RAILWAY MANAGEMENT. - ' — : ib L..:uih A THE PROOF! A THIRD LETTER TO V* * K GEORGE CARR GLYN, ESQ. M.P. CHAIRMAN OF THE LONDON AND NORTH WESTERN RAILWAY COMPANY- ■■ rr. : ■ , ■ . S AV ; -' ►. <- ... BY JOHN WHITEHEAD, OF THE STOCK EXCHANGE, LONDON; AUTHOR OF “ RAILWAY AND GOVERNMENT GUARANTEE,” AND “ RAILWAY MANAGEMENT.’* Cassius —“ A friendly eye could never see such faults. Brutus —A flatterer’s would not, though they do appear As huge as high Olympus.” LONDON: SMITH, ELDER, AND CO., 65, CORNHILL. 1849. Price One Shilling. % w m, i o CJU^JfX x o 5 3 ^ 5 : zz W b'^ r \Tua_'L TO GEORGE CARR GLYN, ESQ. M.P., CHAIRMAN OF THE * LONDON AND NORTH WESTERN RAILWAY COMPANY. Two months having elapsed since Capt. Huish, as the General Manager of the London and North Wes¬ tern Railway, ventured into print, with the view of demonstrating that I was in error, when I alleged, in my published Letter to you, of the 15th November, 1848, that the Goods traffic of the London and North Western Rail¬ way was conducted at a loss ; and a like period having also passed since, in my rejoinder, I denied his conclusions, and challenged him to produce details to justify his unsup¬ ported declarations; and no such proof having been addu¬ ced, I think I should be fairly entitled to say that Capt. Huish was self convicted. Having, however, been made the object of much malevolent remark,—some persons im¬ pugning my motives,—others attacking me for not proving that in a direct manner, which no man, without having the London and North Western books to go to for positive proofs, could do,—I am not inclined to allow the question to drop by default of my antagonist. As I have stated, it has been said by some, that I had not proved my allegation. If there be any force in this objection,—and there certainly is more than I could have p - JB % /V x ' t* KJ 7 wished,—how much more severely must the objection tell against Capt. Huish, who professed in his published Letter to be able “ to attach the cost of every item of Railway expense to each particular description of traffic,” but who produced no such necessary evidence, and when challenged to publish that which he wishes you to suppose he has at his fingers’ ends, fails, though required for his own justification to do so. I think, Sir, I shall be for¬ given for assuming that my gallant adversary is really unable to adduce the details called for, or has discovered that their production would ruin his case, and cause the sudden death of his Goods system. It is certain that if Capt. Huish could have annihilated me by “ verified details,” he would have done so ; he would have had as little mercy on me as have the “ Morning Herald,” and “ Morning Chronicle.” The former, with all its acrimony, has however done me the fairness of noticing my reply to Capt. Huish; the latter, though possessed of that reply the day before it honored me with a condemnatory Leader, having failed then, or since, to say one word on its merits or demerits. I think, Sir, that Capt. Huish will be found to be well informed on “generalities,” but that of “ particularities ” he is utterly ignorant. He can no more satisfy you of what the weight of Goods consisted which was carried of 'particular classes , for any three months of the past year, than I can. He can, I dare say, tell you the total weight, but whether of remunerative or unremunerative traffic, or how made up, he is more uninformed than the clerks in his own office. He can probably give you the number of miles which have been traversed by Locomotives on Goods account, but whether the waggons they moved carried an average load of one ton or four tons he has no means of acquainting himself, or of informing you. The real ques¬ tion, namely, the paying quality of your Goods trade is, therefore, as obscure as it was before Capt. Huish ven- 3 tured into 22 pages of letter-press, to satisfy the world that it was profitable, which, if a fact, a few verified figures would have substantiated. Capt. Huish, I repeat, need not have exhausted himself over 22 pages of letter-press to prove that I was wrong; it was simply necessary for him to say —“ We carried so many tons of the 1st Class Goods, received so much on their account, and expended so much ”; and so on through each class ; and if he had been able to shew profit, after allowing for every railway contingency, then I should have been defeated, and would gladly have acknowledged myself to be so. All which Capt. Huish really did, was to take advantage of an omis¬ sion of mine, to except in words from the Merchandise account the amount received for “ Smalls.” His whole case was built upon that omission. He defended his Ton¬ nage rates by the receipts of the “ Smalls.” This style of objection was very fair in the Morning Herald , who made much use of it, but it was utterly unworthy of Capt. Huish, who was on his trial, and should have taken higher ground than a mere quibble to build his defence on. Two months having passed by since my challenge was given, I am fairly entitled, I repeat, to hold that Capt. Huish cannot, or will not, produce those verified details which were essential to his case. This kind of negative proof on my side will not, however satisfy me ; nay more, I feel it to be incumbent on me to sift the question fur¬ ther, and with this view, I shall proceed to lay before you such confirmatory evidence, in support of my original allegations, as Capt. Huish’s meagre Letter, the London and North Western, the late London and Birmingham, and the Grand Junction published Accounts furnish; and I am satisfied that, spite of all difficulties, I shall make out such a case, not only against the system, but the whole management of the London and North Western Railway, as shall at the same time surprise and please the Proprie¬ tors—surprise them, because, in their trusting innocence, b 2 4 they have hitherto imagined the system to he perfection, and the management economical; and please them, since in the reformation of the one, and the correction of the other, Dividends are to be found, which are now absorbed by wasteful mismanagement, and squandered to counte¬ nance a system founded in quackery, and supported by little else than delusion. At page 6 of his published Letter to you, Capt. Huish ventures on the following unqualified assertion in reference to a previous statement made by myself to the contrary, that the London and North Western “ system must now work very profitably indeed since the rates w T ere the same,” as those which existed under the London and Birmingham rule. In my reply to Capt. Huish’s Letter, also published, I ventured to contradict this very rash declaration, and referred Capt. Huish, for proof against himself, to the Company’s Accountant; or, if all the olden documents had been destroyed when the new system w^as introduced, to any warehouseman in Cheapside, who would have satisfied him on the subject. In that reply I did not consider it necessary to go into proofs, thinking it just possible that Capt. Huish seeing that he had committed a gross error would have acknowledged he had been too hasty in what he had written, and so the necessity of formal proof would have been abandoned. This magnanimous part, however, not having been taken by that gentleman, I proceed to give undeniable evidence that the Classifications toto coelo have been altered, and in very few cases it will be seen added to, —reduction has been the rule, addition to the price the exception. How Capt. Huish can justify himself for this rash and wrong asseveration I cannot comprehend; indeed I cannot imagine how he could have forgotten his own report to the Directors of the London and North Western Company which bears the date of February 11th, 1848, wherein he acknowledges that the partial working of his Goods system had been followed at Liverpool not by an 5 increase of paying traffic, but of an addition of “ no less than 30,000 tons of grain, flour and provisions, which are in the lowest class,” and were all in a higher class before, and are now carried at rates within a fraction of the coal rates, which Capt. Huish is himself ashamed of. His memory must be of about the worst, to have so soon lost all trace of these his own verba scripta, and have plunged him into a written declaration of so contrary a character. I can find no excuse for this rashness. Eagerness to sup¬ port that which absorbs his thoughts by day, and becomes his dream by night, (his Goods system) would be some palliation under other circumstances, and from almost any other man, but for its advocate, its autocrat, (Capt. Huish) to have made this wrong averment, the misstatement is in¬ defensible. The following details shew the Goods rates as they were under the London and Birmingham regime when £10. per cent, dividends ruled, and those of the London and North Western Company under Capt. Huish’s guidance, when the proprietors are woefully asking, “ Oh! where, and oh! where is my £10. per cent, gone ? ” and echo answers des- pondingly, (C Oh where! oh where! ” I think, Sir, before I have done, I shall be enabled to give the true reply to this lament, and point out the whereabouts. It will be remarked, that the rates are set out as between London and Birmingham only, and the reason for this is because, owing to the Grand Junction rates coming into operation from that point, the comparisons cannot be made beyond. If the contrasts could have been carried out to Manchester, the discordances which are shewn would have been more marked, and Capt. Huish’s difficulties to defend his heedless assertion and his system too, more and more impossible of being got over. Now for the statement that “ the rates are the same.” The following shows the Railway Rates for “ Toll and Lo¬ comotive Power,” which were charged by the London and 6 Birmingham Company before they were u Carriers/’ and those now charged by the London and North Western Company as “ Carriers on their own account,” deducting from the latter, for the collection and delivery, sheets, ropes, loading and unloading, rent of sheds, gas, (formerly paid for separately by the Carriers) damage, bad debts, &c. a uniform 10s. per ton. This will be really insufficient to cover the cost, but it will show to a certain extent what is , doing. The First Class under the London and Birmingham pe¬ riod was a charge for locomotive power only , and did not include waggons. The 2nd, 3rd, 4th and 5th Classes of the London and Birmingham then , are therefore compared with the 1st, 2nd, 3rd and 4th Classes of the London and North Western now. LONDON TO BIRMINGHAM. CLASSES. Rates before tbe Company were Carriers. Rates now, tbe Company being Carriers.* Increased Rate now. S. d. S. d. s. d. 1st 11 8 11 8 Nil. 2nd 14 0 17 6 3 6 3rd 18 8 22 6 3 10 4th 23 4 27 6 4 2 According to this, therefore, there is no gain on the First Class, but there is on the remaining three. The value of this apparent saving will however be a good deal reduced if we drop the distinction of classes, and take the rates paid under the old and under the new system on a few of the staple articles of which the bulk of the Mer¬ chandise traffic consists: * Ex the cost of collection and delivery. 