The Express.
London, England, 1849-04-28 00:00:00

Mr. N. DAVIS, the SOSOEIIWAL—I have bean sem.—
to the company eleven years, and I rendered mosants to the
directors always every half year. The halfic.rly printed
60001111 SS were made oat by order of the directors' under my
supsrinteedence ; bat I do net madder myself responsible
for those mounts, because in some instances Gil, were al-
tared by the director, over which alterations I bad no control.
The amounts Sr. kept tender my control, by two gentleness-- '
one of whom takes the construction mosant, the edam Mei
traffic account; but the direeton may make, end have
such 'herniae' as they think fit, Certain expenses
traffic have net been charged against the revenue of the
current half year, but they have been allowed to stand over.
and ultimately such sums wers oharged to capital. By mei
a course, the gums shown to be applicable to dividend were
greater than they might to have been. The mode was this:
the expenditure against the traffic of the half-year was
extracted from the books in the form of a debtor and
creditor amount; in the form of a statement of expenditure '
for each half year, and of the receipts, showing the sums'
Under the eari,tte heads These statements of income
and expenditure were altered by the directors before'
they were submitted to the shareholders at their
general meting,. These statements were returned
to me whoa so altered. Items of expenditure
were diminished, and those of retsapts were increased. My
duty wee to obey my instructions, and I had no alternative
but to adopt suck alterations, without any regard to my
own private opinion. It his become necessary, in conse-
quence of these attentions, to charge expenditure applicable
to revenue to the capital account at subsequent periods. No
erasures were made in the books, but the statements were
altered before they were laid before the shareholder • and
within the last ball-
year the balances have been charged to
the capital account. I thir. k the first half-year this was done
was for the year ending January, 1846. I was net generally
Ch iedam seek alterations were made, although I ream-
s tmeine ones or twkie. I cannot pledge myself to par.
timbre. Ime present when some of the alterations were
misie In January, 1846. It might have been at a board
Metiag, but it was not at a full board. No minutes were
takes, and the secretary was not present. Mr. Waddington
Wen have been present when such alterations were made.
My opinion was not asked respecting such alterations in the
assenats. I have no doubt that Mr. Hudson was there at
times also. Since the first or second half-year, Mr.
Owen has taken in the accounts. As regards
the entry of 75,0001. to the capital account, that
was made by ceder of the directors, in January, 1848.1
There was a fresh set of books made about sloven yens ago,
by Mr. Johnson and myself. I can state positively that the
new books are a faithful trauseript of the old. The old
books are still In existence. The accounts submitted to the
directors were altered before I was called into the room, ani
the altered copy was printed to lay before the shareholders.
The alterations were considerable, but I cannot state what
these items were. This was in the first or second half year
after Mr. Hudson was chairman.
Mr. Joint BLECEMEN OWEN, assistant accountant—The
construction ledger has been under my care for the last two
or three yearn. I know that items chargeable to revenue
have been entered against construction. Blue checks are
issued for traffic, and red checks for construction exp:ndi-
tare. Some of the blue checks were afterwards charged to
capital, and portions of others; whether properly or not, I
cannot say. The headings of the ledgers showed that the
expenditure was properly applicable to revenue which was 1
transferred to capital account If there be an item of
9,0001. for guards' and porters' wages charged to capital, au&
sum Is improperly charged. If similar items are charged to
capital, they are also improperly charged. I have taken the
half-year's somusts as they appeared in the revenue account
books to the board, and there left them in their hands.
Sometimes I have been questioned as to certain items: I
think I have afterwards seen the accounts altered in pewit
Those alterations were adopted by me, and were eo visited
before the accounts were laid before the shareholders. I
have no recollection of any sum chargeable to revenue
being wholly charged to capital ; but I do know that
parts of the amounts were reduced, so that the amounts
were supposititious. By crediting the account of
traffic with assumed amounts due for sundry joint
rents of railway stations, and other charger, the aims-
reat amount has been incrrased. Capital account has she
been charged with payments chargeable on revenue. The
traffic accounts submitted to the shareholders were not a
faithful transcript of the receipts and expenditure of the
sow yas appeared in their books. The books were after-
life& made to agree, by transferring sums to capital in order
to produce such correspondence is the books. I do not
knew why these items should have been charged to works
mad stations. I had no orders as to that from any one ; the
messy was spent, and must be charged somewhere. It was
a seaway understood thing that capital was to bear what
revenue would not. The books were not afterwards
examined by any one. I selected works and stations as
moat applicable to the purpose. I have only rendered two
Wane& sheets; one was in Jaly, 1848, the other in January,
1849. The first was altered, but not the last. The effect
was that certain expenses chargeable to revenue were charged
to capital account. When I received hack the statement of
amount so altered, it was from Mr, Moody, who sometimes
attended the board on such occasions. I know that
the sums of 75,0001. and 30,0001., have been
wrongly charged to capital. It is subsequcat
to June' 1845, that the revenue amounts, as
published first, differ from the books of the company. I do
not remember any account from December 1846, to July
1648, which did not come back from the directors altered'
so as to increase the apparent sum applicable to dividend.
