§ Order of the Day for taking into Consideration Standing Order No. 185, sec. 1, in order to its being dispensed with, read.
§ LORD BEAUMONT
moved that the said section of the said Standing Order be dispensed with. The question involved in the Motion was, in reality, whether there should be only one means of communication between London and the Mersey and between London and Ireland, and whether the vast and important traffic now conducted between those two points of the kingdom should be confined to one single means of communication, and that the proprietors of that communication should possess a monopoly. If his Motion was negatived, their Lordships would come to a contrary conclusion to that which they had arrived at upon a former occasion. Some time ago their Lordships gave their consent to two Bills creating railways, the one between Birmingham and Shrewsbury, and the other between Shrewsbury, and Chester. It was well known that since those railways had been constructed, the amount of traffic had enormously increased; in fact, so much so, that it would be dangerous to entrust it to one line. Their Lordships wisely foresaw that this would be the case, and therefore sanctioned these Bills. The London and North Western Company exerted every means in their power to oppose the passing of these Bills; 547 but they failed in their opposition, in consequence of both Houses thinking it advisable that another and competing line should exist between London and the north-western parts of the kingdom. The two smaller companies were then harassed by their formidable rival in every way possible, and their opponent at last had succeeded in placing such impediments on their working that they were gradually losing their traffic; they therefore felt that their only resource was to seek an alliance with some other Company. They accordingly sought that of the Great Western, in order to carry out a proposition that there should be two continuous lines between London and the Mersey; and if this Bill passed, the public would be in possession of those two lines. A Bill to carry out this great object was introduced into the other House of Parliament, and the House of Commons adopted a Resolution, that it was for the public advantage that two lines of communication should thus exist. The Bill then arrived at their Lordships 'House; but before they could discuss its merits, it was necessary that the Standing Orders should be complied with. One of those orders, known by the name of the Wharncliffe Order, was extremely important. It required that the assent of four-fifths of the shareholders should be given to every new Bill before it could receive the consideration of the House. This order was for the purpose of protecting a minority. Originally the assent of only three-fifths wa3 required, but it had been subsequently increased to four-fifths; giving a protection to a still smaller minority. The shares in the Shrewsbury line were extremely low in the market, and a powerful and wealthy Company like the North Western, of course, found very little difficulty in making itself possessor of a large proportion of the shares. That was done accordingly, for the protection of its interest, and to prevent the amalgamation; and the consequence was, that when the meeting was held, the four-fifths could not be obtained. The Standing Orders Committee had reported that they saw no reason for recommending the suspension of the Standing Order. That Committee, however, could only look at the technical question, and leave it to their Lordships to suspend the Standing Order, although it had not been complied with, if they considered that the merits of the case justified them in doing so. The Standing Order might generally work well; but cases must arise in which, 548 if acted upon, it would occasion great public inconvenience and injury. If their Lordships refused to suspend the Standing Order, and thus prevented the Bill from being considered upon its merits, they would confirm for ever the great monopoly in the hands of the London and North Western Company, because, by throwing out the Bill, they would utterly destroy the chance of a competing line being established. If their Lordships sanctioned the continuance of the present monopoly of communication, they would not only endanger the interests of commerce, but they would peril the lives of persons travelling upon a line so encumbered and overwhelmed with traffic. He entertained the strongest conviction, from the evidence before the Committee, that the minority of shareholders opposed to the amalgamation was composed of persons interested in the London and North Western line; and if their Lordships persisted in enforcing the Standing Order, the Shrewsbury and Birmingham and the Shrewsbury and Chester Companies must be annihilated.
