The Sun.
London, England, 1848-10-28 00:00:00

OCTOBER 28, 1848.

216,642

sumed return on
capital of subsi-
diary lines, as per
Schedule 3

173,083

Working expenses 40 per cent. on gross in-
come

...~__~..._. ..~ ..y~_~,"_.

tilifeeepliattatieirete_dimreecntion4o Amighvterybe
thought
traebee
considerable
to examine any scheme of accounts—confess themselves
,ut of their depth when they come to railways. If they
could see their way clearly, they would be only too
-sappy to buy shares, as they can do now apparently, to
pay Bor 10 per cent. for their money. Let every com-
pany put out such a scheme as shall remove all suspicion
and defy all cavil. Let all the liabilities, debentures,
preference shares be clearly stated, and let the whole
speculation be exhibited in its complete and working
orm. The public will then see what chance there is of
good, bona fide dividend three or four years hence."
Was this the language of hostility, or of friendship?
The North-Western Company at least justifies our ad-
vice, for it admits that it has hastened the publication
)f its statement in consequence of the panic; and, if we
mistake not, it will find its shares rise in consequence.
POST.—The statement of their accounts, which has
or some time been expected from the London and
North-Western Railway Company, will be found in our
!olumns of this day. It is opportune, important, and
satisfactory, and will go far towards relieving the public
nind from an anxiety injudiciously and to a great extent
unjustly created with regard to the value of property in-
vested in those great undertakings which have so largely
imployed the capital and so materially promoted the
commerce of the present age. We were the first to dis-
lourage the daring and desperate speculations which,
under all possible and impossible pretences, were,
some eighteen months or two years ago, palmed on the
inwary or the credulous. Our anticipations were ve-
rified, and men, if not richer for our earnest warnings,
oecamo wiser by their own bitter experience. But caution
may be overstrained, as well as enterprise; and if the
recklessness of '1846 was generally fatal, the fears of
1848 have been extensively injurious. Both were ex-
aggerations of truth, and in exact proportion to its error
-ach has Burt the cause which it misrepresented. Whole-
some adventure in the one case, and judicious prudence
in the other, were overstrained, and " frightened from
their propriety." Both these evils arose from the ab-
sence of sound information. The hopes of the public
mud its fears are easily excited by general statements of
good or evil. The more vast and vague the promise or
hreat, the deeper and more active is the sentiment pro-
,luced. It is therefore with much wisdom, and, we doubt
not, it will be with corresponding benefit to its affsirs,
that the London and North-Western Railway Company
has addressed to its shareholders and the public a
statement in detail of its engagements and liabilities.
The depression of railway stock--a depression
which has weighed most severely on the interests of
that large and important body of the community whose
incomes are so limited as to bring certain and deep suf
fering with any considerable reduction—has been
created by the apprehension that the companies had en-
raged themselves in the formation of auxiliary and
branch lines to an extent beyond their means, and that
consequently even the most remunerative of the esta-
blished trunk communications were in danger of being
swamped by the ruinous expense of such ancillary spe-
culations. As far as the London and North-Western
line is concerned, the accounts now before the public
completely prove that such apprehensions are ground-
less. The capital actually expended on the main line and
on branches producing revenue, including the plant for
all branches, is 18,598,5364 This represents 438 miles
of road formed and bearing traffic. Of branch lines in
the course of formation, but not yet producing revenue,
there are 62 miles for the works, for which, with their
stations, &c., 1,481,3291. had been expended up to the
aoth of June last, and a sum of 836,8964 is required for
their completion. For subsidiary lines, in which the
company is interested by subscription, contribution, and
guarantee, extending to 641 miles of road, the amount
paid is 3,098,4331., leaving yet to be advanced a sum of
1,846,7984, forming a total subscription of 4,945,2314,
and the lines " to make which powers have been ob-
tained, but which will not be acted upon without further
and full consideration," would cost 3,876,963/. The
whole amount, therefore, actually expended up to the
30th of June last is 22,835,120/., while the entire sum
which may be required to complete these undertakings
is no more than 3,136, 6261.—a state of things which,
considering that the last dividend, declared at its mini-
mum, was seven per cent., is the very reverse of doubtful.
Nor is the state of the accounts of capital and revenue
less conclusive. The directors remark that—

" From the summary it will be seen that the total
ultimate expenditure is expected to be 25,862,0121. The
account will therefore stand thus :
Dividend upon total
share capital 0f....£21,047,747 at 7 p. cent. £1,473,342
Loans, 4,814,2651.
at 44 per cent....
Lsts&l634 per cent.
..--45,231/, as-

43,559

1,516,9()

1,011,266

Total £2,528,167
Average per week, to pay 7 per cent...X48,618.
" The gross revenue of the year ending 30th June,
1848, was 2,194,0931., or on an average of 42,1941. per
week.