The reports to be laid before the shareholders at the general
misting, were drawn up by Mr. Raney and Mr. Duncan,
and then submitted to a committee of directors, and laid be-
fore the board.
Mr. C. P. RONEY, secretary.—l believe that the follow-
ing gentlemen, Messrs. Hudson, Waddington, Paterson,
Gibber, and tooth, were the committee appointed to
examine the haltycarly accounts in July, 1848, end settle
them for payment of dividend. Them gentlemen never met
as a body. Mr. Hudson and Mr. Waddington did meet.
Gamma HUDSON, Esq., M.P., the late chairman of the
company—The committee thought it right when the in-
quiry bad reached this stage, to request Mr. Hudson's
attendance. Previous to Mr. Hudson's attendance upon the
committee, they had decided to ask him the following gum
time Were the revenue accounts, previous to publication,
examined and approved by a committee of directors, or at a
general board of directors? Are you aware that the ex-
penditure under this head, as shown by the books of the
company, disagreed with the printed returns ? Can you in-
form us if there was any alteration made in the figures sub-
mitted to the dinctore, before they were published and the
dividend declared ? If alterations were made, can you toll
the committee what they were, and why leads, and when
made, was it by order of the board, by a commie( e, or by
the order of an Individual ; and if the latter, by whom ?
Mr. Hudson was also asked if be had any statement to
make relative to the agreement and propcsod amalgamation
with the Norfolk Railway Company.
Mr. HUDSON said: "I was not aware that the expenses
chargeable to
thought the charges against revenue were heavier than
they ought to have been, and as I could not con-
tract the expenses, I left the board. The statements
of accounts were referred to the finance committee, and
by them to the board. I was not aware that each diger,•
panel's existed in the accounts. I was net aware that the
printed accounts differed from the books. I was not aware
that there was any material variation between the accounts
and the printed reports. I might be aware that there was
a slight discrepancy between the printed reports and the
revenue expenditure. I am of opinion that there were
balances left over,bat not to any extent—to the extent of
1,0001. or 2,0001. It is possible that there might have bees
attentions made by the directors, but I cannot charge my
memory with them at this time. There might have
been, I suppose, as much as 8,0001. carried over to
the following half-yesr, but I did not salvoes that
so much as 10,0001. had been carried over. The board
was always unanimous respecting the dividend. Interest on
No. 2 Stock (4th July, 1847) was not charged • the point
was submitted to the shareholders, at their general meeting,
and by them decided. lam not aware of may over-credit
be anon to the revenue account for rents of stations. Mr.
Wl:dant= and Mr. Duncan drew the reports submitted to
the shareholders at the general meetings. I have always
felt the importance to this company to possess the Norfolk
line, as a point of policy; the only difficulty was the price.
The board was of opinion that an agreement on equal terms
was a fair one. I assented to it ; therefore the agreement
was my act as well as that of the board. I did not then know
that I,oooi. was payable to Mr. Peto as annual rent for
Lowertott Harbour. I afterwards recommended that a diffe-
rence of a half per mt, should be made by the Norfolk com-
pany on that amount ; and I told Mr. Duncan that such a
reduction should be made.