7 # LONDON TO BIRMINGHAM. ARTICLES CARRIED. Rate to the London and Birmingham Company. Rate to the London and Northwes¬ tern Com¬ pany, less 10s. per ton Carrier Costs Increase under the New Plan per ton. Loss under the New Plan per ton. S. d. S. d. S. d. S. d. Grain, Corn and Malt... 14 0 11 8* 2 4 Porter and Ale . 14 0 11 8 2 4 Window Glass . 18 8 17 6 1 2 Cotton Wool . 18 8 11 8 7 0 Spirits & Wine in Casks 14 0 17 6 3 6 • • • Sugar and Coffee . 14 0 15 0 1 0 • • • Common Paper . 14 0 17 6 3 6 • • • Spelter . 14 0 11 6 2 4 Iron . 11 8 8 4 3 4 Grates . 18 8 17 6 1 2 Iron Wire . 14 6 12 6 1 6 Wool . 18 8 17 6 1 2 Furniture & light Goods 23 4 35 0 11 8 • • • There is a seeming gain of Is. per ton on sugars and coffee, but practically there is a loss, the fact being that Capt. Huish is so eager to secure “ quantity ” that he not only does not adhere to his own scale of charges, but is ever ready on pressure from the fortunate or the influential, to reduce his rates in their favour, and it is known that he does so to a large extent when it pleases him to give way,—though he refers the less fortunate tradesman to the schedule when it serves his purpose to do so, he however makes “ special ” rates on “ special ” occasions. Spirits and Furniture are about the only exceptions to the rule of reduced rates ; the risk however on these goods is so unusually heavy that there can be little to boast of there. * It is to be understood that Grain, Flour, and Malt, are conveyed by barges from the river to the railway, and delivered in Birmingham, by the Company, for 165. 8 d. ter ton. It would be perhaps too much to take 105. from this rate, but if we take 85. (supposing the barging, &c. but 25. per ton less than the carting), we shall have only 85. 8 d. left to the new plan againt 145. under the old, or a loss of 5s. 4 d. per ton,— practically the bulk of the grain goes this way. 8 Can any reasonable man doubt that the London and North Western Company, with the evidence only which these prices afford, has, under very hazardous guidance, embarked in a course in which it requires the coolest head that man was ever blessed with to direct them. Capt. Huish avers that his “ rates are the same,” and that he has the “ Carriers’ profits too,” the actual undeniable fact being that his rates are so reduced that, coupled with the Carrier’s costs, risks, and his own reckless outlay, he is in possession of the shadow only, having, like the foolish dog in the fable, dropped the substance. As respects the mere difference of the rates, that which I have shewn may be “news” even to you—Capt. Huish’s declaration that they “ are the same ” has no doubt satisfied you hitherto. I trust however not only that you will now enquire for yourself, but that your proprietors will also become a thinking and inquisitive body. The more that London and Northwestern present management and policy are enquired into the better for all interested; truth only is wanted to give both the “ coup de grace” This “carrying on your own account” at the time you adopted it, was the fashionable remedy for improving rail¬ way resources. I don’t know what was not promised by its promoters, railway revolutions were effected by its advocates ; the great experiment which was to work such mighty wonders—which was to make that prosperous which had never prospered before, and that which had always prospered, prosper the more—has been tried on the large and on the small scale. Let us examine into its operation in your great London and North Western Rail¬ way Company, seeing that if the experiment had a fairer chance of success than another it had it there, and should, looking farther to the mighty character of the resources at command, have succeeded to perfection if success were possible. I propose, Sir, to examine this most interesting question in every possible phase, and I think the result of 9 that examination will startle you, and convince you too that you have been completely misled by those about you. In the Minutes of the Evidence taken before the Select Committee on “ Railway Acts Enactments,” in 1846, and published by order of the House of Commons, Mr. Saunders is asked, (2393) “ Can you state the average expense of each train per mile per ton ?”■—The answer given is “ The best return of the expense per train per mile is in the Report upon the Guages: it is between 4s. and 5s. per train per mile including the whole expense, the traffic, the locomotive power, the clerks, the policemen, the porters, and the wear and tear of the carriages.” (2394) “ Every¬ thing but the dividends? ”—“ Everything but the dividends and interest of money.” Mr. Robert Stephenson was asked the same questions on a subsequent day, and replied, “ The total cost of working the railway trains will vary from 3s. to 5s. per mile ; that is including all the fixed and variable expences; everything included, 5s. is the outside,” (2831). Again at 2835 he says, “ In the London and Birmingham when it first commenced, the first two or three years it ranged about 6s. or 6s. 6d., but we have reduced the expenses a good deal since that, and it may be taken now as ranging, I think, from 3s. to 5s. per mile.” The cost of working may without fear of objection be taken as 4s. 6d. per train per mile, and at this rate I pro¬ pose to examine your Goods trade. By no other estimate can a just appreciation of the paying character of a traffic be arrived at; the rate fixed by the two high authorities quoted being intended to cover every ordinary railway charge and contingency, such as depreciation of stock and renewal of the way from that daily wear and tear which all the perishable parts of a railway are, despite the greatest care, doomed to undergo, and though a railway company may be so unwise as to leave the morrow to take care ol 10 itself, the rule being to look to the existing moment only, the day of reckoning must sooner or later come, and when it does come, if the proprietor have not himself set aside a part of his railway income to meet the call of reparation of stock and renewal of way which will then fall upon him, he will be compelled to pledge his income to raise the means to do that, which a wisely conducted company would have spared him the care even of thinking about, by setting apart annually that small per centage of his means, which put aside year by year would he ready for those claims of which your own railway will he one of the earliest examples, unhappily, most unhappily so, without one penny (save £16,000. last year) to he found in your railway purse to meet the crying, the coming necessity. Of this however more anon, when I come to speak of and give some extracts from your resident Engineer’s warning report on the subject. The 4 s. 6d. per train per mile has, as I have stated, been fixed as that which will cover all the usual railway charges; it was not however intended to embrace within its range such extra sums as a railway company being its own car¬ rier incurs over those which a railway company not being its own carrier would need to expend; for example, the London and Birmingham Company, as will be seen by subsequent calculations, would, according to its rate of expenditure in conducting its “ non-carrying ” trade, have expended £ 35,639. to earn the £339,800. thus received by the London and North Western Company on Merchandise account in the half-year ending 30th June 1848, against the £ 75,093. actually expended (exclusive of collection and delivery), the difference therefore I consider as an excess charge peculiar to a company acting as a “ carrier,” and to be deducted from the profit which may appear to have been made after charging each train mile at 4s. 6d. This deduction and that for the interest on borrowed capital being made, the result will be the profit or loss on the general Merchandise account. 11 This general Merchandise account receives credit for goods, cattle and coal traffic, and also for a very profitable portion of merchandise trade, termed “ smalls,” * not carried by the ton weight, but charged as barrels of oysters and parcels of limited weight are, at per parcel. Again the profit made on “ collection and delivery ” slips into this account also, and the innocent shareholder is led to suppose that for “ tonnages ” only, that is, for goods paid for at 20s. or 405. per 20 cwts. your Merchandise total is made up ; and to this view of the question Capt. Huish has him¬ self most improperly (because wrongly) lent himself, in the note at the foot of page 8 of his published letter, which says, “ the merchandise receipts are for tonnage only.” This obvious mistake I pointed out in my reply ; a mis¬ direction such as this Capt. Huish should never have made. Railway merchandise accounts seldom give information of any value to the shareholder, those of the London and North Western are no exception to this rule, it is there¬ fore impossible for me (Capt. Huish refusing) to say on which class of your goods you are making a profit, on which the loss that I shall prove really arises. I must leave him to settle that question with you and your proprietors. To proceed however with the examination—at page 10 of Capt. Huisli’s letter it appears that the Merchandise Receipts for the year ending the 30th June 1848, were - £722,376 That the total Mileage run with Merchandise Trains was - 2,626,049 Miles The average Receipt per mile therefore was 5s. 6d. If we multiply the miles run by 45. 6d. we shall find the result amount to £590,861., which may be esteemed * Capt. Huish refers to this class of the traffic in his report of his, of 11th February 1848, a copy of which I have, as the “ essence of the whole carrying question,” and congratulates himsell on u the productiveness of the traffic.” 