Dáil Éireann debate -
Friday, 5 Dec 1924

Vol. 9 No. 22

COMMITTEE ON FINANCE. - RAILWAYS (DIRECTORATE) BILL, 1924—SECOND STAGE.

MINISTER for INDUSTRY and COMMERCE (Mr. McGilligan)

I beg to move:

"That the Railways (Directorate) Bill, 1924, be read a second time."

The Bill has already been circulated to Deputies, and the purpose of it is fairly well explained by the Preamble and by the provisions of the Bill itself. A certain amount of historical matter will have to be given to get this matter in proper perspective.

It must be within the recollection of Deputies that while the Railways Act of 1924 was passing through the Dáil, it was provided that four of the larger railway companies should agree to amalgamate, and that if no agreement was secured, then it was for the railway tribunal, set up under that Act, to determine an amalgamation scheme. Three of the four companies mentioned as amalgamating companies, did come to an agreement, and negotiations were opened between that amalgamating group and the fourth—the Dublin and South Eastern Railway Company. These negotiations did not result in any agreement. The reason for the failure to agree was stated by the Chairman of the Dublin and South Eastern Company in a statement which he made at the end of July. It appeared that the bone of contention was that the London, Midland and Scottish Railway Company had as successors to a railway company named in a certain Act the right to appoint a Director to the Board of the Dublin and South Eastern Company. Not by contract arising out of that right, but as a purely voluntary matter, they did grant certain concessions, amounting to about £20,000 per annum, to the Dublin and South Eastern Company. The relations between the Dublin and South Eastern Company and the London, Midland, and Scottish Railway Company, as the inheritors of another company, were summed up in three things—(1) that there was a director; (2) that there were concessions amounting to £20,000 a year made to the Dublin and South Eastern Company; (3) by reason of the director and being one of the causes of the grant of £20,000, there were extremely cordial relations, and there was close co-operation between the London, Midland and Scottish Company and the Dublin and South Eastern Company. When negotiations for an agreed scheme were on foot between the Dublin and South Eastern Company and the group then amalgamated, the contention of the other three companies was that that sum of £20,000 could not be counted in as portion of the stable income of the D. and S.E.R. Co., unless what up to then had been voluntary was made binding by contract. As they could get no assurance that the £20,000 would be contractually guaranteed, the negotiations broke down.

The matter was one mainly for the railway companies, but we were advised as to what the situation was and it seemed to be our duty, in the interests of the public generally and in the interests of the amalgamated concern, which we had been responsible for bringing about, that we should inquire into the circumstances and see if any agreement could be come to. It will also be remembered that during the passage of the Railways Act through the Dáil I was urged from many sides of the House to continue—not to introduce as a new principle—the existing right of the London, Midland and Scottish Railway Company to appoint a director on the board of the Dublin and South Eastern Railway Company, and to extend it to the new Amalgamated Company. That did not seem at the time a proper thing to do, because there was no consideration to the new Amalgamated Company for the extended right, which Deputies from various sides of the House claimed. It was proposed to me that I should not only continue the right of the London, Midland and Scottish Company to appoint a Director, but continue it to the new amalgamated concern, which would have to deal not with the limited traffic which the Dublin and South Eastern Railway Company had to deal with but with all the traffic of the Amalgamated Company. As no new consideration to the Amalgamated Company was promised, that application made by Deputies was refused and the Act did not continue that old right.

This point was then gone into with the various parties concerned and it was found that the London, Midland and Scottish Company were agreeable to convert that voluntary and discretionary payment of £20,000 a year into a binding agreement, on consideration that they be allowed to nominate a director of the new Amalgamated Board. The situation was consequently changed. There was a new specific obligation undertaken by the London, Midland and Scottish Company towards the Amalgamated Company, and on foot of that, when it was represented to us that the agreement was in fact made and had to be implemented by legislation, I undertook to bring in this Bill.

