The Sun.
London, England, 1849-05-17 00:00:00

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isga MAY 17, 1849.

posed, the committee state that the effect of the mode in
which the former items were dealt with in making up the
accounts to the 31st July, 1848, was to unduly increase
the apparent net profit available for a dividend at that
date by the sum of 14,879/. 33. "It should, however, be
observed," they proceed, " that the omission to charge
the expenses of the agencies mentioned took place in
pursuance of the practice observed in previous half-years
in relation to those heeds of expenses; it being stated
that those balances were left in suspense under an ex-
pectation that some arrangement might be effected with
the South-Eastern and Continental Steam-Packet Com-
pany, which would affect their ultimate destination in
the acconnts. The responsibility attaching to the mode
adopted in making up the accounts for the half-year,
31st July, 1818, rests with Mr. Pritchard, the then de-
puty-chairman, as that gentleman admits; and he having,
in reply to the requisition made' to him by your com-
mittee for explanation, stated, in writing, the grounds
on which he considered the course he had taken to be a
warrantable and proper one, your committee consider it
due to Mr. Pritchard to place his statement on this sub-
ject before you." This statement is given in the ap-
pendix, but the committee say they can in no sense
concura irnd e validin validity of
justification
(t,
the as . t
hree
course
s e takenassigned
on
ny Ar.
lt
occasion.

UNALLOTTED NO. 4 SHARES (6TII CAPITAL).
With respect to this question the committee state
they have caused a thorough investigation to be made
into this subject, with the view of ascertaining whether
any, and what, irregular issue has at any time been
made of the stock, and also whether all the shares are
properly accounted for, and they say they do not find
that any scrip has ever been issued, except that allotted
to proprietors, and on which the deposit has been paid ;
and that the stock of scrip in the office has also been
examined, and found to be correct. The report gives,
in the appendix, a memorandum setting forth in detail
the result of the investigation made into this matter by
the committee's accountants. 'With respect to the
making of calls generally, the committee say they find
that they have nut been made unnecessarily, but in the
exercise of a prudent foresight with reference to the
pecuniary engagements and the prospective financial
requirements of the company.
PAYMENT OF SOLICITORS' DILLS.

A very strong point was made at the half.yearly
meeting of the allegation that the sum of 35,0001. had
been recently paid to the solicitors of the company with-
out taxation. The solicitors laid a statement before the
committee, by which it appears that the money nut of
pocket, included in the above amount, is about 20,0001.—
viz., on the
North Kent line ... £6,000 0 0

Ashford and Hastings 4,500 0 0
Tunbridge Wells and Has-
tings Line ... 1,200 0 0
Under other heads, as to
land sr.. ...
On other matters

1,300 0 0
7,000 0 0
---£20,000 0 0
Leaving the sum of 11,901/. 15s. 2J. to represent the
amount of the professional charge for business done
during a period of two years and two months. The coin-
mittee state that in reference to the question of taxation
they find that the bills have not been taxed, but that the
charges have been made upon the same principle and
scale of charge msiutained on the taxation of the for-
mer solicitors' bills, and that it is satisfactory to know
that the large amount of costs incurred on the taxation
and arbitrations referred to—viz, 5,453/, ls , has not
been unproductive of benefit, the proceedings, so far as
they are terminated; having resulted favourably to the
interests of the company, by efiLecting deductions from
various claims to the extent of no less a sum than
65,9551. 23. 61.