12 that proper proportion of the earnings which under pru¬ dential management should be set aside to meet current charges and future contingencies, the balance after such reserves have been made being the amount from which, after payment of interest on borrowed capital, the dividend fund would arise. As however the company, owing to their being “ carriers on their own account ” incur costs and charges peculiar to that business, and beyond what may be reckoned ordinary railway charges, it will be neces¬ sary to add to the merchandise expenses the excess pro¬ portion on the year under examination,—all these things done, the question of “profit” or “loss,” in the honest interpretation of the words, will be determined. The cost of working at 4s. 6d. per train mile is, as I have shewn above, £590,861. The proportion of the interest on the borrowed capital I take as £58,135. or one-third of the whole amount paid on this account in the year under scru¬ tiny. The whole sum earned by the London and Birming¬ ham Company on Merchandise account for the year ending 31st December 1846—the last of its existence as an inde¬ pendent company—was £217,730. The total costs which appear under the head of “ Merchandise Charges ” in the same accounts, are £ 15,933. The total sum earned by the London and North Western Company for the year ending 30th June 1848 on Merchandise account, was £722,376. The costs which appear in the same accounts under the head of “ Merchandise Charges ” are £153,686. The foregoing figures are not taken from periods which favor my views ; on the contrary, earlier years would have served me better, the London and Birmingham “ Merchan¬ dise Charges” having been higher by £5000. at least on the year selected than on previous years. By taking the last year’s accounts of that Company, and the last published year’s accounts of the London and North Western, I felt that I was acting most impartially in respect of both. IS The total Merchandise receipts of the London and North Western Company for the year ending 30th June 1848, were . . . £722,376 Deduct the cost of working at 4s. 6d. per train mile . . & 590,861 Deduct proportion of interest on Loans 58,135 Deduct proportion of Merchandise' Charges, which being peculiar to a Company acting as “ Carriers,” in excess of those which the London y 100,825 and Birmingham Company, not being u Carriers,” would have incurred :* 217,730 : 722,376 :: 15,933 : 52,861. -£749,821 Loss on the Merchandise account for the year - ending 30th June 1848 . . £27,445 which £27,445. would be increased just so much as the “ smalls,” and the profit on “ collection and delivery,” may amount to. I purpose, however, to leave these values as they stand, and to give Capt. Huish all the advantage of them in his general Merchandise account which they may be worth, and so let this part of my proof remain as it stands. This generosity, however, on my part, does not relieve Capt. Huish from proving to you on which of the classes of Goods it is that you have made not only this undeniable loss, and swallowed up not alone the whole of the profit on the “ smalls ” and the “ collection and delivery,” but that also of those classes of Goods on which at the highest rates there is no doubt profit was made. This is no enviable task for that gentleman to accomplish; it is, however, due to you, to your proprietors, and to the public, that he should justify his allegation openly and publicly made, that “ profit ” and not “ loss ” had ensued. * London and North Western “ Merchandise Charges ” £ 153,686 London and Birmingham proportion as per the above would have been . . 52,861 Excess by London and North Western Company £100,825 14 I know that objection will be taken to the 4s. 6d. per train mile test, because the London and North Western Company have not adopted the principle of a depreciation of “ Stock” and “Way” fund; but on the contrary, as respects “ Stock,” have repudiated its necessity. Because, therefore—though your Company is gaining its existence by the aid of machinery which from the nature of its busi¬ ness must be worn out and replaced by new in a period varying, according to the use had of it, from 15 to 30 years—you prefer to divide the uttermost farthing of dis¬ posable balance, and leave to your successors the providing of the new machinery, when required, at their own and sole cost, I am to blink the question also, and treat the daily destruction of the perishable parts of your property consequent on your business as part of your profit; as if, in fact, your road was Adamantine, and your resources Californian. This mode of proving your Goods traffic profitable may serve the views of parties who coute qui coute wish it to appear so; it will not, however, in the long run suit your proprietors. Profit, clear and indisputable, is that only which would satisfy you in your own great commercial undertaking, and surely the same principle which would govern you in estimating your profits should guide the London and North Western, and all other Rail¬ way Companies, in ascertaining theirs. What would be thought of the ship-owner who neither by insurance nor reserve set apart any portion of his annual profits to replace his vessels when by “ wreck ” or “ rot ” his stock-in-trade was gone ? And yet Railway Companies are so acting, the London and North Western Company—the first in impor¬ tance—being the first of the wrong doers. Capt. Huish reminds me strongly of the grocer who sells his good sugars “ dirt cheap” that he may find customers for his rubbishy teas at high prices. The parallel holds good, however, in Capt. Huish’s case only to the extent of the selling of his sugars at less than prime cost, he having no 15 teas by the sale of which to make his profit. If losing tonnage-rates would bring remunerative traffic to compen¬ sate, then I should say to Capt. Huish, carry cheaper and cheaper still; but I defy him to shew me that he has gained in this way; on the contrary, his low rates have induced a larger mass of the unremunerative traffic to your line, with¬ out adding one pound weight of paying traffic. By Capt. Huish’s report before referred to, of the 11th February 1848, it appears that one of the results of the reductions of the wares he deals in has been, to lead to an increase of the weight carried, at one station alone, of 30,000 tons of Grain, &c., which under the London and Birmingham scale of charges would, as between London and Birmingham, that is 113 miles, with a mere fraction of reduction, have brought to the Company 14s. per ton, whilst under the London and North Western scale, but 11s. 8d. per ton is charged. Ex uno disce omnes. Oh! but for a trade in Teas to back this cunning carrying device, and your £ 10. per cent, dividend would live again. Lacking, however, this essential element, what, let me ask, is to be done, but to discard the grocer’s principles, and adopt those in their place which govern private commercial bodies ? As the retail grocer, Capt. Huish would have made his fortune: as the manager of your Railway on grocer-like principles, except in selling your sugars he dis¬ poses also of your teas, he will soon lose you a serious fortune in money, and reputation too. Let me hope that he will quickly alter his system, and return to sound and wholesome principles of trading. At pages 12-13, Capt. Huish says, “ The immediate question is not the actual but the proportionate profit of Passenger and Merchandise trains ; ” and after some would- be facetious remarks at my expence, he proceeds to say, that to convey 100 tons of Goods 22 trucks would be ample, and that the Capital employed in the engine and 16 other necessaries would amount to £3,650.—that 100 tons of Passengers would require for their conveyance a Capital representing, in engines, carriages, &c., £51,600.—the proportions, as between the two, are therefore 14 to 1. That 32 servants would be necessary for the Passenger traffic, 4 being sufficient for the Merchandise business— the proportions therefore on this account are 8 to 1. At page 15 he estimates that the 4 tons of Passengers would require a dead weight of 52 tons to convey them; the 72 tons of Merchandize tf only 80 tons ”—the proportions on this account are consequently 12 to 1. The case, therefore, stands thus: that, according to Capt. Huish, the Capital as between the Passengers and Goods is 14 to 1; the Servants, 8 to 1; and the Dead Weight, 12 to 1. There can be no disagreement as to these arith¬ metical conclusions. Capt. Huish in no part of his Letter gives the means of comparing the relative cost of the two services. On this, the key of the whole question, he was silent at first, and though challenged to produce the figures in corroboration of his assertions, he is silent still. I must, therefore, con¬ tinue to make the best I can of the very scanty means he has supplied, “ to prove on which side the balance of receipt lay.” Capt. Huish’s object throughout his whole Letter, has evidently been to make the Passengers seem the worst (dearest) traffic of the two. Taking the three facts as stated, the inference will not he objected to, that the Passenger traffic is not, in first expenses, quite fourteen times so costly as the Goods, the requirements on account of collection and delivery being left out of the question. Capt. Huish assumes that 100 tons of Goods will require hut 22 trucks. Now as he estimates the Passengers at an average according to experience, so should he have esti¬ mated the Goods. If he will do this he must allow 44 17 trucks, and tlieir et ceteras, for his 100 tons of Goods; if he take experience as his guide in the one case to the dis¬ advantage of the Passenger service, common candour should have led him to do so in the other, though it told against the Goods, he having positive accuracy at his elbow, if he desired its production. Taking 44 trucks, with all their appliances, as the truer estimate, (and making due allowance for the moving of empty trucks, mine will be the approved one of the two,) then the Goods Capital, and attendant expences, must be doubled to arrive at the correct cost of the service. This doubling will necessarily reduce the relative proportions of cost from xjth f° yth. The cost, therefore, of the Plant of the London and North Western Company’s Goods traffic per ton of paying weight will be only 7 times as much as that of its Passenger traffic. We now come to the proportionate earnings; and here, again, Capt. Huish has given nothing like official data to guide us. What information, however, he has given is his own, and such as it is, I presume is based upon some¬ thing of a character to which he can refer, and justify him¬ self to you privately, if he w r ill not to me publicly. Refer to page 11 of his Letter, and you will find as the result of the traffic in Passengers and Goods in the month of Octo¬ ber last, that “ as the Third Class exceeds the first, a receipt of 1 \d. per passenger per mile is above an average, while a ljd. a ton a mile was less than the receipt on the Goods, after deducting the cost of collection and delivery.” At page IS we shall find 16 Passengers go to the ton; if therefore X call the earnings from a ton of Passengers 16 times those of a ton of Goods, I overstate the difference, but not materially; say, however, 15 times as much, and my estimate cannot be objected to. Now, I have shewn that the expences of a ton of Passengers are only 7 times those of a ton of Goods; if therefore a ton of Passengers costs £ 14. and earns £30., a ton of Goods c * - 18 will cost £2y., and earn £2—. I have been guilty of no assumptions here; I have taken Capt. Huish’s facts and figures exactly as he has supplied them, simply correcting his Under estimate of the number of Goods trucks, raising it for the conveyance of 100 tons of Goods from 22 to 44 trucks, railway experience justifying the addition. Now, Sir, for the result, and it is so simple, and withal so conclusive against Capt. Huish, and his whole theory, that I am at a loss to conceive how he will escape from the entanglement of his own net. The portentous conclusion is this: that unless the Passenger traffic makes a profit of •Jfths of the gross earnings, the Goods make no profit at all! And taking the gross receipts from all sources, and the gross expenditure on all accounts for the year cited by Capt. Huish, (to June, 1848) it will be found that the balance of profit is less by £21,049, than-|-J th of the gross earnings should be ; in other words, if he have not built his statement on a fallacy, Capt. Huish himself proves an abstraction in the year referred to from the passenger profits by the merchandise traffic of the £21,049. Here I might leave Capt. Huish and the Goods question, and pay my parting respects to you, but that an examination into your own London and North Western accounts, since the amalgamation, and those of the London and Birming¬ ham, Grand Junction, and Liverpool and Manchester, before that event, affords food for much useful comparison, and will tend to place the question in a light such as the most opaquely minded cannot fail to comprehend. I purpose, therefore, to institute some comparisons, the correctness of each of which will be verified by reference to the pub¬ lished accounts of the London and North Western Com¬ pany, for one or all of the five half years which, to the 30th June 1848, followed the amalgamation, and backward from the 81st December 1845, the five half years, one or all which, as respects the three then independent compa¬ nies, preceded the amalgamation. 