It has been objected that a question of principle is involved, and when that objection was put up I understood that the counter-suggestion was made that if this same proposition could be secured by agreement it would not be possibly entirely without objection, but that it would be less objectionable than the present form. The difficulties in the way of agreement must be stated. And, again, portion of the Railways Act must be quoted. For the first year the directorate of the Amalgamated Company is to be chosen from amongst the existing Directors of the Railway Companies to be amalgamated, but after a year the appointment of Directors falls into the hands of the proprietors of the new amalgamated concerns. It is obviously impossible to ask a company to guarantee a certain sum of money in perpetuity in return for a promise that the present directors of the amalgamated company would encourage or request the proprietors to appoint a director of the London, Midland and Scottish Company on the new Board. It would obviously be inequitable to ask a perpetual right in return for a promise to endeavour to secure something from the proprietors, who might act in any way they chose. It is necessary to have this right secured in some lasting way, because the railway tribunal will shortly have to determine what is the value of the receipts brought in by the Dublin and South Eastern Company, for the purpose of determining what issue of amalgamated stock should be made to them. If this £20,000 disappears from the receipts of the Dublin and South Eastern Company, it will have considerable effect on the value of the amalgamated stock to be given to them.

Mr. JOHNSON

Particularly on the Dublin and South Eastern stock.

Mr. McGILLIGAN

It is the Dublin and South Eastern stock I mention. The right, therefore, if it is to be maintained at all has to be maintained in some binding way. The contract was bi-lateral. There was an agreement proceeding from one side which was not going to be much good except it was put on a firm footing by way of legislation. On the other hand, there was then going to be guaranteed these payments as recited in the Preamble to this Bill. I think we should have agreement on that point, that it is absolutely inequitable to ask one party to guarantee sums set out in this Bill in return for some agreement or promise of agreement which might not be kept by the proprietors of the amalgamated concern when they meet to elect the directors next year.

There are certain matters in connection with this which are sub judice the Railway Tribunal at the moment and I do not intend to encroach on them. Certain points have, however to be borne in mind. The contention of the three companies already amalgamated, with regard to the Dublin and South Eastern Company, is that unless they (the Dublin and South Eastern Company) can guarantee that that £20,000 will be brought in, then their stock must suffer a certain depreciation. The retort made to that by those who speak with authority for the Dublin and South Eastern Company is: “If this sum is lost, as it was portion of the receipts which we ordinarily possessed and which we were likely to possess in future, had it not been for the Railways Act, then the loss should be made good out of public funds.” I am not saying that I have any opinion as to whether the contention of the three amalgamated companies is right or not, or whether the further contention of the Dublin and South Eastern Company, that the loss would have to be borne out of public funds, is right or not. But those two contentions are there and the Railway Tribunal certainly must know before it can form a proper appreciation of what issue of amalgamated stock must be made, whether or not this £20,000 is going to be continued for a long period of years, or whether it is not going to be continued, or whether the question is in the intermediate stage that it is in doubt whether it may or may not continue. The tribunal cannot properly evaluate the issue of new stock to be made to the holders of Dublin and South Eastern stock unless they have some certainty with regard to this £20,000.

Mr. JOHNSON

Does the Minister suggest that there is a definite period fixed in the agreement, during which this concession will continue?

Mr. McGILLIGAN

If the Deputy will read the Bill, he will see that the right to appoint only exists as long as the agreement continues.

Mr. JOHNSON

Supposing the agreement is dissolved in a year or two years what is the effect of that uncertainty upon the decision of the Tribunal?

Mr. McGILLIGAN

That would be a point to be looked into by the Tribunal, having the exact terms of the agreement, which are not here. They will have to look into that, and the Tribunal will have certainty as to the continuance of the allowance. There are two ways of looking at this matter. I suggest and contend that the only way it should be regarded is in the light of a business agreement. If it is a proper business agreement, if it is "good business," then, it should be carried out, and carried out in the only way in which it can be properly carried out—that is, by legislation. The other contention is that an evil principle is brought in. If this were the first time in the history of this country in which a foreign railway company were being allowed to appoint a director certain objection might be made. Still, the argument of the business agreement would overpower that, though it would have a certain force. But it is not by any means the first time that this has been done. This is a continuance in another way under different conditions——

Mr. JOHNSON

This is the first time it has been done by an Irish legislature.

Mr. McGILLIGAN

—of the right which the London, Midland and Scottish Co. previously had, to appoint to the Board of the Dublin and South Eastern Company, which right, although guaranteed by another legislature, was, if one can judge from the opinions of the Deputies here when the Railways Bill was going through, approved of. It certainly was not objected to on principle.

Mr. JOHNSON

It would have been if Ministers had supported it.

