The sun. [volume] (New York [N.Y.]) 1833-1916, 1882-08-06
An English Railway Stock Operation

Tho London financial world has recently
been excited by a railway stock operation,
not unlike, In its main features, some OF
those on this side of the water which our
transatlantic brethren are never weary OF de-
nouncing as dishonest and discreditable.
The London, Brighton and South Coast
Railway Company is an institution which
has always been favorite with British in
vestors, and its shares have commanded
high prices, considering the income they
yield. For the half year ending June &c. 1881,
the dividend on the ordinary or, as we should
call 1t, the common stock, was at the rate
Of three and quarter per cent. per annum.
The official weekly returns OF gross earnings
published during the first half Of the present
year showed continued great gains, and did,
in fact ultimately amount to G97l 120 against
G931 $40 for the first half Of 1881; and, al
though no publication was made of expenses,
it was notorious that the cost OF fuel, repairs,
and other items were less, or certainly no
more, than In 1881. Consequently the public
looked for at least as great dividend out Of
this half years earnings as out Of that Of
1881, and the ordinary shares sold as late as
the 10th Of June at from 143 to 145.
Slngularly enough, just about this time fu-
rious attack was made upon the stocks Of the
company, and the common went gradually
down to about 1874. At the same time PAM
phlet was widely circulated among the share
holders and elsewhere asserting that the
company's show of net earnings for previous
years had been rendered favorable by fraud
ulently charging to construction account
large sums which should have been charged
to running expenses. At subsequent spe-
cal meeting Of the company, held for an
other purpose, the Chairman, being incl
dentally called upon to explain, said that the
directors had q complete answer to the PAM
phlet and gave the impression that its ale
cations were not true.
The astonishmcnt of the shareholders may
therefore be imagined when the official re-
port of the half years profits came to be
made in July, and they found that notwith-
standing the gross earnings had increased
100000 the operating expenses had increased
10000 and that the dividend on the ordinary
shares, instead OF being at the rate of three
and a quarter per cent. as in July, 1881,
would be only at the rate Of two and half
per cent. What was the more surprising
was that the increase in operating expenses
Nuo Ill tuOot Ntly WINCH thC hoctiiS
pamphlet had pointed out as having been
heretofore fraudulently diminished, namely,
the cost Of rolling stock and maintenance Of
way. Naturally the price OF the ordinary
stock suffered further fall, and was quoted
on July % at 1913, or from 10 to II points
lower than it had been month previous
The English press, having the fear Of libel
suits wildly before the minds Of its man
ayers, is very gentle in its comments upon
this matter, but we do not hesitate to say
that the directors Of the company or some Of
their friends must have used their official
knowledge OF the company's affairs very
much to their own pecuniary profit The
Chairman OF the company, who at the spe-
cal meeting failed to warn his constituents
of the impending reduction Of dividend, al
though he must have been well aware of it,
and knew, too, that it was expected by the
| operators for a fall, seems to be the most de-
serving Of condemnation. The whole trans
action shows that some of the railway man.
ayers in England are, like some of their
brethren in this country, only too ready tC
make money for themselves at the expense
| OF the stockholders.