RAILWAY MANAGEMENT.
LETTER
TO
GEORGE CARR GLYN, ESQ. M.P.
CIIAIRMAX OF TIIIÍ
LONDON AND NORTH WESTERN RAILAVAY CO.^IPANY.
BY
JOHN WHITEHEAD,
OF THE STOCK EXCHANGE, LONDON;
AUTHOR OF " RAILAVAY AND GOAWRNMENT GUARANTEE."
" Hanc emendare, si t.ainen possum, volo
A^erfi iabellii : i:)retium est oponas attendere."
SECOND EDITION.
LONDON:
SMITH, ELDER, AND CO., G5, CORNHILL.
1848.
Price One Shilling'.
Londons—J. Davy and Sons, Printers, 137, Long Acre,
HEso^O
I
to
GEORGE CARR GLYN, ESQ. M.P.,
CHAIRMAN OF THE
LONDON AND NORTH WESTERN RAILWAY COMPANY.
Sir,
The statement which has been published under the
authority of the Directors of the London and North Western
Railway Company, showing the present and prospective position
of that Company, is a document of the highest importance. Its
publication has not only dispersed every doubt of the solidity of
that enterprise, but it has done more,—it has imparted confidence
and comfort to Proprietors in other Railways, the Stocks of which
have experienced equally with your own the blasting eifects which
want of confidence ever carries with it.
Lest, however, past doubt and apprehension should be succeeded
by supineness, where inquisitiveness (if full advantage is to be
taken of the present disposition to reform) in its fullest acumen
should exist, I have been tempted to address these pages to you,
that the Proprietors of every Company, and, perhaps, yours in
particular, may see that much remains to be done, ere Railways,
as a property, can be deemed safe and secure.
My previous occupation as Secretary of the South Eastern Rail¬
way Company, my present business pursuits, and my personal
interests, all lead me to use every effort to sustain Railway pro¬
perty in its integrity—to see it placed above doubt—so that the
most timid may select it without fear, for the investment of the
means on which their income—their all—depends. Such are my
4
objects, these my motives for seeking to cherish that spirit of
enquiry which I deem necessary for the attainment of the good
ends I desire.
I have singled out your Company for comment, because, from
its gigantic character, any defects in management generally will
he the more strongly illustrated, the moral (profit or loss) for the
same reason being the more significantly pointed, than would have
been the case had some less prominent compeer been selected.
Your finely tempered mind must frequently have revolted at the
rude and indecorous manner in which the very proper enquiries of
Proprietors (made with no factious object) have been too often
stifled at the periodical Railway Meetings. This is to he lamented,
not only on its own account, hut also for the damaging inference
which it leaves behind, that truth is not desired by the powers that
he. Many a capitalist has withdrawn himself from Railway Com¬
panies on this account alone.
Railway Directors and Railway Officers should never forget that
they are but the breath of the Shareholders. That which has
raised them can level them again. The most humble of the Pro¬
prietors is entitled to respectful attention—enquiries courteously
made should he responded to in a frank and inevasive manner.
That this is not always so, the "Railway King" is himself an
unhappy evidence. His letter of 24th October, to certain Midland
Proprietors who had approached him most reverently hj' memorial,
is the latest example of this tendency.
Mr. Hudson replies (mark the word) as follows—"You allude
to traffic which you do not consider remunerative to the Company.
The Directors are entitled to ask 3-ou to he more explicit, and to
state specifically what traffic is meant." Further on he says, "I
consider it would he an unwise and impolitic measure to take off
the Express Train, which you suggest should he done." Had
Mr. Hudson been a little more candid and a little less evasive—
knowing as he did, or ought to have done, to what the Proprietors
referred—it would have been more honourable to him and better
for his constituents. If he had loved diplomacy less, and candour
more, his character would have been advantaged accordingly.
" Is all the Midland traffic carried at a profit?" was the question,
and a very simple one too, for any Railway Manager to answer.
5
"If not, why not?" would have heen the rejoinder. The Irish
mode of reply adopted is unworthy of the meanest of Railway
suhalterus, much more of Mr. Hudson. The Iron Crown carries
its duties as well as its honors with it, and this its wearer will
live to learn.
The disposition to "pooh! pooh!" those Proprietors who ask
"indiscreet" questions is, as I have already remarked, one of the
Railway hanes. There are, however, other curses which have
beset their existence, and to which much of the present suffering
is to be attributed. I allude 1st.—To the publication, week by
week, of the current receipts, which publicity has too often led to
the encouragement of a traffic carried on at a sacrifice, simply for
the tale it would tell in the improved total''' at the week's end.
2nd.—The very small qualification requffed to obtain a seat at a
Railway Board—and this in your Company, taking into account
the enormous magnitude of your capital, is absurdly low. 3rd.—The
influence which certain (otherwise useful) measures would have on
the market value of the shares, becoming an item in the conside¬
ration of the question of approving or disapproving them. I need
not say that to you, personally, the latter reflection does not apply.
Your experience, however, of what passes in a Board Room, will
bear me out in the allegation that such influences are allowed to
prevail.
