SUBSCRIPTION RATES (Post Free) :
UNITED KINGDOM : Three months, 7s. ; six months, 14s. ; one year, 28s.
ALL FOREIGN COUNTRIES : Three months, 7s. 6d. ; six months, 15s. ; one
^ year, 30s.
Payable in Advance.
Norfolk House, Norfolk Street,
Daily] Established 1884. [One Penny.
THE FINANCIAL NEWS.
CIRCULATION LARGER THAN ALL OTHER FINANCIAL PAPERS IN
Is read by all who have money to invest.
Is read by all who have money invested.
Is read by all who have investments to offer.
SPECIAL INDUSTRIAL AND
HOME AND AMERICAN
SPECIAL BANKING AND
For sale at all Railway Stations, and by all Newsvendors
throughout the United Kingdom.
INLAND SUBSCRIPTION (including postage) :
Six Months, 19s. 6d. Twelve Months, 1 19s.
Advertisement, Publishing 1 , & Editorial Offices:
11, ABCHTJRCH LANE, LONDON, E.G.
Branch Offices :
BERLIN, PARIS, NEW YORK, CAPE TOWN, ROME, MALTA, & PERTH (W.A).
Telegraphic Address : 'Financial News,' London.
(HUeklj) Commercial ^imts, JJanker'a (fenztttt, anb
A Political, Literary, Financial, and General Newspaper.
Price 8d. ; by post, 8jd. Annual Subscription for the United Kingdom, 2.
Colonies and Abroad, 2 4s.
A recognised authority on all Financial and Commercial subjects. In addition to
a large high-class general circulation, the ECONOMIST is subscribed to by Bank-
ing Houses, Chambers of Commerce, Mercantile Firms, and Railway, Insurance, and
other Companies throughout the United Kingdom, the Colonies, and Abroad ; and,
as its columns from week to week show, it is the recognised organ for the announce-
ments of some of the most important trades in the Kingdom.
PUBLISHED EVERY SATURDAY IN TIME FOR THE MORNING MAILS.
Granville House, Arundel St., Strand, W.C.
And of all Booksellers and Newsagents.
INVESTOR'S MONTHLY MANUAL.
Established 1864. Monthly ONE SHILLING.
By post, Is. l^d. June and December Numbers, Is. 6d. each ; post free,
Is. 9d. Annual Subscription, post free, 14s. 9d.
The INVESTOR'S MONTHLY MANUAL is by far the most complete
periodical record in existence of the matters with which it deals. It is published at
the end of every month, and gives the highest, lowest, and latest prices during the
month of all Stocks, Railway Shares, Banking Shares, and other Securities ; the mode
in which their dividends are payable, their four last dividends, and the yield to in-
vestors on last year's dividend at the latest price, etc. The MANUAL includes
Stocks dealt in at the Provincial Exchanges as well as in the London Market It
also contains notes upon current topics of interest to investors. The June Double
Number gives, in addition to the above, the highest and lowest prices for four years
and a half, and a statement of the half-year's results. The December Double Number,
in like manner, contains the prices for five years, and a financial history of the year.
The Double Numbers also give a quantity of information respecting the finance and
commerce of Foreign States, the addresses of the various Companies whose securities
are quoted, with the names of the Chairman and Secretary, and various other par-
Granville House, Arundel St., Strand, W.C.
And of all Booksellers and Newsagents.
BKITISH RAILWAY FINANCE:
A GUIDE TO INVESTORS
SOME BOOKS FOR INVESTORS.
HOW TO SPECULATE IN MINES. By WALTER W.
WALL. With diagrams. Crown 8vo., cloth, 6s.
' Mr. Wall has evidently a clear knowledge of the subject with which
he deals ... a volume which is bound to have a large sale among tho^e
to whom mining securities appeal.' Financial News.
' If people must speculate in mines it is well that they should do so with
knowledge, and this book is calculated to give them that knowledge.'
f Appears to be written with the honest desire to afford real guidance.'
HOW TO INVEST AND HOW TO SPECULATE. By
C. H. THORPE, Financial Editor of the Pall Mall Gazette.
Crown 8vo., cloth, 5s.
