A History of Inland Transport and Communication in England

by Edwin A. Pratt

"Already, however, before these lines are opened, others are promoted in competition with them—promoted, not by a complaining locality, but in some cases by existing companies, in others by persons whose only apparent object is to sell the schemes to advantage when Parliament has sanctioned their construction. In such instances as these we humbly submit that the Legislature should not permit the introduction of new lines until it has seen whether or not the company in possession can fulfil its engagements, and whether, also, such company should not be permitted an opportunity of electing to extend its undertaking, or to leave further effort to the discretion of the Legislature."

Whilst the State was thus maintaining its own policy of competition, the railway companies were equally persistent in keeping to their policy of amalgamation; so that, as the Joint Committee of 1872 remarked, "A new line was sure sooner or later to join the combination of existing railways, and to make common cause with them."

Practical railway experience was showing that the ordinary ideas of competition, as regarded commercial undertakings in general, did not and could not be made to apply to railways beyond a certain point. The capital sunk alike in obtaining a railway Act, in acquiring and adapting land, with provision of embankments, cuttings, viaducts, bridges, tunnels, etc., for the railway lines, and in supplying the various necessary appurtenances, railway stations, and so on, was irredeemable, since, in the case of failure of the line, due to competition or otherwise, the capital invested could not be realised again, the land, rails, buildings, etc., on which it had been spent being of little or no value for other than railway purposes. There could thus be no transfer of capital from one undertaking to another, as in ordinary commercial affairs.

In addition to this it might be that interest would have to be paid on two lots of railway capital in a district where the traffic was sufficient to allow of the financial obligations of only a single company being efficiently met, any success achieved by the new company depending (until the available traffic increased) on its power to divert business and profits from the other company.

Hence it might well occur that "the best laid schemes" of Parliament and Parliamentary Committees, in approving competitive lines, resulted only in the companies concerned coming to, at least, a friendly understanding; and it might even be that the public did not eventually benefit at all, because, as the Joint Committee of 1872 say, "The necessity of carrying interest on the additional capital required for the new line tends sometimes, in the end, to raise rather than to reduce the rates."

Economic considerations, again, apart altogether from those monopolistic tendencies on the fear of which the policy of the State had been founded, were quite sufficient to account for the absorption of one company by another, and especially of small companies by larger ones, not so much to avoid competition as to ensure the provision of through routes operated under one and the same management, involving less outlay on working expenses, and providing greater advantages to the public than if the same length of line belonged to a number of different companies.

The lines between London and Liverpool, for example, were originally divided between three companies, and the same was the case with the lines between Bristol and Leeds. In some instances the companies were not on good terms with one another, and they ran their trains to suit their own convenience. Even when they were on good terms, they might not have any interests in common, apart from (at one time) offering as few comforts and conveniences as possible to the third-class traveller, and compelling him at least to complete his journey by going first class, if he wished to get to his destination the same night.

As early as 1847 attempts had been made by some of the companies to overcome the glaring defects of the original system of railway construction by establishing the Railway Clearing House, with a view to facilitating through traffic and allowing of a better adjustment of accounts when passengers or goods were carried over various lines in return for a single payment. The companies persevered, however, in their further policy of amalgamation and consolidation, and in 1853 the number and magnitude of schemes with these objects in view created such alarm on the part both of politicians and of traders that a further Select Committee—known as Mr. Cardwell's Committee—was appointed.

The members of this Committee pointed out in their report that the whole tendency of the companies was towards union and extension, that competition ended in combination, and that the companies were able in great measure to attain these ends by agreements with one another without the authority of Parliament. The economy and the convenience resulting from amalgamation were admitted by the report; but, though still no proof was offered, or suggestion made, that the companies were actually abusing the greater powers they had thus secured, there was an obvious under-current of alarm in the minds of the Committee as to the many undesirable things which large concerns might do.

The Committee were opposed to any "districting" of the country between different companies, and they recommended that, while working agreements might be allowed, amalgamations between large companies should not. As an example of the combinations they deprecated, I might mention that they pointed with evident feelings of much concern to the fact that if the amalgamation schemes then being proposed by the London and North-Western Railway Company were conceded, they would involve the union under one control of a capital of £60,000,000, a revenue of £4,000,000, and 1200 miles of railway, with the further result of "rendering impossible the existence of independent rival trunk lines." One wonders what the members of this Committee would have said had they been told that by the end of 1910 (as shown by the Board of Trade "Railway Returns") the London and North-Western would control a total authorised capital of (in round figures) £134,000,000, have gross receipts in a single year amounting to £15,962,000, and be operating 1966 route miles of line, equivalent to 5490 miles of single track (including sidings), besides being only one of half a dozen great trunk lines.