The committee considered they would only be dealing
justly with Kr. Hudson in so grave a matter, if they gave
him, in writng, the questions he had been verbally asked,
so that he might give such further answers to them as he
should think fit ; and he has addressed to their chairman,
Mr. Cash, the following letter:
" York, April 3, 1849.—My dear was unable to
write to you yesterday, from press of other matters. In
answer to your inquiries, I beg to say that I was aware that
some of the current expenses of the railway were carried to
capital, or rather to a suspense account. I did not ex-
pect that sum was lirge. If the committee will
call to their recollection the peculiar position of
the railway when I joined it—that accidents were
of daily occurrence, and that it was necessary to go to
a very large expenditure to meet this extraordinary state of
things, I think it was unfair te charge on the revenue the
whole of such a state of things. I therefore feel we were
justified is putting a certain amount to capital, or leaving it
to be discharged on future years of success. lam satisfied
that the amount charged each half-year was fully ample to
work the line under any circumitanoss • therefore then was
no misleading of the public as to the title value of the pro-
mrty. A monthly statement of the expenditure was laid
before the board, which was my criterion of the expenditure,
and I think it will be found to agree pretty nearly with the
published statements. I am firmly convinced that a Goan-
&table reduction may be made in the working expenses of
the line. I have never failed to state that as my opinion to
the board. I had ordered all the payments ef the last half-
year to be sent me to York, that I might have hers fully
examined them b Press of otherbusiness prevented my
doing so. I am yours very truly,
" Gnome HODSON.

" To W. Cash, Esq.,
" Bastan Counties Railway, flhoreditch, London."
DAVID WADDINGTON, Esq., M.P. -It WAS thought
rght
to pat to him the stow questions that were given to Mr.
Hudson, to whi till d
refsz. Bat their attention
having been also called to certain cheques paid to hiss,
DAIDOty:
December 2,1545 £44o 10 0
Augtuit 12, 1846
which are charged under the head of parliamentary expenses,
Maddington explained, that ho had b2en put tl maby
chug.', ar..d had paid various expenses in travelling to

London and elsewhere, during the period indicated by the
dates of there cheques ; so that the money paid wu no more
than he was entitled to receive, and that it would hardly
suffice to pay what he had upended in the service of the

compan
With
respect
to another cheque, dated June 25, 1847, for
2,0001.. which had been given to Mr. Waddington, and to
which the attention of the committee had been drawn in the
coune of this investigation, they think it right to give Mr.
Waddingtem's explanation in Ma own words. Mr. Wadding-
ton, having beard the questions, mreqltreated to be allowed,
first, to give a narrative of the proceeding. which had given
rise to these queries, and stated that he would afterwards
answer any questions not answered by his narrative. The
committee, having assented to this course, Mr. Waddington
proceeded to make the following statement, namely, that
"There was a general adjourned meeting of the board of
directors held on the 22nd of December, 1815, at which Mr.
Hudson presided, when a dividend was determined upon of
nine shillings per share. This war before the accounts were
Made Up. The dieidectl wag payable en the 81st Of
January, and the general meeting was not held
until the 11th February, 1846." Mr. Waddington
then proceeded with his statement, as having more yow-
-1 Cedar reference to the foregoing questions, which bad been
I read to him by the chairman of the committee. " The
course with reference to the revenue aceounts was this. The
account was made eta from the books, and given to Mr.
Hudson, he directing that certain items should be altered.
The account was then altered in the accountant's other, and
presented to a general board of directors. In confirmation
of this statement, Mr. Davis, the accountant to the c aupany,
has found one of the halevem's accounts PO altered—the one
ending July, 1846—with figures in the handwriticg of Mr.
Hudson ; and, as a farther confirmation, the manager of
the company's traffic, Mr. Mostly, will be able to state, that
Mr. Hudson directed him to instruct the accountant of the
company to take off 10,0001. from the revenue expenditure
for the half year ending July 4, 1848. This amount of
10,0001. was found not to be sufficient to enable Mr. Hudson
to declare an eight shilling dividend, and further alterations
were made, under the direction of Mr. Hudson, but I cannot
state to what extent, prior to the declaration of the last July
dividend (1818). Mr. Hudson, others of the directors, and
myself, went to view the Norfolk line, when the accounts, as
made up from tke books of the company, were discussed ;
end I stated to Mr. Hudson that he would, on examination
of the account, see that the Eastern Counties Com-
pany could net pay the eight shilling dividend
which had been talked of. He appeared annoyed,
but no further conversation took place at that time.
