TRANSACTIONS OF THE SECTIONS. 173 
market, the lowest rate of interest for the time being would always be upon those in- 
vestments which afforded the largest margin for the certain payment of the interest 
and the repayment of the principal at the periodsfagreed on. Of £308,775,894, 
which was the total amount of money raised up to the end of 1856 for the construc- 
tion of railways, £77,359,419, or 25 per cent., formed, in the shape of loans, a first 
charge on the profits of the companies, At the end of 1857, £78,406,237 out of 
£315,147,260, or 24-88 per cent., was similarly advanced. The total profits from all 
railways in 1856 appeared to have been £12,277,712, and the interest upon deben- 
tures and loans £3,607,072; thus leaving a margin of £8,670,640, or 70°62 per cent. 
of net profits, to secure the punctual payment of this interest. Under such circum- 
stances, what could be the cause that the average rate of interest on loans so secured 
should be as high as 4°66 per cent. in 1856, and that in the most favourable year, 
1858, it never fell below an average of 4:14 per cent.? What, again, could be 
the cause that the rate of interest on these securities had gone on increasing in 
successive years till 1856, though the rate of interest on ordinary share capital had 
diminished? In 1857 it was true the rate of interest on this class of securities 
seemed considerably less, but it was still 4°133 per cent., whilst the rate of dividend 
on ordinary share capital had increased to 3°579 per cent. Looking at the very large 
surplus which remained, and the ample security thereby afforded for punctual pay- 
ment of the interest, there seemed no reason to doubt that such loans should be con- 
sidered nearly equal to’government securities. A suggestion had been recently made 
that all such bonds and obligations should be made payable to the bearer, and trans- 
missible from hand to hand without expense or trouble. The suggestion was well 
worthy of notice, and the effect would be, no doubt, to diminish the rate of interest at 
which such advances were made, and ultimately this class of loans would probably not 
differ much in value, nor fluctuate much more in market price, than the public funds. 
A difference of one-half per cent. interest on the existing loans of £78,000,000 would 
amount to £390,000 per annum—no mean advantage to the ordinary shareholders. 
Passing to the question of the preference shares, Mr. Brown pointed out that in 1857, 
if there had been no preference shareholders, but all had shared alike, the average 
dividend would have been 3-915 per cent. The truth was, that the raising of money, 
either by debentures or preference shares, was a false system, and always acted pre- 
judicially to the ordinary shareholders, unless their annual dividends amounted to, at 
least, the same rate per cent. on their capital as they had to give on debentures or 
preference shares. After remarking upon questions of the reduction of the working 
expenses of railways, the increase of traffic receipts (which, notwithstanding periods 
of commercial depression, had made steady progress for several years), Mr. Brown 
said, in conclusion, that some of the evils from which railway shareholders were now 
_ suffering, though recognized, could not be remedied. Mr. Stephenson computed that 
no less than £14,000,000 had been spent in law proceedings. Yet, for all this, if the 
loan, preference and ordinary share capital were considered as one interest, the re- 
sults, though falling far short of the expectations entertained, gave no occasion to 
despair of the future. A net profit of £12,338,586 in 1857 on a capital paid up of 
£315,157,258 (share and loan), yielded 3-915 per cent., and was a fair vantage-ground 
for further progress. With a diminution in the rate of interest when the debenture 
and preference share capital was better understood, under improved management; 
with a revision and a reduction in some of the various sources of expenditure; with 
constantly augmenting traffic receipts; with a cessation of the fatal and senseless 
competition which had so long prevailed; with a tribunal for arbitration which would 
save both legal expenses and the reckless opposition of the companies amongst each 
other; with more regard to the convenience of the public in the arrangement of the 
trains; with more attention to the comfort of third-class passengers; and with some 
system to check the construction of unnecessary lines, and to develop the commerce 
of districts by officials thoroughly versed in the resources they afforded, there could 
be no reason for railway shareholders to give way to despondency, but rather to look 
with pride and satisfaction on a branch of commercial enterprise, the capital em- 
barked in which fell little short of £400,000,000 sterling, and of which the net profits 
on the amount paid up exceeded last year half the interest upon the permanent Na- 
tional Debt. 
