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

THE: sUN, LONDON, WEDNESDAY ENENING-. JANUARY 23. 1856.

RAILWAY INTELLIGENCE.

RAILWAY REFORM.

A meeting oishareholders in railway companies was held
yesterday at the London Tavern for the purpose of taking
into consideration the seriously depreciated value of their
properly, and especially to consider a plan which it'is be-
lieved will arrest further depreciation and speedily place
railway property in a sound and healthy condition.
Mr. W. Malins was voted to the chair.
Mr. Brooke, the secretary pro tem., read the advertise-
ment convening the meeting.
The CHAIRMAN said—ln calling your attention to this
very important subject, it is not necessary that I should
remiad 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 in railway undertakings
a capital almost twenty times as large as that of the Bank
of England ; yet notwithstanding that large amount of ca-
pital, so little does the investment enjoy the public.confi-
deuce 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,
90,00 men ; and I might add that they are some of the
best 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 abject 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 tho half-
yearly meetings, make our complaints, see the miserable
state to which the property is being reduced, bnt who,
after the meeting has separated, have no more power—
the directors and officials, 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 bo a very good plan, and very necessary
for shareholders to interfere, the prbper 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 you 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 that they
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, we have thought that
it will be advisable to form apermarient 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 bo governed by a council oi
committee, and that all shareholders be eligible, whether
they be directors or not. Iu dealing with the question 01
railways, we must not forget that the canals are elate]
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 iu saying
that, provided railway directors meet the canal proprietors
in a fair spirit, there will be no great difficulty iu coming
to some understanding. I scarcely need tell you, gentle-
men, that in my opinion—and it is the opinion of a 1 prac-
tical men —that railways maintain the contest between
themselves and the canals under much greater disadvan-
twee upon their side; the expense of construction, and
indeed all the concurrent expenses, are very much less, and
the canals carry at far less rates than the railway; and, if
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 the 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 Mr. It. Stephenson addressed to the
Society of Engineers very recently, many of you will recol-
lect that ho stated that the saving of a single farthing on
the train mile would effect a total saving of 80,0001. 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 shoal('
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 psr-
feet success for the proprietors, and 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 and 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 yon 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 these undertakings are carried on ; and I think
that that consideration should subdue all hostility of feel-
ing between one railway and the other, and that the same
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 de us no good unless we get 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 on your own
of s, if, on making up your accounts at the end of the
year, you find that you have received loss than you
have paid? Why, you would find the same result that
these railways do—the+, instead of making the profit that
you are fully entitled to, you would have met with heavy
losses. Therefore, one of the objects of the association will
he to enforce the revision of the tariffs, and that negotia-
tions may be opened with the governing railway boards to
hying about such a general arrangement of prices anti
charges as shall afford to each a fair compensation for the
c ',pal 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 ono groat error, as it
appears to me, has bawl the system of audit. I know that
there aro 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, I
believe the practice is, iu private life, 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 hear. Therefore, I apprehend
that such audits are comparatively useless. In some cases
we find railways conducted with great prudence and
care, and I could name one 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 consideratiou, 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 as-
eounts is necessary, and the only mode of doing it is by
the appointment of an 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 wreoked upon this rock. The general impression
prevails that the capital account is made subservient to
revenue purposes—that uo 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 made up there would be no dividends
for the shareholders ; and I believe that that is one of the
main 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 directuss, soy 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 t) which
shareholders should direct their attention. Now, sup-
posing that such committee of audit and control 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 that some
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, for equal purposes ;
but, so long as you give to your managers the power of
snaking 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; and'', if you refer to the records, you will find that
its downward progress has been unceasing, except at rim-
meets of special excitement. I ask you how long is that
to go cm.? (Hear.) Therefore, I think that the object of
the associated shareholders should be the immediate con- 1
stitution on each railway of an efficient committee of audit