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IMPOSITION UPON THE SHAREHOLDERS.

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sinister influences are at work, let him read the seductive statements by which shareholders are led to authorize new projects, and then compare these with the proved results. Let him look at the estimated cost, anticipated traffic, and calculated dividend on some proposed branch line; let him observe how the proprietary before whom the scheme is laid, are induced to approve it as promising a fair return; and then let him contemplate, in the resulting depreciation of stock, the extent of their loss. Is there any avoiding the inference ? Clearly, railway-shareholders can never have habitually voted for new undertakings which they knew would be injurious to them. Every one knows, however, that these new undertakings have almost uniformly proved injurious to them. Obviously, therefore, railway-shareholders have been continually deluded by false representations.

The only possible escape from this conclusion is in the belief that boards and their officers have been themselves deceived; and were the discrepancies between promises and results occasional only, there would be grounds for this lenient interpretation. But to suppose that a railwaygovernment should repeatedly make such mistakes, and yet gain no wisdom from disastrous experiences—should after a dozen disappointments again mislead half-yearly meetings by bright anticipations into dark realities, and all in good faith-taxes credulity somewhat too far. Even, then, were there no demonstrated iniquities to rouse suspicion, we think that the continuous depreciation in the value of railway-stock, the determined perseverance of boards in the policy that has produced this depreciation, and the proved untruth of the statements by which they have induced shareholders to sanction this policy, would of themselves suffice to show the essential viciousness of railway-administration.

That the existing evils, and the causes conspiring to produce them, may be better understood, it will be need ful briefly to glance at the mode in which the system of extensions grew up. Earliest among the incentives to it was a feeling of rivalry. Even while yet their main lines were unmade, a contest for supremacy arose between our two greatest companies. This presently generated a confirmed antagonism; and the same impulse which in election contests and the like, has frequently led to the squandering of a fortune to gain a victory, has largely aided to make each of these great rivals submit to repeated sacrifices rather than be beaten. Feuds of like nature are in other cases perpetually prompting boards to make aggressions on each other's territories—every attack on the one side leading to a reprisal on the other: and so violent is the hostility occasionally produced, that directors might be pointed out whose votes are wholly determined by the desire to be revenged on their opponents.

Among the first methods by which leading companies sought to strengthen themselves and weaken their competitors, was the leasing or purchase of subordinate neighbouring lines. Of course those to whom overtures were made, obtained bids from both sides; and it naturally resulted that the first sales thus effected, being at prices far above the real values, brought great profits to the sellers. What resulted ? A few recurrences of this proceeding, made it clear to quick-witted speculators, that constructing lines so circumstanced as to be bid for by competing companies, would be a lucrative policy. Shareholders who had once pocketed these large and easily-made gains, were eager to repeat the process; and cast about for districts in which it might be done. Even the directors of the companies by whom these high prices were given, were under the temptation to aid in this; for it was mani. fest to them that by obtaining a larger interest in any Buch new undertaking than they possessed in the pur

GETTING UP SUBSIDIARY LINES.

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chasing company, and by using their influence in the purchasing company to obtain a good price or guarantee for the new undertaking, a great advantage would be gained: and that this motive has been largely operative, railway history abundantly proves.

Once commenced, sundry other influences conspired to stimulate this making of feeders and extensions.

The nonclosure of capital-accounts rendered possible the “cooking" of dividends, which was at one period carried to a great extent. Under various incentives, speculative and other, expenditure that should have been charged against revenue was charged against capital; works and rolling stock were allowed to go unrepaired, or insufficient additions made to them, by which means the current expenses were rendered delusively small; long-credit agreements with contractors permitted sundry disbursements that had been virtually made, to be kept out of the accounts; and thus the net returns were made to appear much greater than they really were. Naturally the new undertakings put before the moneyed world by companies whose stock and dividends had been thus artificially raised, were received with proportionate favour. Under the prestige of their parentage their shares came out at high premiums, bringing large profits to the projectors. The hint was soon taken; and it presently became an established policy, under the auspices of a prosperity either real or mock, to get up these subsidiary lines—“calves," as they were called in the slang of the initiated-and to traffic in the premiums their shares commanded.

Meanwhile had been developing a secondary set of influences which also contributed to foster unwise enterprises; namely, the business interests of the lawyers, engineers, contractors, and others directly or indirectly employed in railway construction. The methods of projecting and carrying new schemes, could not fail, in the

course of years, to become familiar to all persons con cerned; and there could not fail to grow up among them a concerted system of tactics calculated to achieve their common end. Thus, partly from the jealousy of rival boards, partly from the avarice of shareholders in purchased lines, partly from the dishonest schemings of directe ors, partly from the manœuvres of those whose business it is to carry out the projects legally authorized, partly, and perhaps mainly, from the delusive appearance of prosperity maintained by many established companies, there came the wild speculations of 1844 and 1845. The consequent disasters, while they pretty well destroyed the last of these incentives, left the rest much as they were. Though the painfully-undeceived public have ceased to aid as they once did, the various private interests that had grown up have since been working together as before have developed their systems of coöperation into still more complex and subtle forms; and are even now daily thrusting unfortunate shareholders into losing undertakings.

Before proceeding to analyze the existing state of things, however, we would have it clearly understood that we do not suppose those implicated to be on the average morally lower than the community at large. Men taken at random from any class, would, in all probability, behave much in the same way when placed in like positions. There are unquestionably directors grossly dishonest. Unquestionably also there are others whose standard of honour is far higher than that of most persons. And for the remainder, they are, we doubt not, as good as the

Of the engineers, parliamentary agents, lawyers, contractors, and various others concerned, it may be admitted that though daily custom has induced laxity of principle, yet they would be harshly judged were the transactions that may be recorded against them, used as

mass.

INFERIORITY OF THE CORPORATE CONSCIENCE.

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tests. Those who do not see how in these involved af. fairs, the most inequitable results may be wrought out by men not correspondingly flagitious, will readily do so on considering all the conditions.

In the first place, there is the familiar fact that the corporate conscience is ever inferior to the individual conscience-that a body of men will commit as a joint act, that which every individual of them would shrink from, did he feel personally responsible. And it may be remarked that not only is the conduct of a corporate body thus comparatively lax, but also the conduct towards one. There is ever a more or less distinct perception, that a broad-backed company scarcely feels what would be ruin ous to a private person; and this perception is in constant operation on all railway-boards and their employés, as well as on all contractors, landowners, and others concerned; leading them to show a graspingness and want of principle foreign to their general behaviour. Again, the indirectness and remoteness of the evils produced, greatly weaken the restraints on wrong-doing. Men's actions are proximately produced by mental representations of the results to be anticipated; and the decisions come to, largely depend on the vividness with which these results can be imagined. A consequence, good or bad, that is immediate and clearly apprehended, influences conduct far more potently than a consequence that has to be traced through a long chain of causation, and, as eventually reached, is not a particular and readily conceivable one, but a general and vaguely conceivable one. Hence, in railway affairs, a questionable share-transaction, an exorbitant charge, a proceeding which brings great individual advantage without apparently injuring any one, but which, even if analyzed in its ultimate results, can but very cir cuitously affect unknown persons living no one knows where, may be brought home to men who, could the re

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