CHAPTER XXVI THE RAILWAY SYSTEM TO-DAY

Whatever the difficulties which have attended the development of British railways, the lines themselves have been spread throughout the three kingdoms to such an extent that there are now very few districts not within easy reach of a railway; while though the different lines are still owned by, altogether, a considerable number of companies, the physical connections between them and the arrangements of the leading companies, not only for through bookings but for through trains, supplemented by the operations of the Railway Clearing House, have brought about as close an approach to a really national network of railways, connecting all the different sections of the country one with another, as could well be expected in view of the lack of co-ordination when the lines were first called into being.

At the end of 1910, according to the Railway Returns issued by the Board of Trade, the "length of line" of the railways in the United Kingdom was 23,387 miles. By itself, however, this figure does not give an adequate idea of the extent of the railway system. This is better realised by taking the figures for track mileage and sidings. A far greater proportion of the railways in England and Wales than in any other country consists of double, treble or other multiple track, so that for one mile in length of line there may be two, three or more miles of separate pairs of rails, increasing the transport facilities in proportion. The percentage of single track to total length of line in various countries is shown by the following figures:—
COUNTRY.     PER CENTAGE OF
SINGLE TRACK.
England and Wales     33.0
Scotland     59.0
Ireland     80.2
United Kingdom     44.2
Prussian State railways     57.3
Germany (the entire system)     61.7
France (main line system)     57.0
{360}

"Track mileage" in the United Kingdom is shown in the Board of Trade Returns for 1910 as under:—
TRACK.     MILES.     TRACK.     MILES.
First     23,389     Ninth     24
Second     13,189     Tenth     14
Third     1,517     Eleventh     10
Fourth     1,192     Twelfth     7
Fifth     236     Thirteenth     5
Sixth     143     Fourteenth     4
Seventh     70     Fifteenth     3
Eighth     44     Sixteenth—nineteenth     1 each

Corresponding figures for the United States of America, taken from an abstract issued in July, 1911, by the Interstate Commerce Commission, give the following classification of track mileage, excluding yard track and sidings:—
TRACK.     MILES.     TRACK.     MILES.
First     240,831     Third     2,206
Second     21,659     Fourth     1,489

It will be seen from the figures relating to track mileage in the United Kingdom that there is at least one mile of railway in the United Kingdom which really consists of nineteen pairs of rails alongside one another, though counting, in length of line, as only a single mile. In the United States there seems to be no suggestion of any railroad having more than four tracks.

The length of track in the United Kingdom is 39,851 miles. To this must be added a further 14,460 miles, the length of sidings reduced to single track, giving a total, including sidings, of 54,311 miles.

Rolling stock was owned in 1910 by the different railway companies throughout the United Kingdom as follows: Locomotives, 22,840; carriages used for conveyance of passengers only, but including rail motor carriages, 52,725; other vehicles attached to passenger trains, 20,090; waggons of all kinds used for the conveyance of live stock, minerals or general merchandise, 745,369; any other carriages or waggons used on the railway, 21,360; total number of vehicles, excluding locomotives, 839,544. These figures are exclusive of about 600,000 waggons owned by private traders.[54]
{361}

The total weight of goods and minerals conveyed in 1910 was 514,428,806 tons, and the total number of passengers carried (exclusive of 752,663 season-ticket holders) was 1,306,728,583. The miles travelled were—by passenger trains, 266,851,217; by goods trains, 154,555,559; by mixed trains, 1,814,762, giving a total of 423,221,538 miles. It is difficult to grasp the real significance of these figures; but, taking the train mileage alone the total distance run by trains in the United Kingdom in 1910 was equal to nearly 17,000 journeys round the world, and to four and a half journeys to the sun.

The total amount of railway capital returned as paid-up at the end of 1910 was ￡1,318,500,000, of which about ￡197,000,000, or approximately fifteen per cent, was due to nominal additions on the consolidation, conversion and division of stocks, showing a net investment of ￡1,120,500,000. The gross receipts of the companies during 1909 were as follows:—
SOURCE.     ￡     PROPORTION TO
TOTAL RECEIPTS.
Passenger traffic     52,758,489     42.57
Goods     61,478,643     49.61
Miscellaneous[55]     9,688,433     7.82
    —————     ———
Totals     123,925,565     100.00

The working expenditure in the same period amounted to ￡76,569,676, a proportion to total receipts of 62 per cent. The net receipts, therefore, were ￡47,355,889, the proportion of which to paid-up capital was 3.59 per cent.

The average rates of dividend or interest alike on ordinary {362}and on all classes of capital paid in the years from 1900 to 1909, were as follows:—
YEAR.     ORDINARY.     ALL CLASSES.
1900     3.34     3.45
1901     3.05     3.33
1902     3.32     3.45
1903     3.30     3.44
1904     3.26     3.42
1905     3.29     3.43
1906     3.35     3.46
1907     3.31     3.45
1908     2.99     3.32
1909     3.15     3.39
1910     3.48     3.53

It is pointed out in the Returns, however, that on account of the nominal additions made to the capital of the companies the rates of dividend or interest given in the tables are lower than they would otherwise be. Thus the average rates of dividend or interest for the United Kingdom in 1910 calculated on capital exclusive of nominal additions would show: Ordinary, 4.28 per cent (instead of 3.48 as above), and "all classes" 4.15 (instead of 3.53) per cent.

