The Sun.
London, England, 1866-01-05 00:00:00

Great English and French Railways.

THE SOUTH EASTERN.
The system of which we are now about to take
stock is not, unfortunately for the proprietors, in
such happy circumstances as the Great Northern,
which we last reviewed, but has had to sustain
during the last few years the strain of a very
severe competition. Mistaken economy, in the
first instance, led the promoters of the South
Eastern to be content to be an offshoot of the
Brighton, while the true interest of the proprietors
was to run nearly as straight as an arrow from the
metropolis to Dover, regardless of all obstacles.
It is fair, however, to observe that when the
South Eastern was first projected it was never
supposed that the relations between England and
France would expand as they have expanded
during the last wonderful quarter of a century, and
doubtless the engineer in chief of the original South
Eastern enterprise believed that he was really
studying the interests of his employers in adopting
a cheap circuitous route. In the long run this has
proved a most serious error, for during the last ten
years a formidable competitor has appeared in the
London, Chatham, and Dover, while, what with
fearfully expensive metropolitan extensions and
new works to secure the direct route which ought
to have been adopted in the first instance, the South
Eastern will have to expend in the end an enormous
amount of capital, upon which it is extremely
doubtful whether a fully remunerative return can
be obtained. But it is always easy on looking back
to detect errors which might have been avoided,
were men gifted with a larger share of prescience
than they actually possess, and we must not be hard
upon the present administration of the South Eastern
for errors committed by predecessors unable to an-
ticipate and provide for the future course of events.
With these sage reflections, let us examine the
course of the traffic, &c., upon the South Eastern
during the last three years—the expression South
Eastern," including the London and Greenwich,
the Reading, Guildford, and Reigate, the Mid-
Kent, and, as regards 1864, the Charing-cross also.
Annexed are the receipts acquired, the working
expenses incurred, and the profits realised upon the
system in 1862, 1863, and 1864, or rather in 1862-3,
1863-4, and 1864-5, the company making up its
accounts to January 31 in each year :

Year. Receipts. Expenses. Profits.
1862 ... £1,156,416 £554,673 ... £601,743
1863 1,162,886 560,349 ... 602,537
1864 ... 1,198,187 ... 605,586 ... 592,601
It may be said that we have been rather hard upon
the South Eastern, and that a concern which realises
a profit of about £600,000 a year cannot be in a very
bad way. But, in the first place, it will be seen that
although the receipts have made a certain progress,
yet the working expenses, by reason of the active
competition which it has been found necessary to
sustain against the London, Chatham, and Dover,
have increased in a greater ratio, and that the net
profits realized in 1864 presented a decline of £9142
as compared with 1862. This would be a trifling
circumstance in itself, had not the capital account
been increased from £15,304,137, raised by shares
and loans, Jan. 31, 1863, to £17,561,039 similarly
raised, January 31, 1865. These figures comprise
for 1862-3 the Mid-Kent, the London and Green-
wich, the Reading, Guildford, and Reigate, and
the South-EaStern. For
.1864-5 they embrace
the South-Eastern, the London and Greenwich,
the Reading, Guildfo'rd, and Reigate, the Charing-
cross, and the Mid-Kent. The amount raised by
the Charing-cross, January 31, 1863, was not in-
cluded in the total given for that date, as this vir-
tual extension of the South-Eastern system was not
amalgamated with the parent undertaking until
September 1, 1864, and did not become a charge
upon it until that date. The capital account thus
appears, according to our mode of treating it, to
have been increased to the extent of £2,256,902,
comparingJanua.ry 31, 1865, with January 31,1863,
while the profits realized in 1864-5 as compared
with 1862-3 declined to the extent of £9,142. Such
was the result of the competition carried on for
24 months with the London, Chatham, and Dover.
The directors persevered with it for another year,
in which period the capital account was increased
to the extent of £642,575, while the net profits
realized decreased to the extent of 120,630, as com-
pared with the corresponding period of 1864. The
result of the constant additions of capital was that
the dividends on South-Eastern ordinary stock, which
was at the rate of £5 2s. Gd. per cent per annum
for the year ending Jan. 31, 1863, was only at the
rate of £2 10s. per cent. per annum for the half-
year ending July 31, 1865 ; and the upshot of the
matter finally was that the directors came to the
conclusion that they must secure traffic arrange-
ments with the London, Chatham, and Dover—in
other words, that the competition long and obsti-
nately maintained with that company must cease.
The London, Chatham, and Dover was only too glad
to come to terms, and the result was an agreement
between the two rival companies, to which we shall
make future allusion.

