Since the full opening of the Border Union Railway, passenger trains had terminated at the Canal station of the Port Carlisle Railway.
By 1864 the line was double track throughout and from 1 July 1864 the passenger trains were diverted over the Caledonian Railway connecting line, to terminate in Citadel station.
The financial position was somewhat better and a 2% dividend on ordinary shares was announced in August.
There was more excitement to come: the Edinburgh and Glasgow Railway had for years seemed to be on the point of joining in with the Caledonian Railway, but now it seemed that it, together with the Monkland Railways, would join the NBR.
 The Edinburgh and Glasgow had a considerable system, including the Stirling to Dunfermline line and the Bathgate and Morningside line; moreover it was working the Glasgow, Dumbarton and Helensburgh Railway.
The Monkland Railways had been formed in 1848 by the merging of several of the old "coal railways" operating around Airdrie and Coatbridge.
Their main business was still mineral traffic, and although their operating costs were high, they made a comfortable profit.

On 4 July 1865 an Act was passed authorising the merger and it took place on 31 July between the Edinburgh and Glasgow Railway and the Monkland Railways, and the following day the merged company was absorbed by the North British.
Although some commentators had expected that the E&GR might have absorbed the NBR, the reality was that the new board consisted of 13 former NBR directors and two E&G men.
The NBR habitually ran trains on Sundays and started doing so on the E&GR main line, which had not.
This ignited fresh protests from Sabbatarians but the NBR stuck to its position on the matter.

As well as the railways mentioned, the merger gave the North British a share of the City of Glasgow Union Railway which was then under construction.
When complete, that line would give the North British access shipping berths on the Clyde at General Terminus over the General Terminus and Glasgow Harbour Railway.

The NBR grew to have, by the summer of 1865, about 450 mi (720 km) of route, almost equally divided between double- and single-track.
In addition it was working another 40 mi (64 km) of single track for independent companies.

In 1866, comparison with the Caledonian Railway showed that Company to be in better shape:
In the Spring of 1866 Hodgson declared 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 meetin
Since the full opening of the Border Union Railway, passenger trains had terminated at the Canal station of the Port Carlisle Railway. By 1864 the line was double track throughout and from 1 July 1864 the passenger trains were diverted over the Caledonian Railway connecting line, to terminate in Citadel station. The financial position was somewhat better and a 2% dividend on ordinary shares was announced in August. There was more excitement to come: the Edinburgh and Glasgow Railway had for years seemed to be on the point of joining in with the Caledonian Railway, but now it seemed that it, together with the Monkland Railways, would join the NBR.  The Edinburgh and Glasgow had a considerable system, including the Stirling to Dunfermline line and the Bathgate and Morningside line; moreover it was working the Glasgow, Dumbarton and Helensburgh Railway. The Monkland Railways had been formed in 1848 by the merging of several of the old "coal railways" operating around Airdrie and Coatbridge. Their main business was still mineral traffic, and although their operating costs were high, they made a comfortable profit.
On 4 July 1865 an Act was passed authorising the merger and it took place on 31 July between the Edinburgh and Glasgow Railway and the Monkland Railways, and the following day the merged company was absorbed by the North British. Although some commentators had expected that the E&GR might have absorbed the NBR, the reality was that the new board consisted of 13 former NBR directors and two E&G men. The NBR habitually ran trains on Sundays and started doing so on the E&GR main line, which had not. This ignited fresh protests from Sabbatarians but the NBR stuck to its position on the matter.
As well as the railways mentioned, the merger gave the North British a share of the City of Glasgow Union Railway which was then under construction. When complete, that line would give the North British access shipping berths on the Clyde at General Terminus over the General Terminus and Glasgow Harbour Railway.
The NBR grew to have, by the summer of 1865, about 450 mi (720 km) of route, almost equally divided between double- and single-track. In addition it was working another 40 mi (64 km) of single track for independent companies.
In 1866, comparison with the Caledonian Railway showed that Company to be in better shape:
In the Spring of 1866 Hodgson declared 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 meetin
North British Railway