The Sun.
London, England, 1867-06-17 00:00:00

LONDON AND BRIGHTON.

The report by the committee of investigation into
the affairs of the London and Brighton Railway
Company was issued this afternoon. It is a very
careful and ably-written document, and severe be-
yond measure in the censures it passes on the con-
duct of the directors of that line. The disclosures
made are of a most painful character, and far exceed

in gravity those that took place in connection with
the North British Railway. The report commences
with a lucid history of the line for the last seven-

teen years, contrasting the results of Mr. Laing's
management with the policy pursued by Mr. Leo
Schuster and the present board. The aim of the
former, it is stated, was to abstain from extensions,
to keep down the capital account, to maintain

3 friendly relations with neighbouring companies, to
' cultivate the traffic, and reduce the expenses. A
table appended shows that, from 1848 to 1854, the
increase of the total capital was £735,000, and of
' the net income £125,000. In the following twelve
years, however, the capital had been increased
£8,072,000, raised almost entirely by preference
' stocks and debentures, and the net income aug-
mented only £113,000. "In other words," say the
committee, "a permanent charge of nearly £400,000
a year on £7,300,000 of preference and debenture
capital was incurred, to earn au additional net in-
come of £113,000 a year." _The policy of the board
is severely criticised iu other particulars. £435,214
Id. is shown to have been expended out of capital
on works in progress from 1858 to 1866, which
should have been charged to revenue, and the out-
lay on new lines from 1855 to 1866 amounted to
£6,961,651. During the past ten years the Brighton
Company spent about £2,300,000, and the South-
Eastern about £4,000,000, in improving their metro-
politan terminal accommodation. Full details are
given of the Surrey and Sussex and West Sussex June-
tion Railways. The conclusion to which the commit-
tee come is, that the former was a sham company,
got up by persons connected with the Brighton
board, and palmed off on the shareholders of the
Brighton line as a real and an independent com-
pany. A letter written by Messrs. Faithful, Son,
and Coode, announcing to the board that the
Surrey and Sussex Bill had received the Royal
assent is given in full, and the coniuct of the direc-,
tors is commented upon in no measured terms. The
Brighton Company expended, .on account of the
authorised subscription to this line, £277,144, and
the report states that " no other person contributed
a single farthing, not even in the necessary qualifi-
cation of directors." The works of the line have
now been stopped, and the contract with Messrs.
Waring terminated under an agreement to refer the
affair to arbitration. In the case of the Chichester
and Midhurst line the Brighton Company has con-
tributed £44,450. The railway is Ili miles in
length, and the cost, including stations, is to be
41140,000. The works here also are suspended,
£16,000 having been agreed to be paid to the con-
tractors as compensation for relinquishing their
contract. Regarding the West Sussex Junction
Railway, it is shown that it was promoted by Mr.
Faithful, the solicitor, and other individuals con-
nected with the Brighton Company. Various sums
of money aro stated to have been paid to these
gentlemen for the services they rendered, and
although in the agreement for the amalgamation
of the West Sussex with the Brighton it is called

PI
4d.
STAMPED sd.

an independent line, the former was only repre-
sented IT the directors of the latter. The com-
mittee review the transactions of the board in
very severe language, and sate that the total
amount of capital and borrowing powers of the
three companies, for u hich the directors had
secretly undertaken to become liable, amount to
£1,359,600, while the amount they led the share-
holders to believe would be the limit of their con-
tribution was £595,000, and the amount actually
expended on these three lines up to the present
time being £332,045. The committee consider
that the Brighton Company are neither
legally nor morally bound to take over these lines—
that there are solid legal grounds for holding those
directors who obtained the money from the Brighton
funds responsible for its repayment. The transac-
tions with Mr. J. T. Mackenzie are then referred
to at some length. Mr. Mackenzie, after declining
to make a loan, agreed to purchase stuck to the ex-
tent of £300,000. A stipulation was made in the
contract that no further stock should be sold for
six months, but long before this time had expired
Mr. Mackenzie, it is stated, ascertained that the di-
rectors were endeavouring to raise money by
"pawning" stock greatly below the price he had
paid. The commission paid to Mr. Scrimgeour, the
broker, is shown to have been entered in the books
for larger amounts than he actually received. The
committee then say that the investigation thus far
has satisfied them that the greater part, if not the
whole, of the amount of dividend in 1866 was im-
properly distributed ; that there was, in fact, no sum
available for division among the ordinary share-
holders ; and that instead of a surplus there was a
deficiency. The estimated liabilities of the com-
pany at present are reckoned at £1,968,000; of
which £1,000,000, it is thought, should be imme-
diately provided. The assets are considered to
amount to £2,543,975,and assuming that £2,000,000
has been raised, viz., 1400,000 by debentures and
land and £1,600,000 by stock, the capital would
show total preferential debt £12,579,468, with an
annual charge of £600,530, and ordinary capital
£5,374,595. The amalgamation with the South-
' Eastern is recommended, and also the reconstitution
of the board, the new names proposed including
Sir Charles Jackson and Mr, Laing. With an
economical expenditure and a closing of the capital
account the committee estimate that, after 1868, a
balance would remain-available for dividend on or-
dinary stock to the extent of 2f per cent. The
above is a condensed summary of this report,
which, we may add, is signed by Lord Westbury
as chairman. The charges made are so serious
that it is difficult to believe some explanation may
not be forthcoming sufficient to disprove the graver
itortion of them, and we therefore refrain from
quoting those passages that convey the strongest
censure, until it is seen what the individuals incul-
pated have to say in their own vindication.