Crown v. Kylsant

Picture "John Bull." Now make him taller--6 ft. 6 in. tall. Swell his great girth, expand his barrel chest. Make him the biggest, handsomest, beefiest John Bull in England. Dress him in a well-cut morning coat, impeccable striped trousers and white spats. Give him a handsome cane. Crown him with a high silk hat. Make him a Knight of Justice of St. John of Jerusalem. Make him the colossal figure who merged under the British Royal Mail Steam Packet Co. the largest group of shipping companies ever created (TIME, Feb. 23). Do all this and you have Baron Kylsant of Carmarthen.

If this Colossus of Britain were a monstrous swindler and a mean cheat, what Court, what Law would be so mighty as to overawe or punish him? Last week in the ancient, musty Guildhall of London, Lord Kylsant was brought to trial before a man even more impressive than himself. Without the consent of this awful man (always readily granted) the King of England himself cannot enter his own City of London. The Awful Man is Sir William Phene Neal, Lord Mayor of London. Sir Phene Neal is also Chief Magistrate of the City of London. In his great stiff robes, in his flowing full-bottomed wig, and adorned with his cumbrous, jingling golden chains of office, Sir Phene Neal personified last week British Justice -- the world's quickest, most impressive, best.

Paradoxically the case of Crown v. Kylsant is not, from a purely legal standpoint, either complex or remarkable. In lucid British fashion King's Councillor D. N. Pritt put the case last week at Guildhall thus:

What the Crown alleges is that Lord Kylsant did in 1926 and in 1927, by a profit-and-loss account balance sheet, for the form of which we allege he was personally responsible, represent to shareholders and the world in general that in each of those two years the [Royal Mail] group had made large trading profits, whereas it had made serious losses. . .

"One of the matters of which the Crown complains is that for these two years large hidden reserves--the existence of which was perfectly proper and legitimate but which never had been disclosed to the shareholders, which is not illegitimate--were passed off as profits so as to misrepresent to the shareholders that the company was in fact earning profits in its trading. . . .

"We submit that the profit shown by the Royal Mail Steam Packet on the face of the accounts for 1926 is $1,776,625. The true position, we say, including the losses in the subsidiaries, is that there was in 1926 an actual trading loss of $4,023,315 "

From a purely fiscal standpoint, the case promised to be most complex. Vanloads of ledgers and papers will be produced by both sides. For example, every phase of the $10,000,000 Royal Mail 5% debenture bond issue of 1928 will be minutely examined, the Crown trying to prove that this was a barefaced swindle by the Knight of Justice of St. John of Jerusalem. He sold these shares, the Crown charges, by telling the public that Royal Mail was earning enough in 1928 to cover interest on the debentures five times, whereas for the past seven years the Royal Mail had not earned but lost money.

Four months ago occurred the debacle to which the trial of Lord K. (except for its pomp and circumstance) was anticlimax. At that time the preferred shareholders of White Star Line, all of whose common stock was held by Royal Mail, discovered that their own company was in horrid condition and Royal Mail was worse off. Lord Kylsant, controller of 34 shipping companies and 2,770,000 tons of craft, was roundly vilified by the shareholders (TIME, Feb. 23).

The case did not warm up last week. When it does, Lord Kylsant will be defended by Britain's No. 2 Liberal (Lloyd George is No. 1), famed Sir John Simon. The Crown's major champion will be a former Liberal who suddenly switched into the Labor Party when Scot MacDonald offered him the post of Attorney General of Great Britain in the second Labor Government. Switcher Sir William Jowitt was elected a Liberal M. P. at the last general election (1929), but later in a by-election was returned as Labor M. P. by his old constituents.

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