19 The first comparison* which T shall make shall he a very short hut a very conclusive one. The last London and Birmingham statement of accounts was to 31st Decem¬ ber 1845, and for the half-year terminating then I find that the total receipts on Merchandise account credited to revenue were £111,691. or on the 113 earning miles, £988. per mile on the half-year—the expences on the dehit side, “ Merchandise traffic charges,” £ 12,009. or £ 106. per mile. The Merchandise receipts of the London and North Western Company for the half-year ending the 30th June 1848, appear hy the accounts to have been £339,800., or on the 438 earning miles an average of £775. per mile—the expences under the head of merchan¬ dise traffic charges being £75,093. or £171. per mile. These, Sir, are figures, facts and deductions, based on the published accounts of each company. The results are such that I cannot forego repeating them and placing them in juxtaposition, at the same time asking if it be possible to conceive that evidence more damnatory of the whole system could be found than is here produced. It must be borne in mind too, that the London and Birmingham Company had progressed in its Goods receipts every half-year, and if it had remained independent would have continued to improve, and that the Merchandise traffic charges, owing to the necessity of closing the accounts for the amalga¬ mated company, shew the sum of £12,009. for the half- year the subject of that comparison, whilst the average of the five previous half-years gives about £5,500.; so that in every respect I take that company at a disadvantage, whilst the London and North Western has all the gain (as * The London and Birmingham line I have taken as 113 miles (112| truly), and the London and North Western as 438 miles. If the averages had been struck over the 634 miles, which the company, according to your last report, appear to be really working, the receipts per mile would be £535.; the merchandise traffic charges £118., both per mile. The merchandise receipts, therefore, mile for mile will have fallen 45£ per cent., and the charges increased 11J per cent. c 2 20 Capt. Huish considers it) which the change of systems and the competition he has encouraged have given to him. I may remark too, that if each half-year of the two com¬ panies he compared one with another the result will he equally unfortunate to the London and North Western proprietors, to that section of them especially who were London and Birmingham proprietors. Average Merchandise Average Merchandise Receipts Traffic Charge Receipts. per Mile. Charges, per Mile. London & Birmingham £111,690 £988 £12,009 £106 London & North Western £339,800 £775 £75,093 £171 so that even under the disadvantageous (as respects the London and Birmingham) circumstances above referred to, it appears that the merchandise receipts per mile have decreased 21 § per cent., the melancholy conclusion also is arrived at, that the merchandise charges have increased 61 ^ per cent.! I could have wished to follow this course of comparison through every item of charge connected with the service, hut the accounts give no means of doing so item by item. There is however a very curious illustration in a small w T ay, not hearing out Capt. Huish’s romantic account of the Goods train, wdiich in its “stately march gives no trouble on the journey, utters no complaint, and grumbles not at a quiet speed of twenty miles an hour.” The following shews what has been paid by the two companies as com¬ pensation for accidents and losses, for equal periods before and since the amalgamation. London and Birmingham. £. s 31st Dec. 1843 275 17 30th June, 1844 193 3 31st Dec. 1844 182 12 30th June 1845 463 19 31st Dec. 1845 683 10 d. 8 0 6 7 4 London fy North Western .* £ s. d. 30th June, 1846 934 3 7 31st Dec. 1846 3629 2 4 30th June, 1847 4332 0 2 31st Dec. 1847 5659 19 1 30th June, 1848 5242 18 4 * The current half-year will necessarily show an enormous increase on the cost of losses, that is, if the recent strike amongst the engine drivers be fairly stated. 21 It appears that the London and Birmingham Company, in the last half year of its existence as an independent con¬ cern, earned on Goods account £111,690. at a cost under the head of “ Merchandise charges” of £12,009.; the London and North Western Company having in the half year which ended 30th June, 1848, earned on Goods ac¬ count £339,800. at a cost of £75,093. under the same head of charges, 111,690 : 339,800 :: 12,009 If £111,690. could he earned on Goods account by the London and Birmingham Company at a cost of £ 12,009. under the head of Merchandize charges, what would have been the cost to that Company of earning the £339,800. which the London and North Western Company did earn on Goods account? The answer to this enquiry will be £36,535. as that which would have sufficed for the London and Birmingham Company, the actual London and North Western cost having exceeded this by more than cent, per cent. (£75,093.) Let us try this another way. If the London and Bir¬ mingham Company required an expenditure under the head of Merchandize charges in the half year referred to, of £12,009. to earn £111,690., how much would that Company have earned had its expenditure been that of the London and North Western Company (£75,093.) ? 12,009 : 75,093 :: 111,690 The answer to this enquiry will be £698,404., as the amount which would have been earned by the London and Birmingham Company with that rate of expenditure against the £339,800. earned by the London and North Western Company, or nearly cent, per cent, in favor of the London and Birmingham over the London and North Western system! The Locomotive charges of the same half years give me the opportunity of making two other comparisons elucidative of the question of comparative economy of the London 22 and Birmingham and London and North Western manage¬ ments. The London and Birmingham Company earned in the half year referred to (31st December, 1845,) on Passenger and Merchandise accounts £534,298. at a cost under the head of “ Locomotive power” of £57,961. The London and North Western Company earned in its half year referred to (30th June, 1848,) on Passenger and Merchandise accounts £1,009,907. at a cost under the head of “ Locomotive power ” of £126,626. The interesting questions we have now to solve are— 1st, What, at the rate of its Locomotive expenditure, would the London and Birmingham have disbursed to have earned the £1,009,907. received by the London and North Western. 2nd, What amount the London and Birming¬ ham would have earned at an expenditure of the £126,626. actually disbursed by the London and North Western on Locomotive account,—the earnings and expenditure of each Company forming the elements of the calculations. 1st, 534,298 : 1,009,907 :: 57,961 The answer will be £109,555. as that which the London and Birmingham Company would have expended to earn the £1,009,907. earned by the London and North Western against the £ 126,626. expended by the latter Company , or an excess expenditure on its part over that of the Lon¬ don and Birmingham scale of management of £17,071. 2nd, 57,961 : 126,626 :: 534,298 The answer will be £ 1,167,267. as the amount which the London and Birmingham would have earned at the London and Northwestern actual expenditure, or £157,360. more than was earned by the latter Company. Suppose, Sir, we now try the whole earnings and costs of the two Companies for the same periods by the same rule. The London and Birmingham Company earned in its half year on Passenger and Merchandise accounts the gross 23 > sum of £534,298. at a cost, including interest on loans, amounting to £222,549. The London and Northwestern Company earned in its half year on Passenger and Merchandise accounts the gross sum of £1,009,907., and expended, including interest on loans, and loss on North Union Lease, £542,735. That which I propose to ascertain is, what the London and Birmingham Company at its rate of expenditure would have disbursed to earn that which the London and North Western Company did earn. 534,298 : 1,009,907 :: 222,549 The answer that these figures will give is £420,398. as the amount which would have been expended by the London and Birmingham Company against the £ 542,735. actually disbursed by the London and North Western Company. Try the same half year by another test: The Carrying Stock of the London and Birmingham Company in the half year terminating 31st December 1845, was estimated in the accounts as of the cost of £298,499., the gross earnings on Passenger and Merchandise accounts having been £ 534,298. The Carrying Stock of the London and North Western Company in the half year terminating 30th June 1848, was estimated in the accounts as of the cost of £1,674,600., the gross earnings on Passenger and Merchandise accounts having been £ 1,009,907. 298,499 : 1,674,600 :: 534,298 If £298,499. sunk in Carrying Stock enabled the London and Birmingham Company to earn £534,298. on Passenger and Merchandize accounts in the half year quoted, how much would that Company, assuming of course that the same care in the management existed in the one case as the other, have earned with a Carrying Stock of the cost of the London and Northwestern, (£1,674,600.) The answer to this enquiry will be £2,997,448. as the amount 24 C which the London and Birmingham would, under such cir¬ cumstances have earned, or nearly 200 per cent, more than the London and North Western did earn, (£ 1,009,907.) Let me put this in another shape.