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The Great Western Railway Under the British Railways Act of 1921*

Published online by Cambridge University Press:  11 June 2012

Geoffrey Channon
Geoffrey Channon
Affiliation:
Principal Lecturer in Economic and Social History, Bristol Polytechnic
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Abstract

American railroad executives since the end of World War II have learned — the hard way, as usual — how little real salvation there is in the expedient of the massive merger. They might have studied to good purpose the experiences of the English railways, which were forced to consolidate into four great systems under legislation passed in 1921. Dr. Channon has done so, and tells a dreary story that scouts the idea that great cost savings flow all but automatically from consolidations. His discussion of the Great Western's failure to introduce railway cars capable of carrying 20 tons of coal, at a time when the typical American coal car carried a payload of more than twice that amount, will be variously interpreted by both sides in the controversy over the decline in British entrepreneurship since 1870. Dr. Channon throws much light, moreover, on the problems of managerial organization, a subject that claims considerable attention in current business history.

Type
Research Article
Information
Business History Review , Volume 55 , Issue 2 , Summer 1981 , pp. 188 - 216
Copyright
Copyright © The President and Fellows of Harvard College 1981

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References

1 See, for example, Alderman, Geoffrey, The Railway Interest (Leicester, 1973)Google Scholar and Parris, Henry W., Government and Railways in Nineteenth Century Britain (London, 1968)Google Scholar.

2 Irving, R. J., “The Profitability and Performance of British Railways, 1870–1914,” Economic History Review, XXXI (February, 1978), 64.Google Scholar

3 Aldcroft, Derek H., British Railways in Transition: The Economic Problems of British Railways since 1914 (London, 1968), 32–36.CrossRefGoogle Scholar

4 For example: Aldcroft, Derek H., “The Decontrol of Shipping and Railways after the First World War,” Journal of Transport History, v (1961)Google Scholar, reprinted in Aldcroft, Derek H., Studies in British Transport History 1870–1970 (Newton Abbot, 1974), 117–143Google Scholar; Armitage, Susan M. H., The Politics of Decontrol of Industry: Britain and the United States (London, 1969), 46–101Google Scholar; and Bonavia, Michael R., The Organization of British Railways (London, 1971), 3–35.Google Scholar

5 Railways Act 11 & 12 Geo. V, C.55, (1921). The Railway Returns for 1921 showed 214 separate rail ways. Those excluded from the Act were: (a) certain joint lines, (b) unimportant light railways, (c) lines not constructed or derelict, and most important (d) urban and suburban railways mainly carrying passengers and using electric power (e. g. the London tubes, the Metropolitan, and the Mersey Tunnel).

6 When government control ceased (August 13, 1921) actual charges became the statutory maxima, subject to the power of the Tribunal to revise them in either direction; this continued until the appointed day for the new standard charges, which came into effect on January 1, 1928, as determined by the Tribunal, The standard revenue for the four systems was about £51,400,000.

7 Bagwell, Philip S., The Railway men: The History of the National Union of Railwaymen (London, 1963), 408–412.Google Scholar

8 For a discussion of the managerial factor in the growth of firms in the manufacturing sector, see, Hannah, Leslie, “Managerial Innovation and the Rise of the Large-Scale Company in Interwar Britain” Economic History Review, XXVII (May, 1974), 252–270.CrossRefGoogle Scholar

9 For details of the route mileage of the GWR and the constituent and subsidiary companies that merged in 1923, see, Nock, Oswald S., History of the Great Western Railway, Vol. III (London, 1967), 240–241.Google Scholar

10 This generalization applies to the manufacturing sector as a whole; individual industries, such as tobacco, showed a higher level of concentration. See, Hannah, Leslie, The Rise of the Corporate Economy (London, 1976)Google Scholar, Appendix 2, 214–225.

11 “Leased and worked railways,” RAIL 253/731; GWR Reports and Accounts, RAIL 250/77, Public Record Office, London (hereafter PRO).

12 Before the war, the GWR was critized for its agreements with two “docks” railways, the Port Talbot (1908) and Rhondda & Swansea Bay (1906). See, Mini, of Eu of the Dept. Ctteee. on Railway Agreements and Amalgamations (British Parliamentary Papers, XXIX, 1911), para 16, 823–889 (Wardle).

