Threats of a general railway strike caused much alarm, and led the Government to intervene. The negotiations carried on at the Board of Trade were based mainly on the possibility of arranging some system of conciliation by means of which further disputes would be avoided; and eventually a four-fold scheme was arranged, comprising, in the case of each company accepting it, (1) consideration of applications by officers of the department concerned; (2) sectional conciliation boards; (3) a central conciliation board, and (4) the eventual calling in of an arbitrator if the matters in dispute should still be undecided.

Forty-six companies adopted the scheme. The conciliation boards were elected; agreements were in many instances arranged as the result of their proceedings; and, where no settlement could be arrived at by the boards, arbitration was resorted to. Dissatisfaction with the course of procedure and its results was, however, expressed from time to time more especially by members and officers of the Amalgamated Society of Railway Servants; and such dissatisfaction became acute during the prevalence of the "labour unrest" which spread throughout the country in the summer and early autumn of 1911, affecting, more especially, the various transport services. Joint action was now taken by the Amalgamated Society of Railway Servants, the Associated Society of Locomotive Engineers and Firemen, the General Railway Workers' Union and the United Pointsmen and Signalmen's Society.

At the outset attempts had been made to show that the railwaymen had some genuine grievances against the conciliation boards on account of their "slowness," etc.; but it soon became apparent that the trouble was mainly based on fresh demands for "recognition." On Tuesday, August 15, representatives of the four societies issued from Liverpool an ultimatum in which they offered the railway companies "twenty-four hours to decide whether they were prepared to meet immediately members of those societies to negotiate the basis of settlement of the matters in dispute"; and they added: "In the event of this offer being refused, there will be no alternative than to respond to the demands now being made for a national railway stoppage."

The railway companies expressed their firm resolve to adhere to the principle of conciliation, and on the following Thursday the "signal" was given for a general railway strike. Only about one-third of the railway workers responded, and, though great and very grave inconvenience and loss were caused in some parts of the country, there was (owing, in part, to the calling out by the Government of a large body of troops to protect the railway operations) no such "paralysis" of the railway traffic in general as had been threatened, while public opinion was distinctly unsympathetic towards the strikers.

Meanwhile active steps had been taken by the Government to effect a settlement, and late on the Saturday night (August 19) an agreement was drawn up and signed by the parties to the negotiations.

Under this agreement the men were to return to work forthwith; pending questions were to be referred to the conciliation boards, while the Government undertook to appoint, at once, a Royal Commission to investigate the working of the conciliation and arbitration scheme, and report what changes, if any, were desirable with a view to the prompt and satisfactory settlement of differences. It was further announced that the Government had given an assurance to the railway companies that they would propose to Parliament in the Session of 1912 legislation providing that an increase in the cost of labour due to the improvement of conditions of the staff would be a valid justification for a reasonable general increase of charges within the legal maxima, if challenged, under the Act of 1894.

Two statements, giving the result of the negotiations, were issued by the Board of Trade on the night of August 19. In one of these it was announced that Mr Claughton (chairman of the London and North-Western Railway Company) and Sir Guy Granet (general manager of the Midland Railway Company), who represented the railway interests at the Conference, had "stated that the recommendations of the Commission would be loyally accepted by the railway companies, even though they be averse to the contention of the companies on any question of representation, and, should a settlement be effected, any trace of ill-will which might have arisen during the strike would certainly be effaced." In the other of these official announcements it was said: "Assurances have been given by both parties that they will accept the findings of the Commission." The statements were repeated in "The Board of Trade Labour Gazette" for September, 1911.

The Royal Commission, which consisted of five members, viz. Sir David Harrel (chairman), Sir Thomas R. Ratcliffe Ellis, Mr Arthur Henderson, M.P., Mr C. G. Beale and Mr John Burnett, held twenty-five sittings, between August 28 and October 3, for the purpose of taking evidence, the witnesses examined by them during this period including thirty-four on behalf of the various railway workers' unions, ten non-unionist workers and twenty-three representatives of the railway companies.

The case presented on behalf of the railwaymen's unions was, in effect: (1) that the working of the conciliation and arbitration scheme had in various respects been very unsatisfactory, and changes therein or alternatives thereto were recommended, though in regard to the details of these changes and alternatives the witnesses did not all agree among themselves; (2) that "recognition" of the unions, allowing of the labour unions officials—with, as was said, their "trained and experienced minds"—taking part in the negotiations with the railway companies, was essential to full justice being done to the men, who were either not competent to state their own claims or might have their position in the service prejudiced; (3) that such recognition would be in the interests of industrial peace because of the increased powers of the unions in enforcing the maintenance of any bargains that were made; (4) that discipline on the railways would be strengthened if the men were confident that there would be an impartial investigation of their complaints; and (5) that, as the principle of recognition was accepted in other great industries, the railway companies were not justified in refusing it to their own men.

On the other side it was contended (1) that much of the disappointment felt at the results of the awards—which had, nevertheless, led to substantial concessions being made—was due to the unreasonable hopes raised by the "National Programme," and that, although certain modifications might be made in the conciliation scheme, the principle thereof was sound, while the companies had made a "tremendous departure" by themselves proposing, in 1907, in the interests of peace, to concede the principle of arbitration, which involved the "revolutionary" step of taking from the directors the power of deciding what the rates of payment and the hours of labour of their workmen were to be; (2) that the four unions concerned still included only about one-fourth of the men, and that "recognition" of them would inevitably lead to interference with questions of management and discipline, without—as shown by the experiences of the North-Eastern Railway, where "recognition" had not prevented the occurrence of repeated disputes—offering any guarantee for peace, while a partial strike on certain of the Irish lines during the sittings of the Royal Commission was pointed to as showing that the union officials were unable to control their members; (3) that the allegations as to railwaymen being unable or afraid to present their case to their own companies were unfounded, and that the real object aimed at in demanding "recognition" of the union officials was to coerce non-unionists into joining the unions which, with their increased membership, would then be in a better position to force the railways to agree to all demands; (4) that if the companies were compelled to accept "recognition," with all the risks it would involve, they should, at the same time, be relieved of their present responsibilities in respect to the public safety and public interests; and (5) that no analogy, in regard to "recognition," could be drawn between the railways, the continuous operation of which was essential to the wellbeing of the community, and ordinary commercial undertakings, which could suspend their working with only a limited degree of inconvenience to the public, or none at all.