—If the London and Birmingham Company found in practice, that a Carrying Stock of the cost of £298,499. was sufficient to enable them to earn £534,298. in a given period of time, what amount of outlay in Carrying Stock would have been re¬ quired to enable them to earn £1,009,907. The answer to this enquiry (534,298 : 1,009,907 :: 298,499) will be £564,206., or nearly 200 per cent, less than the London and North Western have not only required, but actually laid out in Carrying Stock. It was my wish to try the Directoral charges for the same half years by the proportionate rule, but to my astonish¬ ment I could not find these acknowledged under any of the different heads in the London and North Western accounts. In those of the London and Birmingham they appeared each half year under the head of “ General Charges,” the positive amount being always stated. The difference be¬ tween the two accounts as rendered in London and Bir¬ mingham times and London and North Western times is of the most marked character, those of the former having been perspicuous beyond praise, those of the latter of the most confined and limited character. It seems really as if at the period of the amalgamation everything which had been sound, frank, and good, or had the least taint of London and Birmingham policy in it, had been discarded. My next comparisons shall be of more extended periods than those of six months against six months. Let us take the London and North Western for the whole period of its existence against a corresponding time of the London and Birmingham, and of the Grand Junction, separately and together, and compare the respective workings. Before, however, I proceed to this more extended enquiry, I will » 25 link together the various comparisons and their results which I have already made. 1st. As to the Company’s charges for the conveyance of Goods, which Capt. Huish said were “ the same ” as those of the London and Birmingham Company, I have shewn that they have been materially altered for the worse. 2nd. By the “ Saunders ” and “ Stephenson ” test, I have proved that the London and North Western Company made a positive loss on their Merchandise Traffic for the year ending 30th June last, of £27,445. 3rd. By Capt. Huish’s own evidence, the Passenger Traffic must make a profit of sixteen-thirtieths of the gross earnings, before the Goods can make any profit at all; by this, his own test, the Merchandise shews a loss in the year quoted, of £21,049. 4th. Whilst the London and North Western Goods Traffic receipts decreased beyond those of the London and Birmingham Company in the half years examined 21J per cent, per mile, the Merchandise Traffic charges increased 61J per cent, per mile. 5th. That the London and North Western Company in the same half years expended in Merchandise Charges £38,558. more than the London and Birmingham would under like circumstances have expended. 6th. That the London and Birmingham Company would have earned £698,404. on Goods account, at the same cost in “ Merchandise Charges ” which was expended by the London and North Western to earn but £339,800. 7th. That the London and North Western Company * expended in Locomotive Power in the same half years £ 17,071. more than the London and Birmingham would have required to earn the same sum that the London and North Western actually received. 8tli. That the London and Birmingham Company would have earned for the same cost of “ Locomotive Power” in 26 tlie same half year £157,360. more than the London and North Western did earn. 9th. The London and Birmingham Company would, in the earning of the whole traffic of the London and North Western Company for the half year to 30th June 1848, have expended £122,337. less than the latter Company did expend. 10th. The London and Birmingham Company with a Carrying Stock equal to that of the London and North Western would have earned £2,997,448., the latter Com¬ pany, in the half year the subject of comparison, having earned but £1,009,907. lltli. The London and Birmingham Company would have required a Carrying Stock equal to £564,206. to do the London and North Western business, the same half year, in place of the £1,674,600. required by the latter Company. Proofs these, I think, pretty strong against the whole internal economy of the London and North Western management! I shall now proceed with the more extended enquiry, with the view of shewing that whether the London and North Western be examined by sections of its existence or for its w r hole period, its management is like the journey from “ Dan to Beer-sheba,” all barren; there is not one redeeming spot from beginning to end. By referring to the accounts of the London and Bir¬ mingham Company for the five half years which preceded the amalgamation, it will be found that the additions made to the Capital account for new Carrying Stock amounted to £ 97,570., the gross earnings on account of Passengers and Merchandise carried over the line having been £ 2,269,893. The London and North Western Company started with a Carrying Stock estimated in the accounts at £681,894., 27 since which time new Carrying Stock to the extent of £992,766. has been added,* and all charged to the conve¬ nient Capital account,—the gross sum earned on Passen¬ ger and Merchandise accounts during the five half years which have followed the amalgamation having amounted to £5,221,800. The Grand Junction and Liverpool and Manchester additions to the Capital account for new Carrying Stock for the five half years which preceded the amalgamation amounted to £22,506., the gross earnings of the two having been £ 1,799,729. ; so that adding the separate amounts of the three then independent Companies together they will appear as follow: Additions to Capital for new Carrying Stock. Gross Earnings. London and Birmingham £97,570 £2,269,893 Grand Junction, and Liverpool & Manchester 22,506 1,799,729 Totals £ 120,076 £ 4,069,622 Deduct the Carrying Stock cost from revenue 120,076 £3,949,546 London & North Western £992,766 £5,221,800 Deduct the Carrying Stock cost from revenue 992,766 £ 4,229,034 Supposing the contrast to end here it would seem (the London and North Western having a balance in its favor * The London and North Western Company are working nearly 200 miles of subsidiary railway, (Chester and Holyhead mainly) which will account for some portion of this outlay. At Capt. Huish’s average, as per his report on the rolling stock, this would absorb £520,000. of capital. The proprietors will be curious to know what the assisted company pays for this. The London and North Western accounts, and the Chester and Holyhead accounts acknowledge nothing; taking £5. per cent, for outlay, and £10. per cent, for depreciation, the London and North Western Company make an annual gift to the Chester and Holyhead, and other assisted bodies, of £76,000. 28 of £ 279,488.) as if profit had resulted to that company from its enlarged operations. Before however this conclusion is adopted, we must examine deeper and probe farther. The Revenue accounts of the London and Birmingham, the Grand Junction, and the Liverpool and Manchester Companies during the same five half-years contain the fol¬ lowing totals (debits) to revenue— Grand Liverpoool & London and Junction. Manchester. Birmingham. 1843. Dec. 31st £85,767 £57,642 £176,233 1844. June 30 th 86,916 57,239 167,723 Dec. 31st 99,703 64,885 182,543 1845. June 30tli 100,364 65,610 192,916 Dec. 31st 180,499 in Grand Junction 222,549 Totals - - 553,249 245,376 941,964 Grand Junction - - - 553,249 Liverpool and Manchester 245,376 Total - - £1,740,589 The Accounts of the London and North Western Com¬ pany shew the following totals (debits) to revenue— 1846. June 30th . £467,341 Dec. 31st . 456,885 1847. June 30th . 515,994 Dec. 31st. 512,230 1848. June 30th . 542,735 Total. £ 2,495,185 If therefore we take in each case the total amounts received on revenue account (after having allowed for the new carrying stock, as in the previous statements) and deduct from them the total costs incurred, we shall arrive at a conclusion which will test the present in its relation to the past— « i 29 Brought down the foregoing London and Birming¬ ham, and Grand Junction totals ----- £ 3,949,540 Deduct the cost of earning the same - - 1,740,580 Balance—Profit - - £2208,966 Brought down the foregoing London and North Western totals - -- -- -- -- - £4,229,034 Deduct the cost of earning the same - - 2,495,185 Balance—Profit - - £ 1,733,849 So that if neither of the Companies had had an open Capital Account to fly to, for the purpose of charging the cost of new Carrying stock to its convenient pages (it should be here observed that the Liverpool and Manchester Com¬ pany in its happy simplicity! charged all increase in the carrying stock to revenue) the result of the last five half-years of working would have stood thus— The three independent Companies in their two years and a half would have shewn a total profit of... £2,208,966 The London and North Western in its two years and a half would have shewn a total profit of ... 1,733,849 Balance against the London and North Western £ 475,117 which divided over five half-years gives an average each half-year in favor of the olden over the amalgamated com¬ panies of £95,023., or £5. per cent, per annum on a Capital of £3,800,920. Some allowance is no doubt to be made for the lower rates which the London and North Western Company have adopted, and the consequently more numerous trains which have been required to earn an equal amount, at a pro rata cost; neither of these reasons will, however, justify an excess expenditure of £ 190,046. per annum, not on one year only, but two-and-a-half years. As respects the Passenger fares the company could hardly avoid the reduction which they made, but the Merchandise 30 rates, I maintain, it was not only unnecessary, but ruinous policy to alter them, by making reductions without necessity and against the experience and recommendations of all persons conversant with the Carrying trade of the country. Though the system was altered, some regard should have been had to past experience ere so vital a change as that which has been made in the Carrying charges of your company had been permitted. I have already stated that your accounts do not specify the proportions of “ Locomotive Power ” charges which apply to the two branches of your traffic, (Passengers and Merchandise,) I have therefore been compelled to take this amount in the lump, as it is rendered in your accounts, and work the same out proportionately with the like charges in the London and Birmingham account, so as to arrive at comparative results; and for this purpose I have chosen the last year of the London and Birmingham, and the last published year of the London and North Western. The items stand thus:— LONDON AND BIRMINGHAM. 1845 . £. £. 30th June Locomotive charges 43,162 Total Passenger and Merchandise Receipts 534,298 31st Dec. Ditto 57,962 Ditto 447,191 £101,124 £981,489 LONDON AND NORTH WESTERN. 1847 > £. £. 