The Sun.
London, England, 1856-01-23 00:00:00

R.P.ILVTA.7 L.NTELLIGENCE.

RAILWAY REFORM.

A meeting of shareholders in railway companies was held
yesterday at the London Tavern for the purpose of taking
into consideration the seriously depreciated value of their
property, and especially to consider a plan which it is be-
lieved will arrest further deprociatiou an I speedily place
railway property in a sound and healthy condition.
Mr. W. Malins was voted to the chair.
Mr. Brooke, the secretary pro tens., read the advertise-
ment convening the meeting.
The CILIIRMAN said—ln calling your attention to this
very important subject, it is not necessary that I should
reusiad you that we approach the largest commercial ques-
tion with which it has ever fallen to the lot of any meet-
ing to deal. We have embarked iu railway undertakings
a capital almost twenty times as large as that of the Bauk
of England; yet notwithstanding that large amount of ca-
pital, so little does the .investment enjoy the public confi-
dence that men of prudence very often chuckle and con-
gratulate themselves that they do not hold a single railway
share. Gentlemen, this is not as it should be; and it is
hardly necessary to remind you that the railway interest
has at its command and in its employment an army double
that in numbers which has been carrying on the war—
viz. according to the statement of Robert Stephenson,
90,S;00 men ; and I might add that they are some of the
beat behaved and best-educated labourers in the country;
that we have 5,000 locomotive engines, each of which re-
presents the power of 100 horses, and, multiplying each
horse acting on the iron road by 10, would make a power
equal to 500,000 horses ; .adding all these to the capital in-
vested in the undertaking, of course it must be matter of
the deepest regret that our property is not more remune-
rative and more successful. It is rather a remarkable
thing, gentlemen, that almost everybody connected with
railways has been doing well except the ordinary share-
holders. The railway world may be divided into three or
four classes. First of all we have the employes, to the
number as I have stated of 90,000 men. Then we have the
preference shareholders and debenture holders, who are
pressing rather heavily on you at the present moment ; and
thirdly, you have those who bear the brunt of the whole
undertaking, viz., the ordinary shareholders, who take a
dividend if there is anything left after the others are paid;
and if not, like residuary legatees, they go without. There-
fore, gentlemen, the object in calling you together to-day is
to see whether, by the united action of the shareholders,
the last of the three classes, to whom I have alluded as
having to bear the brunt of the whole undertaking, we
can form such an association as shall combine its action
from time to time, whenever necessary instead of being,
as we are now, a body of shareholders who attend the half.
yearly meetings, make our complaints, see the miserable
state to which the property is being reduced, but who,
after the meeting has separated, have no more power—
the directors and officia's, and those who have the
management of the property, being left uncontrolled, to
do as they think fit. The object of calling you together
to-day is to discuss a subject which is not new to me. I
have been carefully watching the railway interest for the
last three or four years, and I have made frequent efforts
at the London and North-Western meetings to bring the
matter before the attention of shareholders. And in Feb-
ruary last I moved the appointment of a committee of in-
vestigation, but I was told by the late chairman, that, al-
though it might be a very good plan, and very necessary
for shareholders to interfere, the proper time had not yet
arrived—that it would be deemed offensive to the directors
should such a committee be appointed and I was requested
to withdraw my proposition, and I accordingly did so. At
the following meeting, which took place in August last, the
directors of the London and North-Western Company, as
you will no doubt many of yon recollect, proposed the ap-
pointment of a committee, which committee, I presume, is
now sitting and making theirinvestigations, and when you
meet in February next you will probably get some very
useful information. But the precaution necessary on the
part of shareholders is to combine their action, so thatthey
shall be prepared for all .contingencies, and to put their
shoulders to the wheel to move in the work of reforma-
tion. Therefore, gentlemen, having consulted those whom
I have remarked from time to time as having taken active
parts at the various railway meetings, walleye thought that
it will be advisable to form a permanent association of such
a numerous body of shareholders in railways, as shall by
their weight and influence effect a change whenever it is re-
quired in the management of the properties in which they
are interested, andthat the society be called the "Associated
Railway Proprietors," or any other name that may be
deemed more appropriate, to be governed by a council or
committee, and that all shareholders be eligible, whether
they be directors or not. In dealing with the question of
railways, we must not forget that the canals are either
powerful friends or enemies ; and I have made it my busi-
ness to ascertain what is the feeling of the heads of the
canal interest as to coming to some beneficial arrangement
for mutual advantage, and I think I am justified in saying
that, provided railway directors meet the canal proprietors
in a fair spirit, there will be no great difficulty in coming
to some understanding. I scarcely need tell you, gentle-
men, that in my opinion—and it is the opinion of all prac-
tical men —that railways maintain the contest between
themselves and the canals under much greater disadvan-
taees upon their side; the expense of construction, and
indeed all the concurrent expenses, aro very much less, and
the canals carry at far less rates than the railway; and, it
you come to the real contest who shall do the work the
cheapest, I am afraid that you will find the canals will be
able to carry at a cheaper rate. Now, it is imagined by
people in general that the management of railways is so
difficult that men are scarcely to be found who are capable
of conducting them with success ; but this is an opinion in
which I do not participate. I believe that tho same straight-
forward business habits which are applied to carrying on
the vast commercial concerns of this country may be with
equal success applied to railway affairs, and that your pro-
perty could be made highly and fairly remunerative. In an
interesting paper which Hr. R. Stephenson addressed to the
Society of Engineers very recently, many of you will recol-
lect that he stated that the saving of a single farthing on
the train mile would effect a total saving of 80,000:- a year
to railway proprietors. What we want, therefore, gentle.
men, is a careful and constant vigilance to insure economy
in every department ; that those whom you employ shoulo
be employed solely by yourselves and direct their attention I
solely to your interests, and I have no doubt that We can find
sufficient men with straightforward integrity and talent to
carry on the great concerns of railway companies with p !r-
-feet success for the proprietors, anti with perfect safety to
the public, Now, gentlemen, in looking at the various
undertakings of railways we should endeavour to separate
all hostility of feeling from a calm arid just consideration
of their affairs. If you look at the North-Western, for
example, that is one of the largest commercial undertakings
in the world. I would recommend you to dismiss from
your minds the persons—do not look at the board of di-
rectors or the officials but consider that for every million
of capital you have from 500 to 1,000 families, and that,
consequently, the whole aggregate of the railway interest
in the kingdom numbers some 100,000 or 150,000 families,
whose welfare in a great measure depends upon the success
with which those undertakings are carried on ; and I thick
that that consideration should subdue all hostility of feel-
ing between one railway and the other, and that the saute
goodwill should be entertained by those proprietors who
hold shares in the different lines, and that all should ex-
ercise their influence to reduce asperities and bring about
peace and harmony. But then all the harmony in the
world will do us no good unless we got remunerative ta-
riffs. If you are carrying on an amount of business at
less than it costs you, I ask you, as commercial men, what
will be the result? What would be the effect ore your own
affairs, if, on making up your accounts at the end of the
year, you find that you have received less than you
have paid ? Why, you would find the same result that
these railways do—that, instead of making the profit that
you are fully entitled t.,, you would have met with heavy
losses. Therefore, one of the objects of the association will
be to enforce the revision of the tariffs, and that negotia-
tions may be opened with the governing railway boards to
being about such a general arrapgenient of prices and
charges as shall afford to each a fair compensation for the
capital expended, and shall provide a sufficient fund to
bear the casualties and vast expenditure to which railways
are subject. Now, I have not the slightest intention in
bringing this subject before you to cast a shadow of blame
on any board of directors. We want their co-operation, and
not their hostility; and I am ready to believe that the
railway boards throughout the kingdom embrace men of
the highest integrity and talent. But one great error, as it
appears to me, has bees the system of audit. I know that
there are several auditors in the room, and to them I ap-
peal as to whether the system carried on is likely to pro-
duce such a check upon the expenditure of railways as they
would adopt in their own private affairs. For example,
believe the practice is, in private lifo, before we pay ac-
counts, to audit them ourselves, and see that they are cor-
rect. Butthat is not the practice of railways, for the audit
takes place at the end of the half-year, when the whole of
the mischief is done, and as to refunding, it is a thing of
which we seldom, if ever hoar. Therefore, I apprehend
that such audits are comparatively useless. Iu some cases
we find railways conducted with great prudence and
care, and I could name ono or two which some two or