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[PRICE SD•

number of pasbengees car:it d; but it was an experiment
which the company found they were not justified in con-
tinuing, and the loss occasioned by it, which should he
credited to the locomotive and carriage account, should
be taken at not less than 20,000/.
" It is obvious that this expenditure for the permanent
establishment and protection of the company in the pos-
session of the southeeastern district, and of the conti-
nental traffic, ought to have been charged to capital, and
not to the current expenses of the year.
"It should be added that during the years 1845, 1846,
1847, and 1848, the company were paying rates on ex-
tortionate asse::sments on unproductive as well as on pro-
ductive property, but in these years the directors had
their attention sud energies absorbed in the measures be-
fore Parliament absolutely essential for the existence of
the company, and it was, moreover, necessary to endea-
vour to ensure general favour and support, and to conci-
liate local authorities. These circumstances prevented
the strenuous resistance to these overcharges which the
directors would, in other circumstances, have given to
them, and which resistance, since the contests ceased, the
company are making with success.
" I consider that the excessive payments for rates were
fairly looked on as part of the company's Parliamentary
expenditure.
" The charge of interest to construction account on
unproductive capital is made upon an admitted principle,
with the consent of all men who have studied the subject,
and it has been repeatedly confirmed by the proprietors.
" I consider that the gross amount of just relief to re-
venue, warrantable under the circumstances described,
was effected by the aggregate of the chargetin question.
" I do not think it necessary to occupy the time of the
committee in dwelling on the additional expenditure
which occurred in the locomotive department, and in the
maintenance of the permanent way, occasioned by the
company becoming possessed of a large number of long
boiler engines, with other matters of detail; but if it be
wished to pursue the subject, the correspondence that
took place between the Board of Trade and the company
in October, 1844, may be referred to.
" It is a matter of regret that Lord Dalhou.ie's report
on the Kentish system of railways, which would have
prevented all Parliamentary strife' and would have en-
abled the South-Eastern Company long since to complete
all the railway communication requisite for that district,
was not adopted by Parliament.
" My whole study, in the policy to which I have been
a party in the management of the South-Eastern Railway
Company, has been to protect the property and to pro-
mote the interest of the permanent stockholder.
" I am, sir, your most obedient servant,
" JAMES MAC GREGOIt.
" John Ball, Esq , Secretary, Committee of Inquiry."
" While your :committee admit that there is justice
in the reasoeing contained in this letter, it is their de-
..

citled opinion that such a course ought never to be
adopted without the previous knowledge and sanction of
the proprietors.

"It further appears, from the accountant's report,
that had the accounts been strictly made up so as to in-
clude all the expenditure incurred, as well as that ac-
tually paid during the period, and had the probable
losses from bad debts been written off, and had the full
amount of stores consumed been charged, the actual
available profit would have appeared further reduced by
the sum of 33,8421. 13s. ed., to which has to be added the
item of 8,2691. 6s. Id., carried to credit of revenue in-
stead of capital.
" With respect to the interest on the No. 3 and No. 4
shares, payable out of capital under the authority of a
general meeting of proprietors, your committee are of
opinion that it is of essential importance that a speedy
determination of that arrangement be effected by the
prompt completion of those lines and works for which
those capitals were created."

REPORT OF TILE COMMITTEE OF INVESTIGATION.
" Inasmuch as part of the capital raised by No. 3 and
No. 4 shares has been applied to the general purposes of
the company, a proportionate amount of interest thereon
should have been deducted from the total charge before
placing it to the debit of capital; in other words, that
the interest on so much of those capitals as has been
used for the purposes of the main line, should have gone
to the debit of traffic, which had been receiving the be-
nefit of such expenditure.
" With regard to the general question of interest on
No. 3 and No. 4 shares, it appears that a portion of it is
payable in respect of lines and works opened for traffic.
Having regard to this fact, and to the expectation that
the North Kent line, on which by far the larger propor-
tion of those capitals has been expended, will be opened
for traffic on the Ist July next, your committee
recommend that, from and after the termination of the
current half-year—i. e., from the Ist of August, 1849,
the No. 3 and No. 4 shares should cease to carry inte-
rest, and becomo entitlod, in lieu thereof, to participate
in dividends, revenue account receiving credit for inte-
rest at the rate of 5 per cent. per annum only on such
part of the capital as shall have then been expended on
unproductive works. Your committee, in recommending
this arrangement, do so on the assumption that it may
be carried into effect with a due regard to existing ar-
rangements.
" Your committee have ascertained that, subject to
the considerations arising out of the interest on the No.
3 and No. 4 shares, the revenue account for the half-
year 31st of January, 1549, as published, is substantially
correct, the books having been cleared of all outstanding
accounts then in suspense."