§ LORD LYNDHURST
said, that their Lordships might perhaps recollect that three or four years ago a Bill was pending in that House for the purpose of making a railway from Oxford to Birmingham. That Bill was zealously opposed by the London and North Western Company, with the same feelings, and he believed by the same means, as they had adopted on the present occasion. He took a part then in opposition to the North Western Company; and with the assistance of his noble and learned Friend, who then presided in that House, the late Lord Cottenham, succeeded, for the benefit of the public, as it now clearly appeared, in frustrating that attempt. He approved entirely of the Standing Order to which the noble Lord had referred. It was passed to protect the minority against the wild speculation of the majority; but it was never intended, he apprehended, to stand in the way of any great public interest. A railway was, to a certain degree, by its very nature, a monopoly. Their Lordships conferred great powers upon these establishments; but it was, at the same time, the duty of their Lordships to take care that those powers were not used for the purpose of extending that monopoly, or for the purpose of crushing less powerful companies. At the present time there was but one line of railway communication between London and the Mersey, and it was, therefore, particularly the duty 549 of their Lordships, not only to see that there was no abuse of the powers conferred upon that Company, but that those powers should not be used to extend that monopoly. Now, what was the railway proposed to be established by this Bill? It was a railway passing through Staffordshire and Shropshire, counties rich in minerals and the seats of manufactures of the most important character; and by the Bill it was sought to give them the advantage of communication on the one hand with Liverpool, and on the other with London and Southampton. Of the three railways interested—the Great Western, the Shrewsbury and Birmingham, and the Shrewsbury and Chester—which had now entered into an alliance for the purpose of effecting this object, the Chester and Shrewsbury was the first established. On its starting, the North-Western Company foresaw the consequences which must flow from the establishment of that railway; and they had, therefore, exhibited towards it the most incessant hostility, and had sought to lower the value of its shares, in order to get possession of it, and by that means to break one link in that chain of so much importance in the communication to which he had referred. The Chester and Shrewsbury Company, in consequence, had had to apply over and over again to the Court of Chancery, and had obtained injunction after injunction to protect themselves under these assaults. In May last, the directors of these companies held a meeting to see if they could make an agreement under which they might form an amalgamation. They agreed upon the terms; but the agreement was, of course, subject to the ratification of meetings of the different Companies. There were meetings held of the Great Western, the Shrewsbury and Birmingham, and the Chester and Shrewsbury Companies. Those meetings were advertised in the ordinary way; and now let us see the course pursued by the London and North-Western Company. The North-Western purchased a large number of shares, and divided them in such a manner as to give an undue preponderance to their own shareholders. Some of these shares were distributed among clerks, porters, and others connected with the Company, in the hope that by resorting to that means they might succeed in overpowering the other Companies. But this was not all. They had allies of the greatest power and influence, the leader of whom was a man of great note, of great name, and 550 the head of a great league—the Anti-Corn-Law League—Mr. George Wilson— clarum et venerabile nomen. Mr. Watkins, the secretary, and many of the committee of the Anti-Corn-Law League, all united together for the purpose of assisting the North-Western Company. These enemies of all monopoly, who hated monopoly except that in which they were themselves deeply interested, were the zealous friends of the Company, and assisted them in accomplishing their object. What was the result? The North-Western Company was defeated, not by a majority only, but by between three and four-fifths of the shareholders, who voted in favour of the plan of amalgamation, and the Bill was carried in spite of all the combination, contrivance, and trickery he had mentioned. The Bill was then introduced into the House of Commons, and referred to a Select Committee, the chairman of which was Mr. Christopher, the Chancellor of the Duchy of Lancaster, who examined it with the most scrupulous care. It was opposed by the North-Western Company; hut notwithstanding their most strenuous exertions, the Committee passed the measure, so satisfied were they of its propriety. According, however, to the Standing Orders of their Lordships' House, it was necessary that the three Companies should again meet and agree to the amalgamation; and the man must be credulous, indeed, who supposed that the same barefaced practices which wore formerly adopted were not resorted to on that occasion, though, perhaps, in a more cautious and moderate manner. It was in this way that the Bill, which he considered of the highest importance to the districts affected by it, had been defeated; and on the grounds of public policy—that the great majority of the shareholders of the three Companies had acceded to the arrangement, and that there were reasons for at least suspecting unfair conduct on the part of the opposing Company—he would support the Motion for dispensing with the Standing Orders.
