The Sun.
London, England, 1867-04-16 00:00:00

as future dividends would be more secure. Take
asTan example the London and South-Western
Railway. Their debenture stock was on 31st
December £3,547,320, of which £2,499,769 was
receiving from 41 to 5 per cent. interest. The
net -earning of the line for the half year ending
the 31st December was £174,761 ; for the first
half, £155,333 ; together, £330,094. If that sum
had been paid in debenture warrants the share-
holders would have lost say 10 per cent., or
£33,009 ; but the paying off of £330,094 deben-
tures, receiving from 41 to 5 per cent., would leave
a profit—taking into account stamps, commission
to brokers, &c.—of at least -11 per cent., which
would represent a profit for future dividends of
£2,062 17s. 6d. ; this would represent a capital, at
5 per cent., of £41,257, but the loss would be in
dividends £33,009, which would represent, at 5 per
cent., a capital of £660,180. It is difficult to say
what would be the effect of such a scheme on the
price of stock ; the above calculation may be the
worst feature, as the dividend warrants would
carry 4 per cent. interest and 2 per cent. more
capital if registered' at the end of six months.
Again, the debentures being paid off will make
those outstanding easier to renew at 4 per cent.,
so that it is more than probable that at the end of
a few years the debenture warrants would sell at
par, and might even rise to a premium before the
entire debenture, stock is paid off. The loss to
the shareholders would decrease each year by a
certain per tentage under the 10 per cent. as in
the above calculation, and each year the capital
stock would receive over one shilling per cent.
extra dividend by the saving in interest ; so that
in all probability, stock, instead of falling,
would command a firmer price. In the case
of the Great Northern Railway Company the
figures would run thus :—Debentures carrying
more than 4 per cent. interest, £1,270,995 ;
net profit the first half of 1866, £175,553 ;
second half, £281,271; together £456,824 ; so
that in less than three years the entire deben-
ture interest would be consolidated into a 4 per
cent. stock, the saving would be, at -I per cent.,
£7,944, approaching k per cent. dividend upon the
capital stock. The loss to the shareholders
would, in all probability, be not more than 6 per
cent., or £27,409, during three years, and at the
end of three years an increased dividend of nearly
i per cent. would be ensured. Great alarm has
been excited amongst the shareholders of all the
metropolitan gas companies by a bill which the
Government has introduced to amend the Gas Act
of 1860, and petitions, unprecedented in number,
have been presented to the House of Commons
on the subject. In the bill it is proposed,
amongst several most objectionable provisions,
to enact that the maximum rate of dividend—
viz., 10 per cent.—authorized by two previous
Acts, shall (except under conditions with which
it is impossible to comply) be reduced to 7 per
cent. The injustice of such an enactment to all
shareholders who have invested in gas shares, on
the faith of existing Acts of Parliament, is so
flagrant, and the precedent as affecting other
companies for the future is so dangerous, that it is
impossible, if a shadow of honesty remains in
the House of Commons, that a bill so detrimental
to every interest can be allowed to pass. Among I
several conditions with which it is impossible to I
comply there is one :—‘, That the companies are
not to make up their accounts or charge any price
whatever, even to out-going or doubtful tenants of
large consumption until, on the expiration of
each quarter, a gas examiner (from whom there
is no appeal) has reported what he considers has
been the quality of the gas, and what he considers
is the price properly chargeable for it, so that
neither the companies nor the public will know
from quarter to quarter what the one is to re-
ceive or the other to pay." How is it possible
that any company can accept such a clause ? Is it
not proposing an impossibility in order to plunder
the house? Do members of Parliament expect
that, by starving every enterprise in the coun-
try, they will make the country richer ? 'That,
by reducing every shareholder to beggary, the
shopkeeper& bills will be more readily met. Are
there not at this moment many tradesmen on the
eve of bankruptcy on account of the inability of
their customers to pay their bills? Can they
ignore that the first condition to pay debts is to
have money in purse ? If they go on reducing
every man's income, will not a day come when
the Income Tax will yield next to nothing, or
they will have to reduce the exemption clause from
£lOO a year to £2O. It is time to call upon
common sense—to appeal to better provisions of
economy—unless it is the wisdom of the house
to drive every poor, unfortunate shareholder,
widows and orphans, into the workhouse. In
the City it is felt that the speedy settlement of
the Reform question has become an absolute ne-
cessity to stay apprehensions as to future order in
these kingdoms ; that a heavy responsibility will
fall upon any parties who, for the sake of popu-
larity, may seek to obstruct the passing of the
Ministerial Bill. With political complexities in
all directions and a host of financial and indus-
trial questions requiring solution, it is of vital
importance that the Government should be placed
as speedily as possible in a position to give undi-
vided attention to the general interests of the
country.