8.—12

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No. 2. —The Board 6f Trade to the Chairman of Ways and Means. Board of Trade (Eailway Department), London, S.W., Sir,— 23rd February, 1882. I am directed by the Board of Trade to refer to certain Eailway Bills of this session, in which it is proposed to raise the ordinary share capital of the respective undertakings, amounting to more than twenty millions, by paying interest upon calls out of capital. The Bills in question are : (1) Begent's Canal, City, and Docks Eailway, 8,100,000 shares ; (2) Hull, Barnsley, &c. (Extensions), 2,400,000 shares; (3) Hull, Barnsley, &c. (Interest), 3,000,000 shares; (4) East and West Yorkshire Union, 510,000 shares ; (5) Central Northumberland Eailway, 930,000 shares; (6) Ascot, Windsor, and Aldershot Junction, 330,000 shares; (7) Waterloo and City Eailway, 2,700,000 shares ; and (8) Metropolitan District, 1,250,000 shares, As you are aware, for many years past a clause has been inserted in every Eailway Bill, pursuant to a Standing Order of both Houses of Parliament, prohibiting the payment of interest upon calls out of capital. The Standing Order (167) of the House of Commons is as follows : "A clause shall be inserted in every Eailway Bill prohibiting the payment of any interest or dividend to any shareholder on the amount of the calls made in respect of the shares held by him, except such interest or money advanced by any shareholder beyond the amount of the calls actually made, as is in conformity with ' The Companies Clauses Consolidation Act, 1845,' or ' The Companies Clauses Consolidation (Scotland) Act, 1845,' as the case may be." The Standing Order (128) of the House of Lords is to the same effect, but more stringent. The eight Bills abov6 mentioned not only omit such a clause as is required by the Standing Orders, but, so far as the first seven are concerned, distinctly authorize the payment of interest out of capital; while the Bill of the District Eailway Company authorizes such payment out of capital or any surplus or reserve fund. It is unnecessary to discuss the policy of the Standing Order above referred to. It was well considered, and is supported by obvious reasons of expediency. Even if it were unsound, it should be altered as a whole, and not exceptionally in the Bills of certain particular companies. As at present advised, the Board of Trade are disposed to think that the companies in question should be called upon to amend their Bills in accordance with the usual practice ; and they will be glad to learn what are your views on the question. I have, &c, The Eight Hon. Lyon Playfair, M.P. Henry G. Calcraft.

No. 3.—The Chairman of Ways and Means to the Board of Trade. Sir,— 24th February, 1882. The subject of your letter regarding the Bills which claim powers to pay interest out of capital, contrary to the provision in Standing Order 167, had already engaged my attention, and the counsel to Mr. Speaker has had conferences with the counsel of the Chairman of the House of Lords in relation to it. I propose arranging a conference with Lord Eedesdale in relation to these Bills. I agree with you that the powers sought cannot be allowed to be given by Acts unless the Standing Orders be materially altered. Undoubtedly the spirit of this Standing Order is constantly evaded in the practice of railway construction, and the arguments in favour of it do not seem to be very strong. I enclose you a letter from Mr. Eees describing the inconveniences of the Standing Orders. When you have read this letter kindly return it. Of course I will take no step in relation to changes in the Standing Orders without full consultation with your department. I would be glad, however, that you consider its operation, as it is not good policy to preserve unchanged a Standing Order which seems now to be systematically violated in practice. I have, &c, Henry G. Calcraft, Esq. Lyon Playfaib.

No. 4.—Mr. Eees to Mr. Warner. Sir, — 13, Great George Street, Westminster, 20th February, 1882. In accordance with your desire, I beg to put in writing the views which I expressed to you verbally a few days since upon the subject of the Standing Order which prohibits, in the case of railways, the payment of interest on calls out of capital. It strikes one at first sight as somewhat singular that such a restriction should have been imposed in the case of railways alone. The evils, if any, which might arise from such an application of capital would seem to be common to all undertakings for which money has to be raised by means of shares. Ido not suppose that the Standing Order had its origin in any peculiar prejudice against railways; it was probably due to the fact that the only security which Parliament thought it right, in the first instance, to take for the completion of railways was that there should be a subscription contract for a certain proportion of the share capital, and it may have been thought right that the whole of the money so subscribed should be devoted exclusively to the execution of the authorized works. If this was the cause of the passing of the Standing Order, one reason, at all events, for still requiring its retention would disappear, since Parliament now requires that the money deposit shall be impounded for securing the completion of the works, and forfeited in case of their not being carried out. There can be no doubt—and I believe that any amount of evidence could be procured in proof of the fact—that the insertion of the clause required by the Standing Orders in Eailway Bills has two effects —first, to prevent the promotion oi genuine schemes ; and, secondly, to prevent the carrying-out of powers actually conceded, in many cases in which works highly beneficial to the public would be otherwise executed.