The London and North Western Railway is at once the baro¬
meter and the guide of every other Railway interest. That which
compromises it, affects them. If success or ill fortune attend it,
they quickly sympathise. It was the pattern which all followed,
and whether it were for weal or woe that this should he, the various
managing bodies were too anxious to he " North Western-ish," (or,
perhaps, I ought to say, "London and Birmingham-ish") not to
mould themselves accordingly.
The £ 10. per cent, dividend charm of your Company having
been broken, the woild has become so ungenerous to its idol, as to
* I know of one Company which refuses all free passes, and compels those
who have a claim on them for free passage to pay the full fare, wliich is after¬
wards repaid to them, but, nevertheless, constitutes a portion of the passenger
receipts—fine management this—the receipts are enhanced truly, and so is the
government duty, which the Company has itself to pay.
6
enquire whether it has not been deceiving itself hitherto in
attributing to superior management, that which has alone been
due to the position your Railway occupies on the map of England.
The doubt is disloyal, but the year 1848 has been too famous for
disloyalty, to surprise you at its existence so near to yourself.
With these preliminary remarks I purpose to draw attention
to your Goods Trade—your Passenger Time Bill—the inequitable
manner (as it seems to me) in which the fares are adjusted—the
unwieldy irresponsible character of your Board, and other minor
though not unimportant matters.
Before proceeding with the Goods question it will be necessary
that your Proprietors should have an insight into the past. For
this purpose I shall give a short historical sketch of the mode
which was adopted by the London and Birmingham Company,
in the conduct of its Goods Traffic, when it stood an independent
body as compared with that now in operation on the London
and North Western Railway.
The system adopted by the London and Birmingham Company
was the open one of allowing all Carriers to use the line. The
Railway Company stipulated that they should supply the necessary
locomotive power at agreed rates, and that for the use of the road
certain tolls should be levied. These constituted the whole and
sole account between the Company and the Carriers. The latter
collected and delivered the goods, took all risks upon themselves,
and provided they paid to the Railway Company its dues, every
needful facility was given to them to carrj' on their business. The
tolls and haulage rates were so regulated, that whilst on the one
hand they contributed a handsome profit to the Railway exchequer,
they were on the other sufficiently reasonable to allow the Carriers
to conduct their business to a profit. In this there was mutuality—
an essential ingredient in all business arrangements. The com¬
petition amongst the Carriers was the security which the public had
against unfair charges.
The Grand Junction Railway Company's system on the con¬
trary, was of a close and exclusive character. They could not
prevent Carriers using their line—it was the Queen's highway—
but wishing really to force strangers from it and secure their
trade to themselves, they refused those facilities which were neces-
7
sary to their business, owing to which, and to impediments they
found at every Grand Junction point, Messrs. Pickford and Co.,
for a very considerable period, carried all their goods to Manchester
around by Leeds. To secure that monopoly of the Goods Trade
which they were so eager at all risks to obtain, the Grand Junction
Railway Company became Carriers themselves, and established
agencies at every point whence they thought traffic could be ob¬
tained. They would, however, it is believed, have utterly failed
in this their labour by day and dream by night, but for the amal¬
gamation which took place between that Company and the London
and Birmingham.
The open system pursued by the London and Birmingham
Company ceased with the existence of that Line as a separate un¬
dertaking, and when the formal amalgamation took place, the
London and North Western Company adopted the close and ex¬
clusive plan of the Grand Junction Company.
The Carriers seeing that nothing short of ruin, or an eternal liti¬
gation to maintain their rights was now intended, gave up the
unequal contest, and that for which the Grand Junction Company
had risked everything (a monopoly of the Goods Trade), seemed
within the easy grasp of their gigantic absorber. Not so, how¬
ever, a rival started into existence where none had been calcu¬
lated on.
The Canal Companies having had a foretaste of what was in
store for them, applied to and obtained permission from Parliament
to become Carriers on their own account—a privilege which up to
that time they had not possessed. The result has been that the
Grand Junction Canal Company, to preserve itself from destruc¬
tion, is competing for the Goods traffic between London and the
North, at rates so low that the Railway Company cannot venture
to touch them, much less to drive the Canal Company as com¬
petitors from the field. When this unseemly strife will end no
man can foresee. Life and death are in the balance so far as the
Canal Company is concerned ; excessive loss in character and for¬
tune in as far as the Railway Company is affected.
Some palliation for this ruinous and reckless competition might
have been found if the Railway Company had been making profit
by the trade which their low rates have brought them, but the fact
is so far otherwise, that a considerable portion of the profit derived
s
from passengers cannot fail to be absorbed by the losses which are
incurred in the conveyance of goods.
The London and North Western Railway Company, as you
are aware, is at the present time carrying goods from London to
Manchester at 40s. per ton ! The Grand Junction Canal Com¬
pany are doing the like by Canal, at 30s. per ton ! As both under¬
take to collect and deliver without extra charge, the real fact is,
that the Railway charge is 30s. per ton, the Canal 20s. per ton,
the difierence 10s. being the cost of collection and delivery.
