The Sun.
London, England, 1849-04-12 00:00:00

siderable difficulty, and has occasioned daisy in making
our report.

All these shares seem to have been purchased by Mr.
Hudson between the sth of October and the 12th of
November, 1846, and not at earlier dates as was origin-
ally apprehended, and consequently Mr. Hudson's profit
by the transaction has not been so considerable as it was
at first believed to have been.
With respect to the payment to Mr. Hudson for these
shares by the company, we feel ourselves called upon to
observe that at the period when he received the cheque
for 81,100/. (the 27th of October, 1846,) he himself could
not have paid more than about 25,0001. on account of the
purchase of these shares, although he might be called
upon to make a further payment of about 70,000/. on the
30th of October. The effect of this would be that the
shares bought by Mr. Hudson on his own account, and
sold afterwards at an enhanced price to the company,
were to a considerable extent paid for in the first instance
with the money he had received from the company.
The impropriety of such a transaction between an in•
dividual and a company to which he stands in the relati,n
of a trustee cannot be doubted. And we are of opinion
that the sum charged by Mr. Fluthen fur these shares
ought to be reduced to the sum he actually paid for them,
and the difference repaid with interest.
It appears from the evidence of the other directors
that they were not aware of any purchase having been
made by the company of Alr.Hudson. And the auditors
were also ignorant of the fact ; they having contented
them& lvas Kith an examination of the books without
ascertaining whether any original contract existed.
The next contract of importance is that of Mr.
Christian .Mlhusen, amounting to 218,6691. 12s. On
comparing the prices of the shares included in this c n-
tract with the market prices of the day, via. 19th of De-
cember, 1846, we find the company has paid in excess
a sum of between 5,0001. end 6,0001.
The rest of the items, composing the sum of 749.524/.
14s. 7d., have been carefully investigated, and we have no
comment to make on them.

The next matter which required our investigation was
the charge fur brokerage, amounting to 2,4991. 73. sd.
This sune is !educed to 1,693/. 143. 11d. by deducting
805/. 12s. 6d. erroneously placed under the head or bro-
kerage, which was, in point of fact, a payment for in-
terest o•n bills of exchange which were paid as part of
the purchase money of the shares sold by Mr. Allhusen
to the company.
• Of the remaining sum, the sum of 9901. 18s. 91, was a
payment made to Mr. Hudson for brokerage on the
shares sold by him to the company. This, according to
the statement of Mr. Close, was done on the assumption
that the company must have paid brokerage if they had
bought those shares in the market, and without refer-
ence to the consideration, that Mr. Hudson must have
paid brokerage if he had sold his shares in the market.
The charge for brokerage cannot be justified or main-
tained.

The next item is a charge by Messrs. Lawrence and
fullCo roaftes4of7Lbrlosk.
eirda.
el' h iaclhthwoausg
hpaid ttoh
et hi
re m
or, beingigin a leothne.
tracts produced to us, they charged only half.
We find, however, they returned one-half of this
amount to Mr. Hudson, who states be gave the order as
Chairman of the York Union Bank Company, and that
he paid to the bank the sum he so received.
As all the other brokers employed by the company
have charged only half brokerage, a e do not consider
there is any reason in this case why the company should
sustain a loss, and we are of opinion the sum so re-
ceived should be paid to the company.
The remaining item is that of Mr. Satterthwaite, who
sold to Mr. Hudson a parcel of shares amounting to
16,5001., and stamps 1001., making 16,6001., which sum
he was paid by Mr. Hudson himself. The particulars
of this purchase, as entered in the books of the com-
pany, are—

250 304 shar©s
Stamps ...
Commission

X. s.
... 16,462 10
••• 100 0
••• 100 0

Which sums were repaid by the company to ,
1666 10
Mr 2 . Hudson
as follows:-
1847.
April 5
May 12

X s.
... 16,562 10
••• 100 0

16662
Being 621. 10s. in excess of the sum paid by, him. 10
According to the evidence of Mr. Hudson, he had in-
structed Mr. Close to pay to his credit the sum of 1001.
about that time for travelling expenses, and he could
only account in that manner for the mistake we now
point out.
We think it necessary to add that the sum raised by
calls made and paid in advance was 1,427,8334 10s., of
which the sum 749,5241. 14g. 7d. has been applied to the
purposes intended by the proprietors in their resolution
of the 26th of October, 1846. This sum is about one•
fifth of the whole amount required to pay off the Great
North of Englund proprietors, and it hss been nivebted
in Great North of England Railway shares as folliiws:—
s. d.
351,822 2 0
155,528 19 4
174.705 7 6
61,586 9 9

In the year 1846
1847
-,- 1848
. 1849

£73,42 18 7
There remain, therefore, four-fifths 4 oft he entire sum
still to be paid.
We think a more beneficial result would have oc-
curred to the company had the resolution of the pro-
prietors before reierred to been carried into effect to a
witch larger extent at an earlier period.
'l'be Great North of England purchase account has
been very imperfectly kept. The transactions to which
it relates c,mmeneed in the month of October, 1846;
and yet it is admitted that no books were opened nll
the month of December or January last, when a journal
and ledger appear to have been begun and posted up,
the entries in the journal of purchases of shares being
without dates, and being so made as to baffle examina-
tion without the aid of other materials.
The general accounts of the York, Newcastle, and
Berwick Railway Company, we hope, are dealt with in a
very different way.

