The Sun.
London, England, 1849-12-26 00:00:00

The SOUTH-WESTERN RAILWAY.
(Freya the Times )
The question or way-,-.117,-zy lit
should be solved for ever in the mind of any rational
man by the report of the meeting of the South-
Western shareholders which took place at the Nine
Elms station on Saturday last. It w ill be remem-
bered that certain direct charges of malversation in
financial matters had been preferred, amongst others,
against Mr. Chaplin, the chairman of the board. The
gravamen of the Ain charge was this—that he hal
allowed his calls upon shares, to a heavy =Quilt, to
fall into arrear, and yet had received dividends upon
those very shares. It was further stated, in aggra-
vation of the charge, that the rate of interest charged
upon the shares during the time they were in arrear,
and commencing from the period when the debt to
the company was contracted, was infinitely below
the market value of money at the time—for
then " the panic" was in full operation. To make
the care clear, according to the spirit of the accusa-
tion, let us suppose A, the chairman of a railway
company, to allot to himself 1,000 shares of 601. each ;
that upon each of these shares there is an immediate
call of 101. ; and that, owing to a great commercial
disturbance at the time of the allotment, money could
not be got in the market at a lower rate than 101 par
cent. per annum. The figures are arbitrary, and given
only for the purpose of illustration. A—the chair-
man—does not pay up his arrears, but the shares
stand in his name, carrying interest at the rate of 5
par cent.--half the market value,—and upon them he
receives a dividend of, say, 2i per cent., which goes
in reduction of his arrears : the times are hard, and
railway property, like all eoinmercial property, at its
lowest point of depreciation. But the conduct of A,
far from being actuated by any self-seeking motives
in the transaction, was (so he might tell us)
inspired by the purest and most disinterested
anxiety for the benefit of his shareholders. " Con-
sider," says A, " what would have taken place had
I thrown 25,0001. of scrip upon the market at the
time when the stock of the company was already,
sufficiently discredited. Then, indeed, the share-
holders might have had colourable matter for an
accusation against me ; but, as it was, can any other
construction be pat upon my conduct than that I
offered my own coat to the shearers, to induce them
to spare the fleecy honours of my flock ?" Suppose,
in addition to all we have stated, that the transac-
tion as we have put it was carefully kept from the
knowledge of the shareholders, until one day au-
ditors were appointed to look into the affairs of
the company. It became impossible that this fine
instance of disinterestedness and public spirit
should any longer be concealed, and then A, no
doubt, lest he should be encumbered with the
grateful acclamations of the proprietary body,
instantly makes a great effort to reduce his arrears.
It is easy to conceive the contempt with which a man
on the lofty moral eminence we have described would
listen to the despicable insinuations of the auditors,
" that very censurable irregularities had taken place
in the administration of the company's affairs." How
can such mere men of routine be expected to appre-
ciate the heroism of a railway chairman, or the moral
peculiarities of a board of directors? It might, in-
deed, be said, that had the speculations of the company
prospered according to the ideas of the chairman
and the board—had the dividends been kept up,
or, still better, had they increased, it would have
been no contemptible speculation to have secured
a share in the ripening fruit upon such terms.
If all went well all the gain would have gone into A's
pocket; if things turned out badly, he saved himself
from loss just in so far as the company might be
damnified upon the general result of the transaction.
From the illustraticn we have given, the true nature
of the charge against Mr. Chaplin can be far better
understood than from the wordy, unbusiness like
report made to the meeting, in which, taking things
at the best, two thirds of the facts must he taken upon
credit. Substitute the name of Mr. Chaplin for that
of our friend A, and the charge against him may be
readily appreciated. Some time before the meeting
on Saturday, on the 15th of the present month, Mr.
Chaplin wrote and sent to the proprietors of his line
a letter in "explanation" of his conduct. There is
much of it that is hazy and unintelligible, but when
we had got about two-thirds through the perusal
of it, we were stopped by the following sen-
tence :—" I have already denied in Coto the charge
that I have at any times received dividends upon calls
in tureen" We were much struck with this asser-
tion, for in the previous part of Mr. Chaplin's letter
we can find no such denial as the one to which he
alludes. On the contrary, at the very commence-
ment of his explanation there occurs an actual admis
sion that he had been credited with dividends on the
shares in arrear, in reduction of the interest due upon
such shares. For the sake of common honesty and
common sense, we will not permit ourselves to think
that Mr. Chaplin is quibbling upon the word " re-
ceived," as though to be credited with money in
diminution of a balance were not tantamount to the
receipt of it. Here, however, is the passage at the
commencement of Mr. Chaplin's letter :
" The complaint in my particular case is, that I have
been, and continue to be, in arrear in respect of calls;
and that, nevertheless, matters have been so contrived
that I have received dividend on calls in arrear at a
higher rate than the interest with which I have been
charged. The latter charge is wholly without founds
lion. I have never received or been credited with a
dividend at a higher rate than the interest with which
I have been charged. The former charge I admit, and
although I do so in the confidence that the explanation
lam about to give will excuse me with all fair and im-
partial men, I should do myself injustice if I failed to
state that to have been in any arrear whilst acting as
your chairman has occasioned me pain."