On the next morning, u we were returning from visiting the
N.efolk line, he told me that I had made him miserable, as
he could and would pay ftr. per share ; he had reduced We
dividends in the North, and he would not pay hes than Be.
here. I stated to him that it was a mistake, and that, if he
paid it now, he could not pay it again ; that he would not be
thanked for it, but very much blamed hereafter. He then
went into a calculation to prove that I was wrong as to the
future earnings of the company, he stating that, for the en-
suing halt.year, the receipts would average 16,0001. per
week. I stated that they would be but 16,0001., or at meet
15,5001. per week. On this we had awry words, and I
left the railway carriage. Some elsys subsequently to this
conversation, I again referred Mr. Hudson to the question of
the July dividend : when he stated that I must send Mr.
Mostly down to him, at Albert-gate, with the half-yesr's
accounts Mr. Meetly did go. Before he went, I said to
him—' Mind, that I will be no party to the cooking of the
accounts.' When Mr. Mostly returned, he stated that
10,0001. should be taken off the revenue expendi-
ture for that halbyear. The account was altered
accordingly by the accountant. Before Mr. Hudson
consented to become chairman of the company, be
stipulated that he should have the entire msnagement of the
railway, and it was arranged that I should have the Nieuwe-
ment of the traffic; and for this on'y lam responsible. I
remember a committee of finance was appointed to consider
the half yearly accounts fcr dividend, but the accounts were
not submitted to them ; but an altered account was after-
wards submitted to a board of directors and passed. I wish
to state that Mr. Hudson gave, as a reason for altering the
expenditure accounts of the company, that he anticipated
tho future carmine of the compan would mash increase,
as coon as the Midland lines opened to Peterbn..ngh; and
this intrease, together ebb, the saving of expenditure
consequent on the concentration of the looomotive and car-
riage establishment at Stratford, would enable him to make
good out of the future profits of the company the omitted
expenditure from the half-year's accounts; that is to say, the
items of expenditure so altered by his direction. It was
when I was 'ratified that the Midland traffic would not ac-
complish this, that I determined not again to be a party to
sums being 'so carried over. I had always remonstrated
with Mr. Mellon for carrying over expenditure; bat
at this time I refined to countenance it. This was in
July, 1818. 1 do not know the total amount of revenue
expenditure omitted in the half yearly accounts; in the
aggregate donetless, for the six half-years, it amounts to a
very considerable aura."
The committee then Werra to the cheque for 2,0001, of
which the following is a copy :
" Eastern Counties Railway Company,
"No. W. 1621. London, 25th July, 1517.
"London and Westminster Beek, Lothbury.
" Pay to Extensions ex Bearer Two Thousand Pounds.
(Signed) " Tames °IBISES, 1 Director,.
"£2,000 0 0. "R. PATEROON,
(Countersigned) "C. P. RONEY, Secretary."
Mr. WADDINGTON said—" It was given to me in conse-
quence of the resolution of a committee, of which Mr. Hod-
son was chairman, sitting at Westminster as a parliaments/7
eommittee. It was subsequently named to the band of
directors, and adopted; but, on searching the minute-book,
I do not find any minuts referring to it."
Bring asked if other sums, amounting to about 8,0001. or
9,0001., more or less, had been expended in parliamentary
expenses, Mr. Waddington replied, " I believe they have,
but I have no explanation to give."
The committee did not further press this question, as it
appeared to be one which Mr.Waddington could not answer,
lest it might be again asked" in another place."
Mr. ROBERT MOULT, manager of the traffic and Roods'
department of the Eastern Counties Railway.—l was directed
by Mr. Waddington to take the accounts for the half-year
ending July 4, 1848, to Mr. Hudson, at Albert-gate. I did
take them. Mr. Hudson directed me to tell them (at the
office) to carry 10,0001. to the ensuing half year • that is to
say, to make the expenditure in the printed report appear to
be 10,0001. lees than was actually incurred. I delivered his
message to the accountant, who would, of course, I should
think, take has instructions from the directors ; but whether
he did or not, I cannot say. I saw in the published reports,
that the alteration had been made. The expenditure was
reduced 10,0001. Mr. Waddington, on giving me the ac-
counts to take to Mr. Hudson, said, Now mind, Mr.
Messily. I shall bo no party to the cooking of those accounts."
Mr. Davis, the accountant, hutting been required by the
committee to produce the account spoken of by Mr. Wadding-
ton, which is the rough account showing the traffic receipts,
and disbursements for the half-year ending July, 1848, Mr.