The auditors seem to have misapprehended their duty
in auditing those accounts; they limited their examina-
tion to a comparison of the bank book, in which are
entered the directors' cheques with the entries in the
journal and ledger, they have neither required the pro-
duction of vouchers nor original contracts—a mode of
examination which it is obvious must be utterly worthless.
The remissness of the directors in the discharge of
their duty with respect to this account is very remark-
able. From the 27th of October, 1846, till the 13th of
February last, according to their own statement they
remained in entire ignorance of the state of the Great
North of England purchase account, and made no in-
quiries about the matter.
A still greater degree of blame attaches to the two
directors who signed the cheque for 81,1001. on the 27th
of October, 1846, the day after the creation of the stock
for the purchase of these shares, without asking for,
or receiving any Further explanation than that it was
for the purchase of Great North of England Railway
shares.

Shareholders have a right to expect of gentlemen who
accept the office of directors that they should be cogni-
zant of, and take part in, all important proceedings of
the company.

It is not right that they should confer absolute power,
and impose undivided responsibility on one of their body,
however able and efficient he may be.
The secretary ought not only to be competent to the
discharge of his duties, but should be strictly confined to
the business of the company.
A course of proceeding directly the reverse of that
which we have found to have existed with respect to the
Great North of England purchase account ought to be
pursued both by auditors and directors in the affairs 9f
the York, Newcastle and Berwick Riilway Company, in
order to give to that railway, possessing as it does so
many c siential elements of prosperity yet undeveloped,
its true value, and to insure the confidence of the pro-
prietors in its management.
ROBERT PRANCE.
HORATIO LOVE.
JOHN CLAYTON.
JOHN SHIELD.
ROBERT VENISON.

York, March 29, 1849.

EVIDENCE OF THE WITNESSES,
WEDNESDAY, MARCH 7, 1849.
It was ordered by the Committee that the Secretary, Mr.
CLOSE, be summoned to attend them.
Mr. Prance—Explain the first item in the books of
the purchase of shares amounting to 131,867/. 9s. 3d.
Mr. Close—The shares were originally bought by Mr.
Hudson for himself, to the best of my knowledge, between
the passieg of the Great North of England Act and the
special meeting of this company, called to confirm the
agreement made with the Great North of England Com-
pany on the 26th of Oct., 1846; Mr. Plews was requested
at a board meeting of this company by Mr. Hudson to
furnish a valuation of the value of the Great North of
England shares to this company. Mr. Piews sent me a
document (exhibited to the committee) giving the value
of the shares, Mr. Hudson asked me afterwards what
valuation Mr. Plews had put upon the shares. I told
him for the 1001. shares 2414 55.; for the 404 shares, 51.
paid, 63/. 51. per share ; for the 304 shares, 15/. paid,
57/. 15s. per share; for the 151. shares, 1/. 10s. paid, 241.
3s. 6d. per share. Mr.. Hudson then told me to mark
the shares named in the first lot in the journal, below
Mr. Plow's estimate, viz. of-
-15! £lOO shares, amounting to 416,240 0 0 at £240 0 0 per shre.
342 40 a 21,631 10 0 at 63 5 0
91 30 5,187 0 Oat 57 0 0
2,874 15
67,539 0 Oat 23 18 0
I added the commission ani the stamps of my own„ ac-
cord, but Mr. Hudson was not aware of it. The money
was paid to Mr. Hudson's account at the York Union
Bank, the date of payment 27th October, 1846; first pay-
ment, 81,100/. on the 27th October; second payment,
27th November, 50,7674 93. 3d., which closed the ac-
count. Mr. Hudson came to me some time in the month
of January last, and stated to rise that, as times were so
materially changed, in making up the accounts of the
Great North of England Purchase, I must deduct any
profit ho had received on that transaction. He after-
wards said, before I had the accounts made up, that he
had reconsidered the matter, and that the account was
not to be altered, in consequence of his having advanced
out of his private account a sum cf upwards of 16,0001.
on behalf of this company, in the purchase of West
Durham shares, for which he had no sanction of the
proprietors. And on the 19th February last, being the
day before the meeting, Mr. Hudson came to me, and
said he was sure there was something wrong
in the ac-
count of the 151. shares. That I was to debit his account
with 1/.1
•"ne pound) per share uncalled on the 154 shares
on the 2,874 shares which he had sold to the company,
and that after the meeting he would go into the account
with me. I wish to add, that Mr. Hudson delivered to
the company two Great North of England 1004 shares,
which were not paid for until the 9th of October, 1847,
being the time when I Nutt out tho atiotithot its they t

