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

confirmed than shaken by ob i o
degree to which commer depression has told u n
their returns. Let t ' ressure be removed, and let
mania of reckless speculation and of-suicidal cowetition
be checked (and perhaps nothineless than the severe
-sufferin, of the recent crisis could have ensured this),
wad. ss earogression of railway traffic must attend, as it
---4.11 '',l o tr.° e ote, the extension of wealth, pontsle 'tub )
,
and commerce. If these views are realised, the share-
holders of the North-Western Company will, in
all probability, not reap the least valuable fruits
of the system. Errors in management there may
have . been, false steps which cannot be retraced,
large outlays of capital which the wisdom of present ex-
perience must reprobate and regret; but the statement
which is now exhibited to the public, to the good faitt:
of which we may consider the character of the di-
rectors to be pledged, appears to us to have established
this point, at least, that nothing which hag been= .0 'r-
taken or engaged in has, in any degree, con. - sed
the stability of the concern—whatever tempo a -
culties may be encountered, the basis is sound. % , a
add, that if any course could, more than another, re-
establish its credit, it is the fulness and .firiknessAlffe
present disclosures. The public now le-now the • worst.
We think they may be well justified in hoping for the
best. We will only add our earnest recommendation to
the other companies which have been similarly assailed,
that they should go and do likewise.
IIERALD.—At the conclusion of these observations
Western Company's financial position, the preparation
we give the official statement of the London and t
~
and publication of which have been
in a sortesnrendexedn of semicessary
by the erroneous details recently
thereon,
re which,
oncou found
a
official shape in the Weekly Nliare...aLrkts:,
some leading 'and mischievous rete
prominent place in the columns of
014,. contemporary the
Time's. The statement originally pubbshe heir the
Weekly Share List is one which bears, upon s.fa_cee,o_f
it, an air of great candour, and the observations 1" ""'
Times wear also the semblance of sincerity and compile'lence,
lence, but a slight investigation of the one and but a little
consideration of the other will show that the apparently
semi-official statement is most injuriously incomplete,
and the comments of the journalist.hasty, crude, and,
groundlessly mischievous. What are the facts? The
Times, in some introductory remarks, by which it pre-
faces, in its. City article, its qubtation of the financial
statement from the Weekly Share List, "of the engage-
ments of the London and North Western Railway Com-
pany, together with an estimate of the traffic receipts
that would be required, supposing these engagements all
carried out, to maintain the present dividend of 7
per cent.," informs its readers that " the statement
appears to have been made with great care, and on the
most favourable assumption," and it then says, "We add
also a table of comparative results, which will tend to
open the eyes of the public to the extent and pressure
of the schemes to which Parliamentary sanction have
been granted in individual cases, and also as to the, ad-
ditional amount of railroad travelling
_that must take
place throiighout the country to realise the dividends
that have been promised." The language is, in fact,
merely an echo of what the writer of the statement in
the Weekly Share List himself Observes. His estimate
is to be depended upon " provided all the share capital
of the London and North-Western should he called
up, and the whole of the leased and amalgamated
lines be brought into operation.". Every person at
all acquainted with the general character of the
new lines which the old companies felt it necessary
to go to Parliament for in 1845 and 1846, knows
very well that they were mostly of a protective
character, and that the applications for them were in
most cases matters not of choice, but of compulsion. The
chief point, therefore, on which the compiler of such an
estimate as the one we are dealing with should be clear,
is manifestly the extent to which such lines are likely to
be carried out. Without a correct knowledge of this
portion of the expenditure of a company, an estimate of
the probable amount of share capital, and of the probable
amount of receipts, is worse than useless—it is calculated
to lead to most erroneous, and perhaps—and indeed such
has been the operation of it in this case—most mis-
chievous conclusions. It is true that the writer of the
statement in the Weekly Share List quotes a passage
from a letter written by Mr. Creed on the Ist of July
last, in which that gentleman says the expenditure
of capital for branch and subsidiary lines had been
contracted to a great extent, and that several of such lines,
for the construction of which the company have powers,
would not be made. But we must remark that these as-
surances weigh very little against, and are forgotten by
the London and North-Western shareholder, in the con-
templation of an array of figures, from which he learns
that the liabilities of his company amount to about
36,000,0001., and that while 44,000/. per week is requi-
site to pay 7 per cent. on the present capital, no less a
sum than 70,0001. per week will be required to pay the
same dividend, "provided all the share capital should be
called up," &c. Having quoted from the Weekly Share
List the statement in question, the limes, in a leading
article on the same day, declares that—" The sooner all
the railways of this country are referred to a Parlia-
mentary commission—we will not say of bankruptcy—
the better for the country and for the shareholders.