Meanwhile, it may be of some interest to analyse
the details of the South-Eastern traffic in 1864-s—.
that is, for the 12 months ending Jan. 31, 1865.
The extent of line worked at that date was 291
miles (269 miles double and 22 miles single) as com-
pared with 286 miles Jan. 31, 1864. The number of
passengers conveyed in what for the sake of brevity
may be termed 1864, was 15,008,755 (1,709,865
first class, 3,419,253 second class, and 9,879,637
third class) against 13,455,053 in 1863. There were
besides, last year, 3,309 holders of season or perio-
dical tickets. The number of carriages conveyed
last year was 2,229, of horses 9,202, and of dogs
19,615. The movement of live stock last year em-
braced 26,233 head cf cattle, 209,788 sheep, and
7,358 pigs. The slow trains conveyed, besides,
198,132 tons of coal and coke, and 690,901 tons of
general merchandise. The number of passenger
trains run last year was 121,326, and of goods trains
9,301 ; the passenger trains ran 3,349,218 miles,
and the goods trains 837,100 miles, making an ag-
gregate of 4,186,318 miles. The average fares
charged last year by ordinary trains were—first
class, 1-96 d. per mile ; second class, 1-39 d. per
mile ; and third class, 0-83 d. per mile. With ex-
press trains the fares were 2.34 d. per mile, first
class, and 1.70 d. per mile second class. The receipts
from passengers last year were £807,088 (£254,937
first class, £225,973 second class, £287,654 third
class, and £38,542 season and periodical tickets)
against £769,731 in 1863. The receipts from ex-
cess luggage, parcels, carriages, horses, dogs, &c.,
conveyed by passenger trains, were £59,219 last
year, and from mails, £34,027 ; making the total
earnings in the quick train or coaching department
last year £900,334. As regards the slow train ser-
vice, live stock produced £8,046 ; coal and coke,
£31,298 ; and general merchandise, £258,509 ;
making a total of £297,853. Adding this sum to the
£900,334 acquired by the quick trains we have the
total of £1,198,187 indicated above as the revenue
of the system for the past year. It will be seen
that the company's revenue is very largely depen-
dent upon passenger traffic, the movement of goods
being comparatively insignificant. Turning now
to the details of the working expenses we find that
maintenance of way absorbed last year, £100,072 ;
locomotive power, £145,274 ; repairs and renewals
of carriages and waggons, £48,656 ; traffic charges,
(coaching and merchandise,) £178,362 ; rates and
takes, £45,989 ;
Government duty £27,995 ;
com-
pensation for
personal injury, &c., £6,297 ; corn-
don for damage and loss of goods,
com-
pensation £1,812
legal and Parliamentary expenses, £7,943 _
; and
miscellaneous charges, £43,186; making a total of
£605,586, or rather more than 50 per cent. of the
receipts. At the close of January, 1865, the com-
pany possessed 214 locomotives, two Royal carriages,
339 first-class and saloon carriages, 84 composite
carriages, 306 second-class carriages, 419 third-
class carriages, 160 mail, luggage, and bullion vans,
100 horse-boxes, 102 carriage-trucks, six stores
vans, 2,541 goods and coal trucks, 185 cattle
trucks, 650 timber, coke, ballast, &e., waggons, 65
brakes, and 337 horses. This considerable plant
has this year been further increased to some slight
extent.