" It therefore remains for the shareholders to decide
whether the preceding calculations are sound and
moderate, and if so, whether there is a reasonable pro-
bability of the gross revenue of the company from the
main line and branches to be opened increasing to an
extent of 6,4241. per week by the year 1852, when all the
capital will be called up, and the subsidiary lines be in
operation.
" To produce such an increase, there is the additional
revenue to be derived from all the lines enumerated in
Schedules 2 and 3; and that steady annual increase,
which, with the exception of periods of severe depression,
has taken place since the lines were opened—to which
should be added, that economy of management which,
increased experience will enable the directors to introduce.
" On the other hand, the directors do not overlook
the fact that a certain amount of traffic will be abstracted
by competing lines. It will be much less than is usually
<upposed, and the general traffic is secure to the concern."
We congratulate the company both on tho resolution to
publish its accounts and on the accounts which it has
published. It is right that, in matters interesting society
so deeply and so extensively, there should be neither
secrecy nor mystification. And we feel assured that the
safety of the public and the prosperity of enterprise will
be promoted and secured by a course of proceeding cal-
culated better than the most eloquent arguments to
dispel the clouds which have recently gathered over
prospects so important to the whole community, and
so vital to the numerous classes more immediately
concerned.
ADVERTISER.—We congratulate the public, as well
as the shareholders, on the indications of improvement
in the market value of railway property which have ap-
peared within the last few days. We pause not now to
show in what way the public are interested in the pros-
perity of railways. That we did some days ago. We
recur to the subject, for the purpose of calling attention
to the confirmation which is thus early given of the
soundness of the advice we tendered to the shareholders,
when we told them that there was no real cause for the, depreciation which had taken place, and counselled them not to sacrifice their property, if they were in circum-
stances to keep it. That advice we now repeat, There
may be some slight occasional fluctuations in the market
value of shares; but they will, ere long, not only ac-
quire their proper position in the prices of the day, but
retain it when they have acquired it. The severe storm
by which they have been assailed will, now that it is
about to subside, be succeeded by a long-continued
period of tranquillity, in which railway prices will be
remarkable for their steadiness. ;Mr. Hudson, in his
letter to certain shareholders of the Midland Rail-
way, concurs in this opinion—one, we may here re-
mark, which we do not now express for the first time.
It is no small satisfaction to us to find that Mr. Hudson
coincides with us in several important matters, which
we were the first to bring before the public. Some
weeks ago, when cautioning bona fide shareholders
against disposing of their property, we adverted at great
length to the fact that the quotations which had ap-
peared day after day in the Stock Exchange lists, of
prices which were constantly declining, were not the
quotations of actual sales, but of fictitious transactions,
in which the " Bears " had been systematically engaged.
We appealed, in proof of this, to the records of the trans-
fer offices of any of the leading companies. Mr. Hudson
comes forward and proves the accuracy of our statement.
He distinctly affirms that, during the recent panic,
the number of transfers of shares which have taken
place has been less than usual, And this, not as re-
gards one or two of his lines, but as respects all the rail-
ways with which he is connected. We are in a condi-
tion to affirm, that the same thing may be predicated of
the stock of the London and North-Western, the Great
Western, the London and South-Western, and, indeed,
of all the leading companies. The depreciation in the
value of railway property which has caused so much
alarm, and led to such disastrous results to many of the
most respectable families in the country, has been pro-
duced by those unprincipled practices which we formerly
exposed as being resorted to by the " Bears," and which
Mr. Hudson characterises by the mild term of " a com-
bination to depress shares." And, here we beg to make one
or two observations on the subject of these fictitious sales
those nominal transactions which have for some months
past figured on the Stock Exchange lists, and misled, to
their ruin, thousands of simple people who are un-
acquainted with the mystery of iniquity which is
in unceasing operation Actiong the speculators In Cape!.
court. rt is much to be regretted, that the companies to
which we have referred, did not, when they saw the pro-
perty of their shareholders daily diminishing in value,
and principally through the quotation of fictitious sales,
give an official intimation in the public journals, that
these transactiions were nominal not real. In confirma-
tion of this,
they might have published weekly the num-
ber of transfers which had actually taken place ; and
when it had been seen that the number of real transac-
tions bore no proportion to the number of fictitious sales,
the minds of shareholders would have been disabused.
All apprehensions would have died away ; confidence
would soon have been restored, and the " Bears " would
have been completely caught in the trap which they had
set for the public. There is one other point iu Mr. 11%17

[PRICE SD.

