rences of such evils. The case was one of
great urgency.
The amount of capital
either compromised or lost by the collapse
of the companies' system of management
was perfectly gigantic. He believed it
exceeded the measure of the great monu-
mental debt of this country, and was the
largest expression of figures which perhaps.
the human mind could comprehend.
liament had of late been much condemned

Order for Second Reading read. Motion made, and Question proposed, "That the Bill be now read a second time."-(Mr. Newdegate.)

Par

for having abandoned this vast amount of property to the will and pleasure of private individuals, and for having taken no care of the interests of the shareholders. That, however, he thought was not a just statement of the case; for, up to almost the present moment, neither the shareholders nor a large proportion of the public 1845, all the measures on the subject subseemed to desire that protection. Since

MR. NEWDEGATE, in rising, remarked upon the absence of all the Members of the Government, and said, that the Bill embodied a principle which the House had affirmed. Another measure upon the same subject had been sent up to the House of Lords, and was, it appeared, to be referred to a Select Committee. He should be glad if the House would consent to allow his Bill to go before a similar tribunal, having good reason to think it would bear the examination of a Commit-mitted to the House, either by private tee of the House of Lords. In the present state of that House (there were only a few Members present), he thought that the best thing he could do-considering the determination manifested by a majority of the House to disestablish the Church in Ireland, and in other ways to curtail the

property of the United Churches of England and Ireland- was simply to move that the Order of the Day for the second reading of his Bill be postponed until to

morrow.

Motion, by leave, withdrawn.

Bill to be read a second time To-morrow.

RAILWAY AND JOINT-STOCK COMPA-
NIES ACCOUNTS BILL-[BILL 53.]
(Sir William Hutt, Mr. Ellice.)

SECOND READING.

Order for Second Reading read. SIR WILLIAM HUTT, in rising to move that the Bill be now read the second time, said, he thought it unnecessary to make reference to statistics for the purpose of showing that, in the last few years, the affairs of many railway and joint-stock companies had been in a disastrous position -disastrous not only to the shareholders themselves, but to the country and the general interests of the public. That calamitous state of things had directly resulted from the system of management under which the companies were formed -a system which was vicious in itself and in many cases most disgracefully carried out. It was therefore, he thought, absolutely necessary that Parliament should interpose to prevent, if possible, the recur

individuals or by the companies them-
selves, seemed to have called forth a feel-
that House with the management of the
ing that any interference on the part of
affairs of such companies would be consi-
dered an affront and an injury to the
shareholders themselves. He remembered

Mr. Hudson, who for some years acted as
spokesman in that House for many of those
railway companies, declaring that such at-
tempts at legislation were unconstitutional,
and that it was the right of Englishmen
to manage their own affairs and in their
own manner. In consequence of that feel-
ing and such remonstrances, those compa-
nies had been left pretty free from any
legislative restraint up to a recent period.
In the Railway Clauses Consolidation Act
of 1845, and in the Companies Act of 1862,
as well as in the Railway Acts Bill of last
Session, there were clauses inserted for
regulating the management of the financial
affairs of the companies; and if the provi-
sions of those Acts had been fully carried
out they would have been spared many of
the calamities which they had had since
to deplore. Those provisions were illusory,
and were never enforced, because they
took the form of mere mandatory direc-
tions, which were generally treated with
either neglect or defiance.
should never speak, but to command, and
should never command unless it was able
to enforce its behests.
A very great
change had, however, recently come over
the public mind, including directors and
shareholders. They were now sadder but
wiser men; and legislation on the subject
was now universally called for. The only

Parliament

question therefore was, what arrangements | full and faithful balance sheet of the assets should be adopted by which malversation and liabilities of the company, and that in those matters could be for the future such balance sheet, together with the acprevented; and what should be done to counts from which it was deduced, should restore to those important companies that be filed with the Board of Trade, and with confidence under the loss of which they the Registrar of Public Companies; and, were at present suffering? A Mr. in order to render those accounts intelliWrigley, at a recent meeting at Man-gible, he proposed that, with the accounts, chester, had proposed a plan by which the directors would be divided into two bodies -one to have the exclusive charge of the capital of the company; the other to be exclusively occupied with the management of the working of the line. But he thought no cutting and shuffling of the pack would alter the tint of the cards. He did not believe that any such plan would be effectual in preventing the directors and some of the shareholders combining together for the purpose of paying dividends to themselves and endeavouring to raise the market value of their property, by representations neither sanctioned by upright dealing nor by correct bookkeeping. It was not his intention to adopt any such plan, nor to advocate another one, which had been put forward also by a high authority-he did not advocate a system of Government audit, as that expression was generally understood. If the guarantee of the State were to be given to all such accounts presented to the Board of Trade, the various other companies engaged in mercantile and industrial pursuits would make similar claims upon the Government; and the consequence would be that the Board of Trade would find itself involved in vast, com plicated, and overpowering interests. More than that, he thought it impossible that Government auditors could certify to the correctness of the accounts laid before them without communicating to them the sanction of Government authority, and he was afraid that the effect of such a plan would be to get rid of that individual responsibility which, in matters of this kind, was of much importance. The plan he ventured to propose by the present Bill was one which had been adopted by the Government itself in a measure now before the other branch of the Legislature. His object was to effectually carry out the provisions of the Clauses Consolidation Act of 1845, and the Companies Act of 1862, so far as they related to the regulation and exhibition of the accounts. He proposed that the chairman and two directors of each company, together with the accountant, should, upon the occasion of the company's meetings, draw up and sign a