31st Dec. Locomotive power 124,473 Total Passenger and 1848 Merchandise Receipts 1,130,129 30th June Ditto 126,626 Ditto 1,009,907 £ 251,099 £ 2,140,036 So that it appears that the London and Birmingham Company, to earn its gross revenue of £981,489., in the last year of its existence as an independent Company, ex¬ pended under the head of “ Locomotive Power, Wages of 31 Engineers, Engine-men, Firemen, Repairs, Cost of Mate¬ rial, and Coke,” the sum of - £101,124. whereas the London and North Western on its part, for the year ending 30 th June 1848, to earn its gross revenue of £2,140,036. expended under the same head of “ Loco¬ motive Power, &c.” the sum of - £251,099. Now, Sir, the fair way to prove the relative economy or extravagance of the two managements is, to try the two sets of figures by the same rule of simple proportion which has governed the previous calculations, the particular expenditure on trial being the very heart’s blood of your dividend. It will he conceded to me, that if the London and Bir¬ mingham Company could earn a certain sum, at a known cost of that portion of its expenditure which should and can be under constant check and control, as the “ Loco¬ motive power ” of all other charges clearly ought to be, the London and North Western Company, which has stepped into its shoes, and expended enormous additional sums to enable it to carry on its Locomotive department in a supe¬ rior manner, and at a cheaper rate, (else why the additional outlay) should at least not have exceeded a pro rata ex¬ penditure in this vital branch over that incurred by its predecessor. If the example be worked out:— 981,489 : 2,140,036 :: 101,124 the result will give £ 218,310. as the sum which the Lon¬ don and Birmingham Company would, in the year under examination, have expended for “ Locomotive power ” to earn the gross revenue of £2,140,036. received by the London and North Western Company. Now as the Lon¬ don and North W estern actually expended for “ Locomo¬ tive Power” £251,099. to realise the amount they earned, it follows, that they did so at a cost of £32,789. in excess of what the London and Birmingham, with all its lesser expenditure in additional workshops, &c. since incurred by 32 the London and North Western, would have expended. This £32, 789., treating it as waste expenditure would have added 85 . dividend to upwards of £ 8 , 000 , 000 . of your capital. One of the chief inducements to the amalgamation, was the economy which it was alleged would be secured by the junction of many concerns into one,—one system, one direction, one management,—all of which are existing. That ingredient, however, which led the many to approve the amalgamation, and all to hope “ greater economy,” has fled, and is no where to be found from end to end of the London and North Western Railway. How much of this additional “ Locomotive power ” ex¬ pense is chargeable to your Merchandise department? and how much to your Express trains? are queries I cannot answer. There it is, however, without opportunity for cavil. How it is to be excused is now the question, and an interesting one too it is for your Proprietors to put, and have unequivocally and without reservation answered. Under every head of charge, by referring to the accounts of the London and Birmingham, the Grand Junction, and the Liverpool and Manchester Companies for the five half years which preceded the amalgamation, and those of the London and North Western for the five half years which have passed since that amalgamation, excess in and not reduction of expenditure is the governing rule. The fol¬ lowing are a few examples:— London & Birmingham, Grand Junction and London and Liverpool & Manchester. Xorth Western General Charges, including Secretary’s Accountants, Audit and Manager’s Department, Clearing House, and the other Expenses not classed - - £59,160 £93,508 Police Charges ------- 42,944 88,435 Compensation ------- 4,141 19,798 The inquisitive proprietor will find much to astonish him, by pursuing these comparisons through the whole of 33 the accounts, but unfortunately lie will discover nothing to gratify him. I could well have closed my case here, but the subject is so bewitching, and of such vital moment to your pro¬ prietors to comprehend, that I shall venture to trespass still further on your patience, by establishing a few more comparisons. At the time of the amalgamation, (1st January 1846) it appears by the accounts of all the companies, that the Carrying Stock of the distinct Corporations amounted to:— London and Birmingham £ 298,499 Grand Junction, and Liverpool & Manchester 383,394 £681,893 By the London and North Western statement to 30th June 1848, the cost of the Carrying Stock had run up to - £ 1,674,660 It appears therefore, as has before been stated, that the additional cost of Carrying Stock in two and a half years amounts to £ 992,766 The London and Birmingham Company, as I have before shewn, earned in the two and a half years which preceded the amalgamation, on Passenger and Merchandise account, £ 2,269,893., with a Carrying stock of the cost of £298,499. The London and North Western Company, in the five half years which have followed the amalgamation, have received on Passenger and Merchandise account the gross amount of £5,221,800. Assuming that the latter Company had conducted its business on London and Birmingham princi¬ ples, and concluding also that the Carrying stock of the latter Company was equal to its wants, what would have been the amount of Carrying Stock which the London and Birmingham would have required to earn the gross sum that the London and North Western did in the five half years quoted,—2,269,893 : 5,221,800 : : 298.499. The answer will be £ 686,685. as the proportion of expenditure D 34 in Carrying Stock which would have sufficed the London and Birmingham Company. Amount of cost of London and North Western Carrying Stock expended to earn £5,221,800 £1,674,660 Amount which would have sufficed under London and Birmingham management to have earned £5,221,800 ---------- 686,685 Excess Cost of Stock beyond London and Birming¬ ham requirements - -- -- -- - £987,975 Or at £10. per cent, for depreciation on this ex¬ cess, an annual loss amounting to - £98,797 The above example judges the London and North Wes¬ tern by the London and Birmingham scale. Let us now see how the comparison works out between it, and the Grand Junction, and Liverpool and Manchester Companies, each being alike in all things “ Carriers on their own account.” The Carrying Stock of the Grand Junction and Liver¬ pool and Manchester Companies, on the day of the amal¬ gamation, was estimated as being of the value of £383,394., and the amount earned by these two Companies on Pas¬ senger and Merchandise account, for the five half years which preceded the amalgamation, will by reference to the accounts be found to be £ 1,799,729. The enquiry, there¬ fore, we have now to make is, what amount of Carrying Stock would have sufficed to enable the Grand Junction Company to have earned the £5,221,800. received by the London and North Western Company in the five half years to 30th June, 1848, which followed the amalgamation. 1,799,729 : 5,221,800 : : 383,394. The answer that will result from this enquiry will be £1,112,393. Amount of cost of London and North Western Car¬ rying Stock, expended to earn £5,221,800. £1,674,660. Amount which would have sufficed the Grand Junc¬ tion Company to earn £5,221,800. 1,112,393 Excess Cost of Stock beyond Grand Junction re¬ quirements . £ 562,267 Or at £10. per cent, for depreciation, an annual loss amounting to . £56,226 35 The answer, doubtless, which will be given to this will be a reference to your last Report, wherein you felt it necessary to justify the expenditure on account of Carrying Stock, by shewing that the average cost of plant per mile did not much exceed the average from 1841 to 1848. This would have been very fair, if the additional mileage which has been opened, had been or was likely to be as productive as the trunk portion of your railway. Your proprietors will be delighted indeed to find that your Bedford and Bletchley—your Northampton and Peterboro’ — your Leamington and Coventry—your Dunstable—your Trent Valley folly—prove each and all of them equal to your London to Manchester line. Dunstable bonnets against Manchester calicoes—dross to diamonds. How, however, the average has been struck I confess I cannot make out; seeing that your Report divides the sum ex¬ pended over 633\ miles, while your official statement of the 28th October, 1848, under the head of “ Main Line and Branches producing Revenue,” shewing but 438 miles (435 really, the West London not being worked). By the same statement, it appears that you have 62 miles under the head of “ Lines in course of formation, not producing Revenue,” and that you will require to expend £ 1,000,000. to complete your Carrying Stock. The total ultimate mileage will therefore be 500 miles, and the average when the £1,000,000. have been expended (£2,674,660. will then be the total) will be £5,349., in place of £2,646. as set out in your Report, and the subject of much self lau¬ dation in Capt. Huish’s report on the subject of your “ Rolling stock.” If the additional cost for Carrying Stock beyond the requirements of the two Companies, had been productive of corresponding gain to the London and North Western Company, the end would have justified the means; but how stands the bare and naked fact ? In place of greater nett profits, these have become less and less each half d 2 36 year; whilst the charges to the debit of revenue have in-* creased out of all proportion to what they bore under London and Birmingham or Grand Junction management; not only on the “Merchandise traffic,” but the “Passenger” also. Some examples of these increased debits I have already given. I shall next proceed, to the best of my ability, to dissect the accounts of the defunct London and Birmingham, and the existing London and North Western Companies, the former, for the five half years which preceded the amalga¬ mation, and the latter, for the five half years which, to the 30th June 1848, have followed the amalgamation. The charges, from the mode in which they are set out in the accounts, which I could fix to the “ Passenger ” and the “Merchandise” departments, I have done so, the ex¬ traneous charges not specially set out, such as “ Locomotive power, general charges, &c. &c.” I have divided in the pro¬ portions which the respective earnings bear towards each other. LONDON AND NOETH WESTEEN. Total Total Passenger and Merchandise Charges. Receipts. From Jany. 1 Passenger proportion 1,595,335 3,510,694 1846, to ► June 30 Merchandise proportion 899,850 1,711,106 1848. J £ 2,495,185 £ 5,221,800 LONDON AND BIEMINGHAM. Total Total Passenger and Merchandise Charges. Receipts. From July 1 Passenger proportion 742,203 1,761,238 1843, to - Dec. 31 Merchandise proportion 199,761 508,856 1845. £941,964 £2,270,094 37 Now, Sir, to make an impartial comparison of the relative expenditures which the two Companies incurred on their Passenger and Merchandise traffic, we must again judge them by the rule of simple proportion. 1st. The Passenger.