The Story of the Big Four Railway Companies (eBook)

2

RAILWAY GROUPING

Thus 7 years of government control had reduced the railway companies from being relatively prosperous commercial undertakings to a precarious financial position, for although Parliament had established the principle that increases in wage costs should be met by increased charges by the passing of the Railway and Canal Traffic Act, 1913, no steps had been taken by the government until January 1920 to increase rates and charges with a view to enabling the undertakings to be worked at a profit. Government representatives had declined to respond to the recommendation of the Railway Executive Committee that railway charges, in common with those in every other industry, should be advanced concurrently with increased costs of operation. The government gave an assurance that, in order to enable the companies to revert more gradually to pre-war conditions, the period of control with a guarantee of net receipts would be extended for 2 years after the end of the war.

On 26 February 1919 the Ways and Communications Bill (afterwards the Ministry of Transport Act) was introduced into Parliament. On 17 March, Sir E. Geddes in moving the second reading of the measure, explained that the government:

It should be noted that the railway companies were not consulted on the framing of this bill, or notified of its intended provisions, before it was presented to the House of Commons. The bill provided for the appointment of a Minister of Transport to whom was to be transferred the powers and duties of the various government departments in relation to railways, tramways, canals, roads, harbours and docks. The control of the railways hitherto exercised by the Board of Trade was transferred to the Ministry of Transport. The period of state control of the railways, with a continuance of the guarantee of net receipts, was extended for 2 years from 15 August 1919, the date of the Act, ‘with a view to affording time for the consideration and formulation of the policy to be pursued as to the future position of the undertakings’.

The bill was read a second time on 18 March and a third time on 11 July, 245 voting for the third reading and none against. Royal Assent was given on 15 August 1919, the Act to be cited as the Ministry of Transport Act, 1919. The Railway Advisory Committee, which had succeeded the REC of the war period, was in association with the ministry.

In deciding what the government policy as to the future of the railways was to be, the Minister of Transport was faced with three alternatives:

1 To hand back the railways to their owners, weighed down with all the burdens which had accrued during the years of war and the extended period of control.

2 To unify the railway completely or partially under private ownership, with adjustments calculated to restore their dividend-earning power.

3 To nationalise the railways.

In June 1920 the government issued a White Paper (Command 787) containing an outline of its proposals and indicating that the government had chosen to adopt the second alternative. The suggestions put forward were exhaustively considered by all interests affected, and months of negotiations and discussions took place between the parties concerned – the government, representatives of the railway companies, railways users and railway employees. The result of these discussions was that on a number of points common ground was reached, but at the time of the introduction of the Railways Bill, 11 May 1921, there were still a number of important questions in regard to which there was a diversity of view.

In 1921 the initial thinking was in favour of having four English railways: the Great Western Railway annexing those in Wales; a Southern group; a combined North Western and Midland serving the west coast; and another group serving the east coast. Scotland would have two lines: the East Scottish made up of the North British and Great North of Scotland companies; and the West Scottish, composed of the Caledonian and the Glasgow & South Western.

Negotiations continued following the introduction of the measure and in its main details the Railways Act, 1921, found its place on the Statute Book agreed to and generally approved by those interests concerned in its successful operation.

The Act contained five main sets of provisions:

1 For the grouping of railways.

2 For disposing the claims of the railway companies against the state arising out of the wartime agreements.

3 Governing the future charging powers of the railway companies.

4 Machinery for dealing with questions relating to rates of pay and conditions of service of employees.

5 Regulation of railways.

During 1922 the Great Western acquired the Welsh companies by amalgamation, followed by the Didcot, Newbury & Southampton in the summer of 1923 and the Midland & South Western Junction on 28 September 1923. As the Great Western was easily the largest company in the western group, feeling ran high in Wales and, as a concession to local sentiment, the six local railways were eventually classified ‘constituent’ rather than ‘subsidiary’.

Grouping involved the disappearance of old and familiar names, as famous undertakings, some almost a century old, lost their identity in enlarged concerns. A total of 120 independent railways were merged into four large companies: the Great Western Railway (GWR); London, Midland and Scottish (LMS); London and North Eastern Railways (LNER); and Southern Railways (SR). In general, the larger railway companies were amalgamated while the smaller companies were absorbed (see Appendix 1). Alone of the great companies, the GWR retained the name borne since its incorporation in 1835. This was secured by a special provision in the Act which constituted the Great Western the amalgamated company for the western group.

The three major joint lines – the Cheshire Lines Committee, the Midland & Great Northern, and the Somerset & Dorset – continued as separate undertakings.

The amalgamation of railways was generally recognised as right in principle, in accordance with the history of railways which had been one of amalgamation. In total approximately 1,000 railways had been promoted in Great Britain, but by the process of amalgamation and absorption these had been reduced to about 200 at the time of the passing of the Railways Act.

In December 1923 the route mileage was 20,294 miles. Capital expenditure stood at £1,181,200,000. In round figures, total traffic receipts for 1923 were £205,900,000; of this £94,100,000 was contributed by coaching. Expenditure for the year was £166,100,000. Other items on the 1923 return were those given in Appendix 3, plus:

Although many branches of railway service were dangerous, one great advantage of railway work was its permanent character. The mechanics employed at the companies’ manufacturing and repair shops had to face the uncertainty of this class of work, but even there the activity was more regular than in...