§ MR. DIVETTrose to present a petition, signed by thirty-one of the shareholders of 582 the Eastern Counties Railway. This petition made grave charges against an hon. Gentleman a Member of this House—the representative of Sunderland—in his capacity of chairman of the railway in question. He (Mr. Divett) had thought it to be his duty to send a copy of the petition to the hon. Gentleman whom it implicated. He did not think it necessary that he himself should state the allegations of the petitioners, but their prayer was that the House would cause a full inquiry to be made into the charges which they brought, and in the event of these charges being proved that the hon. Gentleman should be expelled from the House. He had only to move that the petition be read by the clerk at the table.
§ MR. CHARTERISsaid, that he also had a petition to present, signed by sixty shareholders of the Eastern Counties Railway, complaining generally of the mismanagement of the affairs of the company, stating that that mismanagement had commenced almost immediately after Mr. Hudson had become chairman, and Mr. Waddington, also a Member of the House, had become deputy-chairman, and while Mr. Bagshaw, also a Member of the House, had been one of the board of directors. The petitioners prayed for the institution of a searching inquiry into the affairs of the company. The hon. Gentleman added, that he presented the petition without expressing any opinion upon the allegations which it contained.
"Petition of John Spark, and others, complaining of the conduct of George Hudson, esquire, a Member of the House, and Chairman of the Eastern Counties Railway Company, and praying for inquiry, and that he may be expelled from being a Member of the House, offered;
"Petition of Proprietors of the Eastern Counties Railway, complaining of the conduct of George Hudson, esquire, and David Waddington, esquire, Members of the House, and Chairman and Deputy Chairman of the Board of Directors, and of John Bagshaw, esquire, a Member of the House, and a Director of the Company, and praying for inquiry, offered;"
§ MR. HUDSONSir, I felt it my duty, though labouring under considerable difficulty in consequence of domestic affliction, to attend in my place immediately on receiving a copy of these petitions. I am sure I shall have the kind indulgence of the House while I offer my explanations and observations with reference to these 583 petitions. If I had been guilty of the practice which is imputed to me, of designedly taking from what may be termed the revenue to the capital without a fair and sufficient reason, I might feel that I had committed an error; but I can assure the House it was not an intentional error on my part. My first connexion with this company was in 1845; I believe in the month of October. I received a deputation bringing a requisition signed by seven-eighths of the shareholders; I refused in the first instance to take upon myself the office of chairman of this company; but after some pressure I did undertake it. Before then I had no shares in the company, no interest in it whatever; I was not connected with it in any way. My sole object in taking the office was to endeavour, if possible, to benefit the shareholders of that company, and to effect some arrangement with the then projected London and York Company. Upon my accession to the office, I devoted myself as anxiously and assiduously to the duties as I possibly could. I believe the first charge is, that I raised the dividend from 3s. to 9s. the first half year; in one of the petitions presented to the House the following paragraph occurs:—
That, so far has this system prevailed, that, although in July, 1845, the half-yearly dividend declared was 3s. per share, in January, 1840, a half-yearly dividend of 9s., or three times the previous amount, "without any change of circumstances to allow of such augmentation, was proposed and carried by the directors, and subsequent half-yearly dividends of 9s., 10s., 10s., 8s., and 8s. have been successively made, when, by the report of the accountants of the Committee of Investigation, it appears that 3s. 8d., 2s. 1d., 6s. 10d., is. 4d., and 2s. 4d. ought only to have been declared. That the consequences of these false appearances of prosperity have been the indulgence in the most reckless extravagance, the encouragement of schemes of extension and amalgamation which would not otherwise have been thought of, the actual increase since January, 1845, of the capital of the company from 2,908,780l. to 10,861,593l., exclusive of the projected amalgamation with the Norfolk Company "—and so on. It so happens that the market value of shares was higher at the time I joined them than they have ever been since. And the petitioners state most distinctly—I beg the House to mark this, to see what is the correctness of these sixty shareholders—that there was no change of circumstances, no reason why we should go to a dividend of 9s.; I think, when I state the facts, the House will agree that that statement is not borne out. In the 584 half year ending July 1845, the gross income was 114,000l.; in the half year ending January 1846, it was 173,000l., an increase of nearly 60,000l, Surely the House will agree that there was a justification for some increase of dividend. As to whether the dividend declared was the right one, I believe the accountant—the person set to examine the books—states the dividend to be right, except some 11,000l. It is a question, I am sure, that no two persons would agree upon—what ought to be carried to capital and what was revenue; and therefore I feel that there is an ample justification for an increase of dividend. But the petitioners state that the capital of the company has been raised from 2,900,000l. to 10,800,000. That is not true either. The capital of the company when I joined it was 2,900,000l. There was 1,300,000l. (and odd) of the Northern and Eastern, which made the capital of the company 4,300,000l., instead of only 2,900,000l. Then there was added to it a bonus of 1,000,000l., which made it 5,300,000l. Therefore the money actually expended since I had the honour of presiding over that board has been 5,500,000l. The income when I joined was 228,000l.; last year it was 800,000l. I think the petitioners' complaint, that money has been wastefully and extravagantly expended, falls to the ground, when the increase of capital was only about two-thirds, and the increase of income is to four times the amount. There is a statement in the report of that Investigation Committee, as it is called—a committee of which