These averages, nevertheless, allow for a large amount of capital on which the dividend or interest paid is either nil or substantially below the averages stated.

The rates of dividend on ordinary capital in 1910 were as follows:—
    ORDINARY.
RATES OF DIVIDEND OR INTEREST.     Amount of
Capital.     Per cent of
Total.
Nil     ￡67,358,262     13.7
Not above 1 per cent     29,427,057     6.0
Above 1 and not above 2 per cent     18,072,847     3.7
" 2 " 3 "     87,676,759     17.8
" 3 " 4 "     109,788,247     22.3
" 4 " 5 "     38,193,955     7.7
" 5 " 6 "     85,503,721     17.4
" 6 " 7 "     54,962,066     11.2
" 7 " 8 "     362,000     0.1
" 8 " 9 "     40,000     0.0
" 9 per cent     694,907     0.1
    —————     ———
Total     492,079,821     100.0
{363}

The various classes of capital on which the rates of dividend or interest paid in 1910 were either nil or not above three per cent may be shown thus:—
RATES OF DIVIDEND OR INTEREST.
DESCRIPTION OF CAPITAL.     Nil.     Not above
1 per cent.     Above
1 per cent
and not above
2 per cent.     Above
2 per cent
and not above
3 per cent.
    ￡     ￡     ￡     ￡
Ordinary     67,358,262     29,427,057     18,072,847     87,676,759
Preferential     16,607,907     631,967     2,296,250     103,019,553
Guaranteed     —     —     101,180     23,318,760
Loans and
Debenture Stock     558,782     676,789     4,666     189,122,426
    ————     ————     ————     ————
Totals     84,524,951     30,735,813     20,474,943     403,137,498
    brace
￡538,873,205

There are those who regard railway shareholders as "capitalists," and consider that the keeping of railway dividends at a low level, together with any depreciation in the value of railway stock that may result therefrom, are matters only likely to affect a comparatively few wealthy men, and not, therefore, of material concern to the country so long as the railways give the best possible service at the lowest possible rates. In the United Kingdom, however, the ownership of the railways is distributed among a far greater number of persons than is the case in the United States, where the control and the dividends of a great railway system may alike be in the hands mainly of a few financiers. That by far the larger number of shareholders in British railways have comparatively small holdings was well shown by a table published a few years ago giving the percentage of holdings of ￡500 or under by shareholders, exclusive of debenture-holders, in thirty-nine leading railways of the United Kingdom. An analysis of this table gives the following results:—
Number of
Companies.     Percentage of Holdings of
￡500 or under.
2     32 to 40 per cent.
10     41 " 50 "
8     51 " 60 "
9     61 " 70 "
7     71 " 80 "
3     81 " 90 "
{364}

It is true that many of the shareholders here in question might have invested in several companies, so that their ￡500 or less would not represent the full extent of their railway holdings. On the other hand, there is the fact that many of the single investments are those of friendly societies, trade unions, or other organisations representing the interests and dealing with the savings of a large number of members of the artisan class.

In any case, whether the railway shareholder be a capitalist large or small or only an ordinary thrifty middle-class person who has saved a little money which he seeks to put into something both safe and remunerative, the fact remains that since the advent of the railway era he is the person who, though supplying the means by which this huge system of inland communication has been brought into existence, has had the least consideration of all. The trader, the passenger and the railway servant have all been the subject of much legislative effort for the protection or the furtherance of their own interests, whereas the railway shareholder has been too often regarded with an absolute lack of sympathy, and treated as a person who must be severely restrained from becoming unduly wealthy at the expense of these other interests, and should be thankful that he is not deprived of his property altogether.

It has really seemed as though the aim alike of the State and of local governing authorities has been less to ensure to the railway shareholders, who have undertaken a great public work at their own risk and expense, a fair return on their enterprise than to extract from the railway system huge sums in the way of taxation.

What the railway companies have paid in the way of "rates and taxes" since 1894 is shown by the following table, which I compile from the Board of Trade Returns for 1903 and 1910:
YEAR.     AMOUNTS PAID FOR
RATES AND TAXES.     INCREASE (+) or
DECREASE (-) as
compared with
previous year.
    ￡         ￡
1894     2,816,000         —
1895     3,011,000     (+)     195,000
1896     3,149,000     (+)     138,000
1897     3,249,000     (+)     145,000
{365}

1898
    3,425,000     (+)     131,000
1899     3,582,000     (+)     157,000
1900     3,757,000     (+)     175,000
1901     3,980,000     (+)     223,000
1902     4,228,000     (+)     248,000
1903     4,493,000     (+)     265,000
1904     4,736,000     (+)     243,000
1905     4,933,000     (+)     197,000
1906     4,965,000     (+)     32,000
1907     4,863,000     (-)     102,000
1908     4,884,000     (+)     21,000
1909     5,010,000     (+)     126,000
1910     5,102,000     (+)     92,000

These figures show a continuous increase since 1894, with the exception only of the year 1907, when there was a decrease of ￡102,000 as compared with 1906, due to the activity of the railway companies in appealing against excessive assessments. The advance in the total paid in 1910 over the total for 1894 was no less than ￡2,286,000, or 77.9 per cent.

