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

REPORT OF THE ACCOUNTANTS.

This report, which is given entire in the appendix, at-
tached to that of the committee, sets forth the result of
the general examination made by those gentlemen into
the accounts of the company for the three years ended
31st January, 1849, and embraces, with the exception of
about four months, the period during which the present
chairman of the company has held that office, he having
been appointed thereto in the month of September, 1845.
From the accountant's report, it appears that sums pro-
perly chargeable to the debit of revenue during the
period under investigation have been charged, and now
stand to the debit of construction, to the extent of
107,932/. 14s. 11d.
The committee say, " They feel called upon to depre-
cate strongly this mode of dealing with the sums form-
ing this amount in the books and accounts of the com-
pany; it is in their opinion at variance with every safe
and sound principle of meteantile economy, they have
accordingly felt it their duty to make strict inquiry, in
order to ascertain the authority upon which it was re-
sorted to, and to discover the grounds, if any, upon
which it could be justified.
"Your committee find, from evidence given
by Mr. Chubb, the company's accountant, which is
printed in the appendix (I), that his instructions with
respect to the half-yearly accounts were usually received
deputy-chairman;
theai il
rm apna;
rdneovfedritrheeclteosrss,
fromyou
hyour
attaching to this procedure. On this
important point your committee required an explana-
tion from the chairman, who attended them, and stated
the reasons, which, at the request of the committee, he
tbyoCommittee him
responsibility
m cannotthe
reduced to writing, and they are embodied in the fol-
lowing letter addressed to your committee:—
" South Eastern Railway, London Terminus,
May 8, iS-19.

" Sir,—l beg leave, in accordance with the wish of the
committee, to place the following observations before

them iu writing regarding the accounts of the company
and the relief that has been given to the account o,
reve::ue by charges to the account of construction.
" It has appeared to me indisputable that all classes of
disbursements which aficcted the permanent interests of
the company, expended at any particular pressure or
emergency, did not belong to the current expenses of the
particular moment, but should be charged, in account, as
an expenditure of capital. Such disbursements are there-
by made to extend over all future years, and are thus
comparatively unfelt.
" This principle applies equally whether such expen-
diture be incurred in the payment of fees to the officers
of the Houses of Parliament during the progress of Bills
promoted, payments to engineers, solicitors, counsel,
and landowners, or in large sums advanced in the
management of the traffic not expected to obtain imme-
diate advantages at the period when incurred, but laid
out from motives of sound policy for the enduring inte-
rests and welfare of the company, with a confident trust
that all such payments made bona fide were properly
chargeable to capital account.
" To this class of payments also belongs the additional
expenditure which arises in the establishment of nay
new business of the company.
" It should be borne in mind that until my services
were devoted to the interests of the company, the whole
of their carrying trade was in the hands of carriers, the
head of a carrying firm being then chairman of the com-
pany. I refer you to this point to the tinatcial report
of the directors, p. 15. It is there stated that the receipts
from goods, which averaged weekly 6081. in 1844,
amounted to 1,8101. per week in 1848; or, in the former
year, to GI. 12s. per mile per week, and to 121. per mile
per week in the latter. That increase is attributable
mainly to the fact, that the company have, since 1844,
become the carriers of goods on their own lines; partly
to the accession of continental tragic, which is yet un-
developed, but u hich, it is confidently expected, will be
soon greatly increased. It must be obvious that expen-
diture was necessary in the establishment and acquisition
of the traffic referred to; and it would have been mani-
festly unjust to have charged against the revenue of any
particular period expenditure for the enhancement of
the company's general and permanent interests.
" Ou the dissolution of the locomotive agreement be-
tween the South-Eastern, Brighton, and Croydon Com-
panies, in 1845, the portion of the locomotive ,and
carriage stock which became the separate property of the
South-Eastern Company was received in a dilapidated
condition. All expenditure incurred in a
tha repair
b of
that stock to make it as good as now, is charge to e
made to capital account.
" That agreement was entered into at a time when the
South-Eastern Corapany had no locomotiveworks of its
own, and it was a prejudicial bargain. The loss on
these repairs should be taken as part of the charges of
establishing the company.
"As a measure of policy and expediency, pending the
company's application to Parliament, and by way of
experiment the company carried the public at ver to
very low
fares, with frequent trains, from September, 1845,
September, 1846. The number of trains run was more
than double that now in use. There was an increase,
during the year of these low fares, of 50 per cent. in the