National Land Company - Select Committee

Select Committee

The Select Committee issued minutes of its hearings, and then a final report on 1 August, delivered in the House on 31 July. Its principal findings were:

• Lottery

The Select Committee found that the company's plans would not ensure that all the shareholders would get a plot of land. It was therefore a lottery, which barred it from registration as a company. They found it to be a lottery by two analyses.

• The financial lottery

O'Connor's financial projection at the outset was as follows:

Sell 2000 shares at £2 10s, raising £5000.

Buy 120 acres (0.49 km2) at £18 15s per acre (£2250) and then build, fit out, and stock (£2750), total £5000.

60 two acre plots would each generate £5pa, totalling £300pa.

The freehold could be sold for 20 years rental, £6000, which would finance the next, larger, cycle.

The select committee's figures, based on the reality went as follows:

There were 70000 shareholders, each needing a plot & house costing £300. A total of £21 million would be required to satisfy them all.

There were 70000 shareholders, fully paid up at an average of £3 18s, yielding £273000.

Mortgaging the first tranche would raise £182000 for the second tranche, based on the two-thirds mortgages, the best then available. By the eighteenth tranche the mortgage would be insufficient to build another. At this point £819114 would have housed 2730 shareholders, leaving 67270 shareholders unhoused.

• The time lottery

Even if it were possible to mortgage the properties for 100%, so that there would be no limit to the number of times this cycle could repeat, time would be a limiting factor. Assuming a buy-build-settle-remortgage cycle could be completed in a year, it would take 75 years before all the shareholders could be settled.

• O'Connor's Bill

Since the company was a lottery it was not consistent with the principles of a friendly society. O'Connor's bill was therefore useless.

• Expectations

The National Land Company was an illegal scheme that would not fulfill the expectations held out to the shareholders.

• Records

The books had been imperfectly kept; in fact, O’Connor had lost £3400 by the company. Ironically, had the records been better kept those collecting shareholder signatures would have realised they had met the threshold to finalise the company's registration. The bill which precipitated the Standing Committee (and the company's demise) would not have been necessary.

• Recommendation

It was recognised that the parties had got into their predicament in good faith. It was therefore proposed that they should be given the opportunity to wind up the company's affairs themselves.