It should be remembered, also, that the figures given relate to sums paid for rates and taxes, and do not include the expenses incurred by the railway companies in respect both to their rates and taxes departments (conducted by highly skilled officers) and to litigation arising on their appeals against assessments they consider unfair. The total expenditure under these two heads has been estimated at over ￡80,000 per annum.

Since comparisons are frequently made between English and German railway rates, with a view to showing that the former are higher than the latter, it may be of interest to compare, also, the amount paid for taxation by the railways of the United Kingdom with the corresponding payments of the Prussian State railways. The length of line of the two systems is approximately the same; yet while the taxation of the British system comes to ￡5,000,000 a year, that of the {366}Prussian State railways is only ￡750,000 a year. Naturally, when a Government owns the railways, it is much more interested in checking excessive taxation of the lines by the local authorities than when the railways are owned by commercial companies; and one of the questions to which proposals in regard to the nationalisation of the British railways gives rise is whether, when the Government owned the railways, they would be willing to continue the payment from the railway revenues of all the taxation which local authorities are now able to exact from the railway companies. Presumably not; and in that case the trader, whether or not he got lower railway rates from the State, would probably have to pay higher local rates in order to make up for the tolls no longer levied, or levied only to a much less extent, on the railway traffic.

The growth in the payments made by individual companies for rates and taxes between 1902 and 1910 may be illustrated by giving the figures for the London and North-Western, the Great Western and the Midland Companies respectively:—
YEAR.     LONDON AND
NORTH-WESTERN.     GREAT WESTERN.     MIDLAND.
    ￡     ￡     ￡
1903     520,000     524,000     418,000
1904     572,000     558,000     435,000
1905     599,000     592,000     453,000
1906     603,000     621,000     475,000
1907     603,000     608,000     458,000
1908     610,000     638,000     436,000
1909     631,000     663,000     438,000
1910     638,000     669,000     456,000

In addition to the items coming under the head of "rates and taxes" the railway companies still have to pay to the Government the passenger duty of which I have spoken on page 263, their function here, presumably, being that of honorary tax-gatherers who are required to get the money from the British public in the interests of the national exchequer, and save the Government the cost and the trouble of collection. The passenger duty thus collected by them in 1910 came to ￡319,404, the total contributions of the railways to the public finances for that year being thus increased to ￡5,421,715.
{367}

The amounts paid in 1910 by some of the leading companies under the two heads in question may be shown thus:—
COMPANY.     RATES
AND TAXES.     GOVT.
PASSENGER
DUTY.     TOTAL.
    ￡     ￡     ￡
Great Central     149,899     4,156     154,055
Great Eastern     322,894     14,296     337,190
Great Northern     223,254     13,099     236,353
Great Western     669,330     29,640     698,970
Lancashire and Yorkshire     261,734     18,141     279,875
London and North-Western     638,443     50,359     688,802
London and South-Western     268,130     34,356     302,486
London, Brighton and
South Coast     209,491     31,617     241,108
Midland     455,759     16,423     472,182
North-Eastern     467,404     12,982     480,386
South-Eastern and Chatham     278,505     53,015     331,520
Caledonian     150,609     8,905     159,514
North British     129,486     8,721     138,207

The following table shows how the sum total of the payments both for rates and taxes and for Government duty in the years from 1900 to 1910 work out (a) per train mile and (b) per mile of open railway:—
    PER TRAIN MILE.     PER MILE OF RAILWAY.
YEAR.     Rates and
Taxes.     Govt.
Duty.     Rates and
Taxes.     Govt.
Duty.
    d.     d.     ￡     ￡
1900     2.24     .21     172     18
1901     2.39     .22     180     19
1902     2.53     .23     190     19
1903     2.73     .23     200     19
1904     2.86     .22     209     18
1905     2.95     .22     216     18
1906     2.87     .21     215     18
1907     2.72     .20     210     18
1908     2.77     .20     210     17
1909     2.86     .20     215     17
1910     2.89     .19     218     16

This question of the taxation of railways is a matter of material concern as regards (1) the direct results thereof on {368}(a) rates and charges and (b) dividends paid—or not paid; and (2) the general policy of the State towards the whole problem of internal communication.

As in the case of cost of land, of expenditure on Parliamentary procedure, of capital outlay on construction, and of any undue increase in cost of operation, the payments in respect to rates, taxes and Government duty can be met by the railway companies only by one or other of two expedients: either by getting the money back through the rates, charges and fares levied on the railway users (an expedient necessarily curtailed both by legislative restriction and by the economic necessity of not charging more than the traffic will bear), or, alternatively, by leaving the railway investors with only an inadequate return—if not, in respect to a large proportion of the capital, with no return at all—on their investments.

The system of assessing railways for the purpose of local rating is one of extreme complexity. It grew out of the earlier system of the taxation of canals, and, had the railway companies fulfilled the original expectation of being simply owners of their lines and not themselves carriers, the principles on which the system was based might have applied equally well to rail as to canal transport. But, while rail transport underwent a complete change, there was no corresponding adaptation of local rating to the new conditions, and the system actually in force is the outcome far less of statutory authority than of custom, as sanctioned by the judges—who have themselves had to assume the role of legislators—while the machinery of railway valuation differs materially in England and Wales, in Scotland, and in Ireland.[56]

In England and Wales there is a separate assessment of a railway for each and every parish through which it passes. Such assessment is divided into two parts: (1) station and buildings, and (2) railway line. The former, arrived at by a per centage on the estimated capital value of buildings and site, is a comparatively simple matter. It is in regard to the latter that the complications arise. The main consideration in each case is the amount of rent which a tenant might reasonably be expected to pay for the property assessed; and such {369}presumptive amount is arrived at in regard to the lines by calculating the amount of net earnings the railway is able to make through its occupation of the particular length of line that passes through the parish in question, and according to the actual value of such length of line as an integral part of one concern.