should have been included in the purchase above re-
ferred to.
Mr. Clayton-You stated that Mr. Plews valued the
151. shares, 11. 105. paid, at 241. 3s. 6.1. per share. It
appears to me, from the document put in, that the valu
ation is 211. ss. 3d. How do you account for the dis-
crepency 2-Mr. Plows worked out in details the 1031.
shares, the 40/. shares, and the 30/. shares, but not the
151. shares; there are two statements with reference to
the 151. shares, on the side on which the 15/. shares are
put; I took from the first line 21/., and 3/. 35. 6,1. from
the last line, thinking the two together represented the
value of the 15/. shares.
Mr. Clayton-I assume you would not be ignorant of
the market values of these shares on the Stock Exchange
on the 27th October, 1846. Be so good as to state them,
and the difference between that market price and the
sum paid to Mr. Hudson for these shares?-The price
of the 1001. shares in the London market on the 27th
October, 1846, was 2374; Mr. Hudson in exc2ss 21. 15s.
per share, or 415/. 53. The price of the 40/. shares was
61k, Mr. Hudson's price being 63k. or 1/. 158. per share
in excess, or 5981. 103 ; the 301. shares 55/. per share,
Mr. Hudson's price being 21. in excess, or 1821.; the
15/. shares, the market price was 21/. on that day, whilst
Mr. Hudson received 23/. 10s., being 2/. 103. per share
in excess, making, in the total, 7,185/.
Mr. Love-Did the directors at the meeting of the
board authorise the purchase of these shires of Mr.
Hudson 7-There is no minute to that effect
Mr. Love-Have they passed a resolution, authorising
the purchase of any shares; arid if so, when?-On re-
ferring to the minute. book I find no resolution to that
effect.
Mr. Love-Were the shares, amounting in total value
to 81,1001., paid for on the 27th October, 1846, delivered
on that day ?-(After being allowed an opportunity of
referring to the books of the company) I believe they
were, but cannot be positive.
Mr. Love-Mr. Close, please deliver to this committee
the certificates of registration for the shares represented
by the sum of 81,100/-I prod :ce the whole of the cer-
tificates of shares sold by Mr. Hudson, but I am unable
to identify the individual shares represented by 81,100/.
paid for on the 271 h Oetob. r, 1846.
Mr. PLEWS examined.
Mr.. Clayton-Mr. Plews, were you a director of both
companies, Great North of England, and York, New-
castle, and Berwick, in Oct. 1846?-Mr. Plews-I was.
Mr. Prance-Do you admit that you were requested
by the York and Neercas le board to determine what was
a fair price at which they should purchase certain Great
North of England shares of Mr. Hudson, of which he
had become possessed?--Mr. Oxley and myself, at the
board meeting of Oct. 26, 1846, were requested to make
a calculation as to the intrinsic value to the company of
the different 'classes of Great North of England shares,
but I was not aware the calculations were required to
buy Mr. Hudson's shares; I was not aware he possessed
any excepting two 100/. shares, which stood in the com-
pany's books in his name.
Mr. Love-As one of the directors of the Great North
of England and the York and Newcastle Companies, was
there ever a proposition made to you to purchase of Mr.
Hudson his shares? Mr. Plews-Never.
Mr: Love-Did you ever know that the company had
purchased shares of Mr. Hudson?-I never did.
Mr. Clayton-If Mr. Close, from your valuation,
which has been put in, has assumed that you valued 151.
shares, 1/. 10s. paid, at 24/. 3s. 6d. per share, has he or
not made a mistake 7-He has; decidedly so.
Mr. Love-Would you have recommended the com-
pany to have purchased of any party, in October, 1846,
the Great North of England 100/. shares at 240/. per
share, the 401. shares at 63/. ss. per share, the 30/. shares
at 571. per share, and the 15/. shares at 231. 10s. per
share?-If the current market price at that time was, as
I believe, 236 k, I should not have recommended the pur-
chase at 240; similarly, with regard to the 40/. shares, I
should not have recommended a purchase at 631, having
sold my own shares to a friend at 62. The 30/. shares
should not have recommended to be purchased at 57, the
market price being 54g. With regard to the purchase of
the 15/. shares, I certately should not have recommended
their purchase at a higher price than my own calcula-
tion of 21/. ss. 3d. per share, the calculation handed in on
the 2111th October, and produced by Mr. Close.
Mr. Clayton -Do you believe that any one can have
paid, or -any one received, so high a price as 23f for 151.
shares, unless in mistake ?-I think not.
Mr. Prance-Do you believe the intrinsic value of 151.
shares was 211. ss. 3d. in October, 1846?-1 do.
Mr. Prance-Can you reconcile this with the fact that
you yourself sold 100 shares, September 3, 1846, at 17i
premium ?-I can. I sold my shares because I wanted
the money.
Mr. Love-Would you not, for the same reason, have
recommended the company to have waited until they
could have purchased their shares on equally advantage.
ous terms ?-Certainly, had I thought the shares would
have fallen; but, having made calculations, which I did
on the 26th October, and knowing that about 300,0001
must in a few days be iu the hands of the bankers be-
longing to this company, the call having been made on
that day, I would aave recommended the purchase, even
at rather higher than the market price.
Mr. Shield-If you could not have obtained Great
North ot England 1001., 40/., and 30/. shares in the mar-
ket at the prices then current, would you in such case
have recommended the purchase of these shares at the
prices paid to Mr. Hudson ?-No ; I would have given
2401, for 100/. shares. I would have "given GU. 10s.
for 40/. shares. I would have given 56/. 10e. for 3ul.
shares.
Mr. Shiell-How much do the prices paid to Mr.
Hudson exceed the estimate 7-I do not know of my
own knowledge of any shares bought of Mr. Hudson.
Mr. Shiell-Is it your opinion that a very large quan-
tity of shares could have been bought in the market
without any material advance on the prices then current?
I should think the market price wou'd be raised.
Mr. Prance-Do you think that the sale -ot any con-
siderable number ot shares would no 7, have equally lied
the effect of depre,sing the market value?-1 thank it
would, unless there were large buyers in the market at
the same time.
Mr. Prance-Should not-your answer to the previous
question, " I should thick the market would be raised,"
have, in propriety, a similar limitation, viz., unless large
sellers happened to be also in the market?-I suppose it
would.
Mr. Love-As director of the York, Newcastle, and
Berwick Company, would you have thought it good
policy to have appeared in the market as buyers of Great
North of England shares, the moment you had power to
do so, at prices, by your own calculation that would leave
a very small remuneration to the company, when you
had upwards of three years and a half allowed you to
take advantage of the market?-The answer I gave to
the formeiquestion equally applies-that having 300,000/.
in the hands of the bankers, I should have bought the
shares at the prices I before named, excepting the 15/.
shares, which should not have bought beyond 21/. 53. 3d
per share.