Mr. McGILLIGAN

There was absence of objection from three sections of the House, and there was one member from the Deputy's Benches who did speak in favour of that idea.

Mr. DAVIN

Not on the grounds put forward then, but on the very grounds the Minister is now putting forward. Let the Minister look up the Official Report and he will see that.

Mr. McGILLIGAN

I do not think that enters into it, in any event. We are on the question of principle. No objection on the grounds of principle was raised by the Deputy who has just intervened.

Mr. DAVIN

That is true.

Mr. McGILLIGAN

This right, although conferred by another legislature than an Irish legislature, did not find any great objection on grounds of principle from three sections of the House.

Mr. HEWAT

I do not think the question of principle came up for discussion at all.

Mr. McGILLIGAN

I may not have made myself clear. I will put it in another way. If that principle was so very objectionable, it should have been vehemently assailed——

Mr. JOHNSON

Did not the President vehemently assail it? He refused to consider the proposition of Deputy A. Byrne and there was no necessity for anybody else to support him.

Mr. McGILLIGAN

On that point, I shall have to refer to the Official Report as to the grounds on which the President assailed it. It was not on the grounds of principle.

Mr. JOHNSON

He refused to consider the proposal.

Mr. McGILLIGAN

He refused to consider the proposal of Deputy Byrne, that the pre-war value of certain stock should be taken on the date on which Deputy Byrne proposed the amendment and he said it was a most preposterous suggestion—that is to say, that Deputy Byrne's suggestion was preposterous. He did not object on grounds of principle, and nobody objected on grounds of principle, to the continuance of the right of the London Midland & Scottish Company to appoint a Director on the Irish Railway Board.

Mr. DAVIN

Is it not a fact that the President actually guaranteed that he would consider the matter before next Stage?

Mr. McGILLIGAN

The President did definitely undertake that, and, to implement the President's promise, I travelled to London and opened up negotiations with certain railway people to see if a good bargain could be struck. The President was far from saying anything against this on the grounds of principle. He made it clear that he would not oppose it on grounds of principle, and following up that, I went to London to make a good business arrangement. If this principle were to be logically adhered to, the Dáil would have to decide that no industrial or other company could get any right by statute in the Free State, and I venture to prophesy that if we set out with that idea we would soon have to depart from it. I suggest, if any agreement is to be made, it should be made openly and by statute in this House, and not behind doors and by means of private negotiation. I suggest that the best way to approach it is by means of statute. The matter should be discussed openly in the House and voted on, and not decided by means of private agreement.

Those are the main points with regard to the Second Reading of this Bill. I hold it is "good business," and that it is going to secure for the new amalgamated company a matter of £20,000, which money, if lost, will have to be made up out of rates, or if not out of rates—if the Dublin and South Eastern Company's contention be approved of—out of Government grant. In any event, it would fall on the Irish taxpayer either generally or as a railway user. It is good business, and it is a proper thing to be done by statute if it is to be done at all. Inasmuch as it is simply the extension of a principle previously notified to the Dáil, which met with no vehement opposition in this Dáil, I ask the House to pass the Second Reading.

Mr. JOHNSON

The Minister has rather emphasised what he believes to have been the absence of vehement opposition to the proposal to give a right to the London, Midland and Scottish Railway to a directorship on the Irish Board. I can speak for myself on this matter, and I can say that if there had been any encouragement of such a proposal, I would have opposed it as strongly as I possibly could.

