That makes the price 91/-. Turf which is sold here at 63/- requires 28/- subsidy, although it is produced at the bogs at £2 a ton, and I understand from people who know more about this than I do that that £2 a ton is a fictitious figure, that the return is much less than that. Notwithstanding all that, the Great Southern Railways Company propose to increase the freight charges by 2/4 a ton, and we are supposed to regard that as something normal and on which to assess the basis of the return to these people for the last couple of years.
In amendment No. 26, I have asked that, in considering the case, the High Court.
"shall pay attention to all the circumstances of the dissolved railway company,"
—that is a phrase taken from the 1924 Railway Act which, of course, dealt with a situation in which there were entirely different matters to be reviewed with regard to the companies that were to be absorbed or amalgamated. Still the phrase does quite well for this purpose—
"the dissolved transport company and the Company and in particular the value on a net revenue earning basis on the 1st day of March, 1943, of the dissolved railway company and of the dissolved transport company and the estimated value on a net revenue earning basis of the Company under the provisions of this Act, the depreciation as on the 1st day of March, 1943, in the wasting assets of the dissolved railway company and of the dissolved transport company not provided for by reserves, the amount of capital required to make good such depreciation and the aggregate amount of such dividends if any, paid to stockholders of the dissolved railway company and of the dissolved transport company as were drawn from reserves, subventions, or other non-recurrent sources and were not paid out of what I may call ordinary trading revenue."
I put that in in order to cover the ground that the Minister had covered in his statement of May of this year.
"That statement of May this year was only in line with the statement made by the chairman of the Great Southern Railways Company previously and the statement made by the Minister on the two occasions I have referred to—the May and June statements of 1943."
In that connection I want to call attention to the Royal Mail Steam Packet Company case. In that case the allegation against the chairman of the board who issued a prospectus was that he misled the public, that he issued in the prospectus a statement which was false in some material particular and in that way got new money under what amounted to false pretences. What he did was, having certain subsidiary companies which were earning moneys, and seeing that these moneys were not going to be earned much longer, and where he got an adjustment in his tax charges and where he had certain other secret reserves, he drew on these and put them into a balance sheet, as it was alleged, to show a trading profit where in fact there was a trading loss. The whole case was analysed from the point of view as to what should be shown in the accounts. It was alleged that the accounts showed trading profits which were not earned, that there were certain things drawn from reserves and what were called adjusted profits. A phrase used by one of the counsel in the case is, I think, particularly appropriate, with a little difference, to the situation of the Great Southern Railways Company. One of the counsel said: "The trouble in this case was that this old gentleman's business was not making money, that the old gentleman was living on the savings of his prudent middle age." That might have been said for the Royal Mail Steam Packet Company.
It is not so for the Great Southern Railways Company, at least, if we consider that its middle age had been reached and passed by, say, the year 1924, because from the year 1924 on, if one looks at the tables given in the report of the tribunal of 1939—I think it is at page 139—one will see that this company was for years paying dividends when, for a number of years it was not making as much profit as it paid out in dividends and, from 1931 onwards was paying dividends when, instead of making profits it was making losses. Of course, what it was digging into was (1) the money which was handed over by the British Government at the end of the last war for renewal of track, rolling stock, permanent-way and everything like that, and (2) the money they got, of a non-recurrent type, under the 1924 Act, the moneys that were in subvention to them in respect of the baronially guaranteed railways. They had certain obligations to meet in connection with the same matter. For the rest of the period, from 1931 onward, what they were doing, as was confessed afterwards, was letting that renewals item go. The official who was present at the 1939 tribunal said that they were satisfied that not enough money was being put into renewals at all, and that they estimated that £600,000 on each of two sets of estimates was the amount required, and they estimated the amount set up by the two tribunals should be based on that.
Accordingly, it would appear that up to 1931 the company, for a long time, was making some profit and paying, out of that profit, certain dividends, and that from 1932 to 1938 they were making, in the main, losses. They made a small profit in one or two years, on an adjusted account, but in the main they were making losses, which amounted to well over £500,000. From 1932 to 1938 they paid for renewals, having made a deficit of £639,000, and in those years they paid a dividend amounting to almost £1,500,000. The situation in the previous years was not too good. They had a net profit amounting to £815,000, and paid out dividends amounting to over £2,000,000. That, of course, was from reserves resulting from the terminating Railways Act of 1924, but taking the years from 1938 onwards, on the whole, they paid out in dividends far more than they had got in profits, and the way that that was done was by letting the wasting assets waste, with the result that they arrived at the stage that the Minister described, when introducing the original Transport Bill last May, when he said, as reported in column 1793 of the Official Report:
"The provision of cheap and efficient transport facilities in our circumstances involves, so far as railway transport is concerned at any rate, over the greater part of the State, an almost complete scrapping of existing transport equipment. The railway equipment which Córas lompair Eireann—the corporation which it is proposed to establish under this Bill—will acquire from the Great Southern Railways Company is very largely obsolete. Not merely is it largely obsolete, but it is to an entirely uneconomic extent unstandardised. It will be necessary, at the earliest moment, for whatever organisation we set up, to take over the responsibility of transport operation, to replace the existing equipment with new equipment..."