The question at issue is this simple one. Is the London and
North Western Railway Company making profit or loss by their
Merchandise traffic as now conducted ?
It has been said—and as respects the superior classes of passen¬
gers, with great truth—that the Passenger fares are ill adjusted,
and consequently not sufficiently remunerative. Let us test the
question of the Goods charges, by comparing them with the Pas¬
senger fares, admitted to be too low.
The Express fare from London to Manchester is 42s. 6d. per
passenger, each carriage being capable of holding eighteen persons
Total £38. 5s.
The Second Class fare from London to Manchester is 25s. per
passenger, each carriage being capable of containing thirty-two
persons . . Total £ 40.
The Third Class fare from London to Manchester is {vid Bir¬
mingham) 16«. 5\d. per passenger, but by that " folly of follies,'
the Trent Valley line, 15« 8c?.; say, therefore, 15«. 8c?., each car¬
riage being capable of carrying thirty-two persons Total £25. l«.4c?.
The Goods trucks are capable of carry ing 3^ tons weight each,
taking which as the average at the actual Railway charge of 30«.
per ton, would give per truck . Total £5. 5«.
The contrast, therefore, stands thus;—That a well-filled car¬
riage of first or second class passengers, none of whom require the
Carriers' services, at the Company's cost, to bring them to, or take
them from the Stations, produces nearly eight times more than does
a fully laden truck of goods, whilst the humble Third Class Par-
* This 30«. is the average. The Company carry various classes of goods at
much lower rates, as other Companies do, and if the contrasts had been made
on those lower rates, the results would have been much more startling. It
would require eight Goods Trucks laden to produce as much as a full Second
Class carriage.
9
liamentarian, who travels in a vehicle dignified by the name of
" carriage," at about goods speed, brings to the cofiPers of the
Company, with his thirty-one fellow passengers, a sum nearly five
times greater than does the well-packed Goods truck !
The First Class Carriage is capable of earning £ 38 5 0
,, Second ditto ditto 40 0 0
„ Third ditto ditto 25 1 4
„ Goods Truck ditto 5 5 0
In other words, one First Class Passenger of true Aldermanic
proportions, pays for the conveyance of his twelve stone weight
(1681bs.) more than is paid for the carriage of one ton and a third
of goods.
Three Second Class Passengers, or three and a half cwts. pay
as much as do two tons and a half of goods.
One robust Parliamentarian of 1401bs. weight stands in the
Goods balance as exceeding half a ton.
Again,—if Goods are carried at these rates at a profit,
Two First Class Passengers and one child at half fare are en¬
titled to the luxury of a carriage, in true regal style, to themselves.
Four Second Class Passengers should claim a whole carriage to
themselves.
Seven Third Class Passengers in like manner should have a
carriage to themselves.
These contrasts place you and your colleagues on the horns of a
dilemma, from which you must escape as best you can.
Either the Goods Rates are too low.
Or the Passenger Fares are too high.
If a truck load of goods can be carried at a profit from Man¬
chester to London for £5. 5s., then £25. for a carriage load of
human beings are preposterously exorbitant.
The real truth, however, is, that the losses attendant on the
Goods Trade as at present conducted are most uncomfortably heavy,
whilst the much contemned Third Class Passenger, despite the
Railway cant to the contrary, is a most excellent and profitable
customer.
With the passenger there is no " trust," he pays his fare before
he enters the carriage. Not so with the Goods Trade. Ledger
accounts are inseparable from it. Book debts bring bad debts in
their unprofitable train, as all the world knows.
The following Table shews the average rates charged by the Metropolitan Railway Companies (the (Ireat Western, on account of the
difference of its guage, is excluded) for the conveyance of Passengers per Carriage load, and of Goods and Cattle per Truck load.
Railway.
Places»
Milrs.
Cattle,
Goods.
Passengers.
Per Truck.
Per Mile.
Per Truck.
Per Mile.
lixp
Per Carriage.
reus
Per Mile.
Seeon
Per Carriage.
Class,
Per Mile.
Parliamentary'1
Per Carriage.
lird Class.
Per Mile.
London and North Western....
Ditto and South ditto
South Eastern
London and Brighton
Eastern Counties
Manchester ...
Southampton..
Dover
Brighton
Yarmouth
188
80
88
504
146
Jt. Í. d.
4 14 0
2 2 0
2 0 0
1 10 0
3 0 0
8. d.
0 6
0
0 54
0 f
0 5
ii. 8. d.
5 5 0
2 15 0
5 5 0
2 15 4
5 13-9
a, d.
0 6.}
0 8i
1 24
1 1
0
8. d.
38 5 0
18 0 0
19 16 0
114 0
23 17 0*
8. d.
4 0|
4 6
4 6
4 6
4 2|
£. 8. d.
40 0 0
19 4 0
23 9 4
12 14 0
33 12 0
«. d.
4 3
4 7i
5 lOi
5 Oj
4 7è
£. 8. d.
25 0 0
10 13 4
11 12 0
6 13 4
19 9 4
8, d.