VOL. CXCI. [THIRD SERIES.]

there should be drawn up and filed the report of the engineers of each company as to the condition of the permanent way and the rolling stock of the company. In order to prevent any manipulation or cooking of the accounts, he proposed that they should all be made out according to a particular form prescribed by the Board of Trade. No dividend would be payable until all these requirements were fulfilled. In addition, he proposed to enact that all the officers of the company, signing documents of a deceptive or a fraudulent character, should be liable to fine and imprisonment. Two important objects would be gained by making it compulsory on companies to make out their accounts in a prescribed form. In the first place, there would be no dressing them up in order to make things pleasant, or to suit the interests of the company itself; and, in the next place, there would be no payment out of borrowed money, and no money could be paid without passing through the books of the company. In addition to this, by compelling all companies to adopt the same form of accounts, the public and the shareholders would derive great advantage from being able to form some estimate of the respective value of the shares of the companies. He had now stated the leading features of his Bill which he had taken up at the request of others, and which, if adopted, he believed would go far to prevent a recurrence of those evils under which several companies, as well as the public generally, were suffering, and which had produced so great a depression. He might be wrong in his views, but he had taken every pains by study and inquiry to form a right conclusion upon the subject. He had been desirous to see this measure brought forward with the sanction and authority of the Government; but as his hon. Friend the Vice President of the Board of Trade had declined to take the conduct of the measure, he felt it his duty to assume the responsibility of submitting it himself to the House. He trusted the House would feel that he had a claim on its support.

3 D

Motion made, and Question proposed, ments which the Legislature provided for "That the Bill be now read a second ti me.-(Sir William Hutt.)

their protection. It seemed to him that the only perfect measure of the kind which it was possible to bring forward would be MR. STEPHEN CAVE said, he would one rendering Government audit of railoffer no objection to the second reading of way accounts compulsory; but he had last the Bill, the principle of which was simi- year stated, in reference to his right hon. lar to that of the measure introduced into Friend's Bill, several objections to such a the House last year. The position this course. He believed it would paralyze year was, however, somewhat different. the watchfulness of the individual shareThe Government had, already introduced holder, and thus be fatal to the prosperity a Bill into the other House of Parlia- of joint-stock undertakings; the business ment for the regulation of railways, and of the Legislature was to give every facility in that Bill they had largely availed to shareholders for protecting themselves, themselves of the provisions of his right and not to bring about a state of things hon. Friend's measure. There were, how. in which shareholders whenever they met ever, a few salient points upon which the with difficulty would go crying to the GoGovernment had taken a view different vernment for assistance. It had been from that of the right hon. Gentleman. stated over and over again that it was One point was, the Government had con- quite impossible to control directors by fined themselves to railway companies ex- Acts of Parliament; that, if they were clusively. He thought that in any tenta- determined to cook the accounts, as it was tive measure of that kind, it would be wise called, they would do so. And even for the House to try the experiment upon a painful cases of fraud had at times been certain number of companies before em- disclosed, the recurrence of which no barking in the serious operation of legis- foresight on the part of the Legislalating for all the limited companies in the ture could make impossible. But whose country. There was a difference in prin- fault was that? The Courts of the ciple between railway companies and ordi- country were open for the prosecution of nary limited companies. Very few of the persons who were guilty of such crimes. latter had compulsory powers granted The shareholders individually were to them by Parliament a characteristic blame in not choosing competent and trustwhich alone would warrant Parliamen-worthy men. Persons were selected for tary interference in the internal concerns the office of director too carelessly, and, in of railway companies. There were many many cases, on account of their social thousands of limited companies in the country, and the form of accounts suitable to one description of company would be quite unsuitable to another, so that it would be next to impossible to prescribe a form that would apply to all. And a variety of other considerations showed how necessary it would be to limit the operation of a Bill like that before the House, at least for the present, and until opinion had been tested by experience. In the Act of 1862 there was a particular form recommended to joint-stock companies. By that Act it was provided that upon a requisition signed by two-fifths of the shareholders of any joint-stock company, an application might be made for a Government inspection of the accounts But that power had only in one instance been taken advantage of, and in that instance the time for an inspection was past, for the company was being wound up in Chancery. This showed how difficult it was to move

of the company.