The extent of these net earnings is ascertained, in effect, by first taking the gross receipts on all the traffic that passes through the parish, and then making a variety of deductions therefrom. The cost of construction of the railway does not enter into consideration at all. The calculations are on what is called the "parochial earnings principle"—that is to say, the amount earned in the parish, and not the amount received from traffic arising in the parish. The railway company may have no station in the place, and the amount of traffic derived from the parish may be practically nil; but the assessment of the line, on the basis mentioned, is followed out, all the same.

The main principle is the same in Scotland and Ireland, but with this important difference in detail: that in each of those countries a railway is first valued as a whole, the total value being then apportioned among the several rating areas.

It will be seen that the taxation of a railway line—as distinct from that of railway buildings—is, to all intents and purposes, the enforcement of a toll, on all traffic carried, for the privilege of passing through the parish concerned; while there is no suggestion, as there was in the case of turnpike roads, that those who collect the toll confer an advantage on those by whom the toll is paid. The turnpike trustees did provide a road, and they were, also, under an obligation to keep it in order. The toll-payers thus got some return for their money, and, though the trade of the district, or of the country, was taxed, it was, also, directly facilitated by the toll-receivers. The railway company, on the other hand, provide and maintain their own road, without putting the parish to the slightest expense, yet the parish is authorised to levy upon them what is, not only a toll, but a supplementary Income Tax for local purposes, based on the principle of the profits the company are supposed to make in the parish, often only because, for geographical reasons, it is necessary their lines should pass through it in going from one part of the country to another.
{370}

On page 114 I have told how, in the early part of the sixteenth century, the local authorities of Worcester, Gloucester and other towns on the Severn sought to raise funds for their local exchequers by taxing the traders who used the river for the transport of their commodities; and I have further told how, in 1532, it was enacted that any person attempting to enforce such toll or tax should be fined forty shillings. But a practice held in the sixteenth century to be unjust in itself as well as prejudicial to the interests of trade, and penalised by the Legislature accordingly, is considered quite right and proper, and receives express legislative sanction, in the twentieth century, though the local authorities upon whom the toll-privilege is conferred to-day may do no more to help the railways than Worcester and Gloucester and the other Severn towns did to help the river traffic—and that was nothing at all.

One result of the power thus given to local authorities to bleed the railway companies as an easy and convenient method of providing themselves with funds is that in a large number of parishes throughout the country a railway company pays the bulk of the rates, even though it may not even have a railway station in the place.

In Chapter IV of my book on "Railways and their Rates" I have given a table showing that in a total of 82 parishes, divided into four groups, the proportion of local rates paid by the London and North-Western Railway Company ranges from 50 per cent to 86.9 per cent, although in 53 of the parishes the company have no station. In a further table I specify sixteen parishes in which the area of the same company's property ranges from four to fifty-eight acres, or from 1.3 per cent to 5.1 per cent of the whole of the land in the parish, while the proportion which the railway assessment bears to that of the entire parish ranges from 66.9 per cent to 86.1 per cent.

Being thus enabled to depend for the greater part of their revenue on railway companies, who are given the privilege of paying but are denied the privilege of representation or of having any voice in the way the money they contribute shall be spent, there are local communities which show the greater readiness to carry out comparatively costly lighting, drainage, education, road improvement or other such schemes because {371}it is a railway company that will pay most of the cost, the proportion thereof falling on the great bulk of the individual ratepayers in the parish being thus inconsiderable. Social reformers tell us of the improvements they find proceeding to-day in village life in England. What is happening to a large extent is that rural centres are providing themselves with urban luxuries at the cost of the railway companies—that is to say, at the cost either of the railway shareholders or of the railway users or both together.

The same tendency may, however, be carried further still.

On the occasion of the coronation of King George and Queen Mary, various local authorities had the less hesitation in voting supplies to defray the cost of festivities out of the rates because they knew that most of the money so voted would have to be paid by a railway company. In a letter to "The Times" of June 3, 1911, on this subject, Mr James E. Freeman, of Darlington, says:—

"The village of Carlton Miniott, near Thirsk, lately held a parish meeting to consider whether the ￡30 or so that will be spent in local festivities in connexion with the Coronation should be raised by means of private subscriptions or from the rates. It was decided to levy a penny rate, with the result that the North-Eastern Railway Company, which had and could have no voice in the decision, will pay ￡21 13s. 4d., and the loyal residents, who receive the whole of the benefit, will pay ￡9 11s. 8d. towards the ￡31 5s. that is to be expended. At the neighbouring village of South Otterington the keen-witted Yorkshiremen have profited even more from the law's absurdities. They have voted a precept of ￡30 on the overseers for their merry-making, and of this amount the North-Eastern Railway Company will have the satisfaction of paying a little over ￡25."