2 7f
2 8
2 74
2 7|
2 3
The above statement exhibits some curious results and affords food for meditation. From this it would seem that the Eastern
Counties Company can afford to carry cattle at bd. per truck, per mile, whilst the London and Brighton Company require Id.
for the same service ; that the London and North Western Company, with competition by Canal, can afford to carry a truck load of
goods at GJá. per mile, the South Eastern, with competition by sea, receiving Is. 2|rf. ; that the London and North Western can carry
eighteen Express passengers (a carriage load) at 4s. Ofrf. per mile, the South Eastern receiving for a like service 4s. Grf. So with the
Second Class at 4s. per mile, against that of the South Eastern, 5s. \0\d. The Third Class are nearly equal in all the comparisons,
and this, no doubt, from the " imperative" character of the Act of Parliament. Surely these discrepancies are riddles sufRcient to
puzzle the unlearned in Railway mysteries. I must leave the initiated to explain them, merely remarking, that the South Eastern
Company is the only one of the five quoted which has fixed all its fares at the Parliamentary maximum charge.
* The Eastern Counties Company have no Express trains, the £ 23. 17s. is calculated on the First Class fares.
11
If, the schedules of Goods rates generali}' were dissected, and
the diflferent classes examined and compared with each other. Rail¬
way Proprietors would no longer be surprised that though the
earnings increase the dividends diminish ; for instance, the London
and Brighton Company carry coals at 2(f. per ton per mile, the
Eastern Counties on the contrary charge llrf. per ton per mile—in
other words, the London and Brighton assuming each waggon to
carry 4 tons weight earns 33i. 4if. per waggon load, with a run of
50 miles, whilst the Eastern Counties Company earns, under like
circumstances, but 20s. \Qd. per waggon load of 4 tons.* We are
of course to presume that a profit is made on this 20s. lOaf., and
yet the £6. 13s. Ad. which the le?, per mile Third Class Pas¬
senger Carriage load brings on a run of 50 miles is alleged to be
too small a return, and should be increased by the fares being
added to. Some persons are so disloyal as to say that the Clay
Cross Colliery owners derive more advantage from the low Eastern
Counties coal rate, than the Eastern Counties Company themselves
do. Mr. Hudson can say if this be or be not so.
The South Eastern and South Western lines being both of them
of nearly the same length, and similarly circumstanced in other
respects, afford fair criteria of what other lines are doing in the
Goods trade.
The South Eastern Company carry goods between London and
Dover (88 miles) for 9s. 2d., 10«., 15s. \0d., 30s., 50s., 70s.
(according to their classification) per Ton respectively, or per
Truck load of 3| tons, 32s. \d., 35s., 55s. 5d., 105s., 175s., 245s.
Comparing these amounts with the Third Class Passenger laden
Carriage, producing £ 11. 12s., raises a doubt of profit as respects
at least the three first quoted classes, which comprise the bulk of
goods carried by Railway.
The South V/estern rates for a run of 78 miles—Nine Elms to
Southampton—are respectively 9s. 9if., 12s. 3(7., 15s. 6(7., 18s. 9(7.,
20s., 40s. per Ton, or per Waggon load of 3J tons, 34s. \^d.,
42s. 10|d., 54s. 3(7., 65s. 7^(7., 70s., 140s. The Third Class
Carriage fully laden bringing £ 10. 13s. 4(7.
♦ If the Derbyshire coal owners please they can use their own waggons, in
which case the rate is reduced to %d. per ton per mile, or 12«. 6(7. per waggon
load of four tons on a run of 50 miles.
12
These comparisons are full of incongruities, and the more they
are looked into and contrasted with the Passenger charges, the
more incomprehensible they become.
It would indeed be " la3-ing flattering unction " to a Railway
soul, to imagine that any of the Companies are carrying Cattle or
Goods at other than a loss, at the rates quoted. If, however, they
are making profit, then the wonderment should be, not that Divi¬
dends are falling, but that they do not rise, seeing that the Pas¬
senger receipts preponderate so greatly.
If enquiry be made of the Chairman of the Eastern Counties
Company, whether profit is made by the Cattle trade conducted
over that line, he will answer—"Oh, if we did not carry cattle at
the price we do, the Steamers from Yarmouth would, and we should
lose them all." So let them, say I, and the sooner the better.
The only spirit which seems to animate Railway functionaries is
that of securing a particular traffic. Whether the coveted thing
be worth the cost is quite another question, and one with which
they are possibly not allowed to trouble themselves; the receipts
are the engrossing point, profit or loss is fitted only for the com¬
mon merchant to look to, such calculations would be condescension
too great for Railway kings to stoop to. What is politic, is more
important than what pays. " I consider it would be an unwise
and impolitic measure to take off the Express train," says Mr,
Hudson. Whether a loss or profit of £ 50. per day is made on it.
seems to have nothing to do with the question. The fiat has gone
forth—"it is impolitic"—so the Midland Company must retain its
costly unprofitable toy.