—1,761,238 : 3,510,694 :: 742,203. The answer will be £1,479,440. as the amount which the London and Birmingham Company, according to its rate of expenditure, would have disbursed to earn the £3,510,694. Passenger receipts of the London and North Western Railway. Actual amount expended by the London and North Western Company in the earning of the Passen¬ ger receipts of £3,510,694 - - £1,595,335 Amount, which according to the London and Bir¬ mingham rate of expenditure, would have been disbursed to earn this £3,510,694. - - 1,479,440 Excess expended by the London and North Western £115,895 As respects the Merchandise traffic worked out by the same rule, the result is still more to the disadvantage of the London and North Western. 2d. The Merchandise.—508,856: 1,711,106:: 199,761. The answer will be £671,726. as the amount which the London and Birmingham Company, having none of the carrier’s costs and risks to bear, would by its rate of expen¬ diture have disbursed, to earn the £ 1,711,106. Merchandise earnings of the London and North Western Company, a “ Carrier on its own account.” Actual amount expended by the London and North Western Company in the earning of the Mer¬ chandise receipts of £1,711,106. - - £899,850 Amount which, according to the London and Bir¬ mingham rate of expenditure, would have been disbursed to earn this £ 1,711,706. - - 671,726 Excess expended by the London and North Western £ 228,124 / 38 The summary of this money test proves a lavish outlay in all points to the disadvantage of the London and North Western Company, the differences being dividends actually lost to the Proprietors by the reckless extravagance exhibited:— Excess Expenditure on Passengers £ 115,895 Do. do. on Merchandise 228,124 Excess Total - £ 344,019 or, loss to the Proprietors, (the £ 344,019. having been sunk and gone, and no where to be found,) in perpetuity, at £5. per cent, per annum, of £ 17,200., or spread over the two and a half years in which it has been expended, an average each half year of £68,803., or £ 1. per cent, for each half year on a capital of £ 6,880,300. No wonder, Sir, that the London and Birmingham Com¬ pany should have been as successful as it was, seeing that its rate of expenditure was such, that to earn the sum of £5,221,800. received in the past five half years by the London and North Western Company, it would have done so at a cost of £ 2,151,166 The London and North Western actually ex¬ pending - - - - £ 2,495,185 Surely, Sir, something of this difference must be due to the fact of the London and Birmingham Company having declined the responsibilities of the Carrier—some¬ thing to a greater care in the general management than since the amalgamation has been exhibited; but more than all, to the carrying on no part of its trade at a loss—no reckless competition—no Express trains—no Coals carried under one penny per ton per mile, the present rate being f d .— On the contrary, every department looked after vigilantly, and economy enforced on every side. Would that this were so now—would that London and Birmingham princi¬ ples reigned at your Board; there would then be some 39 hope of improved dividends under such improved manage¬ ment. Having satisfactorily established my original allegation, that loss is the result of your Goods traffic, and demon¬ strated by the most indisputable of all tests (figures) that the London and North Western Company’s whole business is conducted at an expense which, as compared with the old London and Birmingham system, is prodigal beyond example, and, as contrasted with the Grand Junction, lavish beyond belief, I should have concluded this Letter, but that I consider that some extracts from the report of Mr. Dockray, the Resident Engineer of the London and North Western Railway, to the “ Committee of Way and Works,” will be interesting, and tend more than any words of mine could to lead the attention of your proprietors to the state of your road, brought about by the heavy weights of coals and merchandise which have traversed it since Capt. Huish’s system of seeking quantity and not quality of traffic became the adopted one of your Company. To this cause of damage is to be added, the effect of the Express trains, the suppression of which, from a paper published in the last “ Quarterly Review ” (of which paper Sir Francis Head is the reputed author) would it appears save your Company at the least £40,000. annually, irrespective en¬ tirely of sparing also that incalculable mischief which those trains are causing to the railway itself, and the carriages and engines used, by the rate of speed at which they travel. These two sources of mischief are however so obvious, and so completely within your own means to check and control, that it is a matter of perfect wonderment, at all events as respects the Goods traffic, how any body of directors can permit that part of the trade which brings weight but no profit with it, to be continued. Surely after such a warn¬ ing as your Resident Engineer has given you, even had you been prospering well in the Goods traffic, it would have been prudent to limit your business to that class of mer- 40 chandise which would have paid you.satisfactorily, until at least you had given your Resident Engineer a fair chance of looking to the road. Rather than encourage more and more to your Railway, it would have been wiser by far to have left to your Canal competitor the conveyance of the to you unprofitable, but to him profitable classes of mer¬ chandise, for the carriage of which the lowest rates are paid. You could have obtained a higher price for what you did carry, carrying less but profiting more; and it cannot be doubted that your competitors of the Canal and Eastern Counties Railway would gladly have made satisfactory arrangements with you. Rut no! despite the warnings of Mr. Dockray, Capt. Huish persists in his low rates, appa¬ rently regardless of all consequences. Persistance in such a case becomes obstinacy—an obstinacy which will be followed by repentance, but not until costly experience has convinced you, your colleagues, and proprietors, that Capt. Huish’s idol is but a brazen image, and not as he has made you believe, a thing of solid gold. What has Capt. Huish and his Liverpool crotchets done for you? Nothing more and nothing less than this—To bring them into operation, you have been compelled to ex¬ pend in Carrying Stock alone nearly £ 1,000,000. more than under the system which these crochets superseded would, for the same paying business, have been necessary,—a stock from its very nature perishable in a few years,—you have earned more in the gross, but profited infinitely less; you have established on each side of you a competition profit¬ able to neither—a competition carried on with an acrimony unheard of since railways began—a competition which will endure so long as you are disposed to give it license—a competition which your rivals, the Eastern Counties Rail¬ way Company on your east, and the Grand Junction Canal Company on your west, would gladly end on mutually equi¬ table concessions — a competition in short to which there can be no end, until the question is looked at with that com- mercial eye which once directed to it must at once cease, and though the system may continue, it will be so under modi¬ fied and more salutary rules than those which guide it now. At the present moment you are your own (so-called) in¬ surers against fire, without one penny being set apart to meet any casualty of the kind. You have ceased to con¬ sider a depreciation stock fund necessary, and will, if Capt. Huish’s advice be adopted, very soon have absorbed for dividend purposes all that which in your days of prudence you had wisely set apart to meet the demands under this head, which must come on you when your Capital Account is closed; and to crown all, you treat the wear of your road as not worthy of serious thought. Let, however, Mr. Dockray, your Resident Engineer, speak for himself on the state of your road ; let us hear what he says of the mischief caused to it by your Express trains, &c. The following are extracts from his most interesting, instructive and elaborate Report on this subject:— “ In laying before you,” (the Committee of Way and Works of the London and North Western Railway Company,) “ the fol¬ lowing remarks, I have thought it desirable to extend my obser¬ vations to the construction of Permanent Way generally, with the view of determining the best mode of carrying out the renewals upon the Southern Division of your Railway, which have become necessary at a period of time earlier than I had anticipated, con¬ sequent upon the comparatively new circumstances of the great increase not only in the weight but in the speed of the Engines.” “ I would here remark, that when competition was developing the present high velocities upon Railways generally, Mr. Robert Stephenson gave it in evidence as his opinion that the limit would be found, not in any particular guage or in the evaporating power of the engines, but in the economic endurance of the Permanent Way to bear the additional weight which must, as a matter of necessity, accompany every increase of speed. “ Time is in my opinion rapidly demonstrating the truth of this observation. 42 “ Every new class of Engine which appears surpasses its prede¬ cessor in power and in speed, and it is evident from the large size of some of them about to run upon your line, that at any rate the builders do not consider that they have as yet reached the limit of their scale. “ The rapid deterioration of the Permanent Way, however, about which there can be no doubt, raises the question, whether the speeds already attained, have not approached the economic limit to which Mr. Robert Stephenson refers. If this be the case, Railway Companies must look to a considerably increased outlay in the shape of renewals of Permanent Way; it may be financially disguised for a time, but sooner or later, it must be met as a regularly recurring charge. “ I have no doubt that the wear and tear of the Carrying Stock is also increased in a high ratio with the speed, and I do not see why the Public are to reap the whole advantage, leaving the Rail¬ way Company the burden of the additional cost. Means should be taken by Railway Companies generally to raise the Express fares, and thus, in some measure, to share the benefit with (he Public.” Mr. Dockray goes on to say,—“ It is evident that, in all renewals, increased weight of rails and increased dimen¬ sions of the materials generally, must he adopted to meet the increased duty required.” He further on remarks, that the period of complete renewal on a line which is “ sound and hard ” at bottom “will vary with the traffic, in ordinary cases I estimate it at from 15 to 20 years.” Mr. Dockray proceeds to remark on those parts of a rail¬ way, the super portions of which are, as your line is nearly the whole way from London to Rugby, laid upon the treacherous clayey substrata. Permanent Way so placed, he states, “ is subject to more rapid wear than in the case previously mentioned,”—“ there is very little sound mate¬ rial south of Rugby.” He then describes at length vari¬ ous modes of laying the way, and goes into calculations of each for the information of the Committee, with which it is not my purpose now to give any of the particulars. 