THURSDAY, MARCH 8.
Mr. PLEw's Examinaion resumed.
Mr. Prance—Have you anything to correct, or any-
thing to add to your testimony?-1 sold the residue of
my 151. shares through Mr. Faulconer, whose contract I
exhibit, at 211. per share; and on the 29th oc:ober, 1846,
I sold forty-five 15/. shares belonging to Mr. John
Church Baekhouse, at 211. 53. per share; on the 26. h of
November, 1846, Mr. Prance bought four 151. shay. s. at
211. 10s. per share. A charge has been made against me
in the public prints of having given a bonus of 2830
shares to Mr. Hudson to induce him to purchase the
Great North of England Railway. Mr. liaison never
received one share, nor any director of the York, New-
castle, and Berwick Railway, excepting Mr. Oxley and
myself, who were the managing directors of the Great
North of Englund Railway. and who received twenty 151.
shares each. At the time of the agreement fur the par-
chase of the Great North of England Railway, Mr. Hud-
son had no shales in the Great North of England Rtil-
way registered in his name.

Mr. Love—When did the York, Newcastle, and
Berwick Company resolve to buy up the Great North of
England shares?—To the bestof my recollection, I think
it would be at the meeting of the directors hell 26 Oc-
tober, 1846.
Mr. Love--Of course such an important resolution
would be entered in the minutes in the c.impar'y's books
on that day ?—I suppose it would.
Mr. Love—Be so good as to look at the minute-book;
do you find on that day, or any subs (Dent day, any
minute of the board of directors directing or authorising
the purchase of any of the shares of the Great North of
England Company. (After looking through the minute-
book, M. Flews said)—l do not.
Mr. CLOSE re-examined.
Mr. Love—When' is the contract entered into between
the York, Newcastle, arid Berwick Company Sor the
purchase of shares of the Great North of Euglind Rail-
way Company of Mr. Hudson? —The only contract I
find in my possession is the paper I produced yi.verday.
Mr. Love—What paper is that?—The paper I now
produce is the paper to which I reter:—

" DR. YORK AHD NEWCASTLE COMPANY.
To 151 G.N.E. Oid Shares at 240 £36,240 0 0
342 ,9 401. „ at 63/
91 „ 30 „at 57 5,187 0 0
2,874 ,9 15 „at 23i
Stamps
279 0
Commission

Mr. Love—ln whose handwriting is ttlis3l:a6p7er?9—l3n
my
iuhra.
Love—When
i_t i nwg
'hen did you show it to Mr. lludson?
lam not award that I ever showed it t Mr. Ifulson•
to the best of my belief I never did.o
Mr. Love—When did you lay it before the director.?
—I never laid it before the directors.
Mr. Love—Up.,n whose authority did you enter it
as a purchase on behalf of the dornpany?-0n Mr.
Hudson's authority, in accordance with the circum-
stances stated in my previous evidence.
Mr. Love—You call this paper a contract, having no
date to it, no name of seller; and you enter it the olss
of the company without the authority of the directors?
—I call it the calculation of the valuation of certain
shares based on the paper sent to me by Mr. Plews.
Mr. Love—Then you admit it is no contract?—l con-
sider it equally binding as a contract.
Mr. Love—Why do you think so?—Because, under
all circumstances, providing there had been t,o inistak,
it appears to me a fair transaction.
Mr. Love—Are you not aware that the prices of
the shares in the paper produced are higher than those
in the calculation wade by Mr. Plews?—l am not aware
that they are, except with respect to the error in the
151. shares.

Mr. Love—Whose authority hid you for the payment
to Mr. Hudson of 131,8671. 9;. 3d. for the shares sold
by him to the company?—The auth6rity of the chair•
man and of the two directors who signed the chcqu,s,
Robert Davies and James Richardson.

