29 JUNE 1867, Page 6


I F Mr. Leo Schuster has failed in his management of the London, Brighton, and South Coast Railway, it has cer- tainly not been for want either of courage or ability. The year has been full of railway scandals, "reports," "replies," "rejoinders," and "apologies," but we have seen no defence so collected or so able as that of Mr. Schuster. It is that of a statesman defending his policy, rather than that of an agent explaining his accounts. The charges against him, signed, be it remembered, by men like Lord Westbury and Sir Charles Jackson, looked at first sight exceedingly serious, indeed, almost unanswerable. The public just now suspect all men, and for more than a week Mr. Schuster has been regarded by railway shareholders as an all but convicted chairman. He was accused, first, of imbecile management, and it was proved that during his reign eight millions had been added to the capital account of the railway, and only 113,000/. to the revenue, the series of transactions therefore yielding not one and a half per cent. where they ought to have yielded five.

He was accused, secondly, of promoting a branch line for himself, as a private individual, telling the shareholders it was promoted by independent persons, and then as Mr. Schuster selling it to himself, as Chairman of the London and Brighton, at a profit ; and it was proved apparently that the owners of the branch were himself and some railway officials ; that he said they were independent, and that he, as Chairman of the London and Brighton, bought the line in which he was largest shareholder. Mr. Schuster replies to the first charge by alleging, first, that three-fourths of the expenditure being on suburban and metropolitan work will be profitable, though not profitable now,—a statement partly admitted by the Com- mittee of Investigation,—and, secondly, that the remainder was forced on him, the shareholders being just as eager to defend their territory from " invasion " as he was himself. He was no wiser than they, but he was not more foolish ; the wars they sanctioned were conducted cheaply,—this seems true, the mileage of construction being very low,—and the receipts of the branch lines have been under-estimated ; one of them in particular, supposed to be worthless, yields 5,000/. a year. In short, Mr. Schuster pleads what Pitt would plead were he alive now,—that he carried out with success, though at great expense, the policy of those whom he was bound to represent, and the plea must be allowed its weight. If the shareholders voted for war heartily, Mr. Schuster's fault in advising war reduces itself to this,—that he was no wiser than the mass of the stupid people who accepted his advice. He was very little in advance of those who elected him their chief. But, hint the Committee, Mr. Schuster had private motives for his advice, carried measures through his House of Commons not by argument, but by wilful misrepresentation. To this Mr. Schuster replies by a flat denial. He has never, he says, done anything for his private advantage, except as owner of 77,000/. in shares in the London and Brighton, which he has tried to make as valuable as possible, that being his own in- terest as well as the Company's. He did build, or rather try to build, the Surrey and Sussex branch, in order to keep out a dangerous competition, but he never owned a share in it in his private capacity, did not even know that the Company's shares were registered in his name. "The documents bear upon their face the fact that the Directors and officers of the Brighton Railway Company were registered as shareholders of the Surrey and Sussex Junction Railway, not for their own benefit, but for yours." The line, he avers, was originally an independent undertaking, got up by people who knew the Brighton Company well, but were not in its service, and with Lord Neville as Chairman ; he was most un- willingly compelled, by fear of the London, Chatham, and Dover, to connect the London and Brighton with the Sussex and Surrey project ; he told the shareholders of the intention to subscribe, and he took the 1,953 shares in the Sussex and Surrey not for himself, but on behalf of the Company now accusing him. They would have had the profit, if any had accrued on the transaction, and not he. In short, the construction and purchase of this line was part of the war, an episode in -a grand, though it may have been an unwise, campaign, the whole of which, though not its details, had been authorized by the shareholding parliament. Mr. Schuster's facts being conceded, this is a strong, though not an absolutely perfect defence ; the shareholders in a rail- way company being much more at the mercy of their leadera than the House of Commons is, even when Mr. Disraeli is leading it, but of course there will be a grand fight over the facts. The Committee will reply, and the Chairman will reply again ; and as the main point is Mr. Schuster's motive, which, nobody knows but himself, the controversy may rage till the public, fairly bewildered with counter-asseverations, will agree. to forget the whole affair. Meanwhile, a new Board has been ordered to get things straight if it can, and to get them straight. by rejecting, as far as possible, every project for a new line, however promising, or however unimportant. Keep down capital, say the Committee of Investigation, and increase your- traffic, buying new lines only when you can get them at ruinous discounts. Keep down capital, says the Times,. and let the branch lines construct themselves. Build nothing,. shouts the chorus of shareholders, and buy nothing which will not directly pay us five per cent. The one idea of the- railway reformers, the single panacea which occurs to City journalists, the one mode of saving themselves which strikes- shareholders' imaginations, is to make their undertaking as useless to the community as possible. The whole duty of a. general in their eyes is to throw up strong entrenchments, the- first business of a merchant to sell as little as he conveniently can. We dare say they are right from their point of view. Indeed, it stands to reason that if a company by building a single line can induce the whole traffic of a district to flow towards that line, if they can compel farmers to do badly with carts work which they themselves should do well with loco-. motives, if they can suppress all competition without supply- ing all wants, and tax everybody for services yielded only to a. few, their undertaking cannot well fail to be profitable. The- way to secure the greatest dividend for a railway company, is- to monopolize one trunk route and leave it without feeders, and the nearer the approach to that ideal the higher will ba- the price of shares. The cost of reaching the railway is, in fact, borne by the nation, or that section of it which is compelled te- nse the line. A great body of expense which ought to be borne. by the Company in return for its monopoly and its privileges,-- the right, for example, of treating debts for fares as criminal' offences,—is borne by the district, and, of course, everything is most pleasant for proprietors. But then it is not so. pleasant for anybody else. If the Railway Companies demand privileges from the people they must pay for them, and the-- first most just and most necessary payment is to supply the popular need of communication. What else is the moral justification for extorting " Parliamentary " trains ? To. secure this end by forcing the Companies, as we now do, either to fight for their territory, or "amalgamate" with some com- peting line, is an arrangement as cumbrous, as expensive, and as imperfect as English arrangements usually are, but the 'end is a sound one, and it is the end which railway shareholders, and City article writers, and the whole body of investors are- now clamorously denouncing.

