RAILWAY SQUABBLES.
After all, the London and Portsmouth Direct Railway would not furnish many incidents which are not common in the history of all railway undertakings. Its career has been over and over again described, and the general result has been an opinion that, like many other projects which have been started with a view to raise unfortunate Portsmouth to that commercial and mercantile importance which nature intended it to assume, and to which it has a perfect right, the Direct Railway scheme, so far from its being carried out in its entirety, has been a miserable failure. As in all other bubble schemes, the most extravagant promises were made; the more than ordinarily sanguine entertained the most hopeful expectations of success; and credulous men fancied they saw looming in the distance a probability of being relieved from what they rightly considered to be a gross monopoly on the part of the then existing Railway Companies. ‟But, alas!” as a worthy but garrulous member of our Borough Council would say, ‟they gave the word of promise to the ear and broke it to the hope.” Even Solomon of old, with all his wisdom, could not have uttered a wiser or more truthful saying than that enunciated by his namesake in modern times.
It is unnecessary, however, at the present time to review in detail the several events which have marked the history of that line of railway. Suffice it to say that, after all the vicissitudes which have beset it in its career, it has arrived at a crisis when it may be the means of redeeming some of the many pledges which were given on its behalf, or per contra, its failure may be consummated and rendered absolute.
Our readers are no doubt aware that an agreement has been entered into between the Directors of the London and South-Western Company and the Directors of the Portsmouth Direct Railway for the virtual transfer of the latter line to the former Company on certain conditions, subject, of course, to the approval of the general body of shareholders. The agreement in effect is, that the South-Western Company shall lease the line in perpetuity, or, more correctly speaking, for a term of 999 years, and on account of such lease shall pay over to the Portsmouth shareholders an annual sum of 18,000l. To the financial part of the agreement, however, some of the shareholders of the Direct Line have demurred. It is necessary, in order to carry the agreement into absolute and final effect, that it should receive the assent of the holders of at least three-fourths of the shares. At the last Wharncliffe meeting, however, a proposition was made by Mr. Locke which had for its purpose the cancelling of the agreement, unless the South-Western Company would consent to increase the sum be paid on account of the lease from 18,000l. to 20,000l. Inasmuch, therefore, as that proposal was not negatived by shareholders representing three-fourths of the shares, the original proposition of the Directors was, to all intents and purposes, defeated, and the agreement is, so far, null and void. Now it certainly is a matter for regret that Mr. Locke and those who acted with him should have thought proper to pursue such a course, which cannot, so far as we can see, be productive of any beneficial results either to themselves or anybody else, and may, as we have before intimated, exchange a certain gain for a certain loss. The addition of 2,000l. a year would, under any circumstances, give but a small increase to the profits of individual shareholders, and the probability is that, like the dog in the fable, in endeavouring to catch the shadow of a benefit, they would lose the substance. The 18,000l. per annum would, of course, be a dividend on a capital of 485,000l., and, assuming that the debenture debt will be got out at four per cent., there will be a dividend of 3l. 12s. per cent, for the shareholders. Certainly, there ought to be no difficulty in getting the debenture stock out at that rate per cent., inasmuch as the South-Western Company get theirs out on the same per centage, or, indeed, lower, and the security is the same, if not better. Now, the Directors of the Portsmouth line have stated clearly that the capital (485,000l.) will not be exceeded, and therefore it should be remembered that, by confirming the agreement between the two companies, the shareholders of the Portsmouth line get rid of directors, lawyers, engineers, and, in point of fact, of all their staff, leaving the 18,000l. a year clear for division amongst themselves.
Now, what will be the result if the minority persist in their refusal to sanction the terms agreed upon between the Directors of the two lines? The Directors of the South-Western Railway have declined to recommend the shareholders of that line to accede to the proposals of the minority, and have determined to treat the arrangement as ended, unless, at the ensuing Wharncliffe meeting, to be held on the 24th of the present month, sanction is given to the bill for legalising the proposed transfer. The Directors of both companies, we are bound to say, have not been precipitate in the course which they have already pursued, but, on the contrary, the Directors of the Portsmouth line have felt it to be their duty to call the shareholders of that line together again, in order to give the minority the opportunity of reconsidering the expediency of the course adopted by them at the recent meeting, and they therefore intend again to submit the bill for the consideration of those shareholders at the next Wharncliffe meeting. There can no doubt the Directors have good reason for saying that they are utterly unable to see their way, in a financial point of view, to take the working of the line into their own hands, which would be absolutely ruinous to the existing body of shareholders. And, yet, they must select one of two alternatives. They must either approve the bill on the terms of the arrangement with the South-Western Company, as previously agreed upon, or take the working of the line into their own hands, for the purpose of securing an independent line, which, however desirable it may be, will never be accomplished, and the discontented shareholders, therefore, are only striving to catch a mere phantom. We are really inclined to give the South-Western Company credit for exercising an extraordinary amount of forbearance. Surely, it is for them, and not the Portsmouth Company, to dictate terms. Whatever they might gain, they have nothing to lose by the continued obstinacy of Mr. Locke and his followers, because there does not appear to be the slightest probability of the Direct Line ever been worked as an independent line; and there can be no doubt that, if the London, Brighton, and South-Coast Company thought it would be to their advantage to lease that line and verge it with their own at Epsom or elsewhere, they would not permit the South-Western Company to take possession without a spirited competition. Under these circumstances, if the South-Western Company were to determine to abandon the proposition altogether, and to leave the Direct Line to its fate, there would be no difficulty in prophecying the result. It ought to be remembered that, although the Directors have obtained running powers into the borough of Portsmouth, they have no power whatever to use the station at Landport, and therefore must build one for themselves, at a cost, probably, of some 40,000l. or 50,000l. Then, again, it would be necessary to purchase plant, in order to work the line as far as Godalming; and a third, and still more important consideration, is that there are no running powers even over the South-Western Line between Godalming and London, nor are there likely to be any, inasmuch as it is only the custom of the Board of Trade to report favourably for the granting of running powers over short distances, as, for instance, between Havant and Portsmouth. We know it is the opinion of many shareholders that the Cardwell Act grants that power, but such is, we are convinced, an entire mistake. The Cardwell Act provides that one railroad shall forward the traffic of another within a reasonable time. Now, of course, there may be many opinions as to what is meant by ‟a reasonable time,” and our opinion is that it would by no means prevent passengers being detained at Godalming one, or even two, hours before they were forwarded to London.
It obvious, therefore, that, all circumstances considered, the shareholders of the Direct Line will pursue a course eminently detrimental to their own interests by rejecting the proposition which will again be brought under their consideration at the ensuing Wharncliffe meeting. It is evident that they commenced their undertaking without correctly estimating the probable results; and, inasmuch as their sanguine expectations have been egregiously disappointed, it behoves them to make the best of a bad job. Let them be assured, therefore, that the first sacrifice (if sacrifice, indeed, it can be called) will be the least, and in all probability the last. Mr. Locke, it is true, has still held out some further hope—groundless though it may be—by intimating that the prospect of a line being constructed between Petersfield and Southampton would enforce submission on the part of the South-Western Company; but it is for the shareholders of the Direct Line to consider whether—with 4½ rate of discount, a possibility of war, and the certainty of five or six years being absorbed in the formation of that line, even if the money were subscribed—such a line, when completed, would be likely to prove more remunerative than the 18,000l. guaranteed, clear of all demands. We really hope, on every ground, that Mr. Locke will see fit to withdraw his opposition to the transfer, and that he will advise his co-oppositionists that it is better to secure even a small dividend than no dividend at all.