I must complain most strongly from its unfair proceedings: I had no notice, no knowledge of what was passing in that committee; no information was furnished me, except three or four written questions; I had no information that such and such assertions were made against me as an individual. And when I called upon them yesterday morning—I only wish to show the unfair position in which I have been placed—when I called along with a friend to see a document purporting to be in my handwriting, with my figures—stated by them—I had great difficulty first in obtaining a sight of that document; and when I did get to see it, they refused to let it be seen in the presence of any other person; and afterwards they said that two of their body should come into the room to show it me, on condition that I should ask them no questions, and get no information. I do not know what 585 the House think of the fairness of such conduct; but I am sure there is only one opinion among Englishmen, that it is but fair and just that information should have been furnished me of the specific charges, and that I should have had the opportunity of answering them. But, what will the House think when I state, upon the testimony of myself and two gentlemen, and I believe I might say, hundreds of others, that not one figure, not one mark upon that document is in my handwriting? I totally deny that any such alterations were made by me. The evidence of the accountant goes to show that when alterations were made they were made by the Board itself; and it is only in the report of this Committee that the charge is brought against me of having individually altered the sum of 10,000l. there referred to. There might have been reasons, from the stock of materials on hand, and other circumstances, why that direction was given. I am personally charged with making certain marks and figures upon the paper referred to. I doubt, however, whether in my individual capacity I altered it at all. It is stated by the Committee—and I caution the House not to be led away by its statements—that I authorised the carrying of 115,000l. from revenue to capital; but I have no hesitation in saying that I did nothing of the kind. On one point the Committee seem to be singularly at fault. I find, on looking at the working expenses of the line, that the published accounts show the average cost of working to be 1,235l. per mile—a sum quite ample enough for the purpose; but the report of the Committee raises it to 1,557l. per mile—a sum perfectly exorbitant. The average expense of working the London and North-Western is 39 per cent; the Great Western, 40.4 per cent; the Lancashire and Yorkshire, 39.4 per cent; and the Brighton line, 37.8 per cent. This shows the general rate of working charges; but in the face of these facts the Committee will have the public to believe that the Eastern Counties line is worked at an expense of 55. per cent. This is so monstrous and absurd that no one having any railway knowledge at all will for a moment believe it. This is brought forward against me as a grave charge; and, if it were true, I should feel deep regret that I had been betrayed into so great an error; but I think the House will agree with me, that from the manner in which the Committee have reported, and from the animus they have 586 shown, they are not entitled to credit from the House. The petition broadly asserts that I have done all this for the sake of profit. That I totally deny. Let any Gentleman search the share register of the company, and they will find that the amount of stock held by me is the same as on the first day when I joined the company. I have neither bought nor sold; but I am a sufferer to a large extent, and I hold the same stock that I did when I first joined the company. I do not know that there are any other points that call for explanation. I will only remind you that the accountant states distinctly that any alterations made were made by the directors, and therefore the petition ought not to have been directed against me individually, but against the directors, with whom I held a joint responsibility. I was seldom able to attend the meetings of the finance committee. I never signed a check for the company in my life. I merely presided over their affairs, and was anxious to do my duty to the best of my power. I may have taken over sanguine views of this undertaking; but I am a sufferer along with the rest in consequence of those sanguine views; and I am convinced that this undertaking will yet amply remunerate the shareholders when the expenses of management are brought down, as it has ever been my anxious desire to do. I can only say that I throw myself upon the House, and that I am perfectly ready to bow to any decision the House may come to. I am ready and anxious to clear myself from any imputation cast upon me; and I distinctly deny that I have done anything either to enhance improperly the value of the shares, or to give an undue position to them. The House will recollect, that when I joined the company there was scarcely a day without several accidents on the line. It was completely out of order; a large expenditure of stock was necessary for the improvement of the line, and I do not think it was unfair or improper to charge a considerable amount of that to capital rather than to revenue. You will see from a report that has been published this morning that another company has placed 150,000l. to capital that ought to go to revenue; and the chairman, instead of being blamed, is praised and' extolled. I think that if the House were, by an express enactment, to determine what is capital and what is revenue, what ought to go to capital and what should go to revenue, directors would then have no difficulty, as they would be 587 guided by strict law; but nothing can be more difficult, or attended with greater anxiety, than the state of matters at present. I recollect a case in which the Grand Junction charged for repairs 14,000l. which was taken from revenue and placed to capital. One charge against me relates to the payment of interest; but Parliament itself has sanctioned the payment of interest out of capital. I do not see why one law should apply to the Eastern Counties, and another to other companies. My position has been a most difficult one; but I leave it to the House to deal with the petition as they may think proper. I have no other explanation to give. I repeat that I totally deny that the alterations of the figures which is mentioned in the report were in my handwriting, or that I altered them at all in any way whatever.