The "Great Western Railway Magazine" for July, 1911, in referring to the same subject, tells of "a parish having the good fortune to have a railway running through one end of it, in which a rate of threepence in the ￡ has been imposed. This has produced ￡200, all of which has been spent on eating and drinking in a population of less than 2000, while the governing idea in raising the rate appears to have been that the railway company would have to pay some ￡70."

Without stopping to discuss the question as to the exact {372}proportion in which the results of this taxation system should ultimately fall on, or be made good by (a) shareholders, or (b) traders and travellers, the policy, if not the justice, of allowing the internal transport of the country, and, therefore, the trade and industry of the country, to be subjected to this abnormal taxation, if not to this actual plundering, by constituted authorities, may well be open to question, and especially so when one bears in mind the already heavy expenditure which has fallen on the companies, and the dissatisfaction expressed, from time to time, by traders with the railway rates, by railway servants with their pay, and by shareholders with their dividends. Certain it is that in the Board of Trade "Railway Returns" all these payments on account of rates and taxes and Government duty are included among the items of "working expenditure," and are deducted from the gross receipts before arriving at the amount of the net income available for dividends or to be taken in account in regard either to reductions in rates and charges or to increases in wages.

There is no suggestion that railways should be exempted altogether from the payment of local rates; but the complicated, anomalous and exorbitant system of taxing the traffic on their lines has long called for amendment.

So far back as 1844 Mr Gladstone's Committee declared they were "satisfied that peculiar difficulties attach to the application of the ordinary laws of rating to the case of railways which give rise to great uncertainty and inequality, as well as to expense and litigation, and they therefore consider that the subject is one which will properly call for the attention of the Legislature when any general measure for the amendment of the law and practice of rating is before it."

In 1850 the unsatisfactory nature of the law and practice in regard to railway assessments was pointed to by a select Committee of the House of Lords on "Parochial Assessments."

In 1851 Lord Campbell adjourned the case of R. v. Great Western Railway Company, and expressed the hope that "before the next term Parliament might interfere" and relieve the court from the difficult position in which they were placed when called upon to administer the existing law {373}with regard to the rating of railways. He added, in reference to the matters arising in the case then before the court: "If we settle those questions we may be considered as legislators rather than as judges, making rather than expounding law."

In 1859 Mr Justice Wightman, in R. v. The West Middlesex Water Company, said: "The whole subject matter appears to me to be involved in so much difficulty and uncertainty that I cannot but hope that the Legislature may interfere or make some provision adapted to the rating of such companies as that in question."

Among still other judges who have expressed similar views and indulged in similar hopes may be mentioned Lord Justice Farwell, who, in January, 1907, in the case of the Great Central Railway v. the Banbury union, said: "Fifty-six years ago Lord Campbell protested and implored the Legislature to intervene. His voice was the voice of one crying in the wilderness, and I suppose ours will be equally ineffectual if we make the same appeal."

Then, also, the Royal Commission on Local Taxation, in the report they presented in 1901, made various recommendations in regard to the assessment of railway companies; but the advice of Committees and Commissioners has been no less unavailing than the protests of judges.

Meanwhile, and pending the long-delayed action by the Legislature, the railway companies have themselves done what they could to protect the interests of those they represent, or of those for whose wants they cater, by appealing against excessive and unjust assessments, and in many of these appeals they have been successful. Such appeals have been warranted, not alone by unfair increases of assessments but by the fact that taxation based on earning powers ought to be reduced as those earning powers decline; and on this last-mentioned point the Assessor of Railways and Canals in Scotland is quoted in "The Rating of Railways" as having said:—

"There is the undeniable fact, which the Board of Trade returns amply prove, that the companies are now carrying on their business at less remunerative rates than formerly. The average fare per passenger carried, and the rates per ton for goods and minerals handled, have fallen enormously; while, at the same time, working expenses have been {374}continually going up, mainly owing to the demands for higher wages and shorter hours of employment, and the more stringent regulations of the Board of Trade as to block-telegraph working, brake-power, etc. Further, the increased gross or net revenues could not have been earned without a large capital expenditure for additional and more costly plant. It is well known that what would have satisfied the public twenty years ago would be deemed wholly inadequate to-day. Competition has compelled the companies to advance with the times; engines are now more powerful, carriages more comfortable, in many cases even luxurious; trains are better heated and lighted; continuous brakes and also the newest type of telegraphic instruments for signalling and working have been provided; stations are better furnished and equipped—all of which would mean a greatly increased outlay on the part of a tenant, which outlay he would undoubtedly take into account before deciding what rent he could afford to pay."

The considerations here presented in regard to the general question of railway taxation are strengthened by the fact that, although a railway company is a commercial enterprise, it has not the facilities possessed by commercial enterprises in general in meeting any increase in cost of production or working expenses by an increase in its charges to the consumer, or the person equivalent thereto. In this respect an ordinary industrial concern, producing goods for sale, is a free agent to the extent that it is restrained in its charges only by market and economic conditions; whereas the railway company, producing for sale the service known as transport, may not raise a single rate or charge in regard to the transport of goods without incurring the liability of having to "justify" such increase before either the Board of Trade or the Railway and Canal Commission. It has even been recommended recently by a Departmental Committee of the Board of Trade that like restrictions should be made to apply in the case of increases of passenger fares.