§ LORD REDESDALE
said, the subject under discussion was one of no ordinary importance, for that was the first time an attempt of the kind had been made in their Lordships' House, to set aside the decision of the Standing Orders Committee when those orders had in no way been complied with. On all former occasions, he believed, when their Lordships had suspended the Standing Orders, they had done so on the recommendation of the 551 Standing Orders Committee, except in the Smithfield Market case, when the House resolved (in his opinion most dangerously) that the notoriety of the intention of the Government to take steps for its removal might he held to excuse the giving regular notice. He thought no sufficient grounds had been shown to justify the House taking the course suggested by the noble Lord (Lord Beaumont). The noble Lord said that the question was, whether there should only be one line of communication between London and the Mersey. But this Bill was not for opening up a new communication between London and the Mersey—it only amalgamated certain lines which formed at present a communication between those points. Those lines were sanctioned for the purpose of affording the advantage of railway communication to a district which did not possess such accommodation, and there was at the time no notion that they would form a competing London line. The noble Lord said it was impossible to give such a communication without an amalgamation of the lines; but the experiment had never been tried, and no opportunity had been afforded for judging how far existing arrangements might enable his object to be attained. Was the noble Lord certain that an amalgamation would secure two competing routes of railway? It was his (Lord Redesdale's) impression that as soon as the Great Western Company became amalgamated with these minor companies, instead of there being a competition between them and the Northwestern Company, from London to the Mersey, the two Companies would ultimately come to a traffic arrangement, to avoid, as it is called, "cutting each other's throats," which would put an end to all competition. The case of the Shrewsbury and Birmingham Company was a very peculiar one, and showed the necessity of the Standing Order. Last year the directors came to an arrangement with the Great Western Company; but the shareholders called a meeting to consider the subject, and they passed, by a majority of 2,000 votes, and in the very teeth of the directors, a proposition in favour of an amalgamation with the North-Western Company. This decision of the proprietors had been overturned by the management of the directors. It came out in evidence before the Committee, what the directors of a Company could do—that they had it in their power to use the money of the Company for the purpose of obtaining votes; 552 and in the Shrewsbury and Chester case one of the directors admitted that they had made many thousand votes by getting their friends to split their shares, and that all the transfers and retransfers had been effected at the expense of the Company. The case of the Great Western, and the Shrewsbury and Birmingham, and the Shrewsbury and Chester Companies, had been referred to the Standing Orders Committee; but their case broke down on their own evidence; and now they wished to set aside the Standing Orders, to have the Bill tried on its merits. The public had a right to look to the Standing Orders as a protection, and if they were to suspend them on the present occasion, they would open a door, which they would be unable to close, to jobbery, and vicious proceedings of all kinds.
§ LORD LYNDHURST
explained, that what he said was, that unless an amalgamation was to place the Companies under one direction and one set of officers, it would be impossible to have any opposition to the rival line.
§ The DUKE of RICHMOND
protested against the merits of the case of the particular railways being gone into, inasmuch as they had not been tried before the Committee. He believed there never was a Standing Order which worked better than that known as Lord Wharncliffe's, and he trusted that their Lordships would not consent to its suspension. Unless their Lordships supported the decision of the Standing Orders Committee, they would never be able to get noble Lords to slave and listen to all the particulars of these cases in Committee.
