large amount of stock, and to reduce its operation within the smallest possible limits.
§ MR. NAPIER
said, he wished to inquire whether it was intended to give the Master of the Rolls in Ireland co-ordinate jurisdiction with the Court of Chancery?
The SOLICITOR GENERAL
replied, that any Judge in Chancery in Ireland would have power to deal with every application.
§ MR. WALPOLE
said, that by this Bill there were three different kinds of investment in which commuted stock might be placed. One of these might be more advantageous for a tenant for life, and another more advantageous for a tenant in remainder. If a tenant in remainder should object to the investment proposed by the tenant for life, then, according to the present clause, as drawn by the hon. and learned Solicitor General, the parties would have to go to Chancery and settle their dispute there as to whether commutation 646 should take place or not. He (Mr. Walpole) had no doubt that the effect of this would be that the Court would in the majority of cases direct the costs to come out of the funds, and the result of such legislation would consequently be that the capital fund would be diminished, and the tenants in remainder would suffer. He thought that the Government would do well to take time to consider this point.
§ Question put, "That the words proposed to be left out stand part of the Clause."
§ The House divided:—Ayes 134; Noes 67: Majority 67.
§ MR. HENLEY
said, he would now ask what was to be done if the trustees should disagree as to the course they ought to pursue?
The SOLICITOR GENERAL
replied, that they should have recourse to the intervention of a Judge, who would then have to discharge the functions of the trustees.
§ MR. WHITESIDE
said, he must object to such a proposition, for a provision of that nature would invest the Judges with an unprecedented power. He congratulated the Solicitor General on the additional business which that clause was calculated to bring to the Court of Chancery.
§ The CHANCELLOR OF THE EXCHEQUER
said, he believed the hon. and learned Gentleman very much overrated the probable operation of the clause on the business of the Court of Chancery. He never recollected a discussion in which such gigantic results had been predicted from causes so trifling, as the discussion that day. Hon. Gentlemen opposite should recollect that there was one important consideration which would decide many of the questions they had raised; and that was the value which parties would find attached in the money market to the different descriptions of stock.
§ SIR JOHN TROLLOPE
said, he wished to press on the attention of the right hon. Chancellor of the Exchequer the very embarrassing position in which trustees would be placed with respect to the course they ought to pursue under that clause.
§ SIR WILLIAM JOLLIFFE
said, he thought the effect of the clause would be to place trustees in this unfortunate position—that while, on the one hand, they might be pressed by persons related to them by the dearest ties, and having a life interest, to do the best for them with regard to the property held in trust, any attempt to do so would, on the other hand, be opposed by those who were hereafter 647 to benefit by the trust. The interests of these two classes were diametrically opposed; and he must say that he concurred in the wish expressed by the right hon. Member for Oxfordshire (Mr. Henley), that the right hon. Chancellor of the Exchequer would reconsider the clause.
§ Clause, as amended, read 3°, and added.
§ Bill passed.