We have said that £17,561,039 had been raised
by shares and loans January 31, 1865. Of this
total, £15,767,739 referred to the South Eastern,
with which the Charing-eroaa and the Mid-Kent
were last year amalgamated ; £BOO,OOO to the Read-

ing, Guildford, and Reigate ; and £993,300 to the

London and Greenwich. One favourable element
in South Eastern finance is the large amount of
ordinary capital taken up. Thus at the close of
January the South Eastern had issued £7,993,090
of ordinary capital, upon which a dividend of
5 per cent. for 1864 was paid ; the Reading, Guild-
ford, and Reigate, £BOO,OOO, which received 5k per
Cent. for the year; and the London and Greenwich
£550,000, which received £2 14s. 2d. per cent. for
the year. Of the whole capital raised by the South-
Eastern and its allies in January, 1865, £9,343,090,
or rather more than 53 per cent., was thus ordinary
stock. The preferential capital iu existence in Jan.
was as follows:—South-Eastern, £2,348,592, at 4f
per cent., and £1,517,450 at 5 per cent ; London
and Greenwich, £210,000 at 5 percent. The South-
Eastern had abo issued in January £67,810 of 4 per
cent. debenture stock. The state of the debenture
debt account, Jan. 31, 1865, was as follows :
South-Eastern, £1,313,146 at 4 per cent., £627,875
at 41 per cent., £1,912,581 at 44 percent., £142,600
at 44 per cent., and £563,595 per cent.; and Lon-
don and Greenwich, £233,300 at 4 per cent. The

average rate of interest paid on the debenture debt
has been gradually advancing, having been £4 3s.
3; d. per cent., Jan. 31, 1863; £4 3s. Old. per cent.,
July 31, 1863; £1 3s. sd. per cent., Jan. 31, 1864 ;
£4 4s. 20. per cent., July 31, 1864; £4 7s. 31d,
per cent., Jan. 31, 1865; and £4 Bs. 61d. per cent.,
July 31, 1865. We have shown that the capital
account has been largely extended during the last
two years, but a great deal has of course been done
for the money. Thus, the original Charing-cross
undertaking has been carried out, and the works of
the City Terminus Extension have now well ad-
vanced, so that it is expected that the city station
will be available for traffic by the beginning of 1866.
A portion of the new direct line to Tunbridge, ex-
tending from Lewisham to Bickley and Chiselhurst,
was opened for traffic on July 1, 1865. The works
on the remainder of the line as far as Tunbridge
are proeeeding, and are expected to be completed in
the course of 1866. This line will shorten the main
route 13 miles, and will place the company in a
more favourable position with respect to Ramsgate
and Margate traffic. The works are rather heavy,
comprising, as they do, a tunnel at Chelsfield 594
yards in length, another at Polhill 2,530 yards in
length, and another at Sevenoaks 3,451 yards, or
very nearly two miles, in length. It was the magni-
tude and difficulty of these works which doubtless
caused the abandonment of this route in the first

instance. If it had been chosen it is possible that
the South-Eastern might have preserved intact its
originally prosperous position. We may add that
the Chelsfield tunnel has been completed, while the
Polhill and Sevenoaks tunnels are advancing at the
rate of 30 yards per week.
Although the South-Eastern has been contending
with very keen opposition for the last three or four
years, there is an immense vitality in the passenger
traffic. Thus, while the number of passengers con-
veyed in the year ending January 31, 1865, was
15,008;755, it was only 13,455,053 in the year end-
ing January 31, 1864 ; 12,354,363 in the year end-
ing January 31, 1863 ; 11,598,827 in the year end-
ing January 31, 1862 ; 11,113,794 in the year end-
ing January 31, 1861 ; 10,531,101 in the year end-
ing January. 31, 1860 ; .9,588,331 in the year end-
ing January 31, 1859 ; 9,295,089 in the year end-
ing 'January. 31, 1858 ; 9,241,462 in the year end-
ing January 31, 1857 ; and 8,709,197 in the year
ending January 31, 1856. There has thus been
a steady and unchecked progress year by year in
the number of passengers conveyed. There have
been some fluctuations as regards classes, but the
general total has been ever onwards ; at the same
time, the great increase has been in third-class pas-
sengers, so that the receipts from passengers have
perhaps not displayed quite so much progress as
might have been expected. Annexed is the yearly
revenue from passengers during the last ten years,
ending January 31 in each year :-1856, £685,046;
1857, £703,666 ; 1858, £707,956 ; 1859, £700,681 ;
1860, £737,190 ; 1861, £765,455 ; 1862, £729,217 ;
1863, £763,966 ; 1864, £755,915 ; and 1865,
£807,088. It is interesting also to note the gradual
growth of season-ticket revenue, indicating, as it
does, the steady development of a residential traffic :
—1856; £22,796 ; 1857, £26,362 ; 1858, £26,847 ;
1859, £27,431; 1860, £30,358 ; 1861, £31,013 ;