§ LORD BEAUMONT
expressed his firm conviction, that by refusing to suspend the Standing Order in this case, they would be placing the order itself in considerable jeopardy hereafter; and would, by so doing, show that larger Companies might with impunity successfully crush and destroy their smaller rivals. While he expressed his determination to divide their Lordships upon his Motion, he felt bound to say that, in his opinion, the Standing Order ought not to be dispensed with upon any occasion without a sufficient case being made out for so doing.
objected for obvious reasons to the principle of bringing the decisions of the Select Committees on questions like the present before the House itself. When such a course was departed from, and when they were asked to sus- 553 pend the Standing Orders, it behaved the parties asking for such suspension to show the necessity for such a proceeding. They were called on to adopt this stop in the present instance on some allegations of fraud, which allegations were denied on the other side. The question then to be determined was, whether the Standing Orders Committee had an opportunity of exercising their judgment in the truth or falsehood of these allegations. That was an issue of fact which the House was not competent to try, and yet upon that depended the vote of every Member of the House. He understood that the Committee had had that opportunity, and that it had not thought proper, upon investigating the allegation, to report in favour of the justifiableness of suspending the Standing Order. If that were so, he was against suspending it.
§ The EARL of ST. GERMANS
said, when he was on the Committee he thought the Standing Orders ought to be suspended; but subsequent consideration made him arrive at a different conclusion. In reply to the noble and learned Lord, he had to state that the Committee came to a resolution which was framed by his noble Friend behind him (Lord Beaumont)—to the effect that nothing had been proved to justify them in recommending the Standing Orders should be dispensed with. He agreed with the noble and learned Lord (Lord Lyndhurst), that breaking down a great monopoly, and substituting a competing interest, was desirable; but he did not think the House had any right to call on the shareholders in any particular railway to sacrifice their interests in order to procure the public such an advantage. It was proved that shareholders representing stock to the value of 500,000l dissented from the amalgamation; and there was no evidence to prove that the North Western, or any other company, had made any undue acquisition of shares. He agreed with the noble Lord (Lord Redesdale) that the proposition, if carried, would establish a very dangerous precedent, and open a door to abuses which it would be difficult to close.
§ LORD BEAUMONT
regretted the defection of his noble Friend, and the silence of some noble Lords from whom he had expected support. The question to which the noble and learned Lord (Lord Brougham) referred had come before the Committee, and the evidence produced by the alleging party amounted to this, that 15,466 voted altogether; of those, 1,0257 voted for 554 the amalgamation, and 5,209 were in the minority against it; and of that minority 230 votes were traced to the North-Western Railway Company; and the decision of the Committee therefore was, that as only 230 votes out of 5,209 votes were traced or proved to be in accordance with the allegation, they were not justified in recommending that upon that, allegation the Standing-Orders should be dispensed with.
The answer of the noble Lord was perfectly fair, perfectly candid, and perfectly fatal to his own case.
§ EARL FORTESCUE
said, that though it was not proved that more shares had been traced to the possession of the London and North Western, there was ground for strongly suspecting that it was used to a much greater extent.
§ The MARQUESS of LANSDOWNE
said, he considered that if this Motion were carried, it would be fatal to the authority of their Lordships' Committees. But after the statement of the noble and learned Lord (Lord Lyndhurst), as to the previous proceedings affecting this transaction, whether the power which the noble and learned Lord had referred to as having been used by one of the great railway companies had been exorcised in this instance or not, it nevertheless appeared that it was in the power of a great company to make use of this Standing Order as an instrument not to advance their own legitimate interests, but to defeat the substantial interests of others, and of the public; and, therefore, if their Lordships should decide that night that they were not justified in going into the merits, he trusted that no long time would elapse before their Lordships reviewed this Standing Order; for he believed that, in its present state, it afforded a great temptation to powerful companies to enter upon agreements with other companies for the purpose of establishing monopolies.
§ LORD REDESDALE
said, there were many points connected with this case which he had not touched upon, and he warned noble Lords not to form too hasty an opinion upon the demerits of the existing order, as in the whole of his experience he had not remembered a single instance in which the regulation had operated with greater advantage, or more for the protection of the interests of the shareholders, than in the present case.
§ On Question, Resolved in the Negative.