13 Cain, Peter J., “Railway Combination and Government, 1900–14,” Economic History Review, XXV (November, 1972), 638.Google Scholar

14 Irving, “Profitability and Performance,” 64.

15 GWR Reports and Accounts, RAIL 1110/185 & 186, PRO.

16 GWR Reports and Accounts, RAIL 1110/197, PRO, 19I3: £7,266,044 and 1922: £7,491,213; RAIL 253/ 731, PRO.

17 The REC had a number of subsidiary committees that corresponded to the main functional departments of the companies.

18 Note, also, the prewar experience in railway management of Geddes, the Minister of Transport.

19 Irving, “Profitability and Performance,” 54–55 and Alderman, Railway Interest, especially 144–160.

20 “Notes of the Proceedings of a Deputation to the Prime Minister from S. Wales' traders in regard to traffic congestion,” December 12, 1919, RAIL 258/314, PRO.

21 Ibid., (Aldington, GWR general manager).

22 Bagwell, Philip S., The Transport Revolution from 1770 (London, 1974), 239.Google Scholar

23 “Notes of the Proceedings”, December 12, 1919, RAIL 258/314, PRO.

24 “Mins. of West of England and Bristol Channel Cttee, 1918–21,” MT 61/11, PRO.

25 Lord Victor Albert Charles Spencer Churchill, born 1864, died 1934, joined GWR board in 1905, and was chairman from 1908 until his death.

26 Nock, Great Western, 240–241. The total excludes joint railways with 402 route miles.

27 Felix J. C. Pole: His Book (Bracknell, 1954), 51–53. Pole was general manager of the GWR, 1921–1929.

28 The Exeter Railway and Forest of Dean Central, 8¾ and 5 route miles, respectively.

29 Full details of the negotiations are found under RAIL 253/731 etc., PRO.

30 See, 4 and f.n.6.

31 For details, see, Railway Returns, 1918–38 and for summary, Barker, Theodore C. and Savage, Christopher I., An Economic History of Transport in Britain (3rd ed., London, 1974), 158.Google Scholar

32 “Negotiations,” 1921–22, RAIL 253/731, PRO.

33 Acworth, William M. “Grouping under the Railways Act, 1921,” Economic Journal, XXXIII (1923), 25–26.Google Scholar

34 The Trustee Act laid down that the debenture, guaranteed and preference stocks of a British railway company that had, during each of the last ten years, paid a dividend of not less than 3 per cent on its common stock would be trustee securities; Sherrington, C.E.R., The Economics of Rail Transport in Great Britain, Vol. II (2nd ed., London, 1937), 40Google Scholar, f.n.1.

35 “Negotiations,” 1921–22, RAIL 253/731, PRO.

36 South Wales News, June 22, 1922.

37 CWR Reports and Accounts, RAIL 1110/197, PRO.

38 Ibid., 1913-£7,266,044; 1922-£7,491,213.

39 RAIL 253/731, PRO.

40 The functional departmental structure, discussed below, encouraged the isolation of spending departments, such as engineering, from those producing revenue, such as traffic. There was a long tradition in the GWR of independent, sometimes idiosyncratic behavior on the part of engineers, a theme that is being studied by the author.

41 GWR Reports and Accounts, RAIL 1110/197, PRO. The reference is to the published accounts. Evidence from management accounts has not been found.

42 Railway Gazette, May 27, 1921.

43 The author is undertaking a study of the social origins, careers, attitudes, and actions of the company's leaders, 1835–1948.

44 For a general discussion, see, Bonavia, Organization of British Railways, 9–25.

45 Chandler, Alfred D., The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977), 176–181.Google Scholar

46 Min. of GWR Traffic Cttee., RAIL 250/253, May 4, 1922, PRO. To avoid confusion I have used the term “district” in preference to the system's “division,” which in present-day literature has a specific and different meaning from that used at the time.

47 Pole was a one-company man, who in the early twentieth century became an expert in labor matters. He resigned as general manager in 1929 to take up the chairmanship of Associated Electrical Industries.

48 By 1938 in only two areas, Plymouth and Central Wales, were the functions of divisional traffic superin tendent and district goods manager combined under one officer designated as district traffic manager. Pole had hoped for many more.

49 Pole, His Book, 49.

50 “Min. of GWR Chief Officers' Conference,” Jan. 14, 1913, RAIL 250/143, PRO.

51 Ibid., January 16, 1928. An expenditure of £25 per week.

52 Ibid., April 8, 1924.

53 Ibid., May 4, 1925.

54 Pole, His Book, 40–47.

55 GWR Reports and Accounts, RAIL 1110/197, PRO.

56 Railway Returns, 1923–38.

57 “Min. of GWR Chief Officers' Conference,” February 27, 1922, RAIL 250/143, PRO.

58 “Min. of GWR Board,” April 7, 1922, RAIL 250/53, PRO.

