The Sun.
London, England, 1849-12-24 00:00:00

LONDON AND SOUTH-WESTERN
RAILWAY.

A special general meeting of the proprietors of
this railway was held on Saturday, at the Nine
Elms station ; Mr. Chaplin, M.P., chairman of the
board of directors, in the chair.
The advertisement convening the meeting having
been read, the following report was submitted to the

meeting :
" The directors regret to have been obliged to trouble
the proprietors by calling them together so soon after
the recent special meeting of the 28th ultimo, bat the
charges which were then preferred against them (though
answered at the time apparently to the general satisfac-
tion of the meeting) have been since made the subject of
so much positive mis-statement, and of so much mis
representation, public and private, that their own feelings
of self-respect, not less than a due regard to the interests
of the South-Western Company, require that these ques-
tions should be set at rest at the earliest possible period.
"The accusation was to the effect that the directors
had, during the panic, when the rate of interest was
from 8 to 12 per cent., granted loans to themselves, at a
less rate of interest, out of the funds of the company to
pay their own calls, in gross violation of their duty as
trustees for the shareholders; and other charges more or
less connected with this question have been subsequently
added.
" The special object of this meeting is to enable the
shareholders to appoint a committee to investigate the
matter; but the directors cannot consent, in the mean-
time, to rest silent under imputations directly affecting
their character as honourable men, and they proceed,
therefore, at once to give such explanations as the limit

of a report will allow.
"At the special meeting of the 28th ult. the state-
ments msde by some of the directors, in reply to ques-
tions put, without notice, were, in the absence of all
means of reference to documents or books, necessarily
incomplete. Divesting the subject, however, as far as
possible, of any confusion which may thus hare been
produced, it is thought that nothing will be omitted if the
explanation be arranged under the following heads, viz.:—
"1. Transactions as to the taking up, by some of the
directors and others, of 15,000 new shares in December,
1846. 1
" 2. Loans made out of the company's funds.

"3. The arrears of calls due by directors.
" First.—ln regard to the new shares of 1846 7, it is
necessary to call attention to the report of the directors
at the special general meeting of 17th November, 1846.
This report embraced recommendations to apply to Parlia-
ment, in the next session, for the various projects which
were the subject of fourteen resolutions, all of which
were passed unanimously by the meeting, the reception
of the report having been previously moved by the chair-
man, and seconded, with expressions of approbation, by
Mr. Sergeant Gaselee. These various projects, if all
sanctioned by Parliament, would have occasioned an ex-
penditure of nearly 7i millions.
" This report also gave a general indication of the
terms on which it was proposed by the directors to raise
the necessary capital, amounting to 6,028,0001., and the
meeting unanimously approved of the terms, and referred
it to the directors to carrying the details into effect.
"Immediately after the meeting, the directors accord-
ingly sent a copy of such detailed plan to each of the
proprietors, calling upon them to declare their option of
taking their respective proportions of the New Shares
prior to the 30th November. The twelfth clause was in
the following terms, viz. :
" That all the shares to be issued in pursuance of
the above resolutions which shall not be taken according
to the option offered to the shareholders, and all such of
the said shares as shall become forfeited, shall be dis-
posed of by the board of directors for the benefit of the
company.'
" On the 11th December, 1846, the directors met,
and it was reported to them that the following number
of shares had been, up to that time, applied for, viz.:—
Shares of 501., 76,014 ; shares of 40/., 8,998; whilst the
number, which it will appear by the first clause it had
been deemed expedient forthwith' to allot, were as fol-
lows:—Shares of 50/., 92,662; shares of 401., 12,000;
and the deposits actually received were only to the ex-
tent of 63,850 shares, or upon about 20,000 shares less
than those applied for as above.
" Oa otrerving this result, it was evident to the direc-
tors, on whom rested the responsibility of having the
subscription completed and the deeds signed and depo-
sited by the 31st of December, that an immediate and
further allotment of shares was necessary.
" The conditions on which these shares were originally
issued offered no great immediate or prospective advau-
tages, being that 5 per cent. should be plod out of capital
upon the amounts called up for six years, after which
time they were to rank with the general stock of the
company. These traditions were subsequently altered
by Parliament disallowing the payment of the interest
out of capital, and the shares (cut down from 501. each
to 161. 133. 4d.) were afterwards registered as thirds, not
entitled el either dividend or interest till after the Ist
July, 1848, and then only to the ordinary dividend.
" At the date in question the shares bore no morn
than a nominal premium (10s. to 15s. per share), and
left no probahility that any considerable amount could
be disposed of on the Stock Exchange, within the very
limited time then available, without injuring those pro•
prietors wh3 had accepted their allotments, and the
only course appeared to be, that the directors, with such
parties as they could immediately influence, should take
up a further portion of the shares. After much reluc-
tance to incur so lerge an additional liability, this
course was adopted ; but as the directors had already
been subjected es the deposits on their own portion of the
new scrip, and as the additional suns required were in
some cases large, and as the parties were not to have
possession of their scrip, a def'rred payment (with in-
terest), to such as found the immediate payment of the
deposit inconvenient., became a necessary part of the ar-
rangement. The conditions on which the new scrip was
alloted by the board, were as follows:
" The d. ed to be signed by each party, for the shares
taken.
T7-,-‘nty -five per cent. of the amount of the deposit
to to paid immediately, and security for the balance
to be given; the company to retain the shares till
payment of such balance; such payments to be
made—one-half in three months, one-cleaner in four
months, and one-quarter in five months, from Dec.
11, 1846.
" No party to have his scrip (even if paid for) deli-
vered up in less than three months, in order that
these allotments might by no possibility come into
competition with those of the general shareholders
for that period.
- _