There was the situation, and now we are asked to pay these people—to give them, in return for the stocks they hold in the two companies—I am dealing with the Great Southern Railways Company at the moment—the amount that they put in. I want this thing to be dealt with from 1924, dividing it up in whatever way you like. I say that something more than a bare calculation on that sum should be given to these people. I say that for this reason: that, in my opinion, up to 1931 there was a net profit, although it was very small, but that from 1931 onwards there was nothing but losses, and it must be remembered that the losses were accrued to them, as the tribunal pointed out, mainly on account of the economic war. That economic war was not their business, and I do not think it is right to saddle them with the unfortunate consequences of it. I think that an examination of the accounts will show that an amazing amount was paid out when it was not earned. It was not resulting from the savings of the old gentlemen or the middle-aged gentlemen. They had no savings, whether they were young, middle-aged or old. Whatever came to them was as a result of subventions of various kinds, and the result was the shocking situation in which the company found itself. When you add to the deplorable situation in which the company found themselves, the fact that Mr. MacMahon said that when he heard of the proposals he was delighted and received them with enthusiasm, and when you also take into account that Mr. Wylie and Mr. Tweedy said that for £14 10s., they were to get £10 I think there is a case to be made for an examination into the whole matter, and the Stockholders' Protection Association have asked for it.
The last point that I wish to deal with is this. I have dealt with stockholders all together, but there are different classes of stockholders in the companies, and the various proposals are known to the House. There is a proposal that there shall be two classes of stock: one the redeemable stocks, and the other the ordinary stocks; but it seems to me that the day after this Bill is passed the Minister can pay off all these debentures in one "go", and establish new conditions of repayment.
However, I hope that at a later stage we shall get an explanation as to the actual proposal in this: whether it is to put a value upon the numerous classes in the two companies, to divide them and give certain equivalent holdings of other debenture stock or common stock in the two companies. During the course of the tribunal hearings, some witnesses were asked whether they could put a value on the stocks of the railway company, as such. As far as I remember, two of them said that the scrap value of the railway would not bring in, or might just bring in, the value of the debenture stock last year. The sum of £4,000,000 was mentioned as being the then value of the debentures. One witness said that he thought they might be more, and a gentleman engaged in the buying of scrap said that, as scrap, it might be worth slightly more than £4,000,000. At any rate, nobody put a higher valuation on it, and yet we have this position now. I ask that it be determined what value is to be put, not merely on the present holdings of the stockholders but then to go on and equate that to what is the corresponding amount they should get in the new company, and I would give the new company power to determine whether they will give that debenture or common stock, mainly because, when this matter was under discussion in the courts nobody suggested that the Great Southern Railways' property, either rail or road, had any value to anybody other than the debenture stockholders, and that if these debentures were paid, nobody else would have any claim to anything. The debentures must be first paid and, if they were paid, there would be nothing left for anybody else. Under the old Acts, if they could not work except for the scrap value, then when people realised that the property was going to scrap, the value put upon it would be very much less than the value put upon it by the courts.
The suggestion in the measure is that we should come to the assistance of the debenture holders and get rid of them after a period—get rid of them at least by 1960. When that is finished, what are we going to do? We are going to hand over this refurbished company to the common stockholders. They are people who, if maintenance and renewals had been properly attended to, would be far down the line for any dividend at all. With the exception of the last few years, it is many years since they saw a dividend. If maintenance and renewals, according to the report of the Transport Tribunal, had been attended to, the interest on the debentures could not be paid up to 1938 and it is doubtful if it could be paid with ordinary charges since. Yet it is proposed that we should clear out the debentures with the aid of the taxpayer's money or by piling on costs to the railway users. When it is all finished we are going to make these other people, who were never believed to have any real profit-earning assets, owners and proprietors of the new transport system. There will be transferred to them at that time the assets of the old railway company and some good assets of the Dublin United Transport Company. There are no transfers of shares from the Dublin United Transport Company to the common stock of the new company. They are going into the debentures. I think that has been already stated. I wonder if an option were given to some of these shareholders, particularly with the version of the new company as now paraded by the Minister, would they choose to become common stockholders or would they go into the debenture class subject to redemption? I think these are matters that should be left to a judicial determination, where everything can be examined, all sorts of witnesses called and calculations can be put before people well skilled in valuing these things.
It may be said that to do that would hold up the Bill. It would not; this measure and the reorganisation can go through. We have been told in the circular of the 26th October that new capital was required but no new capital was got since up to this month. Yet we are told a remarkable transformation has taken place. It is learned from the reading of the report that the old certificate of the engineer that the line was unsafe has been changed to a new certificate that the line has been made safe without any new capital. This is certainly a miraculous transformation, the full implications of which are not yet clear to the people. In any event that is the situation. I do not know how long it will be until the new material required for the replacement of rolling-stock and for the carrying out of necessary repairs can be procured but it will obviously take some time. The suggestion in the Bill is that by changing the name of the Great Southern Railways Company and the Dublin United Transport Company to Córas Iompair Eireann we are going to get immediately a magnificent development and that new capital will be provided by what is proposed in the section. The new capital will be got later but I should imagine that it will be some time before that capital will be required, in the sense that it will be a long time before that capital can be expended. The scheme of reorganisation can meanwhile go on but there should be a judicial determination on this matter which would leave people satisfied. A lot of them are asking for it and as far as the rest are concerned they have indicated that they are doing very well at the public expense. Eventually it is at the expense of the taxpaying public or the railway users——