Mr. Love—What mode of calculation did pu adopt
in charging the commission?—l think, to the b st my
knowledge, I charged the scale of the London brukers.
Dir. ROLM—DC' YQ4 feel your P9Sicitni iu 014 C 9112-

• pany is such that you are at liberty to dispose of a sum
nearly amounting to 1,0001., upon your own responsibi-
?—l co.,J,ider that this is a very peculiar case, and
that I em oely justified in charging what I think is
right.
Mr. Prance—ln what does its peculiarity consist, and
esha gave you authority to constitute } ourself a
judge of its propriety ?—I consider its peculiarity to
consist in its being a valuation. I had no other autho-
rity than my own judgment.
Mr. Prance—Do you conceive yourself authorised,
being the servant of the company, to usurp the autho-
rity of the executive?—Certainly not.
Mr. Prance—Did you not practically do SO in the
instance in question?—Certainly; yes.
Mr. Prance—ln your opinion had Mr. Hudson dis-
posed of his shires in the ordinary chancel of business,
would he not have had to pay a brokerage, instead of, as
in this case, receiving one?—lf he had sold them through
a broker he would have had to pay one.
Mr. Prance—At what time did you communicate to
Mr. Hudson that you had alluwed him nearly 1,000/ in
the form of commission ?—I am not aware that I ever
communicated the tact to Mr. Hudson until after the
meeting of the 20. h of February.
FRIDAY, Bianca 9.
Joint Examination of the Auditors, Messrs. Thos.
BARSTUW and HENRY RICHARDSON.
• Arr. Prance—This .committee is appointed to investi-
gate " the statement of Great North of England Pur-
chase Account," to 25th January, 1849, to which your
signatures are appended as having been audited and
allowed, we presume this implies previous examination?
—We did previously examine it.
Mr. Prance—The first entry in the statement on the
Dr. side of the account is 832 100/. shares, averaging
2341. 14s. 04' 1. per share, total 195 2711 17s. 3d. Hew
did you examine the latter item ?—We took the book.
Mr. Prance—To what book do you refer 7—To a
book entitled G. N. E. Purchase, now on the table.
Mr.Prance—The first item states the average of the
100/. shares to be 234/ 14s. Oid. per share, from what
documents did you arrive at this conclusion ?—We did
not calculate the average, but we saw that the sum total
and the items composing it were correct, namely,
195.271/. 17s. 3d.
Mr. Love—Did you compare the entries in the ledger
with the contracts?-No, we did not. We compared
them with the banker's books and the directors' cheques.
Mr. Love—You took no means, then, to ascertain that
the 832 1001. shares actually cost the company on the
average 2341. 14a. 04.1.?—We took no means to ascertain
the average ; as previously stated in reply to Mr.
Prance's question, we considered it only our duty to as-
certain that the sum total was correct, and corresponded
with the banker's book and the directors' cheques.
Mr. Prance—Are you aware that your signature to
the account rendered included the fact that the average
price was 234/. 14?. Old., and which fact should be in-
cluded in your attestation to the printed statement pre-
sented to the half-yearly meeting?—We were not aware
that there was any intention of including the average
price in the statement; there was a conversation, and Mr.
Close said the average was so and so, but we ourselves
went no farther than the books showed—that is, the bona
fide cost of the shares.
Mr. Love—Had any other sums been inserted in the
journal as due to individuals, and paid to them, would
you have considered the fact of the payment correspond-
ing with the entry in the journal conclusive as to the
correctness of the account?--We do not understand the question.
Mr. .Love—Have you examined the journal?—We did,
and compared the journal with the cheques and the
banker's book.
Mr. Love—What mode do you usually adopt to prove that you have examined a book?—We first compare
the items in book with ;the cheques and the banker's -
book, cast the accounts, and then sign it.
Mr. Love—Have you so examined the book marked
Journal No. I?—We have examined it, but we have
omitted to sign it, but we have signed the result in the
ledger.
Mr. Love—Then you would not undertake to say that
all the items in the journal are correct?—We believe
they are correct. We compared them with the cheques.
Mr. Love—What mode did you adopt to ascertain
that the purchases entered in the journal of the Great
North of England shares were correct?—The cheques of --
the directors.
Mr. Love—Did you not compare the purchases with
the contracts?—No. We thought that the business of -
the directors.

Mr. Love—Have you assumed the fact of payment by
h-

,e directors as evidence of correctness?—Yes.
Mr. Luve—ln the entry of shares bought of George
Baker and Son, amouating to 19,8051. 4s. 48., what
vou..hers did you compare with that account?—None but
the directors' cheques; we never looked at the broker's
contracts at all; we thought that the duty of the di-
rectors.