Such a process involves no stigma—let misfortune be the
plea." And having indulged in some general remarks,
our contemporary says—" Let every company put out
such a scheme as shall remove all suspicion and defy all
cavil. Let all the liabilities, debentures, or preference
shares be clearly stated, and let the speculation be
exhibited in its complete and working form. The
public will then see what chance there is of a good bona
fide dividend three or four years hence." Hero we have
an apparently semi-official journal, the Weekly Share
List, proving to us, in a statement which the Times tells
us " appears to have been made with great care and on
the most favourable assumptions," that the London and
North-Western Company must, contingent on certain
events, about which nothing of a guiding character is
given to the reader, take an additional 24,000/. per week
to pay 7 per cent. upon its capital, and then in another
column we have the Times itself suggesting the reference
of railways to a Parliamentary Commission—" it will
not say of bankruptcy"—and throwing out something
like an insinuation that railway shareholders stand but a
poor chance of having " a good bona fide dividend three
or four years hence." We repeat that the operation which
such a statement and such observations were calculated
to have upon the public -was clear and manifest—visa
to depreciate the value of London and North-Western
property. To us the principle on which such a publica-
tion should be conducted seems obvious enough. None
of its statements of the financial position of railway
companies should be imperfect or open to the charge of
a panic tendency. In the absence of official information,
the better plan would be the omission altogether of any
such statements. It will be seen from the official state-
ment, which appears to be a very candid one, that the
total ultimate expenditure of the company is expected to
be 25,862,0121., and that to pay the present 7 per cent.
dividend, the working expenses being put down as 40
per cent. on the gross income, a weekly take of 48,618/.
is required. The gross income for the year ending June,
1848, was 2,194,0931., giving an average weekly result
of 42,194/., so that an additional 6,6241. per week will
have to be realised to give the 7 per cent, upon the ex-
pected total ultimate outlay. The official statement, while
it incidentally justifies the company in the course it pur-
sued in reference to the lines obtained by it in 1845 and
1846, goes briefly, but lucidly and, as it appears to us,
very fairly, through all its guarantees, its subscriptions
to other lines, and its branches, stating the value and
object of them, and specifying the present or probable
value nf them respectively. We refer the reader to this
very satisfactory portion of the statement. The esti-
mate which the company have made of the results of
their engagements under these three heads appears to
be extremely moderate, and a careful attention, both to
the figures and the remarks appended thereto, will
show, that the monetary engagements of the London
and North-Western Company have, considering the cir-
cumstances under which the majority of them were
carried out, been entered into with a degree of prudence
which their opponents have not given them the credit
of possessing. The plea that the construction of lines
and guarantees has been forced upon directors by way of
protection, is, however, not very acceptable to the share-
holders in times like the present. But the London and
North-Western shareholder may uith considerable
confidence feel somewhat indifferent upon this
point. The official statement appears in
itself a guarantee that the future dividend
will not fall below 7 per cent., while there is good reason
for believing that with the improvements which are being
made in the construction of permanent wav, by a judi-
cious re-arrangement of trains and a revision of the lo- -
comotive management, the working expenses of the line - may be considerably reduced. The official statement in-
forms us that " the directors do not overlook the fact
that a certain amount of traffic will be abstracted by com-
peting lines. It will be much less than is usually sup-
posed, and the general traffic is secure to the concern."
We have always considered that the amount of traffic
likely to be abstracted from the London and North-
W estern system of railways by competing lines, has
been considerably overrated, and that the annual increase
of the traffic over the old main lines, in addition to the
development of the through traffic from Ireland via the -
Chester and Holyhead line, and of the traffic of the
branch lines, would more than balance any such
abstraction. Largo as the goods traffic upon the
London .and North-Western line is, it is yet very far
from its full development. Our opinion is that the
additional 6,4241. per week required to make up
a yeceipt that will yield a 7 rer cent. dividend
upon the expected ultimate expenditure of the company
will be produced from the goods traffic alone in the
year 1852, " when," as the directors tell us, " all the
capital wil"l be called up, and the subsidiary lines in
operation. We may here opportunely offer a few ob-
servations on the apparently uncomfortable increase
which will have taken place in the capital of the com•
pany by the year 1852. The share capital paid up on
tho 30th June, 1848, was 13,845,615/. Supposing all _,
the capital to be called up by 31st December, 1852, the;
capital account would exhibit a sum of 21,047,697/. ;
that is, an increase of 7,202,6821. of capital in four .
years. But of this 7,202,6821., the sum of 4,366,525/.
would go in diminution of loans, and of this 3,704,3604
will bear interest up to December, 1852, at 4 per cent.
only—a rate more favourable than that at which deben-
tures could. be renewed. As far as we can understand
the financial statement of the London and Ncrth-
Wettern Company, as given in the Weekly Share List, .
the compiler has added this 4,366,52.5/, or seine such
sum, to the 21,047,697/. We cannot otherwise under-
stand how he has made out his 36,000,000/. or
40,000,000/. of' capital. Connected with the operation .
of financial misstatements and panic-tendency leading
articles upon the value of railway shares, we must not
forget the fictitious sales of shares .that take place in •
the market. It will scarcely be credited by those who
do not understand the "dodges" of the share market,
that 'the bona fide transfers of London and North=
Western shares have been numerically fewer during the
last .;ix Months than they were during the correspond-
ing period of last year. Such, however, we are assured .
is the face • For the last two mouths the transfers were
~
fewer by 300 thin they were for -the corresponding -
-period of last year, and for
-the previous periods of two