' His aim has been a popular volume for the general investor and
speculator, and he has achieved it with pronounced success.' Financial
'A large proportion of books of financial advice are written on behalf of
outside brokers and others who cannot be deemed disinterested, but " How
to Invest " is by no means of that class ; the very antithesis. . . . This
latest addition to the literature of finance is a most admirable book.'
' This book covers the field completely.' Pall Mall Gazette.
HOW TO DEAL WITH YOUR BANKER. By HENRY
WARREN. Third Edition. Crown 8vo., cloth, 3s. 6d.
' It overflows with hints of the greatest value to persons who have bank
accounts . . . the value of the book is undoubted.' Financial News.
' Is a mine of knowledge in regard to the practical and legal aspects of
cheques, endorsements, bills, promissory notes, credit accounts, pass books,
and the like, as considered from the customer's point of view.' Spectator.
' Among the many books which have been wi itten to explain the technical
points in banking business, we have met none which deals with them so
simply, concisely, and clearly.' Westminster Gazette.
HOW TO CHOOSE YOUR BANKER. By HENRY WARREN.
Crown 8vo., cloth, 3s. 6d.
' His volume is an instructive book for whosoever may be so happy as >o
possess some capital to turn over ; and the impecunious will peruse it with
the wistful interest that always attaches to the might-have-been.' Scots-
'There is much in his book that is forcible, and true, and well-expressed.
. . . The book is unquestionably worth reading.' Financial Sews.
1 The book will be of immense service to the man on the look-out for a
barker, or even to those who may conclude they can make a judicious
chi age.' South Africa.
LONDON: GRANT RICHARDS, 48, LEICESTER SQUARE, W.C-
A GUIDE TO INVESTORS
WALTER W. WALL, F.J.I.
LATE EDITOR OF ' THE MINING JOURNAL '
AUTHOR OF 'HOW TO SPECULATE IN MINKS.' I7C.
o n tJ o n
BILLING AND SONS, LIMITED,
THE inauguration of the twentieth century is, unfor-
tunately, not an auspicious inauguration for our
home railways. Whatever prosperity they may have
enjoyed in the past, there has now come a change for
the worse in their fortunes, and it is impossible for any
man to say, however penetrating his insight into the
future may be, whether that change is temporary or
permanent. Even the chairmen and directors of our
railways are far from unanimous on that point. The
premises they lay down are by no means in accord,
and the inferences deduced from them are necessarily
lacking in accord also. After ail, it is hardly so much
a matter of knowledge as a matter of temperament,
and as temperament is infinitely varied in its mani-
festations , so do we necessarily find the views and
opinions of man varied also. The optimistic see
vistas of brightness and of hope, the pessimistic see
the clouds of darkness and of despair. Whilst our
visions are affected in this way, who of us, shall we
say, are suffering from illusions f We can put faith
and confidence in time alone, for time alone can
decide for us which is the clearer and truer view.
My object in writing this book is to give as con-
cisely as I can the position as it is at present. No
book, of the kind, of which I am aware, has been
issued for some years, and I think a subject of this
kind, if brought up to date, will be welcomed by
railway investors all over the country. They may
not have all the information at their jingers ends, or,
if they do possess it, they may not have it in a
convenient form for reference and study, and this
book is designed to supply such a deficiency. It will
be seen that 1 have gone little into past history ; to
do so would have enlarged the book beyond convenient
dimensions, and such a book could hardly be pub-
lished at a popular price. Moreover, I do not think
it is necessary to go into past history at any great
length; the present and the future are sufficient
The plan of the book may be criticised, but, natur-
ally, I think myself that it is the best. Instead of
paraphrasing the reports of directors I give them in
full, for shareholders will not only be able to get all
the essential information, as far as reports give it,
from them, but at the same time the opinions of the
directors on the prospects, etc., which will give them
food for study and reflection, as well as a diversity
of matter for profitable comparison. I have done
the same with the chairmen's speeches, for I consider
these speeches of very great importance. I comment
both upon the reports and the speeches, and give my
opinions upon the most essential matters.