son's letter to which we may allude with a special
gratification. We refer to what he says of the
Weekly Stock Exchange List. Our journal, now five
or six weeks ago, was the first to direct attention to the
unspeakable mischief which this publication, by its
gross misstatements, was weekly working. We cha-
racterised the course it was pursuing, in the strongest
terms which it ' would have been prudent for us to
employ. Nor did we spare the Stock Exchange Com-
mittee, under whose sanction it was issued, any more
than we did its conductors. It was idle for them to
cause an intimation to be put into it, that they were not
to be held responsible for the opinions it expressed, ('.r
the statements it contained. It came out avowedly
under their auspices, and at the very moment they were
disclaiming responsibility for what it contained, the
conductors were neutralizing the value of the
disclaimer by publishing in all the public journals
that they had got the sanction of the Committee
of the Stock-Exchange to the insertion of ad-
vertisement, in the List. This clearly showed
that the publication was entirely under their control.
So, at any rate, the public understood the matter. And
so understanding it, it was no wonder if the price of
railway shares tumbled-down, day after day, when a.
publication, issued under the authority of the Stock Ex-
change Committee, boldly asserted that stock which was
paying six and seven per cent, was not in a position to
pay more than three or four per cent. Mr. Hudson comes
fbrward and indorses all we have said respecting this
mischievous publication.
"I wish," says that gentleman, "I could call the
serious and grave attention of the Chairman of the
London Stock Exchange to a publication, which is issued
weekly, professing to be under the sanction of that
body. lam aware that the statements which appear is
that paper are stated not to be published under the
authority of the Stock Exchange; but I cannot close my
eyes to the effect that they produce on the mind of the
public, who naturally consider that they have that sanc-
tion. If these statements were correct and true, no per:
son would have a right to complain; but when they are
almost in every instance incorrect, and their general
tendency is to depreciate railway property, it would be
well that the Stock Exchange should disavow a publica-
tion which is calculated to do so much mischief."
Such pointed observations, coming from such a quarter,
cannot be without their effect. The Stock Exchange
Committee are now bound, in justice to their own
character, as well as in justice to the holders of railway
shares, to withdraw their sanction entirely from the
publication. This they are bound to do at once, and in
the most public manner, so that no one may hereafter be
misled by its erroneous representations. If this be done,
the publication will cease to do mischief by ceasing to
exist.—[Since the above was put into the hands of the
printer, we have received the gratifying intelligence that
this mischievous publication has heed brought under the
special consideration of the Committee of the Stock Ex-
change, and that they have come to the resolution of
prohibiting the insertion of any more " statements" re-
garding railway accounts. The resolution is thus
worded—
" That Mr. Slaughter be required in future to limit
the contents of the Weekly Share List to the usual
tabular railway statistics, prices, and official corre-
spondence."
So, then, our object is accomplished. The sting has
been extracted from the wasp. Henceforth the Weekly
Exchange List will be as harmless as a dove. This is
one essential service which has been rendered to the
railway world.]
CHRONICLE.—We publish this day the expose,
officially promulgated by the North-Western Railway
Company, of their financial position and prospects. It
presents a detailed and elaborate picture of the past ex-
penditure, and the existing liabilities of the company,
arranged under four distinct heads, with a summary,
forming a fifth schedule, of the total capital which re-
mains to be provided for each class of liabilities. The
result of this statement, which is plain and distinct
enough even for persons little practised in accounts to
comprehend, must tend, we think, to dissipate the wild
rumours which have been ignorantly or designedly
circulated within the last few weeks respecting the
situation of some of the leading companies, and to
disabuse the minds of shareholders of those
panic terrors which have led them at once to sacrifice ,
their own interests and that of the commercial commu-
nity upon whom this new mania of apprehension has, in
various ways, operated most injuriously. The classifica-
tion adopted in the tables before us appears to be an ac-
curate and a convenient one. The first head exhibits
the expenditure and liabilities upon the main line and
branches now producing revenue. The extent of rail-
way included under this division is 438 miles. The total
amount authorised to be created in shares, was 1,047,7471.
—the sum at present received upon shares is 14,044.574/.•
upon debentures 9,186,6721.; making together 23,231,246 i
The expenditure incurred, down to Ist July last, was
18,145,6241, the aggregate estimated outlay being
18,598,5561. So that the sum remaining to be expended
on account of the whole of the main line and branches,
at present yielding revenue, is little more than 450,0001.
The second schedule shows the branch lines in course of
construction, and not yet productive. These are nine in
number, but the extent is only sixty-two miles. Among
the most considerable of these works are the enlarge-
ment of stations at Liverpool, Manchester, Crewe, Bir-
mingham, &c. The total estimated outlay is 2,318,225/.