The alternative for a railway company lies in the possibility of reducing expenses; but there are limitations in this direction if perfect efficiency in all branches of the service is to be maintained, and no one would be likely to suggest that these exactions of local authorities should be made good by {375}reductions in, for example, that especially large item of working expenses represented by the wages of railway servants.

What I have said in regard to rates and taxes in general applies no less to the increased financial burdens that would fall on railway companies in respect to the National Insurance Bill. With the main issues presented by that measure I have here no concern; but the difference between railway companies which cannot "pass on" the heavier taxation that all measures of this type involve and the ordinary industrial companies which can should be sufficiently obvious.[57]

Clear, at least, it is that if both the Government and the local authorities continue to pile up these burdens of taxation on transport companies, themselves subject to the restrictions mentioned, the traders of the country cannot expect much relief in the railway rates of which many of them complain. It may be that the primary effect of the financial conditions thus brought about falls on the railway shareholders. It is, also, the case that the traders are well assured against any increase in rates. But the traders suffer a disadvantage as well as the shareholders because, though the railway companies may be prevented from raising their rates, they may, also, find it practically impossible to reduce rates which they would otherwise be willing to put on a lower scale. On the one hand the traders are protected from being charged more. On the other hand they are prevented from being charged less. They may not lose, but they may not gain; and inability to secure a benefit that might otherwise be secured amounts, after all, to the equivalent of a loss. In regard, also, to the wages of the staff, these may not be reduced yet the power of companies to advance them may be curtailed by any undue swelling of working expenses in other directions.
{376}

A good idea of the magnitude of the capital, the scope and extent of the operations, and the greatness and variety of the interests concerned in the working even of a single great railway company is given by the following table of what are deservedly called "interesting statistics," drawn up in regard to the Midland Railway for the year ending December 31, 1910:—
Capital expended     ￡121,304,555
Authorised Capital     ￡193,900,517
Working Expenses     ￡7,716,665
Salaries and Wages     ￡5,015,017
Revenues:—    
Coaching     ￡4,058,129
Goods, Mineral & Cattle     ￡8,375,673
Miscellaneous     ￡607,581
Rates and Taxes     ￡450,379
Lines owned (miles)     1,680
Constructing or Authorised     10?
Partly owned     329
Worked over by Engines     2,378
Train Mileage     48,472,172
Passengers carried     46,481,756
Season Tickets     221,862
Coal and Coke consumed (tons)     1,773,179
Minerals & General
Merchandise passing
over line (tons)     47,533,420
Engines     2,800
Carriage Stock     5,489
Waggon Stock     117,571
Horses     5,158
Road Vehicles     7,009
Signal Cabins & Stages     1,942
Miles of Teleg. Wire     31,446
Railway Telegrams     14,542,689
Steam Fire Engines, Pumps, &c     511
Fire Hydrants     1,619
Men qualified to render first
aid to the injured     10,037
Contributions to
Friendly Society     ￡21,916
Sick Allowance paid by
Friendly Society     ￡36,367
Contributed to Superannuation
Fund     ￡34,858
Total number of Employés     69,356
Uniform Staff     29,500
Clerical Staff at Derby     2,519
Workmen in all Shops     13,443
Area of Carriage Works (Acres)     126
Acreage of Loco. Works     80

The organisation and working of the English railway system as it exists to-day are matters as to which a good deal of interest has been shown from time to time, and a certain degree of knowledge thereof is essential to an appreciation of the position that has developed from the primitive conditions already detailed. The subject is treated very fully in "The Working and Management of an English Railway," by the late Sir George Findlay, formerly general manager of the London and North-Western Railway Company, whose line {377}he naturally dealt with in his book. Much, however, has happened since the first edition of that book was published, in 1889, and some of the details given are not applicable to present conditions. I do not propose to bring them all up to date, but it may be of advantage if I attempt to convey to the reader a general idea of the basis on which the London and North-Western, as a typical English railway, is organised and managed, leaving aside the technical data concerning construction and operation with which, although they occupy a considerable space in Sir George Findlay's book, I have here no direct concern.

The London and North-Western Railway had, on December 31, 1910, a total length of line of 1966 miles, of which 380 miles were single track and 1586 double or more. The total length of track, including sidings, in equivalent of single track, was 5490 miles. The authorised capital was ￡133,989,000 and the paid-up capital ￡125,038,000. The magnitude of the company's operations is indicated by the following figures in regard to traffic, etc., in 1910: Number of passengers carried (exclusive of season-ticket holders), 83,589,000; minerals, 43,384,000 tons; general merchandise, 10,511,000 tons; number of miles travelled by trains, 47,463,000; receipts (gross) from passenger traffic, ￡6,699,000; receipts (gross) from goods traffic, ￡8,900,000; total working expenditure, ￡9,937,000.