three years ago were in a very intricate position, but.,
through good management and prudence, have raised
their dividends and regained their position in the mar-
ket ; but I do not deal with this question individually.
It is a matter for general consideration, and it appears
to me that the only efficient mode of audit is that
which precedes payment ; that a much more powerful
mode of examining, auditing, and passing railway ac-
counts is necessary, and the only mode of doing it is by
the appointment of au efficient board or committee of
audit, with control to deal with all subjects before the
payment is made and finally passed. The public confi-
dence is wreaked upon this rock. The general impression
prevails that the capital account is made subservient to
, revenue purposes—that no railway is earning sufficient
money to pay its way, if honestly and fairly every charge
were paid out of the earnings of the line. Prudent men
are afraid to invest their money in railways. They appre-
hend that they are being grossly deceived, and that if the
accounts were fairly rnada up there would be no dividends
for the shareholders ; and I believes, that that is one of the
wain points with which we have to deal in the future go-
vernment and management of railways; and, however dis-
agreeable it may be to boards of directors, my opinion is,
that if something effectual be not done on that point, all
our efforts will be comparatively useless, and railways will
continue to be a depreciated and suspected property ; and,
therefore, the formation of such a committee of audit and
control forms the principal and primary object to which
shareholders should direct their attention. Now, sup-
posits., that such committee of audit and ceutrol could be
formed, the objects to which they would have to direct
their attention would be the closing, when possible, of
capital accounts, and, where not yet possible, the adoption
of such stringent measures as would render the application
of capital to revenue purposes absolutely impossible. The
exercise of an efficient audit has never yet, to my know-
ledge, bean experienced by any railway company ; as far as
I can judge, the audit has been exclusively confined to the
debtor side of the account ; hence you have been carrying
on your great concerns for some time past at a continually
depreciating price, and it is within my knowledge thatsome
railways of the first respectability and magnitude are now
carrying goods for particular people at prices which are per-
fectly absurd. Now, my impression is, that we are standing
in the position of old turnpike-road trustees—that the rail-
ways of the kingdom are public roads—that all men have
the right to use them on equal terms, fcr equal purposes ;
but, so long as you give to your managers the power of
making what I call exceptional or special rates, so long will
it be perfectly impossible to control the expenditure of the
receipts of railways, and so long will your property con-
tinue to be depreciated, as it is at the present moment, if
not much worse, for the downward progress has not yet
been arrested. Railway property has been something like
from 5 to 10 per cent, lower this year than it was last
year; mull, if you refer to the records, you will find that
its downward progress has been unceasing, except at mo-
stmitiieetnuat
tBs
isooonfe special ee ta: eachaalb earrxaeci
hli
Twtoelhamdyeereorensfftoss.
eo,ln
enlailadsetlitt. you how long is that
ei
nu
ttk
committeeh tehia
immediate
theled oaobtfje ea cue tod
noi
audit
to go on.? (Hear.)