59 E.g., the Taff Vale general manager received £50,000 and his Cambrian counterpart £20,000.

60 “Mins. of GWR Board,” especially June 2, 1922, RAIL 250/53, PRO.

61 Bonavia, Organization of British Railways, 27–28.

62 A “distinguished railway official” estimated £4 million p.a. as an outside figure; “some officials” £45 million p.a. and Geddes £20 million p.a.

63 Calculated from the Railway Returns, 1923.

64 See, Barker & Savage, Economic History of Transport, 153.

65 “Mins. of GWR Board,” March 5, 1923, RAIL 250/143, PRO. To December 31, 1924 the traffic department claimed savings due to the consolidation of £92,412 or 1.13 per cent of current traffic expenditure, “Traffic Department Report, 1924,” RAIL 253/431, PRO.

66 “Traffic Department Report, 1926,” RAIL 253/433, PRO. Working expenses exclude interest charges etc.

67 Pole, His Book, 67.

68 Railways Act, section 18.

69 This estimate is based on the assumption that the traffic brought into the pools approved by the Ministry of Transport in 1932–1933 or established under the London Passenger Transport Act (1933) was subject to intersystem competition. It amounted to £76,000,000 of the systems' gross traffic receipts of £150,000,000. Source: “Proposed Pool of Receipts from Competitive Traffic, LMSR and GWR,” 1932–3, MT 47/135, PRO.

70 “Goods Department Report, 1924,” RAIL 253/431, PRO.

71 GWR Secretarial Papers “Pooling …” (1927–34), RAIL 258/356, PRO.

72 Ibid., January 1, 1931.

73 “Proposed Pool”, MT 47/135, PRO. For the wider context in the 1930s, see Grumbridge, J. L., “Coordination of Inland Transport In Great Rritain,” (Ph.D. thesis, London University, 1939).Google Scholar

74 “Chief Mechanical Engineer's Annual Report, 1924,” RAIL 253/431, PRO.

75 Calculated from GWR Reports and Accounts, RAIL 1110/169–186: and RAIL 254/24 and 175, PRO.

76 Calculated from GWR Reports and Accounts, RAIL 1110/197, PRO. It is not possible to distinguish in the accounts the contribution of coal to net receipts.

77 For the prewar position at Cardiff, see, Daunton, M. J., “Aristocrat and Traders: The Bute Docks, 1839–1914,” Journal of Transport History, III (September, 1975).Google Scholar

78 Kindleberger, Charles P., Economic Growth in France and Britain, 1851–1950, (Cambridge, Mass., 1964), 141–145CrossRefGoogle Scholar; “Traffic Department Report, 1924,” RAIL 253/431, PRO; general managers report to Traffic Cttee., October 11, 1923, RAIL 250/450, PRO.

79 “LNER Papers etc. as to Coal Wagons,” 1931, RAIL 1059/3269 PRO.

80 Reports of the Standing Cttee. on Mineral Transport, (Cmd. 3420, 1929–30), para. 24.

81 Ibid., para. 65 and Pole, His Book, 71–75.

82 “LNER Papers,” RAIL 1059/3269, PRO. In 1933 the GWR produced a leasing scheme under which after ten years colliery companies could buy at a “nominal figure,” GWR Reports and Accounts, 1933, RAIL 1116/180, PRO.

83 “Mins. of Chief Officers' Conference,” September 28, 1925, RAIL, 250/144, PRO.

84 GWR Secretarial Papers “Closure of Penarth Docks, 1928–32,” RAIL 258/438, PRO.

85 Unit costs per ton (working and maintenance) of shipping coal were: 1925 - 4.57d, 1926 - 6.98d, 1927 - 4.04d; “Mins. of Docks & Steamboat Cttee,” RAIL 250/628 PRO, July 26, 1928.

86 “Closure of Penarth”, RAIL 258/438, PRO, April 24, 1936, memo of meeting between a deputation of traders and industrialists and Sir Robert Horne, March 16, 1936. Home was born in 1871. He joined the GWR board in 1923 and succeeded Churchill as chairman in 1934, remaining until his death in 1940. He had wide business interests and was vice-chairman of Baldwins (iron and steel) at the time of his election to the GWR board.

87 E.g., the Commissioners for Distressed Areas, the Special Areas Reconstruction Association Ltd., the Nuffield Trustees and the S. Wales Trade Recovery and Expansion Cttee.

88 Penrose, Edith T.,The Theory of the Growth of the Firm (Oxford, 1959), 161Google Scholar.

89 Bonavia, Organization of British Railways, 28–32.

90 For a stimulating discussion of the wider issues connected with the growth of the administrative coordination of resources in railways, see Chandler, The Visible Hand, 79–205.