POSITION AND PROSPECTS OF THE COMPANY.
"The permanent way and rolling stock of the com-
pany are reported by the engineer in chief and heads of
.departments to be in a very satisfactory state. No pro-
vision has hitherto been made to meet the deterioration
of the permanent way. Increased experience in the
practical working of railways has recently brought this
important subject prominently before those concerned in
their management; and the necessity of making such
provision is obvious and unquestionable. The question
has a two-fold bearing, relating to the depreciation
already sustained by past and that which will result from
future traffic, and great consideration will be required in
determining the amount of the fund requisite for both
purposes, and the manner in which that fund should be
provided. And although the unfinished state of its lines
and works renders the precise and immediate solution
of this important question by the South Eastern Com-
pany difficult, if not impossible, the committee strongly
recommend that the directors be required to forthwith
commence the formation of a fund fur the support of this
branch ofexpenditure on the principle of an annual reserve
to accumulate at compound interest. The working stock
should be maintained in a constant state of effi-
ciency out of revenue. The committee have examined
the statement of financial position of the company, issued
by the directors in January late. It was based upon
estimates 'which have been laid before your committee
and upon the books of the company; and the committee,
assuming the correctness of the estimates, believe that
statement to be a substantially correct exposition of the
ways and means of the company, and its liabilities on
capital account, so far as concerns the works contem-
plated by the directors in January. But the directors
have informed the committee that circumstances, and a
maturer consideration of the subject, and especially with
reference to the representations under which Parlia-
ment entrusted them with their powers, have lcd them
to the conclusion that an additional outlay of about
140,0001., not contemplated in January, will be ulti-
mately required to be expended in works which they
had hoped to avoid. Notwithstanding the extraneous
additions to the capital account set forth in the report
of the accountants (which do not affect the stability or
permanent prosperity of the company), the connnitte ore
enabled to state their firm conviction that the position
of the company is sound and its prospects favourable.
Satisfactory results are especially to ha looked for from
the opening of the North Kent line and the continued
development of the continental and goods traffic.
MANACIEMENT.

After adverting to the disunion at the board of direc-
tors, the commattVrecommend—
" 1. The formation of an efficient board of directors,
acd that the sy stem of diviling.; the board into conamittces
to undertake the more immediate superintendence of the
several branches of mantgement be adopted; such divi-
sion may, in the opinion of your committee, be conve-
niently made for the purpose of
Accounts and Finance,
Road and Traffic, •
Locomotion and Stores.

Such committees to be subject to the control of the ge-
neral board, to whom rt gular reports of their proceed-
ings should be made.
" 2. That the number of directors he not less than 10.
"3. That the directors bo fairly remunerated
for their services. While giving this recom-
mendation, your committee express their opinisn
that the most useful principle
ont which to
apportion the directors' fund is
each member a moderate fixed sumby
retain-
ing fee, beyond which he should be
o
ine of the company;
ut i wayt,ieof a
doaccord to
only
in pr o
portion to his attention to the b
accounts
nthuealdviroetcetoorfst'hreempruonperriaettoiorns.to be tho subject of an Ru-
be; slaobuTlrihs
that three auditora ho
That an efficient audit of the company's
and one professional
committee recommend
accountant.
appointed—namely,
of a law clerk at a
tors,
With respect to the appointment
of
two proprietors
citors in the ordinary way, your .
committee are of opinion
salary, instead of the employment and payment soli.
that that course cannot be adopted in the present state of
the company's works and affairs with safety or advan-
tage ;
how far it may become desirable on the comple-
dun of all the company's works, when its business a ill
be solely that of traffic, is a question which your com-
mittee would leave to the consideration of a future period.
" Whilst your committee thus discharge their duty in
commenting on the past management of the company,
and in freely offering their suggestions for the future con-
duct of its affairs, they cannot too strongly inculcate
upon the proprietors the absolute, the vital importance
to their own interests of a termination, speedy and final,
of the injurious disputes which, originating in the board-
room, have extended to the court of proprietors, and di-
vided it into parti(.s.
" In the opinion of your committee, the minority in the
direction are bound to retire as a first step towards the
restoration of harmony and confidence.
"Your committee are anxious that all party feeling
should subside, and past events be only remembered as
a beacon in the future progress of the company's affairs.
With that end accomplished, and an efficient directory,
4 supported by the confidence of the proprietors, your