8.—12

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believe lam correct in saying, they have never paid any dividend at all. But that is the natural effect of duplicate railways. Some, perhaps, may advocate the duplication of railways. The case of the London, Chatham, and Dover Eailway and the South-Eastern Eailway is a very striking one. The London, Chatham, and Dover Railway is practically a duplication of a good many lines of the South-Eastern; and the South-Eastern Eailway Company has been obliged to do the best it could to get dividends in the best way it could, being attacked in this way ; but what has been the effect on the public ? 420. I think this is wandering a little wide of the reference to the Committee : the general question of duplicate railways is not referred to us; our reference is particularly to this Standing Order, and the effect of it?—l was merely going to point out that where there have been no duplicate railways the railway fares between 1845 and the present time have been greatly diminished. 421. Mr. Brand.] I understood you to say that the result of the injunction in the Hull and Barnsley case would be, in your opinion, to prevent promoters in future promising to pay interest out of capital?—l think it will have an effect in that direction. 422. In that case, however, there was in the prospectus—was there not—a direct statement that the Board of Directors could pay interest out of capital ?—Yes, it was put forward that they would : it was in the " heading " of the prospectus. 423. You have made some error in your evidence —have you not—with respect to the Eailway Construction Facilities Act ? I understood you to say that the railway companies under that Act were able to pay interest out of capital?—l meant to say exactly the reverse : that, although those Acts of Parliament were distinctly designed to facilitate the construction of railways, Parliament had taken care in both those Acts of 1864 to provide that no one should bo permitted to raise money for the purpose of facilitating the construction by the payment of interest out of capital. 424. Your evidence on that point is in collision with the evidence of Mr. Eoes, for Mr. Eees states, at Question 109, " That provisional order must still be confirmed by Parliament, and therefore Parliament ultimately sanctions the undertaking in the one case as in the other; but in the case of a limited-liability company coming for a provisional order they can pay interest out of capital during construction, or do anything they choose; and yet a tramway company coming for a special Act of Parliament is put under special terms as to the mode in which the capital is issued. That appears to me to be an anomaly: I can see no reason why it should be allowed in the case of a company registered under the Act of 1862, and not in the case of a company having exactly the same powers, but obtained by a special Act. And the same thing applies theoretically, though perhaps not practically, in the case of railways; for in 1860 an Act was passed called the Eailway Construction Facilities Act: it has not been of much practical use, because it involves purchasing all the land, and so forth—there have been one or two cases, I believe, under it—but in that case the company might register themselves under the Act of 1862, provide in their articles of association for the payment of interest out of capital during construction, come under the Eailway Construction Facilities Act, and obtain a certificate of the Board of Trade"? —That may be evidence about the way of doing a certain thing; but the Eailway Construction Facilities Act of 1864, and the Eailway Companies Powers Act of 1864, both contain a clause that companies shall not pay interest out of capital. The Acts themselves will be the best authority. 425. The Chairman.] Do you believe that, even were this Committee to recommend an alteration or repeal of Standing Order No. 167, still the law of the land would prevent the practice which has been adopted ?—I am not sufficiently a lawyer to say exactly that. If it was decided to repeal it, it would be taken to be an indication that Parliament had changed its mind, and that it was a legitimate thing to pay interest out of capital. 426. Mr. Salt.] I take it that you are in favour of retaining the Standing Order precisely as it stands now? —Certainly ; at least, I see no reason for altering it. 427. You have no wish to see any modification at all, however careful that modification might be?—No; I see no reason for any modification. I am not aware that any of the old companies desire to have any alteration in their favour in the Standing Order. It is a very salutary Order as regards the old companies. 428. Two important witnesses have told us that during the last thirty years, or whatever the period may be, very large sums of money have been raised for railway construction in spite of and against the principles of Standing Order 167 : do you concur in that ?—I should think that is very likely; but I could not say in the least how much, but I think, from the general idea which I have, that a very large proportion of the capital expended has been raised by the old companies. 429. And this system of duplicate railways, which you justly condemn, has been carried out also to a great extent in spite of the Standing Order?— Yes; there are some duplicate railways that have been passed and carried out. 430. I take it that your contention is that if this Standing Order had not existed those evils would have been greatly increased ?—lt might have cured itself a little earlier, perhaps, by people finding out sooner the unproductive character of the railways. 431. Have you had occasion in your company to raise capital for the construction of new lines or new works to any large extent? —Yes, to a large extent. 432. Have you paid interest on the capital out of revenue? —Yes. 433. You have always had sufficient revenue to cover the cost ? —Yes. The experience of the North-Eastern Company, and, I think, of nearly all the companies, is that the new railways which they can now construct are not likely to bring in immediate revenue when they are opened, and that, the shareholders having taken the burden upon themselves, it is the much more prudent course to let the burden come upon them gradually by paying interest as it is incurred, rather than by charging it to capital during construction, and then having a large sum coming down upon the revenue, which in some cases might cause fluctuations in the dividend and disturb the stock. 434. There is no doubt that that is by far the most legitimate way of raising new capital; but,