If it were the custom—and no valid reason exists why it should
not be—for Directors to place before Proprietors a general Profit and
Loss statement, shewing what had been made, or what lost by
each description of traffic carried on the line, infinite good would
follow. With such a statement, the Midland proprietors would
bave been able to shew to Mr. Hudson " specifically what traffic is
meant," which they " do not consider remunerative." So with
your own and every other Company; a losing trade, the moment it
was found to be so, would be dropped.
For example, let me suppose that the London and North Wes-
13
tem Company had rendered a statement of such a character as
the following, at the last half-yearly meeting, will any rational
person say that the present system of the Goods, the Cattle, and
tlie Express Trains would be in existence ? The idea is too absurd
to require an indignant " No" to be given to it.
For the sake of illustration, I will suppose a case, observing
that the figures are purely imaginary. What a mass of valuable
information would proprietors thus obtain.
RAILWAY COMPANY
Dr. In account with their Proprietors. Cr.
Goods Traffic from 1st January to 30th June, 1848.
To Amount received for
carriage and delivery of
Goods £ 312,000
Balance 88,000
By Costs of carriage and
delivery of Goods £, 400,000
£400,000 £400,000
By Balance brought down. Loss £ 88,000
Express Trsins from 1st January to 30th June, 1848.
To Amount received on
account of Express Pas¬
sengers 150,000
Balance 50,000
£ 200,000
By Costs of conducting
same 200,000
£ 200,00
By Balance brought down.
Loss £ 50,000
Mixed Trains from 1st January to 30th June, 1848.
To Amount received on
account of Mixed Trains 500,000
£ 500,000
To Balance brought down,
Profit £ 350,000
By Costs of conducting
same 150,000
Balance 350,000
£ 500,000
14
Third Class Parliamentary Trains.
To Amount received on
account of Tliird Class
260,000
X 260,000
To Balance brought down,
Profit X 190,000
By Costs of conducting
same 70,000
Balance 190,000
X 260,000
To Amount received on
account of Cattle 50,000
Balance 30,000
Cattle Trains.
By Costs of carrying same... 80,000
£ 80,000 £ 80,000
By Balance brought down. Loss X 30,000
Dr.
General Summary.
Cr.
To Loss on Goods Trade... 88,000
Do. on Express Trains 50,000
Do. on Cattle ditto ... 30,000
Balance 372,000
X 540,000
By Profit on Mixed Trains 350,000
Do. on Third Class
ditto 190,000
X 540,000
By Balance brought down.
Profit X 372,000
" Loss " is written in such glaring letters on the Express
trains, the Goods trucks, and the Cattle conveyances, that Direc¬
tors must he more than blind not to see them, and worse than
obstinate to persevere with them, as they are at present conducted.
The Public cannot fail, as respects the Goods contest, to see, that
should you succeed in your endeavours to destroy the Canal com¬
petitor, you will establish on the ruin of this, 3'our only antago¬
nist a monopoly to their prejudice ; to ruin may not, however, be
your desire, to weaken so as to make the Canal the more easy
prey, may be all that is intended. Take warning, however, ere
you are so committed, that retreat will be disgrace—perseverance
ruin. An amalgamation with the Canal may not be so easy or
profitable a matter as you may suppose.
It must be evident to all who have watched the London and
North Western line, that what with Express trains—Mixed trains
—Parliamentary trains—Cattle trains—Goods trains—Coal trains
15
—Empty Truck trains—Ballast trains, and Spare Engines running
up and running down (literally so sometimes) the Railway is -vir¬
tually covered -with Engines and Carriages from end to end, all
steaming one on the heels of the other so closely, that it is miraculous
continual accidents are not occurring. This not very comfortable
state of things to Traveller or Shareholder is happily under revi¬
sion ; the Trains are to be reduced in number, but whether the
Goods rates are to be raised to a remunerative standard, is a
question not yet resolved on.
If the Goods rates were doubled, what would be the probable
result to the Railway ? Possibly one-third of the weight now car¬
ried by the latter, would forthwith pass to the Canal. Suppose
one-third did so leave the Railway, the Company would actually
receive for the two-thirds which remained £ 2,000. for every
£1,500. now paid for the carriage of the whole quantity, besides
saving Heaven knows how much in staff and haulage, wear and tear
of waggons, sheets, &c., leaving the poor road itself out of the ques¬
tion,—no insignificant matter, as the cost of maintenance, given in
your public accounts, shews, and as your Resident Engineer, Mr.
Dockray's private report to you and your colleagues proves.* The
speed and regularity of the Railway over the snail-like motion,
and uncertainty of the sometimes ice-bound Canal, must always
ensure to the former a very large proportion of the Goods traffic at
remunerative rates ; whence, therefore, this desire to crush a com¬
petitor in reality so harmless ?
So far as respects your Goods Trade—next as to your Passenger
Trade.
It is admitted on all hands, that a vast number of useless trains
are running on every Railway. This, there is no doubt, will to a
great extent be remedied. It would be well, however, for the inte¬
rest of Proprietors, if they would make themselves masters, more
than they have hitherto done, of this source of their income, and
satisfy themselves by minute enquiry as to the return each train
gives, ere they rest content that all the wasteful trains have been
removed.
