RAILWAY COMPANIES AND THEIR PROSPECTS. [From the "London Mercantile Journal"]

New Zealander, Volume 6, Issue 435, 15 June 1850, Page 3

RAILWAY COMPANIES AND THEIR PROSPECTS. [From the " London Mercantile Journal"]

Eveiy successive disclosure in the railway world,— and they follow thick and fast enough in all conscience— indicates that the system of management which has prevailed during the last twenty years is on the eveof dissolution. We need not revert to the reform which has taken place already in the management of the Eastern C'lunties line, or to the revolutions successfully effected in the directorship of many Midland and Northern lines. If these were merely solitary instances of misgovernment and misappropriations of financial blundering, and fraudulent tnalven>aiion, we might be t Id that they might all be aciounted for by the miitaken c >nfidence placed by the shareholders in the raoie than questionable honesty of one man. But though Mr. George Hudson stands out in prominent re ief and in gigantic proportions as the great example of railway delusion and trickeiy, he is neverthe'ess, uothing more than n splendid type of all that busy speculative and scheming class who have been the railway princes of this world since railways were first commenced. Undoubtedly he was the first to exemplify how easily the public mi^ht be duped into a faith in the riches of railway traffic by paying enormous dividends out of capital which the net revenue could not have justified? He taught other diiectorial bodies how successfully fchaicholders might bs led by the nose into ultimate ruin by artificially keeping up the value of their shares \n the market. And his example was also very instructive as to the means which niinht lie employed to throw false splendour over railway monopoly, by purchasing up all minor undertaking at extravagant prices, and mshiuginto extension in every direction, without reference to the cost which mere engrossing ambition wou'd entail upon them. But he had rivals as will as disciples in this destructive course. Not a single Boaid of Directois with whofce history we ore yet acquainted, has been guiltlrsj of thi« absurdity and sin. Take our mOUSter models of railway management iv the metropolis — the London and North Western and the GreatWcStei n. 'I he London and North Western directors have been continually iucumbering themselves with fresh capit<il,to carry out extension which add nothing to the amount of the geneial traffic, while they largely increase the amount of their general expenditure. To remedy this bluudei , each successive portion of new capital has been raised on the ruinous condition of the subscribers consenting to dispense with dividends for a limited time. But it must have been evident to evmy man of common sense, that a great sacrifice roust ha^j been made for such forbeaiance, and that when the day of leckoning came at List, dividends must be paid for this subsidiary capital, at an extraordinary rate of interest. It ig therefore, no wonder that they now find themselvea in a state of painful embarrassment. Alter having been compelled to reduce their dividends from 10 to 7 per cent, they mubt now reduce them from 7 to f>, or else endeavour to carry further the delusion which has brought them into their present dilemma. And if they plunge themselves farther into this slough of despond, how will they be able to extricate themselves twelve months hence, when more passive capital will have come upon them for dividends, while a considerable portion of their capital traffic will ha\e been taken away from them by the completion of the Great Northern line fiom London to York ? And the Great Western is in a still worse position. The chairman, Mr. Chaplain, lias made an appeal to the sympathy of the shareholders, detailing in piteous terms how he relinquished one of the largest coaching businesses in the world to embark nearly £200,000 in Great Western shares, and how he owes scaicely ;£f>ft,ooo on his calls, lie begs them to remember that he only erred in common with themselves in sanctioning speculation, which only after experience proved to be erroneous. But Jet us ask him whether the shareholders would ever have sanctioned such speculations had not Mr. Chaplain and his brother directors boasted of their expectations, by paying them large dividends out of their own money, and not out of the earnings ot the line. The truth is, that every board of directois have been tarred wiih the same brush, and they now deserve to be feathered out of the same bag.