1862, £32,175; 1863, £33,429 ; 1864, £34,693; and
1865, 237,623. The traffic agreement with the
London, Chatham, and Dover has been concluded
" with the view of avoiding the injurious effects of
undue competition, and of working the traffic of the
two companies more economically. and efficiently."
The agreement, we may add, provides for the es-
tablishment of a common fund, into which shall be
paid—first, the gross receipts of each company from
continental traffic ; secondly, the gross receipts of
each company from local traffic; thirdly, the pro-
portion received or receivable by each company of
through-rates, fares, and charges in respect of traffic
to or from the Continent, or to or from Dover or
Folkestone, brought upon any of the railways of
either company at London from any railway beyond
London, or forwarded by either company by any
other railway from London to places beyond Lon-
don ; and, fourthly, all subsidies or payments re-
ceived by either company, for the carriage of mails
by railway or steamboat, either directly or indi-
rectly, through the medium of any other person in
connection with the companies. The agreement has
a number of clauses defining what is Continental
traffic, what is local traffic, and what is through
traffic, but we have not space to enter upon all these
niceties. It must suffice to say that the common
fund is to be divided between the two companies in
the following proportions :

London, Chatham, and
Year. South-Eastern. Dover.
Per cent. Per cent.
1863 68 32
1861 66 34
1865 65 35
1866 61 6
1867 61 39
1868 59 41
1869 56 41
1870 54 ••• ••• 46
1871 52 48
For 1872 and subsequent years the proportion is
to be 50 per cent. for each company. This agree-
ment may be all very well for the London, Chatham,
and Dover, but it is scarcely so well for the South-
' Eastern. Supposing that by 1872 the London, Chat-
ham, and Dover has reached an average revenue of
£20,000 per week, that result can only be attained
to some extent at the expense of the South-Eastern
system ; but, even if the natural buoyancy of the
traffic of the old network overcomes every obstacle
and continues to expand to an average of £30,000
per week by 1872, how will matters then stand?
Why, each company will be entitled to £25,000 per
week ; and, allowing 50 per cent., for working ex-
penses, the net profits of the South-Eastern will be
at the rate of £650 per annum. Supposing that
the working expenses can be reduced to .45 per
cent., the South-Eastern's net revenue will he in-
creased to £715,000 per annum, as compared with
£600,000 at present. It may seem a nice profit
enough, but there can be little doubt that the
capital rapresented by the South-Eastern system
by 1872 will be £19,000,000 or £20,000,000,
of which £12,000,000 will be preference and loan
capital, for it is not very likely that the directors
will be enabled to issue any fresh ordinary stock.
Taking the average charge of £12,000,000 of pre-
ferential capital of 41 per cent. per annum,
£570,000 of the £715,000 is at once swallowed
up, leaving £145,000 ftir division upon nearly
£8,000,000, of ordinary stock, or not quite 2 per
cent. This would be a grievous result, and it is
right to state that it would be attenuated by such of
the traffic as is not comprehended in the agreement
entered into, by rents, and by miscellaneous items
of revenue. On the other hand, the receipts of the
two companies must experience an enormous expan-
sion before they attain a total of £50,000 per week
between them. That would be £2,600,000 per an-
num, and in 1864 the revenue of both undertakings
combined was £1,576,000. In other words, traffic
must be developed to the extent of £1,024,000 per
annum between 1864 and 1872 to enable the hypo-
thetical case which we set up to be realized. It may
be that the local and other traffic excepted from the
agreement is of more importance than we suppose ;
but this is a point which must be left to the solution
afforded by time. Meanwhile it does seem that it
would have been better for the directors to have