The supreme control is exercised by a board of twenty directors, including a chairman and a deputy chairman. Four retire annually, and are eligible for re-election. The directors are appointed by the shareholders, all of whom have the right to express their views thereon at the half-yearly meetings of the company; and when it is stated that the number of shareholders—debenture, preferred and ordinary—in the North-Western is 100,000, representing 90,000 holdings, and that in 45,000 cases the holding is ￡500 or under, it will be seen that an English railway company is a far more democratic institution than one of those great railroad systems in the United States which may be completely dominated by a single individual. Any shareholder in the London and North-Western who possesses the necessary qualification, by being the owner of ordinary stock to the value of ￡1,000, is eligible for appointment on the board.
{378}

The main functions of an English railway board are—to decide questions of principle and policy; to keep close watch over the interests of the shareholders in regard to all questions of finance; and to exercise a general control and supervision in order to ensure the thorough efficiency of the line. Subject to such general control and supervision, the working details are entrusted to railway officers possessed of the skill, judgment, experience and technical knowledge requisite thereto. It is thus no more necessary that railway directors should be railway experts than it is that the proprietor, the manager and the editor of a great daily newspaper should themselves be able to write shorthand, set up type, cast a stereo and run the machines. They can dictate policy, attend to business details and direct heads of departments without these, in their case, superfluous accomplishments. Railway directors who, going beyond their legitimate functions as aforesaid, sought to interfere with or dictate to skilled railwaymen on matters of ordinary detail or office routine would, in fact, cause friction without necessarily promoting efficiency in operation.

In practice it is not unusual for a retiring general manager to be invited to take a seat on the board either of his own or of another company; but, generally speaking, the main qualification for a railway director, apart from the extent of his holding, is found in his possession, or assumed possession, of good business qualities, coupled with an interest in some particular part of the district the railway serves.

The full board of the London and North-Western Railway meets twice a month; but much work is also done by committees which, as in the case of a county council or other important public body, exercise supervision over certain departments, or groups of departments, presenting minutes of their proceedings to the board for confirmation. The principal committees are the Finance Committee, the Permanent Way Committee, the Locomotive Committee, the Passenger Traffic Committee, the Goods Traffic Committee and the Debts and Goods Claim Committee. There are, in addition, various smaller committees which deal with questions arising in connection with legal business, stores, hotels, refreshment rooms, etc.

The heads of the different departments concerned attend, either regularly or as desired, the meetings of these various {379}committees, whose members are thus kept thoroughly in touch with everything going on in regard to matters under their special cognisance.

On the subject of finance, Sir George Findlay says (and the position is still as here stated, except that certain members of the Finance Committee now meet weekly to pass current accounts for payment):—

"The system of control over the expenditure of the Company's money is a very complete one. The general theory is that no expenditure is incurred without the direct sanction of the directors, expressed by a minute of some committee approved by the board. The district officers are, indeed, allowed to make small necessary payments, but for these vouchers are submitted monthly and, after being carefully examined, are passed by the Finance Committee. No work is done by any of the engineering departments, except ordinary maintenance and repairs, without a minute of the directors to sanction it, and, in like manner, no claim is paid, except those of trifling amount, without the authority of the 'Goods Claims Committee.'"

The executive management is carried out by the general manager, the chief goods manager, and the superintendent of the line, the heads of the various other departments—and, also, the district officers—reporting to, and being under the direction of, one or other of these three officers, or, in the case of the chief goods manager and the superintendent of the line, of their assistants.

The general manager naturally exercises general control. He is accountable to the chairman and directors for the good working of all departments, and when one takes into account the magnitude of the financial interests at stake; the extreme complexity of the movements and details involved in the operation of so many miles of railway transporting so huge a volume of traffic; the responsibilities of the company towards the multitudes of travellers who depend for life or limb on the perfection of the arrangements made for their safety; the enormous value of the goods of which temporary charge is undertaken; the questions of principle or precedent that arise in connection with a whole army of workers, no less than the matters of policy as regards development of the line or the relations with other companies, involving, it may be, {380}introduction of or opposition to Railway Bills; the preparation of evidence to be given before one or other of those oft-recurring Parliamentary or Departmental Committees; together with the ever-present need of reconciling, as far as possible, the conflicting interests of public, of staff and of shareholders—when one tries to realise the full extent of all these duties, obligations and responsibilities devolving upon the general manager of a great English railway company, the holder of such a post would seem to occupy a position more onerous than that, probably, of any other British subject, even if he should not deserve to rank as a ruler of what, in the variety and extent of the interests concerned—interests greater far than those of many a Continental State—is itself the equivalent of a small kingdom.

In the chief goods manager's department there are, besides himself, an assistant goods manager, two outdoor goods managers, a mineral traffic manager and a large staff of clerks. The chief goods manager and his assistants take charge of all matters connected with merchandise and mineral traffic, apart from the actual running of the trains. They arrange the rates and conditions of carriage; control the handling, the warehousing, and the collection and delivery of the goods; deal with all questions of goods accommodation and goods rolling stock; negotiate the arrangements in regard to private sidings for traders, and discharge a great number of other duties besides.

The main function of the superintendent of the line, in whose department there is, also, an assistant superintendent of the line and several assistants, is to deal with all passenger, horse, carriage and parcels traffic, and, also, the running of all trains, whether passenger, merchandise, live-stock or mineral. All questions relating to the actual working of the line, passenger stations, signals, etc., are referred to him, and the issue of all time-tables is also under his control.

The other heads of departments include: Secretary; solicitor (with assistant solicitor); chief accountant; locomotive accountant; cashier; chief of expenditure department; chief of audit department; registrar; estate agent; rating agent; chief engineer (with a chief clerk and two assistant engineers, one for new works and one for permanent way); chief mechanical engineer (with a chief indoor assistant {381}in locomotive department, general assistant and two outdoor assistants); signal superintendent; electrical engineer; rolling-stock superintendent; carriage superintendent; waggon superintendent; stores superintendent; horse superintendent; police superintendent; marine superintendent; hotel manager; and chief medical officer. The total number of persons engaged in these various departments, as carried on in the general offices at Euston station, without reckoning those employed elsewhere, is about 1500.