t Mr. Love—Then, in fact, you did not examine or com-
pare any one of the contracts with the entries in the
t journal fbr the purchase of the Great North of England
shares, amounting to 747,785/. 14s. Id ?—We did not.
Mr. Shield—Then in tact did you limit your exami-
nation of the Great North of England Purchase Account
to the verification of the fact that the directors had ac-
tually paid the sums of money they professed to have
paid on account of these sbares?—Yes, we did.
Mr. 1401.-;-11 iihin what period, before the last half-,
yearly uoeeting, did the directors furnish you with the
statement of the Great North of England Purchase Ac-
count for examination? —We saw the accounts for the
firs.; time on sli 6 hof F.-bruary, and audited them on
that day, as will as the revenue and construction
accounts.
Mr.. Love— You are aware that ycu are appointed audi-
ters by the general body of the proprietors, for the exa-
mination of accounts rendered to you by the directors,
that, the proprietors might have some security for their
correctness?—Yes, anti we executed our duty to the best
of our ability.
Mr. Prance—Do you consider it consistent with the
duty delegated to you by the general body of proprie-
tors, that you should confine your verification to one
fact, whereas the document to which your signature
was attached included a large variety of facts which
are actually included in your attestatiou?—We inquired
into every fact which we considere.d it our duty to in-
quire into.
Mr. Prance—You stated that you audited and exa-
mined,
in one day, the Great North of England Pur-
chase Accmmt, as well as the construction and revenue
accounts. If so short a time was allowed to you, do
you not conceive it was a duty you owed to yourselves,
to refuse to attest the accounts unless sufficient, time
and means were allowed you for their investigation?—
We
laiieved we fully and fairly examined the accounts.
Mr. Love—Your name appears, by the printed state-
ment, to be appended to the Great North of England
Purchase Account. Did you sign any document of which
this professes to be a copy, or which may be saosed
to
be a copy ? We do not know that we signed any tabular
form similar to the printed account; but we examined
and signed, in the ledger now before us, every item from
which this tabular statement is constructed.
Mr. Clayton—Where did you examine the item of
br.-iker's commission, and from whence are the particular
items forming that charge collected?—We examined it
at ra4.e 16 in the ledger, and we collected the particular
items from the journal.
Mr. Love—Are there, in the books themselves, any
marks of yours to feel assured that you arrived at that
c mclusion at the time. you audited the accounts?—Cer-
wanly, our initials are affixed to the commission accounts
page 16, ledger.
Mr. Love—Are you aware that the sum of 17/. 4se
included in the commission account to which you refer,
and which you state you have examined, is not the sum
that was paid to Baker and San for brokerage, that
being the whole sum alleged to be paid to them in the
ledger ?—%\re are ILA aware that it is not the sum.
Mr. Love—Be so good as to look at the eighteen con-
tracts
now exhibited to you, and see what amount of
brokerage is charged therein.-7.11 9s. sd.
Mr. Love—How can that agree with the entry made,
p. 16, ledger, which you say you examined?—We can-
not explain, as we never before saw the contracts noW
put into our bands. We lzalieve Mr. Close will be able to
explain.

Ou the succeeding day the auditors handed to the
committee the following statement, drawn up and signed
by thews-Avf,s, which they requested the committee to ap-
pond to their evidence:—
" We submit that we have fully and fairly executed
our duty as auditors, having compared every entry in
the j,urnal of payments and receipts with the banker's
pass book ant vouchers, and afterwards g-ne through
the ledger, se,ing that every item w is entered under its
proper head; that we have east up all tie sum?, and seen
that Om), corr, spondcd, and particularly in tilt, journal of
the Great North of England Purchase, as is evidenced by
the plyrufrita being rugularty ticke,e; having been coos'
pared with directors' cht ques and banker's pass book,
with which they actually agree, and which we consider
suffi ient vouchers for those accounts. We did not ex-
amine the conrr cts of sale of the brokers, considering
them entirely within the province and jurisdiction of the
directorti,, and we submit that the accounts, as audited by
contain a true and just exposition of the pecuniary
affArs of the company."

Mr. CLosE's Re-examination continued.
Mr. Prance—You stated, in your first day's examina-
tion, that you were ordered by Mr. Hudson to deduct
from the price charged for Great North of England
sharer, the profit he had made by the transaction, What
means had you of knowing what profit he had made?----
I understood Mr. Hudson that the profit was between
7,0001. and 8,000/.
Mr. Clayton—you have stated that you fixed the
price of Mr. Hudson's 15/. shares purchased by the com-
pany at 23/. 10s. per share, on the assumption that Mr.
Plews had valued those shares at 241. 3s. 6d. per share.
If you had known that Mr. Plews's valuation was
211. ss. 3,1 per share, what sum, acting on Mr. Hudson's
instructions to keep below Mr. Plew's valuation, would
you have fixed the price of the 151 shares sold by Mr.
Iludson to the compAn) ?—My opinion is that the price
would have been put down at 211. per share.
Mr. Glayten—What, therefore, is the excess of price
beyond 21/. per shale charged to the company for Mr.
Hudson's 15/. shares, and what is the aggregate amount
of such excess?—The excess of price is 21. 10s. per
share, and aggregate arrrAtut of excess, 7,185/. 8
Mr. Clayton—Was the sum o!' 2,74/ returned by
Mr. Hudson to the company on the 19th of FebruarY
hat as part of that excess?—Yes.
2.. r. Myton—You have stated in answer to a question
put by Me. Prance, that if 'Mr. Hudson had sold his
shar a in the ordinary way, he must have paid broker-
age; if the company had purchased the shares in the
onlinary way, mast they not have paid brokerage?—Yes'
and it was on this consideration that I put down the
brokerage charged and included in the director's cheques
paid to Mr. Hudson.
Mr. Love—You state that the sum of 2,874/. was re
paid by Mr. Hudson to the company on the 19th Feb'.
ruary, us part of the excess charged on the 151. share
69141 by hAm ; why wt's not the whole KIM Of 7,1"•

repaid on that (ay ?—I h ‘,l not disc.)ve:cti ti extent o!
the error.