I am not making any claims for any Simon Pure Irish nationalism, but I am going to ask these members of the House who have protested years back —I am sorry so few of them are present—their belief in Sinn Féin and the ideal that Sinn Féin stood for to oppose this Bill. Taking the Bill in regard to some of its details, the Railway Bill, as passed at the instigation of the Minister, sets out that the Directors should not exceed fifteen in number, or be less than twelve, and the qualification should be the holding in his own right of such amount of share capital as may be specified. That was obviously intended to prevent companies and combinations of persons appointing a director. It was intended to ensure that directors who would be appointed in future would be elected by the shareholders themselves. Now, within a very few months after its passing the Minister comes along with a Bill to make an exception, not a general exception, which would allow existing shareholders of the Great Southern Railway, the Cork and Bandon Railway, or the Midland Great Western Railway, but only of the London Midland and Scottish Railway, a right by statute of the Oireachtas of the Irish Free State to have a directorship upon the new Irish railway. The excuse is given that the same company, by virtue of certain investments and certain concessions, had already a right in one of the companies that are to be amalgamated: a company with a capital of about £2,400,000, where they have one in seven of the directorate. The same rights in the new company over the same area, and the privileges given to the same line, the Dublin-South Eastern, are to be continued, but in exchange they are claiming, and we are asked to grant, a similar right in the new company which covers the whole of the country. That is to say, that for that one-seventh of the directorate of a company, with a mileage of 133 and with a capital of £2,400,000, they are to have one-sixteenth of the control in a company having probably 2,200 miles of line, and a present capital of, perhaps, £33,000,000 or £34,000,000. That is a fair exchange! The Minister may speak of good business! It is good business—for the London Midland and Scottish. The old arrangement which was paid for by the concession was one director for 20 miles of railway and £350,000 capital. The new arrangement—good business from the point of view of the London, Midland and Scottish—is one director for 138 miles of railway and £2,000,000 of capital. It is a fair business proposition!

Mr. McGILLIGAN

You have not mentioned the consideration.

Mr. JOHNSON

The consideration is to be the same and no increase pro rata with increased power. They have not even pretended to give an increase pro rata in concessions for the increased power they are getting over the whole railways of the Saorstát.

Mr. McGILLIGAN

On that point the Deputy seems to be ill-informed. The London Midland & Scottish company had not the right to appoint a director on the Dublin South Eastern Board in return for a guarantee of £20,000 a year.

Mr. JOHNSON

No, but certain concessions in respect to that line, according to the Bill.

Mr. McGILLIGAN

The Deputy is comparing the old arrangement with what is proposed to be the new arrangement.

Mr. JOHNSON

Does the Minister propose to put on the Table the new agreement?

Mr. McGILLIGAN

The new agreement will probably be made public. The Deputy has addressed himself to the point that there will be no difference, but he has not challenged my assertion, so far, that there is going to be £20,000 a year paid for the right of appointment. He states that that is the old consideration, the return of a director for a much larger company.

Mr. DAVIN

Is it not a fact that the £20,000 is wrongly used in this debate, that it is the present fixed value of the concession which may increase with the increase of traffic?

Mr. JOHNSON

I read the Bill in this way. It says that "so long as the continuance of the concessions, allowances and advantages, including special proportions in division of receipts from through passenger and perishable or other traffic," so long as that is provided for in the agreement with the new company, this right will be continued.

Mr. McGILLIGAN

That is the present right.

Mr. JOHNSON

The present right will be continued. That is to say, that the rights and concessions in respect to the Dublin and South Eastern Company are to be continued for those concessions and investments. They had one director out of seven on the Dublin and South Eastern Company.

Mr. McGILLIGAN

No. The London, Midland and Scottish had the right in the old days to appoint a director of the Dublin and South Eastern Company. The consideration was not these concessions which are being continued. These concessions were voluntary and outside the consideration on the foot of which they got the right to appoint a director on the old Board.

Mr. JOHNSON

Whether voluntary or not, these concessions to that particular railway are to be continued, and if it was a voluntary arrangement in the past there is no breach of any obligation other than the desire of the Minister to conciliate the London, Midland and Scottish.

Mr. McGILLIGAN

Does the Deputy consider that there is any difference between £20,000 which may or may not be paid in any year, and a binding agreement to pay £20,000 every year?

Mr. JOHNSON

Now the Minister tells us that the London, Midland and Scottish Company are buying this right and the Minister is prepared to sell the right over Irish railways to the London, Midland and Scottish for £20,000 a year.

Mr. McGILLIGAN

The Deputy cannot have read the Bill if he has only come to that conclusion now.

Mr. JOHNSON

I am taking the Minister's explanations and interpreting them as well as I can, a thing which he did not do in introducing the Bill. Perhaps we will learn more of the Minister's intentions and of the Company's desires when we get to the Committee Stage, if we ever get to it, but I hope we do not. It is not because, in the words of the Minister, it is a good business proposition from the point of view of the London, Midland and Scottish Company that I want the Dáil to refuse a Second Reading of this Bill. I think that the case which I tried to make, just a year ago to-day, in moving the Second Reading of the Transportation Bill still holds. and should hold, the minds of the Deputies. I then urged, following the example of a much abler man, very much more concerned in the past with Irish railway policy, that the railways in Ireland should be directed towards furthering the development of Ireland rather than that Ireland should be an instrument for furthering the development of railways, and that railway policy should be subordinated to national policy and development.

