A History of Inland Transport and Communication in England

by Edwin A. Pratt

Without adopting wholeheartedly the views of either of these two opposing parties, Parliament regarded the position with much concern lest there might be a renewal, in another form, of what we have seen to be the grasping tendencies of monopolistic canal companies; and the distrust inspired, under these particular circumstances, and from the very outset, towards railway companies which were preparing to create a revolution in the transport conditions of the country—a revolution the State was not itself disposed to effect or to finance—was powerfully to influence much of the subsequent railway legislation, if, indeed, it has even to-day entirely disappeared.

At first it was assumed that competition in rail transport would be assured, and the dangers in question proportionately reduced, by different carriers using their own locomotives, coaches and carriages on the railway lines, which alone, it was thought, would be owned by the railway companies constructing them. In some of the earlier railway Acts there was even a provision that the railway companies could lease their tolls, as turnpike trustees were doing. But the apparent safeguard in the form of competition between rival carriers disappeared when it was found (1) that, although a railway company was required to allow a trader's own horse or locomotive to use the line, it was under no obligation to afford him access to stations and watering-places, or to provide him with any other facilities, however indispensable these might be to the carrier's business; (2) that the tolls charged by the railway companies were heavier than the carriers could afford to pay; (3) that the entire operation of a line of railway worked by locomotives must necessarily be under the control of the owning and responsible company; and (4) that railway companies would have to become carriers of goods as well as owners of rails.

A Parliamentary Committee which sat in 1840, and of which Sir Robert Peel was a member, had reported in the strongest terms that the form of competition originally designed was both impracticable and undesirable, and that monopoly upon the same line, at all events as regarded passengers, must be looked upon as inevitable. "Your Committee," said the report, "deems it indispensable both for the safety and convenience of the public, that as far as locomotive powers are concerned, the rivalry of competing parties on the same line should be prohibited"; though, as some check to the consequent monopoly of the railway companies, they suggested that the Board of Trade should act as a supervising authority, with power to hear complaints, consider bye-laws, etc.

A witness for the Grand Junction Railway Company, who gave evidence before this Committee, said that any person might run his own engine on the Grand Junction, and in one instance this was done by a trader who had a locomotive on the company's line for drawing his own coal; but the witness apprehended the greatest possible inconvenience from any general resort to such powers. On the Liverpool and Manchester, also, anyone might run his own engines on the line; but, the witness added, "no one does."

The Royal Commission of 1865 summed up the position thus:—"No sooner were railways worked on a large scale with locomotive power than it was found impracticable for the general public to use the line with carriages and engines, and railway companies were compelled to embark in the business of common carriers on their own line, and conduct the whole operations."

When, in these circumstances, it was made certain that any idea of competition between carriers using a railway company's lines in the same manner as an ordinary highway would have to be abandoned, it became the established policy of the State to promote competition between the railway companies themselves by encouraging the construction of competitive lines or otherwise, thus still protecting, as was thought, the interests of railway users, and checking any monopolistic tendencies on the part of the railway companies. The futility, however, of seeking to compel railway companies to compete with one another had already been pointed out by Mr James Morrison, whose speech on the subject in the House of Commons on May 17, 1836, confirms, also, the theory I have suggested as to the attitude adopted towards the railway companies being traceable to fears engendered by the undue prosperity of the canal and navigation companies.

If, argued Morrison, after one company had spent a large sum on a line to Liverpool, another company were encouraged to spend as much again, with a view to providing a competition which would keep down the charges, the two would inevitably arrive at some understanding by which the original charges would be confirmed; and the Legislature, he contended—though the Legislature never acted on his contention—was "bound to prevent, as far as it could, the unnecessary waste of capital" on the building of unnecessary lines to promote a competition he held to be futile. The safeguarding of the public interests could, he thought, be effected in another way. "The history of the existing canals, waterworks, etc., afforded," he went on, "abundant evidence of the evils" of allowing too much freedom in the matter of rates; and he quoted the high prices at which the shares of the Loughborough Canal and the Trent and Mersey Canal were then still being sold,[^[40]] adding: "The possession of the best, or, it may be, the only practicable line, and the vast capital required for the formation of new canals, have enabled the associations in question, unchecked by competition, to maintain rates of charges which have realised enormous profits for a long series of years."

The remedy he recommended in preference to competition was that when Parliament established companies for the formation of canals or railroads it should invariably reserve to itself the power to make such periodical revisions of the rates and charges as it might deem expedient, examining into the whole management and affairs of each company, and fixing the rates and charges for another term; the period he favoured being one of twenty years.[^[41]]

There was no suggestion, at this time, that the railway companies had abused their powers. The only suggestion—and expectation—was that because the canal companies had abused theirs, the railway companies might, and doubtless would, do the same, unless they were prevented; and it will be found that this was mainly the position throughout the whole of the subsequent controversies.

Morrison's proposal was approved in the House of Commons, and on May 17 he brought in a Bill for giving effect to it in regard to all new railways, to be sanctioned in that or any subsequent Session. But the prospect of a Parliamentary limitation of the profits a railway might earn had a most depressing effect on the railway interests, and on July 11 Sir Robert Peel urged that the question should be decided without further delay inasmuch as "this branch of commercial enterprise was injured and almost paralysed." On the following day the Bill was brought up again, and it was then defeated.