For administrative purposes the entire system, with its close on 2000 miles of railway, is divided into a number of districts, each of which is in charge of a district superintendent who is responsible for the working of the trains and the control of the staff in his district. Each district superintendent has an assistant and several travelling inspectors working under his direction, their duty being to visit regularly every station and signal box, and deal with any matters requiring attention.

In some districts the superintendents are responsible both for passenger traffic and for goods traffic. In this case they are called district traffic superintendents. They report in regard to the passenger business to the superintendent of the line and in regard to the goods business to the chief goods manager. In the most important districts the district superintendent is relieved of the management of the goods business (except as regards the working of the trains) by other district officers known as district goods managers, or goods superintendents, who are responsible to the chief goods manager at Euston.

In Dublin there is an Irish traffic manager who takes charge of all the interests of the company in Ireland, and there are agents in Paris and New York who look after the Continental and American business.

The same general principle, as applied to the various districts, operates, also, in regard to individual towns and the management of the stations therein. At the majority of the company's stations there is an agent, popularly known as the station master, who is in charge of both the passenger and the goods traffic; and at the larger stations the work is divided between a station master—who attends to passenger traffic, and is accountable to the district superintendent—and a goods agent, who is responsible for the goods work, and is under {382}the control of the district goods manager. The station master, in turn, has authority over the signalmen, porters and lamp-men at his station, just as the goods agent has authority over the local goods department. The chain of responsibility thus works out as follows:—
Station staff.
Station master.
District superintendent.
Superintendent of the line.     Goods staff.
Goods agent.
District goods manager.
Chief goods manager.
brace
    General manager.
Committees of the board.
Chairman and full board.    

While the control through the board of directors and the general manager is complete yet, at the same time, it would be impossible to keep pace with the rapidity with which business is done at the present day unless the district officers were able to act on their own responsibility in those cases where time did not permit of matters going through the usual routine, and for that reason the district officers of a company like the London and North-Western are capable men who are able, and are encouraged, to take full responsibility when it is necessary for them to do so.

Just as the committees of the board of directors keep in touch with the chief officers and heads of departments, so do the chief officers keep in touch alike with one another and with the country officers, doing this by means of periodical conferences.

There is, in the first place, what is known as the "Officers' Conference." Held once a month at Euston or elsewhere, as convenient, it is presided over by the general manager, and is attended alike by the chief officers and by the district officers for both the passenger and the goods departments. At this conference the matters discussed include proposed alterations in the train service, mishaps or irregularities and their avoidance, suggested changes in the rules, and everything appertaining to the working, loading and equipment of the trains.

Another conference, known as the "Goods Conference," is also held monthly—generally on the day preceding the Officers' Conference—and is presided over by the chief goods {383}manager, who meets the district officers responsible for the goods working, and discusses with them the various subjects that arise from time to time in connection with the goods traffic.

The minutes of both conferences are submitted to the directors, who are thus kept still better informed of all that is happening. Nor do the officers themselves, whether chief officers or district officers, fail to benefit from the opportunities for the exchange of views and experiences which the conferences afford.

Periodical inspections of the line, or of the stations, in various districts by the directors and the chief officers—whether both together or by the chief officers alone—afford further opportunities for checking any possible irregularities, for ensuring the provision of adequate station accommodation, for seeing that rules and regulations are properly observed, and for maintaining the thorough efficiency of the system in general.

The locomotive works of the London and North-Western Railway Company at Crewe extend over 140 acres, including 48 acres of covered-in shops, mills, etc. These works give employment to about 10,000 men and boys. In addition to the making of locomotives, the various processes carried on include the production of steel rails, girders for bridges, underframes for carriages, hydraulic machinery, cranes, bricks, gas-pipes, water-pipes, drain-pipes, and a great number of other objects and appliances necessary to the construction and operation of the railway. Created by the London and North-Western Railway Company, Crewe has developed from an agricultural village into a flourishing industrial town of 42,000 inhabitants.

At Wolverton, half-way between London and Birmingham, the company build and repair their own railway carriages and road vehicles, and do much work besides in the making of station furniture, office fittings, and other requirements. The works cover 90 acres, and give employment to about 4000 hands.

The Earlstown waggon works extend over 24 acres and employ 1800 persons, Earlstown, like Crewe and Wolverton, being essentially a railway colony. In each instance—as will be shown more fully in Chapter XXVIII—liberal provision is {384}made for the educational, social and recreative needs of the workers and their dependents.

No fewer than 82,000 persons are included in the industrial army which to-day constitutes the staff of the London and North-Western Railway. Of this total 11,000 are salaried officers and clerks and 71,000 are employed at weekly wages. A company which employs such a multitude as this, and, indirectly, ensures sustenance to a much greater number of persons, incurs obligations that are not met entirely by a stated salary or wage. Hence the company, in addition to their encouragement of schools and educational institutes, support a Superannuation Fund Association and a Widows and Orphans' Fund for the salaried staff, and various funds, on a contributory basis, for the wages staff. Other organisations supported by the company include a savings bank, a literary society, chess, rifle and athletic clubs, a temperance society and numerous coffee taverns for the staff.