In the appendices I give tables, articles, and
expressions of opinions from varied sources, which
should not only be found interesting and instructive,
but a great help also to a complete grasp of the
situation and the prospects, and an aid to the eluci-
dation of vital and complex figures. I have also
given elaborate tables in the first part of the book,
and these, too, may be studied with profit. Indeed,
my aim has been to give as much material as possible
for the help and guidance of the investor, and I think
he will find it of considerable assistance to him.
I have also written one or two chapters on market
operations, market influences and conditions, for I
wish the book to be a guide to the novitiate as well as
to the experienced. Many refrain from investing
and speculating because they are frightened by the
complexities and intricacies of the Stock Exchange,
and of the vast array of influences that determine
the prices of stocks and shares. They cannot under-
stand them, and therefore I have devoted a portion
of the book to enlightening them on matters of this
kind, as well as in enlightening them on railway
investments, railway administration and prospects.
In my criticism of railway administration I am
severe, for I think it calls for severity, especially as
mildness of censure hitherto has brought about no
beneficial reform. Therefore I think it will be found
that I have dealt fairly adequately with matters and
questions of most importance, and if my efforts help
to the enlightenment and the awakening of investors,
and induce them to study more deeply than they have
hitherto studied matters of vital concern to them, the
book will not have been written and published in
w. w. w.
SOME REFLECTIONS ON THE HALF-YEAR'S WORKING - 15
EXPLANATORY OF STOCKS, ETC.
MARKET INFLUENCES - - * 5
MARKET OPERATIONS - ^
SOME EXPLANATIONS - - 70
THE POLICY OF DRIFT - - 85
SOME COMPARISONS 105
AMERICAN AND ENGLISH METHODS - 115
COAL BILLS AND TRAIN MILEAGE 128
THE OUTLOOK - 136
THE LONDON AND NORTH-WESTERN RAILWAY 153
THE GREAT WESTERN RAILWAY 162
THS MIDLAND RAILWAY - 172
THE NORTH-EASTERN RAILWAY - - 183
THE GREAT NORTHERN RAILWAY 191
THE GREAT CENTRAL RAILWAY 203
THE GREAT EASTERN RAILWAY 221
THE LONDON AND SOUTH-WESTERN RAILWAY 233
THE LONDON AND BRIGHTON RAILWAY 244
THE SOUTH-EASTERN AND CHATHAM RAILWAYS - 257
THE METROPOLITAN AND METROPOLITAN DISTRICT - 275
THE METROPOLITAN DISTRICT (continued) - - 295
THE NORTH LONDON AND TILBURY AND SOUTHEND - 312
THREE PROVINCIAL RAILWAYS 319
THE LEADING WELSH RAILWAYS - 333
PRINCIPAL SCOTCH RAILWAYS - - - 348
APPENDICES ... - 375
IN writing this book on our home railways, my
sole object is to give some advice and guidance
both to those who invest their money in our rail-
way companies, and to those who are likely to do
so in the future. Vast numbers invest in home
railway securities without knowing anything what-
ever of their individual values and prospects, and
merely because they feel that a railway stock or
bond is absolutely safe. These are the cautious
investors, those who are perfectly satisfied with
something safe, to whom security is the first
essential, and who prefer a small yield provided
they have no anxiety respecting the safety of their
capital. So long as they receive their yearly
dividends they are content. They trouble them-
selves very little about anything else. The past
has no interest for them, only the present, and
they suffer no suspense respecting the future, for
the future is quite able to take care of itself. They
can see the railways before their eyes, they can
travel upon them, and therefore they can see them
BEITISH RAILWAY FINANCE
solid and substantial, without liability to vanish
into nothingness, as mines do and other ventures
which exist only in the imaginations of promoters.