Davis did se. Oa which certain items of expenditure appear
to have placed against them certain figures—for instance
3,0001. is placed against the item coke-1,0001. a.gainsi
wages three times over—that is to say, against three items;
and Mr. Davis being asked what those figures indicated, and
by whom they were made, he replied, that in his belief the
figures were Mr. Hudson's and that they indicated the ex-
tent to which reductions were to be made in those items, en
the charges against traffic ea the printed report for the halt-
year ending July, 1848.
Mr. MuteLY, at a subsequent date, was examined, and
being asked by the committee to explain the reasons why a
difference is made in the rates of carriage for plate-glass,
stated that—" The plats glass coming from a party at New-
castle-on-Tyne comes in their own carriage, they taking all
risk of breakage. The house is that of Swinburne and Co.
Mr. Hudson is a partner in that firm. The arrangement
was made by the York, Newcastle, and Berwick Railway
Company, and we were called upon to acquiesce in it. The
arrangement was forced upon us. It was Mr. Hudson's
wish that we should undertake it. It wasn't a desirable
arrangement for the Eastern Canada Com."
Mr. Mostly, being asked respecting the advance of his
salary, said : " When I entered the service of the company
in December, 1815. my salary was to be 6001. a year, with a
house to live in. In lieu of the house the salary was fixed at
6.301. a year, commencing from the above elate. In June,
1813. it was arranged that I should have 1,0001. a year. "
Mr. Sone DUNCAN, the solicitor to the &stern Counties
Railway Cenmany—The reports wera prepared by Mr.
Raney, Mr. Waddington, and myself, so far as the topics
are concerned ; bat with the preparation of the accounts I
had nothing to do. The ac counts, until Mr. Hudson became
chairman, were made up, so far as I know, in the ordinary
manner of making up railway.accounts•, and at the last half-
year, previous to his becoming so, they showed 3s. per
share. At the meeting at which but 3s. dividend was de-
clared, Mr. Thomas Scott of Lincoln'ainnt as the organ of a
party, declared that Mr. Hudson must be induced to become
chairman. Subsequently to the meeting, the ditectors aster-
tales,' that Mr. Hudson would probably become their chair-
man, if asked ; and the bond directed Mr. Fisher of Cam-
bridgei and mirmysanabip. elf to proceed to York to invite Mr. Hudson to
take tro cha Mr. Waddington had been previously
asked to became chairman, and he had assented to do se.
My visit to York was successful, but Mr. Hudson stipulated,
in the first instance, that he must have uncontrolled power
of management; and we had authority on behalf of the
director.' to may it should be as he wished. He did not give
his decision as to our request on the day it was made, bat
oa the following morning Mr. Scott haying strived with a
memorial signed by about two-thirds of the shareholder as
I was informed, inviting him to become chairman, Mr.
Hudson then assented. The board meeting of the 22nd of
December, 1843, was held, and at that meeting divi-
dend was decided upon. No accounts had then been pre-
dead
remember Mr. Hudson said that when he took the
=ands' chair he found the concern depressed : that he had
made a good dividend there, being satisfied that he could bring
the concern fo keep up that dividend out of its profits;
and that the same thing must be done with the Eastern
Counties. The board knowing that Mr. Hudson had
largely invested in the company's stock, at the then high
prices (about 231. per share) deferred to his opinion. When
Mr. Hudson consented to become chairman, he received no
pecuniary inducement. Immediately Mr. Hudson became
chairman, he effected an arrangement with the No--them
and Eastern Railway Company, which was of great value
tosayththe. aslternconsCioduenties.
reryl
„Wel ft clue to Mr, Rectum to
!lamely to the one declared_
inclusive of the one in
appear to have been
sequent on the false
in the first instant*:
inked some questions
money charged as par:i-
did not appear to have
Mr. Quitter the specific
perms, in reference to we
particulars, as I canult
parties."

rveri other dividend declared subs,-
tared at Christmas, 1846, up to and
t Jolly, 1843, WWI, so far as may DOW
in overstated, to haro
so step taken 'Art.,
nes.—Mr. D• ^I -Itfoknte , •
one respecting ,' er• )IR
rliame nta ry expanalg
been given, replietro , e.
ac amount pelt for
which I do rot fe r
• ,do ED withon •
. Airir
9...•