As regards the Fares, Parliament has determined that the rate
* Seethe Railway Chronicle of 4th November, 1848, for some remarks on
this report, and most important subject.
16
shall be levied at per mile, and has fixed the maximum which may be
charged. It requires little trouble to shew that this is a manifest
wrong. The rate of speed, in my judgment, should be the deter¬
mining rule. It is preposterously absurd to charge at per mile
where speed so varies, as it does between the Parliamentary and
the Express trains, the one running at a rate which commits none
but fair damage in its progress, whilst the other batters the road,
and damages the locomotives and carriages so to pieces,* that it
seems an unnecessary waste of words to do more than point at the
injustice, to ensure relief.
In olden times, before Railways began, the traveller who was
not content with the waggon, took his place b}' the stage coach, at
6 miles an hour ; if however this did not suit his taste or pace, the
post-boy at Is. 9d. per mile, and 8 miles per hour, was at his com¬
mand, and if one pair would not do, four horses were at his call, at
a cost of nearly 4s. per mile, with a rate of travelling of 10 miles
an hour. Now, forsooth, the latter is carried on the wings of the
wind, at 45 miles per hour, for a paltry 3if. per mile, that being
the highest rate of charge allowed by Parliament to be made.
If speed were, as I think it should be, the ruling guide, and
15 miles an hour, at lif. per mile, admitted as the governing stan¬
dard, all speeds above a fair rate, say 30 miles, being charged
* The following remarks from the Railway Chronicle have so apt a i-eference
to the costly tendency of Express Trains, that it has been thought well to give
them here :—" Mr. Docki'ay's report is, as we have already said, full of interest¬
ing matter iu an engineering point of view ; and it is possible we may hereafter
examine it on that side. But our more immediate concern, and the concern,
too, of all directors who are alive to their duty in the present state of things,
lies with the previous question out of which the necessity for any such report
has arisen. It shows in a light that cannot be mistaken, the tendency of an ex¬
cessive rivalry in speed to diminish the cuivent nett earnings, as also to destroy
before its tune the structure from which those earnings are obtained ;—and this
exhibition—which would be serious enough in the most prosperous times—
becomes of the utmost gravity in a season when, as we have seen, the income
of the company has for some time past been rather decUning than increasing,
while the public .are paying less than heretofore for a more expensive service.
It contains an instinctive lesson, which ought not to be overlooked,—cannot be
passed over, indeed, by those who desire to raise from its present state what was
once the first of railway properties. On this account the conclusions which
must be incidentally drawn from it are far more important just now than the
direct results of Mr. Dockray's investigations."
17
double, then something like equity would be observed.*—15 miles
would be charged at the rate of \d. per mile; 30 miles, 2if.;
45 miles, 4(f.; 60 miles, 6d.—32 persons travelling in every carriage,
of third class make and accommodation.
Following out this view, as a First Class carriage carries but
18 passengers, the rule of proportion, at 45 miles speed without
reference to the more expensive character of the carriage itself,
(fairly an item of consideration) would justify a charge of 7d. per
mile ; and, taking Birmingham as the point of destination, the Ex¬
press fare would be £3. 5s. Id. per passenger in place of £ 1. 5s.
now charged. No account is here taken of the superior accommo¬
dation required by, and afforded to, the first and second class pas¬
sengers, in the carriages they use and the stations they frequent,
both of which should, in my opinion, be paid for. Up to the present
time the Public only has been considered, it is full time that Rail¬
way Proprietors had their turn.
Whether first, second and third class distinct trains would not
prove a profitable arrangement is problematical, possibly if managed
with judgment it would ; say, that the first class train started an
hour later, but reached its final destination earlier than the third
class, and in like manner the second class, those persons who now
travel by the second or third classes, and who, by their standing in
society, should go by the superior class, would do so. Now there
is no inducement,—the first class passenger travels second class
not only because the train being a mixed one he arrives at his
journey's end in a comfortable closed carriage at the same time as
the actual first class passenger, but really because the rate is
cheaper and the inconvenience none. The experiment may be
worth a trial ; this however your better judgment will determine.
I have seen a suggestion in print, which I repeat here, consider¬
ing it of much value. It is in efiect, that no question involving
additional outlay, or the raising of new capital, should ever again
be submitted for final approval until a Committee of Proprietors,
(appointed at a meeting convened for the purpose) had examined
* The notice you have given for a Bill to amalgamate with the Great Western
and London and South Western Companies would enable you to carry out tins
change, if thought desirable.
B
:i8
the propositions fully, and reported thereon at a subsequent meeting.
Surely such a rule would be a relief to Directors sufficient to induce
its adoption.
The foregoing hints shew the way to better management, and to
its sequitur, improved dividends. "Whilst, however, Proprietors
are in a reforming mood—they are never so in prosperous times,
when most they should be,—they are earnestly advised to use the
pruning knife freely.