It has been pointed out in the past, many times, that railway policy has been directed to conveying commodities and passengers, for as long distances as possible, to England, and conveying commodities from England, for as long distances as possible, to increase the revenue of the railways, and the effect of this policy has been to develop this importation and exportation, not because it is of advantage to Ireland, but because it would be of advantage to the railway companies, both in Ireland and in England. As the Minister pointed out, the advantage of having a director upon the Dublin and South Eastern Railway Company has resulted in some advantage to the London, Midland and Scottish Company. If it had not promised such advantage, then there would have been no such arrangement. I said, a year ago, that we might well consider that the sending of a bale of bacon from Limerick to Leicester, and the sending of a parcel of boots from Leicester to Limerick, would be a good policy from the point of view of the railways, but bad policy from the point of view of Irish industrial development.

Mr. McGILLIGAN

Am I right in thinking that the Deputy is making a mistake? The proposal is to give one London, Midland and Scottish director on a Board of sixteen, and not of fifteen directors.

Mr. JOHNSON

I understand that. I will come to that later on. I say that we must legislate here as far as we can, so that the railway policy shall be directed towards developing and encouraging transportation to and from points within Ireland as far as possible, and to encourage that rather than to encourage transportation with a view to markets in England, and from England to Ireland. That I thought up to a year ago, was the common view of people who had been engaged in propaganda for an Irish Ireland, and Irish industrial development. Now I am beginning to see that that was never seriously meant, but was only part of an agitation. I am asking the Dáil to say that it was not only political agitation, but good national policy, and we should not depart from it. Certainly we ought not to go and do something that would tend directly away from that conception of the relative position of the State and of the railway position. I am sure the Deputies in the first Dáil will forgive me for reading a few sentences from a speech by the late Michael Collins in advocating the acceptance of the Treaty, and there are some Deputies here—I wish there were more present, as I could remind them of certain influences at work at that time—who voted for the Treaty because of these special considerations.

"For our continued spiritual and national existence two things are necessary—security and freedom. If the Treaty gives us these or helps us to get at these, then I maintain that it satisfies our national aspirations. The history of this nation has not been, as is so often said, the history of a military struggle of 750 years, it has much more a history of peaceful penetration of 750 years.... It has not been a struggle for the ideal of freedom for 750 years, symbolised in the name Republic. It has been a story of slow, steady economic encroach by England.... The English penetration has not merely been a military penetration. At the present moment the economic penetration goes on. I need only give you a few instances. Every day our banks become incorporated or allied to British interests, every day our steamship companies go into English hands, every day some other business concern in this city is taken over by an English concern, and becomes a little oasis of English customs and manners. Nobody notices, but that is the thing that has destroyed our Gaelic civilisation. That is a thing that we are able to stop, not perhaps if we lose the opportunity of stopping it now. That is one of the things that I consider is important, and to the nation's life perhaps more important, than the military penetration, and this gives us the opportunity of stopping it. Indeed, when we think of the thing from that economic point of view it would be easy to go on with the physical struggle in comparison with it."

There would be acceptance of that, nominal mental acceptance, but I want to ask the Deputies who agree with it to apply it. The proposition is to confer a right by statute upon the London, Midland and Scottish Railway, of a directorate on the new amalgamated company. The Minister points out the difference between giving them one directorate and giving them a majority. You are not proposing to give them a majority, but one out of sixteen. Let us assume that that one person is the same person who was a director of the Dublin South Eastern, or another person equally, or almost equally, conversant with English railway requirements and interests. I can imagine that person being very frequently in touch with the general manager of the Irish company, having a much clearer knowledge of the railway affairs and what is required in respect of railway policy, being constantly kept informed of every detail of the development of policy, not merely financial, but actual development of railway policy, and probably, as I suggest, very much more conversant with the business of the new amalgamated company than any of the fifteen directors and because of his knowledge of railway business and being in constant touch with the railway management, having very much more influence in the direction of Irish railway policy than five or six, or even fifteen of the Irish directors.

