The Sun.
London, England, 1865-08-31 00:00:00

SPIRIT OF THE PUBLIC JOURNALS

TIMES.—The result of the dispute between Capt.
Jervis and his brother directors of the Great Eastern
Railway Company is not a little curious. The Capt.
has won the day, but the decision was quite unin-
tentional on the part of his constituents. It all came
of the glorious uncertainty, or rather obscurity, of
railway law. About 3,000 proprietors tumbled into
a pitfall and were lost to their patrons on the day of
strife. Last Thursday, when the chairman of the
company declined at the half-yearly meeting to ac-
cede to the proposal for a committee of investiga-
tion, a vote was moved and carried by a show of
hands making the appointment of such a committee
compulsory. Upon this the directors demanded a
poll, and a poll accordingly took place. It was then
found that the directors had been armed with a most
powerful array of proxies, so that though the votes
personally tendered were against them in the pro-
portion of two to one, they could completely upset
this majority by the proxies producible ' • in fact,
they did thus retain possession of the field by a ma-
jority on their own side representing upwards of
£2,000,000 of stock. No sooner, however, had the
secretary read these statements to the meeting which
reassembled on Tuesday morning than he proceeded
to observe that the results were completely vitiated
by reason of an unfortunate informality. Four years
ago Parliament relieved railway property of a cer-
tain impost, and provided facilities for its manage-
ment by reducing the stamp on a proxy paper from
half-a-crown to sixpence. But the act also ordained
that every shareholder signing a proxy should efface
the stamp upon it by signing over it his initials and
the date of the transaction, besides adding the day
on which the proxy was to be used. This formality.
just 2,946 shareholders out of 3,202 omitted to ob-
serve, and the consequence was that a like number of
proxies was declared inadmissible by the scrutineers,
and rejected from the account. This, of course,
destroyed the phalanx in which the strength of the
directors lay, and the upshot was that a majority
was declared for the amendment in favour of a
committee of inquiry. Still, the affair was not
quite over, for this wholesale disfranchisement re-
duced the total amount of stock represented at the
meeting to less than the sum of £1,000,000, required
to make a meeting legal, so that, in the opinion of
many persons present, there had been no meeting
at all, and nothing had been done or decided by
which either directors or shareholders could be
bound. To this objection, however, the solicitor of
the company reasonably replied that a " legal meet-
ing" could hardly be considered necessary for the
purposes immediately in view, since any number of
shareholders might surely go at any moment to
those who managed their affairs and request to see
the accounts of the concern. So in the end five
gentlemen were " appointed a committee to investi-
gate the affairs of the company," and Captain
Jervis accidentally gets his way. We are glad of
this for the sake of all parties. It is no doubt true
that a large majority of the proprietors, measured
by the stock represented, was preparedto support
the directors in the refusal of the committee. The
natural influence of official authorities, coupled with
solicitude for material interests supposed to be at
stake, might be relied upon for producing this result.
Things must be very bad indeed if the directors of
any great company cannot by means of the proxy
system secure a majority at a meeting. The number
of persons who will trouble themselves first to in-
quire and then to act in such cases is always small.
The majority will stay at home, and " support the
direction" by proxy as the likeliest way of stifling
scandal and escaping loss. The Great Eastern
directors were literally justified in arguing that, as
a majority of their constituents supported them in
their opinion that Captain Jervis's charges had been
sufficiently answered, and that any further inquiry
would be undesirable, they were in duty bound to
act upon this verdict of the body which they repre-
sented. This was plausible argument, but it was
bad policy. A considerable number of share-
holders, as appeared plainly at the meeting, did
desire an investigation, and it might have been
fairly presumed that the rest would have enter-
tained no independent objections to the committee
had the directors conceded it. By such a conces-
sion, therefore, the directors would have satisfied
one party without offending the other, while, as
they were considerate enough to take the public into
the question, they might have relied, as we can
assure them, upon thus satisfying the public too.
" With regard to the public generally," observed
the Chairman, " it would seem that apprehension
is felt in certain quarters as to the validity of bonds
issued in anticipation of others falling due." We
beg to say that this is a very imperfect representa-
tion of the feeling of the public. The over-issue of
bonds by a great company in excess of its borrow-
ing powers is a most important matter, but it is far
from being the only one raised by this controversy.
