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8.—12

288. Is it not almost the universal practice of companies, in issuing shares at a premium, to issue them to their shareholders at a lower premium than when they issue them in the market ? —Yes. 289. They are only doing that in the case of this railway to which you have referred, I understand?— Yes. 290. Do you think that the repeal of this Standing Order will really get money into the pockets of the railway directors quicker than at present ? —Yes. 291. In what way? From the public outside?— Not from the public. You cannot raise money from the public now;"you cannot get the public to invest until the thing is a tangible, existing, money-earning concern; and you must provide for a kind of interregnum between the passing of the Bill and the construction of the railway ; and the only way in which that can be got over is by a great company using their funds—l mean their general funds, not these specific funds allowed by Parliament to carry out works—or by contractors, in combination with financiers, taking on themselves the risk of preparing and completing a railway which, when it is prepared and completed, they can sell to the public. 292. Do you not think you w rould pay as much for the money always as you do now ; that you will always have to get it done as now, in a general way, by contractors and financiers ?—I have just made a contract which I will undertake to say will evade even Sir George Jessel; and the cost of that I estimate at about £35,000 —very nearly 10 per cent, more than I should have had to pay if I could have gone to the people and said, " I will pay the interest on this money from the date of issue." 293. Then you are in favour of repealing the Standing Order, and giving the investor full notice of what is being done ?—I am. 294. We have had a question raised here before us of how this notice should be given: you would give it on the prospectus, I suppose, if you were issuing to the public ? —Yes, I should give it on the prospectus, and I should venture to suggest to some of the authorities, I think Dr. Lyon Playfair, that the Committee before whom any Bill for a railway comes should deal with this very question. I think it is desirable that there should be some limitation to it; and I think that the time within which this payment is to be made should be specified in the special Act; and I think that the extreme amount should be specified. 295. In each Act ?—ln each Act. As you know, Parliament always gives a certain period for the completion of the railway, and there would be no great harm in saying that up to that date interest shall be paid, up to a certain rate, not exceeding 5 per cent. Then, if the parties fail in completing the railway in the time specified, they have to go to Parliament for an extension of time, and if they had to show cause for that extension of time they would also have to show cause for an extension of the period of payment of interest. This being in the Act of Parliament, every broker, every man conversant with these transactions, would be able to see exactly what the position of the company was in that particular ; and it would be put upon the prospectus. 296. And in the scrip, I suppose ?—Probably that might involve some technical objection ; but no doubt it ought to be fairly guarded and secured. 297. Would you put in the words "interest to be paid out of capital"?—"lnterest paid during construction." 298. It is really paid out of capital ?—Yes. 299. It is better to state the real thing on the document, is it not ?—Yes. 300. The Chairman.] The time allowed would vary according to circumstances ?—Yes. If, for instance, Parliament gave five years for the execution of the work, they probably would say that the payment of interest should be for five years ; and if they gave two years for the work they would say two years for the interest; the real object being that an essential and inseparable element of the cost of the work up to the completion should form a part of the cost of the work. 301. Mr. Brand.] Then I understand that, even in the case of this Standing Order being repealed, you, in promoting a railway, or any one who promotes a railway, would still, in your opinion, not go to the public for the money; they would still have to go to the financier ?—Yes ; I think that is the most economical and the best way of doing it. 302. Then I apprehend you would be able to get money more cheaply than you do at present if you were able to say that these shares would either be issued at a discount or that the interest would be paid during construction out of capital ? —lssuing at a discount is, in fact, discounting your credit. It is like men who go to borrow money and are prepared to pay a very heavy discount. If I go to a man in the City and say, " I want £100,000, and I will give you \ per cent, above the Bank rate," he gives it me ; but if I say, " I will give you 10 per cent.," he suspects me, and I should get nothing by it. 303. You say this is a very improvident method of raising money. I want to ask you to point out the difference between my subscribing £100 to your undertaking and getting back in the course of five years £20 during construction, and, on the other hand, my paying £80 and getting back nothing during those five years, except this: that, I shall have £20 to use myself. As far as the investor is concerned, it seems to me the most improvident method of applying the money ? —When you issue at a discount—issuing, for instance, £100 at £80—it follows you for ever. Take a case in point, the District Railway. If they had borrowed the money for three years at £30 discount, that would have been a sufficient penalty to pay; but at the end of three years, the railway being a going concern and earning money, they would have been relieved of the consequence which follows having issued the whole capital at a percentage of £7 17s. Bd. out of the earnings of the company, instead of £5. 304. Upon that point, may I ask you what is the interest that the Metropolitan District Company are paying upon their ordinary stock?— Very little; they have only got up to \\.