Of this sum 1,481,3291. has been incurred ; 836,8961. is
yet to be expended. Schedule 3 is that to which the
public and the shareholders will probably look with
most solicitude. It specifies the subsidiary lines in
which the company are interested by subscription, con-
tribution, or guarantee. There are nineteen lines in-
cluded in this category. To fifteen out of this
number the company had, up to the 30th of
June last, subscribed to the amount of
3,098,433. They are still under engagement
to subscribeLl,B46,79Bl The sum is undoubtedly
large, and, at present prices, the subscriptions to the
Caledonian, the Chester and Holyhead, the Bucking-
hamshire, and some other concerns may not appear to
have been very advantageous investments ; but then it
should be recollected that these were not mere specula-
tive adventures. The concerns embarked in are all
naturally connected with the company's main line ; they
are calculated to further the development of its traffic ;
and the influence which a participation in the property
of them affords, is of essential importance to the
North-Western directors. Adverting next to the gua-
rantees, we mast acknowledge that, whatever may
have been the sins of other companies, we find here
little to support the imputation of improvident bargains
against the London and North-Western. Some of the
higher guarantees, such as the North Union and the
Scottish Central, have been undertaken jointly with other
companies, and, even if thearrangements should not prove
remunerative, the amount of these liabilities is compare-
lively inconsiderable. In other cases, the rate cannot be
deemed immoderate; nor, according to the test of the
Share Market, has it at any time been so viewed by the
people. The engagement to the Buckinghamshire line
is 4 per cent.' to the Coventry and Nuneaton 5, to the
Huddersfield, Manchester, Leeds, and Dewsdury 7-10ths
of the North- Western dividend for the time being, to the
Stour Valley 2-3ds of the same, to the Shropshire Union
one half. The return which these lines will yield must,
of course, be at present problematical; but upon what-
ever data they may be computed, there appears to be
little ground for charging the directors with having sa-
crificed the interests of the proprietors by any very ex-
travagant bargains, or outrageous concessions. In the
majority of caves, the amounts which the com-
pany has undertaken to pay are not more
than a reasonable indemnity to the under-
takers for their enterprise ; and, taking one
line with another, we believe that the anticipation, that
in a few years they may be expected to yield a margin
of profit to the North-Western Company, is by no means
over sanguine. Schedule 4 comprises a class of under-
takings which, if not actually abandoned for good and all,
may, we trust, ba considered as indefinitely postponed.
The outlay which they would absorb is set down at
3,876,9631. _The expenditure as yet incurred is stated to
be nil. The Parliamentary expenses which must have
been incurred in obtaining the Acts, we presume, are
charged elsewhere. But the lines themselves not having
been commenced, there can be little question, under
the present circumstances of the company, and of the
times, that there will be no disposition, either on the
part of directors or proprietary, to add these four
millions to their capital account. &Neral years
will probably elapse before the fifteen branches
and extensions enumerated in this schedule will be
called for, to satisfy the demands of the public, or
will excite the cupidity of the shareholders. The sum-
mary of the several classes above specified (the last be-
ing excluded), shows that the total ultimate amount of
capital to be expended upon the works and engagements
of the Company will be 25,862,012/. If the entire
amount of authorized stock and share capital should be
fully called up, which is contemplated as likely to occur
in 1852, it will reduce the sum raised upon debentures to
4,814,2651. The great question then arises, as to the
amount of profits which it will be practicable to divide
upon this capital. Upon this point, the estimates formed
by the Directors in their present manifesto are a fair
subject for scrutiny and criticism, to which they will no
doubt be rigidly subjected. The public . must judge
whether or no it is a reasonable anticipation to assume
that, in four years from this time, the average
receipts upon the main line, increased, as it will
then be, by the branches specified in Schedule 2,
and by that development of traffic from the
completion of the works of the Subsidiary Com-
panies, may be expected to increase to the extent of
6,424/. per week over the average of the year just ex-
pired. They must judge, too, whether the estimate of
a return of 31 per cent. upqn the lines guaranteed and
subscribed to, which are enumerated in schedule
modest or an over-sanguine estimate. That 40 per
cent, upon the gross income is likely to form, at the
° pert ' din question, a sufficient deduction
`These.
for working
expenses, will not, perhaps, be much questioned.
then, are the data upon which the directors. build their
calculation' of a minimum dividend of 7 per cent, upon
the entire capital in 1852. This, of course, is not pro-
pounded as the measure of their hopes, or even of their.
expectations, but only as a safe and cautious estimate of
their ultimate position. For ourselves, we must avow
that the impression we have - formed, . upon the
review of their affairs now taken, is, that the.share-
holders in this great undertaking may repose a we'l-
founded confidence in the issue of their investment.
The opinion which we have always expressed, as to the
ultimate retattnerOvnigot railway_ property, is -rather