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 some 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 man of business
here will see that the advice I gave was that which any
ordinary commercial mind would deem right and proper,
and was sound itself. (Hear, hear.) 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 N0v.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. hare 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. 1 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 ansv 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. Pete 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 sixmonths
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 feel 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. (dear, hear.) Tho million and a half of stock
was created by the board of directors with the sanction
of the shareholders in public 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 obtained in the House of Parliament, and known to
every railway director. All 1 have to say is this, that as
far as my firm 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 new stock applies to Mess.Fresh-
field and Newman, iu the conduct of the company's affairs,
and not to Pete 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 at £2.9, 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 their
solicitor, Mr. Newman, myself, and the general manager
and secretary of the Company, to go LAD the City and
consult with those best qualified, 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
better 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 foe 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
hero read a correspondence for the purpose of showing that
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 April 1, 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 ho 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, ou 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 admi t au
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 groat deal of
painful anxiety in regard to myself. (Hear, 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 own
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. Those
forms wore so deposited on the passing of the act on its re-

ceiving the royal assent. Of this £200,0001 never received
a single shilling. It all passed from the solicitors of the
financial company to the solicitors of the London, Chatham,
and Dover Company, and was applied by them for the pur-
chase of land for the Metropolitan city lines. At the time
I borrowed the .000,000, there is a board minute of the
company to show that I called their attention to my having
borrowed this money and having given securities for it,
and also to my having previously borrowed £500,000, and
having given security for that and on the surplus land of
the company. The whole of the money was applied to the
purchase of land. On these city lines, between the Black-
friars-bridge and the Metropolitan extensions, the purchase
of lands came to moro than £1,000,000 sterling; while the

works of my firm, irrespective of the Ludgate station, came
to only £130,000. I stated to the directors that £16,000
was all the profit I could expect, and that it was quite in-
adequate to the responsibility I had undertaken ; and the
board passed a resolution that I bad undertaken this re-
sponsibility for them, and that they thought I was entitled
to a commission for it. I want you.to bear in mind that I
had always treated this loan as my loan ; and the board
did it also, and agreed to pay me interest for it. Now,
what was done ? These documents—l cannot call them

debentures--that were lodged with the financial com-
pany with my securities were not put on the company's
register, were not filled up with any names, and were not
entered into the company's accounts, and did not appear
in the accounts as published to the proprietors. :There is
no doubt that the solicitors of the Company and every-
body else knew all about these documents, which were
lodged with the financial company, and were informed by
the solicitor to the company that the other debentures were
the legal debentures; and the information which Mr. May-
nard gave to the Investigation Committee is now unchal-
lenged. The committee paraded in their report a certain
amount of money received by my firm, £128,000 between
certain dates, but they omitted to state that between those
dates I had paid for the company £200,000 in hard sove-
reigns. Moreover, I met for the company during these
dates £150,000 of acceptances which I had given for them,
and which they ought to have met themselves, and could
not meet. And the financial company had a quarter of a
million surplus of my property in their hands, and these
loans were not due, and it wasperfectly optional whetherl
paid them. There was no occasion to mention this matter
at all, and, as Mr. Newman said, those documents were
simply placed for my sake to show the indebtedness of the
railway company to my firm, and that I was at liberty to
pay the financial company when I pleased, and it was not
for the London, Chatham, and Dover Company, or any-
one else, to charge me with the over issue, when there
could be none, when the documents placed in the hands of
the public were the only legal documents, and nobody
could have considered the others were legal. The com-
mittee stated in their report that a sum of money was due
from my firm to them, instead of their being indebted to
me, but they do not give any account to show how that is.
It is simply an entry, and shows nothing. I sent them and
_ _ _ _

the board an approximate statement, and that gives them
credit for £128,000, while estimating the securities at a
certain value they owed my firm £384,000. I told them,
moreover, I did not desire any sharp practice ; I did not
desire any law. If there was any question on the amount,
or respecting any transaction of my firm, I was perfectly
prepared to leave that or any other question to the appre-
ciation of third parties, they being men of high and hon-
ourable standing. (Cheers.) The hon. baronet declined
asking for any vote of confidence, as he said the proceed-
ings could not be allowed to pass over without an inquiry
elsewhere, but an unanimous vote of thanks was accorded
to him for his explanation.