a 3% dividend on ordinary shares, but the share price continued to decline. In the Autumn of 1866 Hodgson was again proposing a dividend of 3% but a new company secretary, John Walker, alerted the finance committee to the true state of the NBR's finances. A new preference share issue had flopped, and it proved impossible to pay debenture interest and preference share guaranteed dividends. Evidently it was intended to pay the dividend out of new capital; North British ordinary shares fell overnight by 8% after this revelation. Widespread financial impropriety and falsification of accounts were disclosed, all laid at Hodgson's door, and this was reported to a Special General Meeting on 14 November 1866. Hodgson did not attend; instead he sent a letter of resignation, and blamed bad headaches for preventing him from being present. John Balfour, the former Chairman, took the chair for the meeting. The Committee of enquiry submitted a lengthy report, which included the statement that there had been not merely deliberate falsification of the accounts from year to year so as to show to the shareholders and divide among them a revenue which was not in existence and was known not to have been earned; but it was a careful and most ingenious fabrication of imaginary accounts, begun and carried on from time to time for the purpose of supporting the falsified half yearly statements of revenue and the general misrepresentation of affairs The board resigned, only four remaining for the sake of continuity, and the previous statement of accounts and the declared dividend were reversed. No dividend was paid and warrants bearing 4% interest "until paid" were issued in their place, The meeting was naturally lengthy and at times stormy; a verbatim report occupied two and a half pages of the Glasgow Herald the next day. On 12 December 1866, the interim Chairman of the Company published a notice, stating the intention to make a 5.5% preference share issue in the amount of £1,875,625 (), covering all the financial liabilities of the Company. On 22 December the Glasgow Herald carried an eight-line report that the interim Chairman had stood down, and that John Stirling of Kippendavie had been appointed Chairman. Amid the fireworks of railway management, in 1866 the new line from Monktonhall to Dalkeith via Smeaton opened, as did the Blane Valley Railway. Passenger services on the latter did not start until 1867,