MR. WADDINGTONsaid, it was his most painful duty to have to follow the hon. Member for Sunderland, and he would do so briefly in the observations which he had to address to the House. He should not have thought it necessary to address them if he had not thought some explanation was due from him. In that petition he was charged with being a party to deceiving the shareholders with respect to something like nine millions of money. He availed himself of this opportunity of first calling the attention of the House for one moment as to how those statements made their appearance. They appeared from the report of the investigation committee; and his object in rising was to claim the indulgence of the House to detail a few of the proceedings of that investigation committee as regarded himself, inasmuch as the House had an interest in his character, and in defending him from statements to which he was not a party. He had, however, alluded to this on a former occasion, when a committee of the shareholders made a charge against him, and which a committee of that House was appointed to investigate. He wished now to allude to it, inasmuch as when he recently addressed the shareholders he charged the committee of investigation with having inserted a clause which many of their body looked upon as expunged, and which was obviously incorrect. He, therefore, called upon the House to bear in mind the evidence given before the committee, inasmuch as he had not the opportunity of correcting any statement which might have been made before it. With respect to what had fallen from the hon. Gentleman the Member 588 for Sunderland in reference to the alteration of the document not being in his handwriting, all he wished to say that although the accountant had given it as his opinion that the document was in the handwriting of the hon. Gentleman, yet, he having denied that it was in his handwriting, he had nothing more to say upon the point. He should not trouble the House with the details referred to in the report of the committee, believing that it would not be edified by them. He had already stated that the amount of liabilities mentioned by the committee was incorrect. He reiterated that statement now, and had to complain that the committee had not given him an opportunity of answering that statement, or making known to him what he had to answer, during the period they were sitting. With respect to investigation, he should be happy to bow to any that the House might think proper, believing that they would come to the conviction that during the last three years of his life he had devoted every faculty of his mind to promoting the present and future welfare of the Eastern Counties Railway, and if he had erred it was in judgment only. He had done all in his power to promote the prosperity of the line, and to place it in a healthy and sound condition.
§ MR. HUDSONhoped he would be allowed one word of explanation with reference to a matter which he had forgotten to mention. He was merely going to show the incorrectness of the committee's report respecting the amount of money stated to have been carried over from revenue to capital. The committee had forgotten that 27,000l for the working of the line was due from another company to the Eastern Counties, and was not included in the 115,000l. which they said ought to be charged to revenue. It was perfectly clear, therefore, that they were wrong in this as in other matters, and that the House could not place much reliance upon such a report.
§ MR. BAGSHAWSir, I belong to the Northern and Eastern Board, and it is so stated in the committee's report. One-third being shareholders in the Eastern Counties, there were six gentlemen sitting on the Eastern Counties board who hold shares in this company. I am one of those; but as we owe no allegiance to the sixty gentlemen who have signed this petion out of 14,000 shareholders—though we owe no allegiance to these gentlemen, we owe a great deference to the opinion of 589 this House. I am not a very young Member of it, as you all know, and if I were to be thought capable of having acted as the hon. Gentleman the chairman of the committee of investigation has stated, I, as one of the directors, have done, I should think myself quite unfit to sit in this House at this moment. Having mentioned that I belong to the Northern and Eastern board, I may mention as a vindication that the board of the Eastern Counties have had a meeting this morning. This case has been gone into by my hon. colleagues, and I am proud to say I have been returned unanimously by the Eastern Counties board to sit again, by the self-same gentlemen who before sent me there. That is a sufficient justification of my conduct; and I only repeat, in justice to the hon. Member for Sunderland, that on the occasion of his going to Norfolk to investigate the concerns of this line in 1848, he said to me, in great agony of spirit, "Mr. Bagshaw, I have been grossly deceived in these matters." So much I am bound to say in vindication of the hon. Gentleman opposite. I am convinced that the gentlemen with whom I was associated have to the best of their ability done their duty under the peculiar circumstances in which they found themselves placed.
§ Petitions to lie on the table.