As for studying the financial administration of the
railways, they would no more think of doing it
than of sitting down patiently to study Greek or
Chinese. Others are paid to do this for them, and
why should they go to the unnecessary labour to
do it themselves ? They place the most implicit
trust and have unquestioning confidence in railway
directors and managers. That trust has never been
betrayed, and is not likely to be betrayed. Their
honesty is above suspicion, and their competence
That this supineness on the part of the average
shareholder is unwise and also unjustified is
apparent to any reflective observer, and one of my
objects in writing this book is to show the grounds
for this. I shall not hesitate to criticise severely
and as it deserves the present administration of our
railways, to show wherein it is defective and negli-
gent, and where reforms and improvements are
needed. This, of course, I can only do to the best
of my ability, and all I can hope for is that my
opinions may be worthy of some consideration. I
shall endeavour to show that the seeming pros-
perity of our railways, its noble and substantial-
looking appearance, is built upon a crumbling
foundation, and that unless that foundation is
strengthened by some solid financial and other
masonry -work, we shall see it fall in ruins even as
we gaze upon it. Tottering buildings, as we
know, by a little propping here and a little prop-
ping there, may last a long time and become quite
a world's wonder ; but when they do fall they fall
suddenly, and with a terrible crash. We do not
want a fate of this kind to overtake our railways,
and yet when we come minutely to examine their
foundations, we find them to be alarmingly insecure.
Those who are content to seek refuge in the edifice
are thus less safe than they think they are, simply
because they are ignorant of the insecurity of its
foundations ; therefore it is advisable, as well as
a duty, to warn them of their danger, and of the
predicament in which they have innocently placed
themselves. They may gaze in wonder at us and
refuse to believe us, but we must not be discouraged
by their unbelief. Incredulity of that kind is to
be expected, as well as the other credulity which is
deeply ingrained in them by superficial observation,
and which it is so difficult to inform and to change.
Nevertheless, duty must be done, no matter what
little measure of success may attend it. We have
done our part, and if others do not heed the results
of beneficial work done on their behalf, they must
pay the penalty. There is nothing else to be said.
If investors are unobservant and supine, the
directors of our railways cannot be charged with
similar failings in one respect. They, too, are
sadly unobservant in seeing and foreseeing the
inevitable effects of their errors, and supine in
taking the trouble to see, but this comes merely of
their keen and accurate observation of the attitude
of shareholders and investors. They note the
BEITISH RAILWAY FINANCE
contentedness and satisfaction of the latter with
everything they do, and therefore, being merely
human men, they take advantage of it, and do not
exert themselves more than they need. We should
all do the same probably if we were in their places,
for we all like to live as easily and as comfortably
as possible. But that does nob prevent us from
seeing the shortcomings of others, especially if we
have to suffer seriously from those shortcomings
ourselves. And we are suffering seriously from
the shortcomings of our railway directors of that
there is no doubt and, what is more, we shall
suffer far more seriously in the future if we refrain
from protesting, from giving utterance to our
indignation and discontent ; for silence would only
encourage them the more to take their ease, to
neglect their work and their duties, with conse-
quences which we hardly dare contemplate. It
may come as a great shock to the multitude of
investors in this country to find that the men in
whom they have unquestioningly placed their trust
are not performing their work with that ideal per-
fection which they unconsciously imagine. They
may not relish any rousing from their lethargy by
the trumpet sound of criticism, but this long and
heavy sleep of theirs is not a healthy one, and
some day, perhaps, we may even find them
Apart from investors, there are, of course, pure
and simple speculators, though by simple I do not
nrnan that they are men of a childlike simplicity.
The simple ones are those who speculate with
the blindness and recklessness of ignorance, who
attempt to make quick and large fortunes, and yet
who are as innocent as children of the rules and
points of the game. They have not made them-
selves skilful by study and experience. They
depend for success solely upon their mother-wit,
not knowing that that attribute is merely an
imaginary one. They will not learn. Many have
not the intelligence to learn, others lack the
patience. It is too much trouble. How can
they learn ? Who is to teach them ? They can
learn most, of course, from experience, and those
who have not had the advantage of experience may
learn something from the high-class financial papers,
and perhaps not a little from books. This book of
mine is an attempt to give what instruction I can
by the latter method, and notwithstanding its
many shortcomings, I hope it will be of help to
many. I hope it will be instructive not only to
those who are bond fide, contented investors, but
also to those who are content merely to speculate,
merely to buy and sell, when they see opportunities
arise for one or the other operation. Speculation
is, of course, confined almost entirely to the ordi-
nary stocks of our railways, but the opportunities
of making fortunes in the fluctuations of the prices
are few and far between, even if they may be said
ever to exist. In comparison with mines, these
opportunities are, of course, insignificant. If a man
wants to try the chance of making himself a
millionaire and to run an equal risk of making
himself a pauper, let him speculate in mines only.
