The Sun.
London, England, 1866-10-25 00:00:00

Sir M. Peto and his Constituents.

Sir S. M. Peto addressed a meeting of his political sup-
porters at Bristol, on Monday evening, in explanation of his
connection with the affairs of the London, Chatham, and
Dover Railway Company. After somo introductory re-
marks, he said—Until December, 1863, we were simply
contractors, nothing more nor less, and we took in payment
for our works in various instancesbonds and shares, and in
some instances also Lloyd's bonds. A good deal has been
said of our taking them at a discount. Well, we were bound
to do so, because we could not ourselves take at par that
which would not realise par. (Cheers.) In 1863 the com-
pany found themselves in great difficulty, and here I am
very anxious you should quite understand that when I speak
of the company being in great difficulties, it was not on ac-
count of that portion of the line which we were executing
under a distinct contract and engagement, called the Me-
tropolitan Extension ; but with regard to the main line, my
firm never did any work nor ever received a shilling from
the company, therefore if they were in any difficulty it was
not likely that we should know anything of it. (Cheers.)
But a resolution was come to by the Board of Directors,
which was to the following effect—that Sir Morton Peto be
invited to attend all the meetings of this committee to assist
the directors with his advice and counsel. I did attend,
and I asked them to place before me a complete analysis
of their position, and I found that they owed upwards of
£1,250,000 upon what are termed Lloyd's bonds, that is
to say, an engagement of the board and the company
taking precedence of all debentures and every security
whatever to that extent. Now, the advice I gave them was
this : I found that they had £BOO,OOO of what they called
Third Preference Stock which they had never been able
to issue at all, and at that time they had only £700,000 of
ordinary stock, notwithstanding their immense capital in
preference stock, debentures, and other things. I said the
best think you can do is to raise £1,500,000, putting that
before everything, and also to raise £500,000 debentures to
go alongside your present debentures, and with that you
may pay off this debt. I think that every than of business
hero will see that the advice I gave was that which any
ordinary commercial mind would deem right and proper,
and was sound itself. (Hear, bear.) lat once addressed
myself after the Company had obtained these powers and
issued those debentures and this stock to the task of taking
up these Lloyd's bonds, and I was able on Nov. 23, 1864, to
hand over to the Company's accountant the Provisional
Bonds, amounting together to £1,275,950. In the report of
the committee they paraded the fact that this £1,500,000 of
stock was created, and that it was put into certain names,
but this report doesn't tell you in respect to a single shilling
what was done with the money, and anyone reading the re-
port will think that Peto and Co. have taken every shilling
of this money for works. With that money I had taken up
obligations for the Company which ought never to have
been created. (Loud cheers.) It has been stated that
this £1,500,000 of stock was created, and not a shilling of
money was ever paid for it. I am not going to take the re-
sponsibility of any irregularities of the London, Chatham,
and Dover Company. (Cheers.) If there is anything irre-
gular in connection with that, it does not rest with me or
my firm ; but it was purely and entirely between the soli-
citors and the board of directors, and they must ansu er to
the public. (Cheers.) Mr. Geo. Newman, the partner of
Mr. Freshfield, was the person who gave the board advice
from the very initiation of the whole undertaking until the
breaking down of his health. Such was known to Mr.
Surgey and to the board, and yet Messrs. Peto and Co. are
held up to the public as the scapegoats for the whole com-
pany. (Shame.) Now, what was the arrangement with re-
gard to the issue of this stock ? It was this : —My firm en-
tered into the engagement that for the period of six months
they would take this ordinary stock at 20, unless the board
could say they could do better by their not taking it.
What course did the board take ? They called in Mr.
Surgey, and he advised, in the interest of the company,
that it was better than selling the stock that the loan
should be continued. Mr. Surgey was a party, not only
consulted by the board, but assisting them most ener-
getically with regard to loans, and in the conduct of other
business-; therefore it is that I foel it the more that Mr.
Surgey should take it upon himself to censure my firm
for that in which he, at any rate, was the prime mover,
and which he and I believed was to the interest of the
company. (Hear, hear.) The million and a half of stock
was created by the board of directors with the sanction
of the shareholders iu putlic meeting, under the sanction
of the act of Parliament, upon a subscription loan, obtained
in the same way that hundreds of other subscription loans
are obtaine i iu the House of Parliament, and known to
every railway director. All 1 have to say is this, that as