The real gist of the case still seems to escape the
apprehension of the directors. The public cannot
admit that when a director of a company has openly
advanced charges of grave maladministration
against his brother directors, these directors should
be allowed to be sole judges in their own case.
When they " submitted that the charges preferred
required no further answer or inquiry than that
which had already been given them," and " trusted
that both the shareholders and the public would be
satisfied with the explanation," they assumed a
great deal ton _much. They were not entitled to
ismiss the case in this ivauuer, alai I, OL,Thand that
their own plea of " Not Guilty" should be accepted
fis the equivalent of a verdict to that effect delivered
by a jury. Doubtless it might happen that an ac-
cusation might really be beneath the notice of the
Board and unworthy of any attention, but that
view could not be taken of the case before us. In
fact, it was not taken, for the directors, by pre-
paring and publishing an elaborate reply, showed
that they did attach weight to the indictment, only
they wished the case to be tried in their own way.
They answered their opponent, pronounced their
own answer decisive in their own favour, and then
desired the world to accept this decision. That
was more than could be granted. The reply of
the Directors, even as considered in itself, was by
no means so conclusive as they were pleased
to suppose ; besides which it was met by a
rejoinder from Captain Jervis impeaching the
representations, and offering to make his words good
before an impartial Committee. Moreover, the
Captain intimated that he suspected more than he
said, and that there were many inquiries which he
wished to raise, but that he could not get at the in-
formation he wanted. The directors averred that
they had nothing to conceal ; Captain Jervisasserted
that they were concealing things even from him—a
brother director. This was not a position in which
so serious a question should have been allowed to
stand. The directors may assure themselves that
the " detrimental effect upon the credit of the com-
pany" which they apprehended from the inquiry
would have been far more likely to ensue from a
refusal of the inquiry, and we are glad for the sake
of all parties to find that their decision, though it be
by accident, has been overruled.
POST—The great German people, the nation that
has—we forget for how long—been asking itself
what the Fatherland was, is now rather summarily
called upon to consider the question from a point of
view not at all poetical. Germany has made war
and peace, and conquered land and sea, without
counting the cost. On-lookers saw from the first
that such a demonstration of force would prove ex-
pensive, and that obligations had been contracted
which would have to be met. There is no longer
any doubt about the fact ; the bill will shortly be
presented, and it cannot, like the " glories of Dup-
pel," be handed down to posterity. Lauenberg and
Holstein have to be paid for as soon as the money
can be raised ; for that is a cash transaction, and
Germany must guarantee the possessions, German
and non-German, of the Austrian empire. So runs
the bond, and it is to be hoped that the Germans
—princes and people—will read, mark, and learn its
meaning, the responsibility it imposes, and the con-
tingencies it contemplates. The purchase of Lauen-
burg and Holstein primarily concerns Prussia ; and
the Prussian people, it is supposed, will find the
millions of thalers that are required. Still, the
bargain scarcely less affects Germany, inasmuch
as, virtually, it goes to extinguish the inde-
pendence which remains faintly flickering, in
the Federal Diet. It may be, too, that the
principle the proceeding in a manner esta-
blishes—the assumed right to rectify frontiers by
private contract--will be taken to be the act of the
Government of Berlin. But the guarantee proposed
to be given to Austria is more comprehensive, and,
although referring to future events, more immedi-
ately serious. The engagement, to be understood,
must be considered in its practical bearings ; and it
amounts to this, that the completion of the unity of
Italy may only be accomplished in a great European
war. In effect, it declares that if Austria chooses
to hold Venetia, Germany will co-operate with her
in defending the Quadrilateral. Having sold Lauen-
burg and agreed to sell Holstein, it might have oc-
curred to the Italians that Austria would sell her
dependency in the Adriatic. That idea may now,
however, be put away ; and perhaps it is just as well
that it should be. The cession of Venetia would
not alone have sufficed to secure peace to Europe.
Of course the German Guarantee is suggested to
make Italy answerable for the consequences of at..
tempting to realise her aspirations, and in that sense
it will, no doubt, be said to be pacific in its tendency.
But it is perfectly idle to argue upon such an as.
sumption. If the Federal Diet resolves to pledge
its resources to the protection of the Austrian empire
ton-day.
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