BRITISH RAILWAY FINANCE
He can become a millionaire, by a series of good
strokes of luck, in a few months, but he can
become a pauper in five minutes. Speculation,
therefore, owing to the chances and risks in the
game, is far more exciting and engrossing in mines
than in home railways. Next to the latter come
American rails, and whilst fortunes are not easily
made here, paupers are made by the hundred. It
is not often, thank heaven ! that we have an
experience like that of the Northern Pacific
corner. Nothing of the kind is possible in home
railway speculation, and therefore we have some-
thing to be thankful for. Our railway adminis-
trators are not the unscrupulous men to be
numbered by the dozen in America, and, happily,
they have not the means nor the power to be
tempted to imitate the tactics resorted to on the
other side of the Atlantic. Their powers are
limited. Neither do they run the railways for
their own private ends, and simply to enrich them-
selves at the expense of the shareholders. Their
honesty is above suspicion. There is little more
purity in the administration of American railways
than there was in its early days, but it is sadly
wanting in purity and honesty still. There are
not the opportunities in our home markets for those
' bull ' and ' bear ' campaigns which have such
startling developments in America. They do not
give so much matter for inventing lies, and when
lies are told we have greater facilities for testing
them. Still, speculation is hazardous unless one
grs es up sufficient time to the study of it, and this
is what speculators refuse to do ; hence they only
too easily play into the hands of the professionals.
And it seems to me, as I will endeavour to show
in the following pages, that the ordinary stocks of
our railways will become nothing else but specu-
lative gambling counters in the future. It will be
a great and a lamentable fall, but an inevitable
one, unless our directors show more competence
and foresight in their methods of administration.
Of late years we have seen a steady decline in the
dividends paid on the ordinary stocks, and at the
end of 1900 the fall was so excessive as to startle
shareholders and to depreciate their capital hold-
ings to such an extent as to aggregate a loss of many
millions. There is something like 1,152,000,000
sterling, excluding mere nominal additions, invested
in our home railways, and of this some 440,000,000
represent ordinary capital. Since 1896 there has
been a steady depreciation in this capital, until
to-day it amounts to over 280,000,000 sterling,
including not only the decline in ordinary stocks
but in debenture and preference stocks as well.
What does this mean ? It means immense losses
to many, and, unfortunately, there is little or no
hope that they will ever be recouped. For this, as
I have said, we have to seek no other cause than in
the decline in profits and dividends, together with
the not hopeful outlook of appreciable improve-
ment. No wonder we have witnessed of late years
a growing disinclination, almost imperceptible
though it may be, to deal in railway stocks.
There has been no great rush on the part of
BRITISH RAILWAY FINANCE
holders to get rid of their holdings, and it is
fortunate that they have not been scared to do
this. Sentiment, doubt and credulity have been
restraining influences, but that is no assurance that
we shall not witness a mad stampede on their part
in the future, with all its deplorable consequences.
Discontent is undoubtedly spreading amongst them,
and this discontent may take firmer and firmer
root, until it becomes active and formidable in its
activity. It is slumbering as yet, or, rather, we
might more aptly say smouldering, and a vigorous
fanning of criticism may cause it to burst out into
a raging fire, and whether that fire will be a
devastating or a warming, health-giving one,
burning merely debris and rubbish, will depend
upon the prudence with which it is controlled and
directed. And directors would be wise to make
provision to meet with a conflagration of the kind,
or else they may find themselves the victims of its
The policy of investors in the future must be
directed by wisdom and foresight. It is true that
market values are often a bad test of the real value
of a security, and merely fluctuate through tem-
porary incidents, without regard to their bearing
upon the future. This must not be lost sight of,
and must be a corrective to impetuous and un-
reflecting action. The market value from day to
day of an ordinary stock running into 25,000,000
to 35,000,000 and upwards often depends upon
the turnover of a few thousands. This may create
a disposition to buy on a large scale, which, of
course, would at once send up the price of stock.
It would also be helped by the covering of * bears,'