far as my firai is concerned, those remarks in the commit-
tees report in which they call serious attention to those
debentures being raised without the capital being paid up
on the million and a half now stock applies to Mess.Fresh-
field and 14,..wman, in the conduct of the company's affairs,
and not to Peto and Co. (Loud cheers.) The whole of
the money was applied to the taking up of those Lloyd's
bonds. With regard to the sale of this stock, it was said
that my firm sold into the market at £27 10s. Such was
the fact ; but my firm originally undertook to take this
stock a. £2O, in connection with a specific arrangement with
the board, and to give them an opportunity to determine
within six months whether they would take the stock or
whether they would place it themselves ; and it was
elected to continue the loans, and upon the loans fall-
ing due at the beginning of last year I called the very
serious attention of the board to the then state of the
money market, and suggested that they should take it
into their serious consideration whether this stock should
or should not be sold. The board thereupon desired theif
solicitor, Mr. Newman, myself, and the general manager
anndsuuwith those secretaryoofse best qualified, the
e Company,
to go h.to the City and
co to advise whether it was
better to place the stock on the market, or that the loan
should be continued. I should say that the loans were
taken then at 20 on the stock. I find from the Finance
Committee's accounts that Mr Surgey himself attended and
advised the board, after looking at the whole question, and
the fact of the soon approach, as he hoped, of the opening
of the line into the Great Northern, of the development of
the company's traffic, from the completion of the metropo-
litan extensions and from other things, that it was a great
deal better that the company should take the loans for ano-
ther year, and the consequence was that I got those loans
renewed for 12 months at 30 on the £lOO instead of 20.
Those loans became due just before the setting in of the
money crisis. I applied to the company, but they were
unable to pay those loans off, and I had no alternative but
to sell the stock. I sold the stock at £27 10s., and I did
bettor for them, for that was a better sum than they were
originally sold to my firm for, and a better price than they
have ever been able to realise from that time to this.
I refer now to the eastern section. An agreement was pre-
pared between my firm and the company for the execution
of this section by Messrs. Freshfield and Newman. That
agreement my firm and its liquidators are prepared still to
carry out to its fullest possible extent. (Hear, hear.) The
stock which was placed in my own name at the request of
the board, communicated to me by their officers, I, on my
suspension, returned to them without anything being bor-
rowed upon it ; in fact, the whole as it was. (Loud
cheers.) But now a most important thing with regard to
the eastern section, and that which has created so much
discussion, is the creation of debentures. The hon. baronet
here read a correspondence for the purpose of showing that I
the forms of receipt adopted between his firm and the com-
pany were prepared under Mr. Newman's express direc-
tions. He con inned—l will read to you the board's resolu-
tion by which the board created the debentures. "At a
meeting of the finance committee held Aprill, 1864, as to
issuing debentures as to the eastern section, resolved that
the issue be authorised." Now Mr. Newman was summoned
to attend this board, and the whole of this thing was for-
warded to him, and the whole of the proceedings were car-
ried out under his direction. Now, gentlemen, 1 ask you
this, whether, if Mr. Newman thought it right on passing
those receipts as against the immense sum of money owing
by the company to my firm, if he considered it aright thing
in issuing those debentures? It is not a question for the
solicitors of the company. It is a question which cannot
stop with the discussion of to-night, but it must be pro-
ceeded with elsewhere ; and I am prepared to say this to
you, gentlemen, if no other member in the House of Com-
mons, on the assembling of that house in February, will
move for a committee of inquiry, I will be that member.
(Cheers.) I am prepared to yield, with regard to the
London, Chatham, and Dover Company, that there is
much to condemn in that over sanguine view of things I
might have taken, and which led me to pledge my own
name and the name of my firm to such an enormous ex-
tent for them ; but I am not prepared to admit an
imputation on my character, which is dearer to me than
my life. (Cheers.) If this thing was done, it was done
under the advice of the solicitors of the company, those

solicitors being the solicitors of the Bank of England.
With your permission I will 'proceed to the next point,
which I think has occasioned amongst you a great deal of
painful anxiety in regard to myself. (Ilear, hear.) That
is the question of the over-issue of debentures. I begin,
then, by telling you there is no over-issue at all. My

firm borrowed for the London, Chatham, and Dover Rail-
way Company of a financial company the sum of £200,000.
We gave securities for that ourselves; we gave our ow❑
notes of hand. The Act of Parliament when it was
arranged had not passed the House of Lords. The
solicitor of the financial company and the solicitor of the
London, Chatham, and Dover Company (Mr. Newman),
entered into a correspondence. It was agreed and
arranged that on the passing of the act the forms of the
debentures should be deposited with this company. These
forms were so deposited on the passing of the act on its re-