Mr, Prance—Assign a date to your di-covery of the
error.—On tia!? 20 of February, af7er the tn,eting.
Mr. Love—You have stated, ha l you purchased shares
in the market to the amount c'llrgei to Mr. Hu,lson,
you would havo been charred a c irnmilaion ; would the
commission in that case be a.) much as 3ou have paid to
Mr. Hudson ?—This wr.s the first transaction, and at
that time I couidered it WA; the commission %hie!'
would have been charged.
Mr. Love—Are you not aware that all the principal
brokers with whom you have dealt have charged Only
half the rate paid to Mr. Hudson ?—Yes, of c mrse ;
George Baker and Son, and others.
Mr. Prance—Do you state the ground of the error in-
to which you had fallen in your supposed estimate o'
Mr. Plews, that you added to 21 an item of 5i.31.3 6d ,
which appears at the foot of that statement ?—Yes.
Mr. Prance—lf this be a true expl.tnation, why wa.
not the same princip!e applied to the 100/. shares, and
also to the 401. shares, viz., iu the ease of the 100/shar-s
adding to 2361. 103. (see Mr. Plow's statement), the
amount 16/. 17s. 6d., similarly appended at the fo.,t at the
statement, with the 3/. 3s. 6d., as applying to the 15/.
shares, which would thus have brought out the price oi
the 100/. shares 253/. 7s. a, and to the 40/ shares add
the sum 1 11. 125., similarly appearing at the foot of the
page, which would thus make their price 72/. 12s. per
share?—Because I took the result of the detailed calcu-
lation of the 100/. shares and 40/. shares as given on Mr.
Plow's paper.
Mr. Clayton—ls there any detailed calculation of the
151. shares on Mr. Plew's paper2—No.
Mr. Prance—ln your opinion, as a principle of equity,
ought not Mr. Hudson to have been content with a noga-
tive advantage of escaping the necessity of paying a
commission, without adding thereto the positive advan-
tage of receiving a commission?—Under the circum-
stances, when the transaction occurred, I thought Mr.
Hudson was entitled to the commission.

Mr. Shield—ls there any principle of equity which
prescribes the duty of either receiving or not receiving
brokerage, or is such a receipt or non•receipt a mere
matter of bargain or of calculation with reference to cir•
cumatances?—l am not aware of any such principle.
Mr. Love—My reason for asking you why you
charged a commission in this particular instance is, that
Mr. Hudson individually is the seller to himself, ai
trustee to the York, Newcastle, and Berwick share-
holders, and do you not conceive that this is a circum
stance which would render the charge of commission an
unjust one? If I had, at the time of the transaction.
seen it in the light you now put it, I should not have
charged it without full authority.
Mr. GEORGE Ilupsoles Examination.
Mr. Prance—Do you desire to offer anything by way
of explanation of a sale of Great North of England
shares, debited to the York, Newcastle, and Berwick
Company, 131,867/. 9s. 3d?-1f the committee thing pro-
per to ask me any questions respecting this matter, 1
shall be very :happy to answer them, and also to give
them any information in my power.

Mr. L-dve—Did the board Of directors authoriz. you to
• purchase these chares, and if so, at what period?—lm-
mediately after the meeting, on the 26th of October, 1846,
to the best of my recollection, a board meeting was held,
and a general instruction was given to me to carry out
the resolution of that meeting to purchase the shares, in
accordance with the plan which had been submitted to
the meeting of proprietors, by which the stock was ere
ated for the express purpose of such purchase; for it
would be impossible to meet the payment of Great North
of England shares by raising a capital of three millions
and a half in in one day, that is, on the Ist July, 1850.
Mr. Love—When did you sell these shares to the
eampany?-on-the day after the meeting.
Mr. Love—Did you formally acquaint the board that
you, individually, had sold to the company. of which you
were chairman and trustee, certain Great North of Eng-
land shares, amounting to 131,8671. 9s. 3,1. in October,
1846?—No; nor did I acquaint them with the purchase
of any other shares during the whole of the time it WAS
under my management. Before I made the sale or fixed
the price at which I would dispose of the shares to the
company, Mr. Plews and Mr. Oxley were requested by
!tie and the board to furnish an estimate at what price
It would be advantageous for the company to purchase
the shares; to the best of my belied and conviction I
charged them at a lower price than that estimate; I did
not then think, nor do I now think, that inasmuch as the
company were compelled to be purchasers in 1350, my
position did prevent me being a seller, at a proper price,
as any other individual, and I also felt I had strone
claims on the eempany for the best prise they could
afford to give, inasmuch as I bad given up to the com•
pany a very large sum guaranteed, which I held in my
own right, amounting to 3,2501 a year, which would
have produced me a very considerable income.
Mr. Love—Are you aware that there is no minute
made by the directors either on the 26th October, 1846.
or at any other time, that they had requested Mr. News
and Mr. Oxley to furnish estimates of the value of Great
North of England shares?—l am not aware that there
is; but there is no doubt of the fact that such instruction
was given.