It has to be attained somehow, and the only point is how.. The shareholders, and the Times, and the Stock Exchange, and Lord Redesdale, who is on this point their parliamentary spokesman, may make as much noise as they please, but five- sixths of the property -.holders, farmers, and people of Great Britain will not put up with expense, annoyance,. and galling inferiority, in deference to any theory what- ever. So long as there is a farm in England more- than five miles from a railway, so long some one is. injured by the State granting advantages to his neigh-- boar which it does not grant to him, and no injustice of that kind felt by thousands can in this country be of long con- tinuance. In this very branch, about which so much has been- said, Lord Neville was chairman of the Company, and any-- body who knows where the Abergavenny property is, can see- that he was directly protecting his father's property, tenantry, and labourers, in fact, the other interests which those who- denounce the " branch " lines, that is, in better English, the- rural lines, persistently ignore. The Railways cannot fight interests so great, so permanent, and so justly exasperated by neglect, and if they intend in the interest of their dividends- to give up "wars," they must first devise some better scheme- for satisfying the legitimate requirements of the country. The Post Office might as well be permitted to run mails only on the profitable routes. They must support some new and effective plan, and we believe there are but three among which they will ultimately be able to choose. The first and, in our judgment, the best, the absorption of all Railways by the State, we mention only to exhaust the alternatives. Nothing so great, so difficult, and so effective will be accom- plished, or attempted, or understood by so effete a body as the present House of Commons, or by politicians steeped to the lips in the.worn-out philosophy of laissez-faire. The second is to purchase freedom from competition by a contract to complete the supply of accommodation, each district of England being assigned to some railway or group of railways on certain con- ditions, the object of which would be to open cheap but very numerous feeders. This plan would pay the Companies, for it would relieve them of all the irregular expenses—law charges, promoting charges, rent charges, and the rest of the half-fraudulent, half-inevitable bills against thEri which now eat away shareholders' dividends. The objection to it is, that unless the chairman of each group were an official responsi- ble to Parliament,. amenable to the public and the Press, the monopolists would be a little too powerful, might grant "pre- ferential rates," for example, to "large customers" to an extent which would soon ruin all small capitalists. There is a nasty practice of that kind already in vogue which greatly needs exposure. The third plan, which has attracted atten- tion from many keen minds, and has been tried on a small scale in France, is to consider the rural railways high- ways, which in fact they are, build them out of county rates, and only manage them through the great companies on terms to be mutually arranged, the Companies, of course, making concessions to avoid "running powers "—a terrible but necessary nuisance—and the counties making concessions in.consideration of the immense increase in the value of landed property. Nobody gains by the rural railways so directly as the landowners and their tenantry. It is they even now who hold most of these branch railway shares, and who will lose by their failure, and the substitution of " rates " for "sub- scription" will only equalize the burden. If the Railways are well made and pay, the counties will gain them without expense ; if they are badly made and do not pay, the loss will be as fairly distributed as the gain. The counties, moreover, will build the lines cheaply, make serviceable instead of showy bridges, and viaducts which will stand instead of viaducts like some we could point out, the primary idea of which has been to !increase a great engineer's swollen reputation. The plan needs much discussion, but to some such scheme we must come at last, if the State is not to take the Railways, and the Companies are not to build branches, and entire districts, like parts of Wales, South Scotland, and others are not to be left behind by the march of civilization. Shareholders may be quite right in abusing branches, but the counties will be mad to give them up. Mr. Schuster may be another Hudson for aught we know or care,—though we do not believe it,—but Mr. Schuster would have been a benefactor to Sussex and Surrey, which are now expected to swell railway dividends, and not get roads to market for their wheat in return.