We would not willingly be guilty of the slightest
misconstruction, or do Mr. Chaplain the shadow of
wrong, but it appears to us that he says here, "I did
receive dividends, but the divid•nds were not so high
as the interest I paid ; the dividends, in point
of fact, went in reduction of my interest."
The task, however, of reconciling Mr. Chap-
lin with himself is not an easy one, as will be
seen by the following paragraph. We quote the
passage, however, rather as a curious specimen of
the dealings of a chairman with his company than
from the idea of reconciling anomalies. It will be
observed that Mr. Chaplin treats the proprietary body
just as an Irish gentleman, somewhat in difficulties,
might deal with an opulent friend, who in an un.
guarded moment had permitted him to have the run
of his bankers. Mr. Chaplin procured a ledger—we
presume it is the identical book to which Sergeant
Gazelee alluded in the discussion on Saturday —and
opened a little account between himself and the com-
pany, by which it appears that Mr. Chaplin and the
chairman of the South-Western Company were on
the most confidential and friendly footing in pecuniary
matters, and that there were no lengths to which the
chairman was net willing to go to oblige his friend
Mr. Chaplin :
" I have already denied in tote the charge that I have
at any time received dividend on calls in 'incur; but,
before passing to matter subsequent in point of date, I
must, in order to displace that charge more completely,
state that in 1845 I advanced the company 43,000/.,
without security, and at a low rate of interest. This
loan was either absorbed in calls which fell due from me
in the year 1846, or by cash payments by the company,
and I only refer to it because it was the means of open-
ing a ledger account between myself and the c)mpany,
on the credit side of which will be found my loans,
and on the debtor side my calls, with the company's re-
payments in cash. When, therefore, in the latter part
of 1846, and during the year 1847, further calls and de-
posits on new stock became payable by me, they
were debited against my name in the abovementioned
ledger account, and I no longer stood in the list
of shareholders in arrear of call. It has been
asserted that this was done for the purpose of
enabling me to receive dividend (at the higher rate
which the company were then pa)ing on the dividend-
bearing part of their stock) upon amounts I had really
never paid, whilst I was only charged interest thereon;
or that at least such a consequence resulted from it.
This neither was nor could be the case. The shares on
which I was then in arrear bore no dividend, and the
rate of interest on those bearing interest was at 4 per
cent. only, whilst I was on my arrear rightly charged
with 5 per cent."
We would wish that every shareholder in the three
kingdoms would weigh this paragraph well, and
consider what kind of control they exercise over
an account of this sort ? Who is the judge of the
propriety of borrowing ? Mr. Chaplin. Who is the
jndge of the propriety of lending ? Mr. Chaplin.
Who has to choose the time for either operation ?
Mr. Chaplin. Who asks for time ? Mr. Chaplin.
Who gives time ? Mr. Chaplin. In whose interest
is the account opened at all ? Mr. Chaplin's. Who
is the only person who knows anything about the
matter ? Mr. Chaplin. Who suffers ? The South-
Western Railway Company. There was some talk at
the meeting on Saturday of the control exercised by
the board over the acts of their chairman. Now, if
there be one result more striking than another from
the investigations that have taken place with regard to
all the defaulting railways, it is this—that one man
is the manager of the concern invariably, and that the
names of the other directors are merely for show.
A row of wig-blocks would have been as sufiLient
a protection to the shareholders as the boards of
the Northern or Eastern Lines in which Mr.
Hudson was concerned ; nor, with regard to the
South - Western Railway, have we any reason
to see that the case is materially different.
The public should bear this in mind, and
not permit themselves to be duped by the ,
mere mention of a few names with ap•
purtenances. If the directors of the South-
Western line had done their duty, how could such
transactions have taken place at all ? 'With regard I
to one half of the charge, Mr. Chaplin frankly admits
it, and deplores the impropriety of his act ; upon the
remaining portion of the accusation, when we heve
clearer explanations than those contained in Mr.
Chaplin's letter we shell he enabled to speak with
more certainty. At present all is mist and mystery, 1
but no doubt the Committee of Investigation will