"Oa these'terms, 15,000 shares were accepted. Four
of the parties paid their entire deposits immediately, and
as respects the whole, the agreement was rigidly ad•
hered to, except as to the precise dates of the payment
of the stipulated instalments, the completion of which
was in some cases allowed to be deferred. The whole,
however, hr.s long since been paid up, with interest. It
may be necessary to state here, that the Bank of Eng-
land rate of discount on the 12th December, 1846, was
3 per cent„ and remained at that rate till 14th January,
when it became 31, and was not raised to 5 per cent, till
the month of April, at which rate it remained till Sep-
tember, and that the parties were charged interest on
their subscriptions, at the rate of 4 per cent., until 17th
Ally, 1847, and at the rate of 5 per cent. from that date.
"In the carrying out of this arrangement the cheques
of the company were issued, when required, in favour of
the respective parties:—ln some instances, merely to
enable the necessary transfer to be made in the com-
pany's books, such ch.-quest never having passed out of
the possession of the company, whilst in others the
cheques were handed to the parties, paid by them to
their own bankers, and chegnes drawn on the latter and
paid to the company for the full deposit. In all these
cases the transaction in the company's books has been
denominated a loan, even where 'she parties never had
the cheques in their possession, and the whole
have thus been returned as loans in answer to
an o-der !flack by the House of Lords in tle last
session of Parliament, though, in the ordinary sense of
the term loan,' it must appear wholly inapplicable to
the circumstances of this deferred payment. After the
above explanation, it may appear unnecessary to state
that these transactions have no connexion whatever with
the preference (7 per cent. deposit) shares, which were
created a year afterwards; but the name of thirds'
having been sometimes assigned to those shares,
as well as to the issue of 1846, proprietors have con-
founded the two descriptions of shares, and it is therefore
right to repeat that all the above matters had regard to
the unprivileged shares of 1846.7, and not to the prefer-
ence shares of 1847-S.

" The directors believe that this bare statement of the
facts sufficiently disposes of the imputation, so far as
this matter is concerned, of their having borrowed the
money of the company to pay their calls during the panic,
charging themselves with about one-half the current rate
of iuterest; but the question still remains, were the
shares thus allotted really disposed of with the view to
the benefit of the company, or for the private advantage
of those who accepted them ? It may be urged, that
though the proprietors at large have unquestionably been
benefited by the additional capital thus actually paid
up, and though the transaction shows to the parties
themselves a very heavy loss, yet the point of
gain or loss does not affect the question. T. o
all candid and unprejudiced minds, however, it will
be sufficient to advert to the circumstances of the times,
to the conditions under which the allottees bound them-
selves, and to the quotations of the Stock Exchange, to
prove that for the liability they then assumed no rea-
sonable motive can be assigned but that by which the
directors affirm that they were actuated—the benefit of
the company. If the directors could have been influ-
enced by any lower inducement, they need not have
waited till the close of 1846 for colourable excuses to ,
help themselves on occasions where profit was not
distant or doubtful, but certain and immediate. In
the• year 1837, when it was necessary to raise ca•
pital to finish the original line to Southampton, new
shares were offered to the proprietors at 50 per cent.
discount, and a considerable proportion of the subscrip-
tion list remained unfilled. The directors of that day
(several of whom remained in the board in November,
1846, and some of whom are still members of it) sub-
scribed for the deficiency in addition to the proportion
of the new stock which they took up on their own
account; the shares afterwards rose in value, and though
the risk of the transaction was borne by the directors
individually, the shareholders at large had the entire
benefit of the profit (21,807/. 10s. 3d.), which was carried
to the credit of the company.
" In 1841, 1843, 1844, and 1846, new capital was suc-
cessively created for the purposes of those respective
periods; on each occasion there were parties who (from
one cause or other) omitted to accept of their prgor
tions; on each occasion the beard had the opportunity of
abusing their trust, and on the two most important 9c.
-
calions was distinctly invested by the proprietors with
powers to dispose of the shares not accepted ; butin
none of these instances, where profit was certain, did
they exercise that power by allotting to themselves or
others any portion whatever of the surplus shares, which
have remained in every case the property of the
oompany.