But considered from another point of view, this nominee of the British railways, having the ear of the general manager in a rather abnormal way as compared with the other directors, the general manager, knowing that there are no further prospects for him in Ireland, but that there are possibilities of development, of improvement in position, of extension of power and authority in England, what is more natural than that he will give ear and heed to the promptings and suggestions of the director appointed by the London, Midland and Scottish Railway? In all those innumerable little ways— not matters that come before the Board —in which the general manager will influence policy, he will give ear to the director appointed by the London, Midland and Scottish railway. In that way I say you are going to bring into authority and power over the Irish railways a nominee of the British railways, whose chief purpose will be to assist in the development of the London Midland and Scottish railway, to whom the interests of the Irish railways will be secondary to what he thinks are the interests of the British railways.

Mr. McGILLIGAN

If that man, with all this power as pictured by the vivid imagination of the Deputy, stood for election for the Dáil, we might close it, because he would have the same power in the same multitudinous way over Deputies.

Mr. JOHNSON

If that director could get into the Ministry and have the same power over the Ministry that he will have over the directors and the management, then you might say that we may close up. That is what the proposition of the Minister is—to put him into executive control, with not merely the right to criticise, but to get the ear of the departmental chiefs and influence them in all these wonderful ways that departmental chiefs can influence Ministerial policy.

Mr. McGILLIGAN

Is there such a man?

Mr. JOHNSON

There is. If we are going to give this right to the London, Midland and Scottish Railway Company for certain concessions, we are definitely setting it down that we do not desire, that it is not our intention, that it is not our deliberate view, that the Irish railways shall be directed towards assisting the development of Irish industry; that the policy which has led to special privileges for cattle exportation trade, special privileges to the manufactured goods importation trade, will continue; that the economic policy of the country, which we have been generally regretting for a long time will continue to be based upon the exportation of raw material, foodstuffs, cattle on the hoof, and the importation, covering as long a railway journey as possible, of manufactured articles. That will be British railway policy. That will be the influence sought to be exercised by the British railway director upon the Irish railways. That influence will be much greater than that of one out of sixteen. We are, by the passing of this Bill, quite definitely accepting the proposition that the railways are to continue in their policy of feeding British companies.

I said that I believed railway policy ought to be subordinate to national policy in economic affairs; that we should rather hope that the railways would encourage transportation between points in Ireland than direct their policy towards transportation to and from England. It is on these grounds I am asking the Dáil to refuse a Second Reading to the Bill.

There is another point that I want the Minister to make a note of; that is, the right to appoint a director is to last as long as concessions, allowances and advantages continue. I wonder whether it is intended to restrict the powers of this director, at least, to the extent that he should not have a voice in deciding whether these concessions should continue. Surely we are not going to give him the right to say whether or not—possibly even to have a deciding voice if it came to a vote— Irish railways shall relieve themselves of this, shall I call it incubus, or if you like, privilege, whatever it may be worth. If a director is to be appointed I should say, at least, he should be restricted in that respect; that he should not have a right to a voice in deciding the question whether this agreement shall continue. That is a small point, perhaps one that could be raised in Committee.

The main principle of the Bill is a bad one, and I think the Dáil ought not to give it a Second Reading. On the first Stage I said—the Bill was not then in our hands—that if this had been a proposal to allow the shareholders of the new company to elect a nominee of the London, Midland and Scottish, while the evil might be as great, we would not be to the same degree parties to it, and my opposition to it would not be so intense as it is to this proposal.

Mr. McGILLIGAN

Even though that director might gobble up the railways as the Deputy described.

Mr. JOHNSON

He might be as evil a genius as this man, but we would not be conferring the right on the London, Midland and Scottish Company to do it. I would oppose it, as I think the principle is a bad one, when you are not conferring a similar right upon combinations of Irish shareholders who, at present, hold Irish railway stock.

Mr. McGILLIGAN

You make a distinction between allowing people to commit suicide and assassination.

Mr. JOHNSON

Between people being allowed to commit suicide and we being parties to assassination.

Mr. McGILLIGAN

On the ground of the sanctity of human life.

Mr. JOHNSON

On the ground of moral responsibility, political responsibility, and national responsibility.

Debate adjourned until Tuesday, December 9th.

The Dáil adjourned at 4 p.m.