Love—You have stated that the shareholders of
the York, Newcastle, and Berwick Railway, at the spe
cis! meeting authorised the purchase of Great North of
Englat d Railway shares; can you point out any parti-
cular resolution to that efl'-et?—l refer you to Resolution
No: 2at that meeting, taken more particularly in con-
nexion with the statements I made to the meeting, ano
at the York and North Midland meeting held on the
same day and place.
Mr. Love—ls not resolution No. 2, to which von hare
referred, strictly limited to a provision for the -purchase
of the Great North of England C Joopony's railway and
works, and not to a particular purchase of the shares?—
Iconsider the resolution of proprietors expressly autho-
rised the purchase of shares; I could only purchase the
railway and works by the purchase of the shares.
Mr. Prance—The principle of the calculation adopted
by Mr. Plews is to ascertain that if money borrowed a,
five per cent. was invested in Great North of Eagland
shares at certain prices, what profit would have accrued
to the porch .ser when paid off at 2501. in July, 1850;
the results, assuming that his calculations were arithme-
tically correct, were that 100/. shares at the price of
2361. 10s. would have left a profit of 71. 55.; 401. shares
at 611. would have left a profit of 2/. HO.; 15/. shares at
21/. would have left a profit of ss. 3d.—how can such a
calculation be applicable to the duty which devolved on
you, viz., to have purchased for the company, of which
you were trustee, shares at the lowest possible price,and
would not the average price which had prevailed on the
Stock Exchange of London for a certain period, say six
months preceding, have been a fairer principle than that
of Mr. Plew's calculation?—Experience has taught me
that in attempting to buy any large quantity of good
shares, it is utterly impossible to obtain them without ma-
terially advancing the price. I give an instance: last Sa-
turday I wrote to two brokers in London to purchase Great
North of England shares at about the price of the day;
the answers I have got are, that they are unable to make
any purchases whatever, though the Stock Exchange
List showed sales on that day. I believe, but for the un-
fortunate error respecting the 15/. shares, the sum paid
to me for my shares would not be more than 5001. above
the market value at that time.

Mr. Prance—Would not your experience have equally
led you to the discovery that any considerable sale, such
as yours
to the company, would have had the effect of
depressing the price, and that a similar difficulty of find-
ing purchasers would have been felt, as you now describe,
in finding sellers?—Under ordinary circum-tances I think
it possible it might have that cif, ct ; but with the resolu-
tion of the Newcastle and Berwick Company promul-
gated in the London Stock Exchange, I don't think that
the effect would be to lower the price; on the contrary,
to raise it, in consequence of the company being known
to be large buyers of the shares.
Mr. Clayton-..What written evidence is there that the
share which have been purchased for the company have
been so purchased and are so held?—l put in a deed of
trust, dated January 25, 1849, executed under the seal
et the company by myself end my colleagues, and by
three directors of the York, Newcastle, and Berwick
company.
Mr. Love—What is the unfortunate error you refer to
with regard to the 151 shares?—ln fixing the price which
I thought in fairness I ought to receive from the com-
pany, the prices estimated by Mr. Plews, and shown to
Zile by Mr. Close, was 241. 3s. 6 I. per share as a price at
'which it was advantageous for the company to purchase;
I then directed 'alr. Close to put them down to the com-
pany at 231. 10s. per share, and I never discovered that
there was any error, or doubted that the transaction was
perfectly correct, until Monday morning before the meet-
lug coming to York, I was looking at the average put in
'the statement, it struck me that the average looked very
high, but before the statement was sent out, it was sub•
flitted to a meeting of the board, and although some of
the directors went into the calculations, yet none of them
bade any remark as to the high average of those shores.
Upon arriving in York, I went into Mr. Close's office,
and I stated to him that the average looked very high,
and asked of whom had been bought the largest number
of those shares. lie referred to the books of the
company, and stated they were principally bought of
isle. I said, then turn to see what are the prices given
for the same description of shares to other parties; upon
which, seeing that the shares taken of me were at a
higher price than those taken of other parties, I said I
Must pay the 11. call due upon them immediately, and,
after the meeting, you and I must go carefully into that
Itecount, and we must have the matter set right, but I
cannot attend to it until after the meeting. I received
Ito intimation from any party whatever that there was
auything wrong in the price of the shares, or in the
statement ; and although I felt that something was
wrong, I was not aware until afterwards of the extent of
that wrong. Had it been my intention to have concealed
gave been
.have taken an advantage of the company, it would
eve been very easy to have published that account in a
manner that the error would not have been so palpable.
Mr. Love—Why did you not mention, when you had
proceeded so far as to move the adoption of the report
sit the half-yearly yecarly meeting held on the 20th of February
last, TR
Of the (}rest North
there was an error in the statement
reason was,
thatl''rth of England purchase account?—One
error; but still I r
I was not aware of the extent of the
beenedrzet that I did not at once state that
y discovered.
an error had
Mr. Love—Did
duced, to the York, °Newrecllay by the cheque now pro-
the sum of 2,8741., heingaisre, and Berwick Company,
per share on 2,874 Great
North of England 151. shares sold by you to the court
pas did.
Mr. Prance—What induced yo t 9 fix on this parti-
cular sum of 11. per share as the of your over-
Viarge?—l did not fix it as the limit Ttthe overcharge,
p_ aid on the calls,
.out paid the 11. per share as beim-.
I would go Care-
nd I distinctly stated in paying the 1/7,
aged correct any
'cilY into the matter after the meeting,
father error that might exist.
ti0b21.!......L0ve—T0 whom did you make this communica-
kurt
?To Mr. Close.
Prance--Am Ito wag sitnel understand that the sum of 11.
to
ply a payment on account towards an error, the
1044:_a0, nut of which was hereafter to be ascertaieed,
Diltlvace then to be paid?—Most elettnotly 49.