shareholders to take advantage of arrange

standing and other circumstances, which in no way necessarily qualified them for their office. Gentlemen were constantly elected to the office of director simply because they were Members of Parliament, and supposed rightly or wrongly to have certain influence, which might on occasion be valuable; and in many respects shareholders permitted their affairs to be managed in a way which would bring a private concern to the verge of bankruptcy in a very short time. Shareholders then would act wisely if they asked the Legislature for no more than perfect freedom of action and perfect publicity with regard to the affairs of the company. Let the accounts be kept in an intelligible way, and the shareholders be afforded every facility for sifting them to the bottom. No form of account was prescribed by the Bill of his right hon. Friend; power only was given to the Board of Trade to prescribe a form. The Government had in the Schedule of their Bill set forth a very

carefully prepared form, which might be

"Another ruinous financial collapse is due in the year '67, and we have every reason to believe the preliminaries are already adjusted." This prophecy was verified; and he believed persons of sound judgment could always predict with tolerable certainty the consequences of reckless investing. The evil has arisen from the wish of investors

By their very nature, railways are monopolies; and the best plan would have been to recognize the fact at the beginning, and treat them accordingly. But this has not been done. Still, he approved the proposal to give every possible publicity to companies' accounts, and would not oppose the Bill.

modified with the consent of a company, teach investors the truth of the Duke of to suit particular cases. This, he believed, Wellington's maxim, that high interest was more agreeable to the wishes of the meant bad security. The shareholders railway companies. It was, he believed, might be taken to the salutary springs of sufficiently elastic to meet the varying cir. economy, but it would be impossible to cumstances of the different railways; and, at make them drink. He remembered a parathe same time, sufficiently precise to enable graph in the money article of The Times any shareholder of ordinary intelligence to in 1863 which, quoting from memory, he compare one year's accounts with another believed ran in this wayyear's, and those of one company with those of another. This would prove of the greatest advantage. He should be very loth to allow auditors to interfere with the policy of a company, on which the success of an undertaking really depended. That was a matter purely for the shareholders, who had every facility for controlling it under measures recently passed. The right hon."to eat their cake and have their cake." Member wished the reports of companies to be sent to the Board of Trade; but he did not tell them what the Board of Trade was to do with them. The probability was that those reports would be put into pigeon holes and there they would remain, unless some shareholder should apply to inspect them, which would rarely happen. The Government, on the contrary, thought it would be better to require a printed copy of the report to be furnished to each shareholder on his application, and that he should have the power of inspecting the books of the company at its office. The Bill of last year provided that the accounts should be certified by the auditor, and that unless he did so the dividend could not be paid. He (Mr. Cave) did not, however, agree that the auditor should declare the dividend, that being more or less a matter of policy, and not to be decided merely upon the state of the half-year's accounts. On this point as well as upon some other matters of detail, the two Bills differed. He thought it would be better to postpone the next stage of the Bill until the Government measure came down from the House of Lords in order that they might be both

considered at the same time.

MR. SCOURFIELD said, he had little confidence in Parliamentary efforts to reform joint-stock company management. Everything that had hitherto been done to provide facilities for the shareholders to detect fraud or irregularity in their companies had been systematically neglected. And this had not arisen so much from want of light or knowledge as from wilful shutting of eyes. The extraordinary fascination of a large rate of interest was stronger than the wisest counsel; and nothing but bitter experience seemed to

Motion agreed to.

Bill read a second time, and committed for Wednesday next.

COUNTY FINANCIAL BOARDS (No. 2)
BILL-[BILL 52.]

(Mr. Wyld, Mr. Hodgkinson.)

SECOND READING.

Order for Second Reading read.

MR. WYLD, in rising to move that the Bill be now read the second time, said, that the subject had occupied the attention of the Legislature during the past thirty years, and had been reported on by Select Committees of both Houses of Parliament, and by Royal Commissions, in every case to the effect that ratepayers should have some control over the expenditure of County Boards. This opinion had been supported by many statesmen of acknowledged wisdom. Sir Robert Peel stated that

"He should admit, what he was prepared to admit, that the representative system should to a certain extent be adopted in the administration of the county funds."

The Earl of Derby in 1848, speaking on the Petty Sessions Bill, said—

"In the county with which he was connected the county rate had risen from £77,000 in 1823, to £175,000 in 1848, and it did seem an anomaly that such a sum should be assessed by the local

magistrates without the control of the ratepayers."