From the earliest moment of there being any prospect of railways, operated
by locomotives in place of animal power, coming into general use, the
attitude of the State towards their promoters was one less of sympathy than
of distrust; and this distrust was directly due to the experience the
country had already had of the waterway interests, whose merciless
exactions and huge dividends had led to the fear that if the railway
companies, in turn, were to get a monopoly of the transport facilities of
the country, they might follow in the footsteps of the inland navigation
companies unless they were restrained either by law or by the enforcement
of the principle of competition.
Public sentiment, which Parliament is assumed to represent, and of which
our legislation is supposed to be the outcome, was divided between, on the
one hand, the landed gentry, the canal proprietors (each alike hostile to
the railways until they found they had more to hope for from exploiting
them), and the inevitable opponents of innovations of any kind; and, on the
other hand, the traders, by whom the railways were being cordially
welcomed, not only because of the greater and better transport facilities
they offered, but also because they presented an alternative to the canals,
the earlier enthusiasm for which had been greatly moderated by the prospect
of an improved means of transport.
Without adopting wholeheartedly the views of either of these two opposing
parties, Parliament regarded the position with much concern lest there
might be a renewal, in another form, of what we have seen to be the
grasping tendencies of monopolistic canal companies; and the distrust
inspired, under these particular circumstances, and from the very outset,
towards railway companies which were preparing to create a revolution in
the transport conditions of the {259}country--a revolution the State was
not itself disposed to effect or to finance--was powerfully to influence
much of the subsequent railway legislation, if, indeed, it has even to-day
entirely disappeared.
At first it was assumed that competition in rail transport would be
assured, and the dangers in question proportionately reduced, by different
carriers using their own locomotives, coaches and carriages on the railway
lines, which alone, it was thought, would be owned by the railway companies
constructing them. In some of the earlier railway Acts there was even a
provision that the railway companies could lease their tolls, as turnpike
trustees were doing. But the apparent safeguard in the form of competition
between rival carriers disappeared when it was found (1) that, although a
railway company was required to allow a trader's own horse or locomotive to
use the line, it was under no obligation to afford him access to stations
and watering-places, or to provide him with any other facilities, however
indispensable these might be to the carrier's business; (2) that the tolls
charged by the railway companies were heavier than the carriers could
afford to pay; (3) that the entire operation of a line of railway worked by
locomotives must necessarily be under the control of the owning and
responsible company; and (4) that railway companies would have to become
carriers of goods as well as owners of rails.
A Parliamentary Committee which sat in 1840, and of which Sir Robert Peel
was a member, had reported in the strongest terms that the form of
competition originally designed was both impracticable and undesirable, and
that monopoly upon the same line, at all events as regarded passengers,
must be looked upon as inevitable. "Your Committee," said the report,
"deems it indispensable both for the safety and convenience of the public,
that as far as locomotive powers are concerned, the rivalry of competing
parties on the same line should be prohibited"; though, as some check to
the consequent monopoly of the railway companies, they suggested that the
Board of Trade should act as a supervising authority, with power to hear
complaints, consider bye-laws, etc.
A witness for the Grand Junction Railway Company, who gave evidence before
this Committee, said that any person {260}might run his own engine on the
Grand Junction, and in one instance this was done by a trader who had a
locomotive on the company's line for drawing his own coal; but the witness
apprehended the greatest possible inconvenience from any general resort to
such powers. On the Liverpool and Manchester, also, anyone might run his
own engines on the line; but, the witness added, "no one does."
The Royal Commission of 1865 summed up the position thus:--"No sooner were
railways worked on a large scale with locomotive power than it was found
impracticable for the general public to use the line with carriages and
engines, and railway companies were compelled to embark in the business of
common carriers on their own line, and conduct the whole operations."
When, in these circumstances, it was made certain that any idea of
competition between carriers using a railway company's lines in the same
manner as an ordinary highway would have to be abandoned, it became the
established policy of the State to promote competition between the railway
companies themselves by encouraging the construction of competitive lines
or otherwise, thus still protecting, as was thought, the interests of
railway users, and checking any monopolistic tendencies on the part of the
railway companies. The futility, however, of seeking to compel railway
companies to compete with one another had already been pointed out by Mr
James Morrison, whose speech on the subject in the House of Commons on May
17, 1836, confirms, also, the theory I have suggested as to the attitude
adopted towards the railway companies being traceable to fears engendered
by the undue prosperity of the canal and navigation companies.
If, argued Morrison, after one company had spent a large sum on a line to
Liverpool, another company were encouraged to spend as much again, with a
view to providing a competition which would keep down the charges, the two
would inevitably arrive at some understanding by which the original charges
would be confirmed; and the Legislature, he contended--though the
Legislature never acted on his contention--was "bound to prevent, as far as
it could, the unnecessary waste of capital" on the building of unnecessary
lines to promote a competition he held to be futile. The safeguarding of
the public interests could, he thought, be effected in another way.
{261}"The history of the existing canals, waterworks, etc., afforded," he
went on, "abundant evidence of the evils" of allowing too much freedom in
the matter of rates; and he quoted the high prices at which the shares of
the Loughborough Canal and the Trent and Mersey Canal were then still being
sold,[40] adding: "The possession of the best, or, it may be, the only
practicable line, and the vast capital required for the formation of new
canals, have enabled the associations in question, unchecked by
competition, to maintain rates of charges which have realised enormous
profits for a long series of years."