Let them with one voice call upon the Legislature to appoint a
Public Auditor of Joint Stock Companies' accounts, (not Railway
Companies alone) to whom, under heavy penalties. Directors should
be compelled to deliver half-yearly statements of accounts, and
when required, to verify the same. Such an appointment would
carry with it the fullest possible confidence, and be the surest pro¬
tection against those fraudulent misrepresentations of accounts
which have led to the ruin of hundreds. Instance upon instance
of such falsification might be named, but a recent flagrant case
will be sufficient, that of the Copper Miners of England Company,
a company presided over by Bank of England Directors,—the
falsification of whose accounts for years previous to their insolvency,
has subsequently to that crash been elicited.
Such an appointment would, it is to be feared, be resisted to the
death by Directors of Joint Stock Companies generally. Let Pro¬
prietors however beware how they aid opposition to so wholesome
a provision ; let them recollect that it is for their protection that
the measure is called for—that it is they who will be advantaged
by it.
In France the Government right of inspection exists, and has
been found to work most beneficially.*
The necessity of appointing such an officer has been, with almost
one voice, approved by the Press. The Money article of the Times
of the I2th October, has some remarks on this subject, which em¬
body views so wise and so prudent, that no apology is necessary
for their r-e-introduction here ;—
* The minuteness Tvith which French Kail way accounts are rendered would
surprise those not conversant with the fact. Those of the Boulogne Company,
recently published, are an example of this. Any person desirous of doing so
may see them on application to my partner or myself (Garden and Whitehead).
19
" The public hear of meetings of the heads of the leading lines
to devise means to stay the ruin. There is only one measure
wanted, and that is the publication of accounts that shall be unmis-
takeable. If there is a single railway that is considered by its
directors to have fallen too low in the market, they can set the
matter right. There are plenty of shrewd people at this moment,
notwithstanding the hardness of the times,waiting with money in-
their pockets to find investments. Give them a statement such as
they would require, and such as any city accountant with the mate¬
rials at his command would prepare in a form that the simplest
tradesman might understand it, and forthwith they will bid within
a fraction the true value of the shares. So long as such statements
are kept hack, while it is at the same time notorious that every
other available effort is being used that can be used to arrest the
fall, there can only be an increase of distrust. Several months
back the companies resisted the appointment of a public auditor.
Had it taken place, it is probable the end would by this time have
been arrived at. As it is, it may easily be seen that until the books
of each concern shall have been thoroughly sifted by some wholly
unbiassed person or persons independent of the directors, paid ex¬
pressly for their work, and with a professional reputation at stake
upon its accuracy, it must be vain to hope for any permanent
mitigation of the chronic terror that now prevails."
Solvent, honestly conducted Companies need not dread the
appointment of such an officer, those which are rotten may " fear
and tremble," and the earlier they are submitted to the light of
truth the better.
With such a system of supervision. Joint Stock property would
take a position somewhat akin to that maintained by the Govern¬
ment Funds. Those Stocks, at all events, would, which in the
guarantees they possess, have certainty in amount of dividend
secured to them. Such, however, is the wide difference between
the two classes of stock, as to lead to the inference that the many
are still ignorant of the existence of such guarantees, or that their
fears have rendered them incapable of taking full advantage of
present circumstances for investment purposes.
20
The following table will show the extent of this discrepancy.
The prices are those which ruled on 10th November, 1848.
Price,
per £100.
Stock.
Rate
per Cent,
of
Guarantee.
Annual
Return
per Cent.
Guaranteeing
Company.
Consols
Buckinghamshire
Wilts, Somerset and
Weymouth
Reading and Reigate ...
Croydon, 3rds
Eastern Counties, No. 1.
£86 7 6
81 8 6
72 0 0
95 0 0
94 8 11
101 17 6
£S
4
4
5^
5
5
£3 9 6
4 18 3
5 11 1
5 15 9
5 5 10
4 18 1
Lond.&N.West.
Great Western
South Eastern
Brighton
East. Counties
Let proprietors insist on every Board being reduced to a busi¬
ness number.
The Board over which you have presided so long and so ably, is
composed of 45 members. To call this a "business" body would
be a libel on the meaning conveyed by the term. Call it a debating
club and (as was well said by the new Chairman of the Brighton
Company in reference to large Boards) you are nearer the truth.
Better by far place the management in the hands of a small body of
responsible Directors, each being known to have the charge of
one department, the whole forming a general Council, than leave
it in those of a set of irresponsihles, many of whom seek a seat at
the Board only for a free passage over the line, which the appoint¬
ment carries with it. With such an alteration something in the
shape of good management would soon be seen. If, too, the whole
number went out of office every year (being re.eligible) the fullest
responsibility that could be wished for would be obtained. The
Proprietors should pay such Directors, not well, but very well.
Parsimony in this would be the worst " economy."
The present system is one of seeming responsibility only, one or
two Directors generally taking the lead, the others being nothing
more than so many Kailway pegs, on which the dominant party
hang their decrees. Railway Boards are made up of a few " actives"
and many " passives."