43 This Report of Mr. Dockray’s bears the date of August 1848, and must have been presented to the London and North Western Board simultaneously with Capt. Huish’s, on the “ Rolling Stock.” Now mark the apparent influ¬ ence of the one and the other. On Capt. Huish’s recom¬ mendation, not only was the “ depreciation of Stock fund ” voted a bore, and £30,462. reclaimed for the Dividend fund, but his nostrum for future Dividends, in the disco¬ very he made that the “ real working value of the Stock is now at least £ 200,000. more than was paid for it,” and that, “ in strict justice, the difference between the first cost and the present real value belongs to the existing proprietors, and might be made available for division, or transfer to a reserve fund,” was suffered without rebuke to remain as a part of his report, and so to be published ; whilst Mr. Dockray’s report, save a notice in the Morning Herald, and the Railway Chronicle, received but the scanty atten¬ tion of a vote in one year of £16,000. for “relaying of rails”; Capt. Huish being allowed to pursue his “will o’ the wisp,” and conduct your undertaking according to his own unfettered pleasure. Surely, Sir, the day of patient endurance of this absurdity will soon be past. In Capt. Huish’s Report of the 11th February 1848, before quoted, he remarks that the Carriers “ were fully alive to the fact, that their personal advantage was best served by embroiling neighbouring companies in a contest for traffic, held on a precarious tenure, and liable at any moment to be abstracted by the offer of more flattering inducements from other parties ; ”—he then theatrically says, “ This is at an end,” and adds, “The community of interest necessarily induced by the extension of the carry¬ ing principle over all the narrow-guage lines North of the Thames, has drawn the Companies together, and united them by a mutual bond of kindly feeling.” Will any one credit that this state of bliss,—this concentration of all 44 that was amiable and fraternal,—these diurnal embraces of narrow guagers “ North of the Thames,” has turned out a very Pandemonium of bickerings, heart-burnings, and jealousies, and that the blissful February of 1848, as painted by Capt. Huish, will find its fellow of 1849 engaged in intestine hostilities,—not arising from the “flattering inducements ” to the olden Carrier (for he is dead and gone) to take his trade to other lines, but amongst the loving Companies themselves. The Eastern Counties Company, supported by Mr. Hudson, on the one side, has ceased to be Capt. Huish’s friend, and has become his bitter opponent; and the Grand Junction Canal Company on the other, has grown into a rival, where it would have been content to have been an humble competitor,—the crumbs from its rich neighbour’s table would once have satisfied it, not so now. The Eastern Counties Company are bringing traffic from the London and North Western districts at the same rates as the latter charge, though the Railway extra distance is some 60 miles more. Profit is the question with neither, defiance ruthless and bitter leads them on. The Grand Junction Canal Company has also extended its business into distant districts, so as to cover Manchester and other places,—that Manchester of which Capt. Huish, in this same report, says, “ There was no direct Carrier by Canal between London and Manchester during the last six months.” He will have no need to say this now; his self-lauded system has raised the storm he cannot now lay,—the Canal competitor whom he has created will now and for ever become a fearful rival, not to the extent of his former limits, but to the extremest point to which Canals run. He may arrange with both these parties : I need not, however, say to’ you, Sir, that he will do so at a severe cost to the London and North Western Company, who at the best must then become content with a divided traffic — a penalty which, had ordinary business prudence I 45 guided the concern, need never have been incurred. “ Live and let live,” Capt. Huish does not comprehend, at all events he does not practise it. Again. In this famous Report, Capt. Huish contrasts what he calls the London and Birmingham olden system with his existing system, and shews an apparent increase of “nett profit,” as he terms it, of £7,563. 13s. 8c?. in favor of the new over the olden system, the periods selected for comparison being the half-year ending 31st December, 1846, which he calls the London and Birmingham period, and that ending 31st December, 1847, which he truly terms that of the new system. Now, Sir, will it be believed that in the half-year which is brought forward as the London and Birmingham example, the Goods traffic was mixed up of the old and the new systems, and as unfit for fair comparison as it is possible to conceive. The utmost which Capt. Huish shews, even thus unfairly made, is that the worth of the half-year’s additional receipt of £7,563. 13s. 8 d. is the gain only which was made by the London and North Western Company by the expulsion from their railway in their half-year of “ the thirty-six carriers who were suddenly deprived of their means of conducting a profitable trade upon the Railway,” (these are Capt. Huish’s own words,) so that in truth it appears that to make a seeming gain of some £15,000. per year, Capt. Huish considers the end has justified the means. “ Thirty-six carriers suddenly deprived of their means of conducting a profitable trade upon the Railway,” may be a source of congratulation to Capt. Huish; that, however, which has been amusement to him, has been death to them, and all for £7,500. seeming gain in six months’ traffic of the greatest of all railway undertakings. In estimating this £7,500. as additional “nett profit in the half-year,” (so Capt. Huish terms it), that gentleman has omitted to debit the account with interest for the new plant, which, as I have already shewn, figures in the 46 capital account rather largely. Depreciation of stock I must not venture to name as an item he should have con¬ sidered, Capt. Huish having proved that your stock, like wine, “ is the better the older it grows.” One other extract from this curious Report, and I have done. It is this : “ This practical amalgamation of interest is fraught with future consequences of great weight, and has placed the Railways in a position of vantage to contend with their natural opponents, the canals, as a strong phalanx, instead of as disjointed members of a jealous and weak because a disunited party.” To all this bombast, February 1849, simply says “ false prophet.” You will he my witness, Sir, that my first Letter to you contained no allusion to Capt. Huish in his private capa¬ city, and not one word that could give his susceptible temperament the slightest abrasion. You will recollect also, that Capt. Huish’s reply to that Letter was couched in a tone tending to throw ridicule over me, and so to shelve the question I had broached. You will not be sur¬ prised that in this, the proof of allegations which in gene¬ ral terms Capt. Huish ventured to deny, I should have been drawn into a severity of remark which I would have preferred to have avoided. Capt. Huish has, however, taunted me, and striven to frighten me from the field; that gentleman has however to learn, that he has met with one who, in the pursuit of truth, has the resolution to press forward, though a whole regiment of Captains with sneers and scoffs attempted to stay his progress. I have been laughed at by one, abused by another, and praised by many, for forcing this question forward. The laughter I can enjoy, for I can laugh too,—the abuse I can bear, for I have had much of it, and have become used to it,—the praise I can appreciate, for onward it and my own sense of right urge me, to denounce and expose a system of management which I believe to be more fraught with danger to the true interests of your Company than any 47 scheme, short, of utter destruction of your property, which the mind of man could have conceived. I may, and pro¬ bably shall fail in my efforts to induce early reforma¬ tion, for proprietors are slow to understand and difficult to move, but whether that coming change which I foresee arise from within or from without your Council-room, I am convinced that the time is not far off when those official clouds which ignorance or interest has spread around you, will soon vanish under the broad sunshine of truth; and when that not very distant day shall come, and present errors made apparent by its advent, then, Sir, I trust I shall be at hand, not to triumph over my fallen ad¬ versaries, but to congratulate you and your proprietors on the fact that you have thrown off those shackles which your amalgamation imposed, and resumed in their place those sound commercial principles which, in your London and Birmingham days, led you on to success, and when again readopted,—as readopted they must be,—will do similar good service to the London and North Western Company. I have the honor to be, Sir, Your most obedient Servant, JOHN WHITEHEAD. London, 2 , Royal Exchange Buildings, 5th February, 1849. P. S. I have been drawn into too much length already to permit me to make further comments on your Coal trade, or to ask some questions as to the past and present, as respects that trade,—I am constrained to leave the matter in the good hands of Mr. Brancker of Liverpool, who in combating the question with Mr. Hudson is virtually doing 48 so with the London and North Western Board. The infor¬ mation I have received on this Coal question is as curious as extraordinary. It would be interesting to ascertain— How many Coal-owners occupy seats at Railway Boards ? I had also intended to go at some length into Capt. Huish’s report on your “Rolling Stock,” and amongst other queries to have asked what number of carriages declared effective in August last have been condemned since as fit only to be broken up. I had purposed, moreover, putting some questions on the subject of Contracts, Trent Valley Share matters, &c., all of which I must postpone to some other opportunity. Mr. Eckersly’s Letter on the Lancashire and Yorkshire traffic, for the same want of space, I am unable at present to advert to farther than to say, that in estimating the amount divisible as profit amongst Shareholders, he has forgotten that which every other Railway Company appears likewise to have a short memory of, namely, depreciation of Stock and Road. Mr. King’s recently published pam¬ phlet, “ Uniformity of Railway Accounts,” I must also pass by, congratulating him on the talent displayed in its composition, and Railway Proprietors on having so able an advocate on the side of right as that gentleman in the work referred to has proved himself to be. Printed by J. Daw and Sons, 13/, Long Acre. BY THE SAME AUTHOR, PRICE ONE SHILLING AND SIXPENCE, “ RAILWAY & GOVERNMENT GUARANTEE,” THE SIXTH EDITION. This Edition can be obtained of the Author only, No. 2, Royal Exchange Buildings. ALSO, OF SMITH, ELDER & CO. THE SECOND EDITIONS OF “RAILWAY MANAGEMENT,” IN TWO LETTERS ADDRESSED TO GEORGE CARR GLYN, ESQ. M.P. PRICE ONE SHILLING EACH.