A History of Inland Transport and Communication in England

by Edwin A. Pratt

Once more, therefore, railway Bills were left to be dealt with on their individual merits by Private Bill Committees operating on lines to which, not simply John Herapath, but Mr Gladstone's own Committee, had taken exception; and once more was a set-back given to the aspiration for the establishment of some central authority which could organise, co-ordinate or otherwise consolidate the still rapidly increasing railways on the basis of a national system of rail communication. The difficulty might, perhaps, have been met by the creation of a Minister of Communications, who would have held a position somewhat similar to that of the Minister of Public Works in Prussia or in France, and have discharged a useful function as director-in-chief, or, at least, as adviser-in-chief, in regard alike to railways, roads, rivers and canals. Such a Minister, being a member of the Government, might have acted or recommended without wounding the susceptibilities of Private Bill Committees or of individual members; he might have organised or been the means of organising an efficient system of railways at an earlier date and at far less cost; and he might have saved both the country from its enormous losses on the wild-cat projects of unscrupulous schemers during the mania period and bona fide companies from much of the excessive capitalization into which they were driven.

Whether or not the problems of the situation could have been solved in this manner, the fact remains that it was the railway companies themselves who—in spite of the established policy of the State, directed to the maintenance of railway competition, and in spite of the disapproval of amalgamations by one Parliament Committee after another—brought about the conveniences of through travel or through transit. It was they themselves who, by amalgamation or otherwise, instigated the creation of the "great" companies which both ensured these conveniences and effected a complete transformation in the general railway position, to the great advantage of everyone concerned.

Before, however, reaching this stage in their development, the railways had had some other struggles with the Government on questions of State policy arising out of those aforesaid feelings of suspicion and distrust, and due to the same fear as before that the companies would be sure to abuse their position unless they were restrained from so doing.

Following on the recommendations of the Committee of 1840, and with a view to safeguarding the public interests in regard alike to safety and to reasonable treatment, some important statutory powers had already been conferred on the Board of Trade. Under the Regulation of Railways Act, 1840, notice was to be given to the Board of Trade of the opening of all new lines of railway; such lines were to be inspected by Board of Trade inspectors; various returns in respect of traffic, tolls, rates and accidents were to be made to that body, to which, also, all existing bye-laws affecting the public were to be submitted for confirmation. In 1842 a further Act gave the Board power to delay the opening of any new line until they were satisfied that all the necessary works had been effectively constructed. Mr Glyn, chairman of the London and Birmingham Railway, said of this measure: "It is a Bill which I do not hesitate to say is, on the whole, calculated to do the interests of railways very considerable service."

But the attitude of the companies was no longer favourable when Mr Gladstone's Committee of 1844 proposed to confer on the Board of Trade some drastic powers for the periodical revision of railway rates, and likewise sought to lay down the terms on which the State might acquire all future lines of railway. The proposals in question were incorporated in a Bill which was brought in by Mr Gladstone; but the measure met with strenuous opposition from the railway interests, and the modifications introduced before it became law were of such a nature that the Act has never been put into operation.

In regard to the revision of rates, the Act laid down that if, after the lapse of twenty-one years (not fifteen, as proposed in Mr Gladstone's first Bill), any railway sanctioned after the passing of the Act had paid ten per cent for three years, the Treasury (not the Board of Trade) might reduce the rates, guaranteeing, however, a ten per cent dividend to the company, while the revised rates and the guarantee were to continue for another twenty-one years. Needless to say, railway companies in general do not pay ten per cent dividends, though in 1844 ten per cent was regarded as quite a reasonable dividend for a railway, in view of what the canal companies had been paying; while no such guarantee as that suggested is ever likely to be made by the Treasury. Provisions authorising the Board of Trade to make deductions from the guaranteed income as penalties for what they might regard as mismanagement, and prohibiting a company from increasing its capital pending a revision of rates, without the sanction of the Board of Trade, were so vigorously opposed that they were abandoned.

The clauses of the Act relating to State purchase were to apply only to new lines of railway, the 2320 miles of railway sanctioned prior to the Session of 1844—and including many of the chief links in the great trunk lines of to-day—being expressly excluded. As regarded railways sanctioned in the Session of 1844, or subsequently thereto, it was enacted that after the lapse of fifteen years the Treasury might acquire them for twenty-five years' purchase of the average annual profits for the preceding three years; but if those profits were less than ten per cent, the amount was to be settled by arbitration. It was further enacted that no railway less than five miles in length should be bought; that no branch should be acquired without purchase of the entire railway; that the policy of revision or purchase was not to be prejudiced by the Act; that "public resources" were not to be employed to sustain undue competition with independent companies; and, finally, that no revision of rates or State purchase of lines should take place at all without an Act of Parliament authorising the guarantee or the purchase, and determining how either was to be done.

To argue, as many advocates of the nationalisation of railways habitually do, that the basis for State purchase has already been established by the Act of 1844 is to set up a theory which is obviously inconsistent with the real facts of the situation.

Commenting on this Act of 1844 the Joint Committee on the Amalgamation of Railway Companies (1872) say in their report:—

"It would be impossible to deal with railways made since 1844 without dealing with railways made before that time, since both form part of the same systems.