Mr. Lang, the Chairman of the Brighton Company, is for making
all " active." His observations on this subject, already referred to,
are highly interesting, and are here transcribed.
" I believe tiiere is a general feeling existing on the part of all
21
who are acquainted with the system of Railway management, that
the system hitherto pursued is ill-suited for carrying on the busi¬
ness in a proper manner. A numerous Board of fifteen or sixteen
members—so numerous as to come almost within the denomination
of a debating society—may be very well adapted to carry on the
business of an association—snch, for instance, as a Dock Company,
in which the transactions are simple, and where they receive a
large sum of money with one hand, and pay it away with the other ;
and where all that is required is the exercise of common sense and
honesty, and the easy enforcement of a few plain rules, the usual
system may be applicable. But I contend it is inapplicable to the
business of a Railway, which consists of minute details requiring
the closest personal supervision to be effectually conducted. The
business of a Railway Company bears a close analogy to a great
firm of common Carriers. We are a gigantic Pickford, or Chaplin
and Home, and our business cannot hope to prosper any more
than theirs would do, if we have a Board of sixteen members
meeting once a fortnight—taking a glass of wine, and discussing
the multifarious business which comes before them. I am con¬
vinced that one of the causes of depreciation of Railway property
is the deficient system of its management. I think when a Board
is so numerous all sense of individual responsibility is lost. I look
around me, and see eight or ten millions of property depreciated,
in which all the elements of success exist, and which, if managed
with the prudence and vigilance of private concerns, I see no
reason why it should not be equally flourishing. I think the
proper system would be to concentrate the responsibility into the
hands of one or two individuals, because, in a Company like this
and that of our neighbours, any one may see that the most enor¬
mous mistakes have been made, involving, perhaps, the sacrifice of
millions of money, and yet cannot turn round to any one and say
' You are responsible for this.' "
The floating debt of Railway Companies is a subject of serious
anxiety—it is one which should be resolutely dealt with. Many
of the Companies in the days of their prosperity made provision
for meeting it as it fell due ; the majority, however, in this the day
of pressure have found themselves unprovided with means to liqui-
22
date their mortgage engagements, and are in consequent dépen¬
dance on their creditors, who may or may not demand their money
or their bond. This is a most unfortunate state of affairs, and one
which it will require a strong hand to deal with. Surely it would
be a wholesome and honest system to set aside some small portion
of the earnings, as a fund for the gradual liquidation of incum¬
brances which hang like a mill stone around the necks of Railway
Companies. With such provision (no matter how small the per
ceutage set apart) Mortgagees would remain eager lenders at mode¬
rate rates, and all uneasiness on the score of their claims would
vanish.
Unfortunately, however. Parliamentary trammels interpose to
prevent this happy consummation. The power of revision comes
in here as an insuperable objection to such honest providence. It
is more to the interest of a Railway Company to remain in debt, or
to capitalise the amount by shares issued at a discount, the nominal
capital becoming so much the more, than to pay off that debt from
its earnings, seeing that, in the latter case, the right of revision
would come into operation not only the more quickly, but to the
prejudice of the company so meeting its incumbrances ; whereas
in the former it would be the longer delayed. If debts so liqui¬
dated were permitted to be treated as capital, then there would be
a good inducement to provide for them out of income, and never
otherwise.
If, Sir, Directors would but resolve to take the lead in the pro¬
motion of every necessary reform—if they would abandon all
traffic from %vhich no profit arises—cut down all useless expendi¬
ture—not "covet their neighbour's goods"—adopt the " live and
let live " golden maxim as their guiding rule—and promote the
appointment of a Public Auditor of Joint Stock Companies' ac¬
counts, then indeed would they find their path easy, and their
responsibility light. If, however, they should oppose such salu¬
tary measures, they may rest assured that they will soon cease to
possess the confidence of their Shareholders, and with its loss,
their official existenoe also.
That you. Sir, who are in every respect so fitted to take the
lead In legitimate Railway Reform, may not refuse the honorable
23
task, but that you may accept it, and persevere until you have placed
Joint Stock Companies above the fear of reproach, and far above
that suspicion of their integrity, which now exists so generally, is
the earnest desire and sincere wish of.
Your most obedient,
humble Servant,
JOHN WHITEHEAD.
London,
2, Royal Exchange Buildings,
\5th November 1848.
Printed by J. Daty and Sons, 13?, Long Acre.
PREPARING FOR THE PRESS,
THE SIXTH EDITION OP
RAILWAY AND GOVERNMENT GUARANTEE."
This Edition will bo entirely re-modelled, and will contain particnlars
of the varions Guaranteed and Preferential Railway Stocks which shall
have been created up to the time of publication. They will be classed
as follows :—
1. Parliamentary Guarantees.
2. Guarantees secured by Leases made, or
Agi-eements for same completed.
3. Preference Shares.
4. Stocks which must or may be paid off at
known rates and fixed periods.
5. Guarantees requiring Parliamentary sanction to give them
validity.
The rate per cent, that each wiU secure to purchasers at current
prices, will be worked out and stated.
Parliamentary
formalities
complete.
APR30 )n?8