The remedy he recommended in preference to competition was that when
Parliament established companies for the formation of canals or railroads
it should invariably reserve to itself the power to make such periodical
revisions of the rates and charges as it might deem expedient, examining
into the whole management and affairs of each company, and fixing the rates
and charges for another term; the period he favoured being one of twenty
years.[41]
There was no suggestion, at this time, that the railway companies _had_
abused their powers. The only suggestion--and expectation--was that
_because_ the canal companies had abused theirs, the railway companies
might, and doubtless would, do the same, unless they were prevented; and it
will {262}be found that this was mainly the position throughout the whole
of the subsequent controversies.
Morrison's proposal was approved in the House of Commons, and on May 17 he
brought in a Bill for giving effect to it in regard to all new railways, to
be sanctioned in that or any subsequent Session. But the prospect of a
Parliamentary limitation of the profits a railway might earn had a most
depressing effect on the railway interests, and on July 11 Sir Robert Peel
urged that the question should be decided without further delay inasmuch as
"this branch of commercial enterprise was injured and almost paralysed." On
the following day the Bill was brought up again, and it was then defeated.
In the same Session (1836) the Duke of Wellington moved, and carried, in
the House of Lords a general clause, to be inserted in all railway Acts,
the effect of which would have been to give to Parliament the power of
dealing as it might think fit with any railway company during the next
year. John Herapath thereupon inserted in the current issue of his "Railway
Magazine" a letter addressed to the Duke of Wellington, in the course of
which he said:--
"No person can doubt your Grace's intentions are honourable to all parties.
Fearful of the consequences of overgrown monopolies, you are anxious to put
some salutary restrictions to those bodies riding, as you apprehend,
rough-shod over the public; and you are anxious to do this before they
become too powerful to be ruled. Every honest and right-minded man must be
satisfied that such are needful; nor is there a company got up on
honourable principles that would object to any reasonable measure, in which
a due regard is paid to their own interests, and a proper consideration is
had to all the circumstances of their situation and risk. But in common
fairness these must be taken into account."
Defending the railways, and keenly criticising the attitude of the State
towards them, Herapath further said:--
"No man knows better than yourself that these works, if they are at all
likely to be beneficial to the nation--which everyone in his sober senses
admits--will form a great and brilliant era in its prosperity. Nay, my Lord
Duke, permit me to ask you if they have not been a Godsend towards the
preservation of this country, by giving a new impetus to {263}industry and
trade, and saving us from that anarchy and confusion to which distress was
fast hurrying a large proportion of our population? With all these
advantages staring us in the face, what have the Government done to promote
railways? Have they done a single thing? I am not conscious of one. Have
they removed a single impediment? Not to my knowledge; but they have raised
several. Have they contributed a single farthing? Rather, I believe, by the
intolerable and vexatious oppositions permitted in passing the bills, have
been the cause of spending many hundred thousands, which, like another
national debt, will prey to the end of time on the vitals of public
industry."
The Duke's proposed clause was dropped, and was heard of no more; but
Herapath's prediction as to the equivalent of "another national debt" being
imposed on public industry was to be verified by the course of subsequent
events still more than by any avoidable expenditure then already incurred.
If, again, as Herapath said, the Government had done nothing to promote
railways, they had not been backward in seeking advantage from them in the
interests both of the Exchequer and of the Post Office.
Within two years of the opening of the Liverpool and Manchester line, a tax
of one-eighth of a penny per mile for every passenger conveyed on the
railway was imposed, and the directors of the Liverpool and Manchester,
then struggling into existence, announced that, in consequence of the tax,
they would be obliged to charge the public higher fares. By 1840 the
Exchequer receipts from the tax amounted to £112,000. Two years later,
following on a great public agitation, Peel substituted for the mileage tax
a tax of five per cent on receipts from passenger traffic, and in 1844 the
tax (which had been especially oppressive on the poorer class of
travellers) was abolished in the case of third-class passengers carried at
fares not exceeding a penny a mile in "Parliamentary trains," stopping at
every station.[42]
The local authorities, with Parliamentary sanction, also subjected the
railways to a degree of taxation against which {264}Mr G. C. Glynn,
chairman of the London and Birmingham Railway, in a speech (at a meeting of
his company) quoted by Francis, protested in the following terms: "Then
comes the last item of local taxes and parochial rates; these, gentlemen,
we do take exception to.... The county assessors and the parties to whom
appeal from them is made seem actuated by one principle, namely, to extract
every farthing they can from the railway property. We ask no boon, we ask
for no favour from Government on this subject; but we do ask for justice."
The railways had to submit to the taxation, but they won the day as against
certain excessive and, as they considered, intolerable demands made upon
them by or on behalf of the Post Office.
In 1838, based on the recommendations of a Select Committee of the House of
Commons on the transmission of mails by railway, the Government introduced
a Bill which, in effect, placed the entire railway system of the country,
then and for all future time, at the command and under the supreme control
of the Postmaster-General. That functionary was empowered by the Bill to
call upon the railway companies to provide him with--at their own
cost--special or ordinary trains for carrying the mails at any hour of the
day or night, proceeding at such speed, and calling or not calling at such
places, as he might direct, the companies giving security to the Queen by
bond for duly complying with all Post Office orders, and being made liable
to a penalty of £20 in respect to every railway officer, servant or agent,
who might disobey any Post Office order. If the Post Office wished to use
its own engines and conveyances it was to be at liberty to do so without
paying any rates or tolls whatever; and it was, also, to be free to clear
away any obstructions to its engines, and use any of the railway company's
appliances it wanted. The railway companies were, in return, to be assured
a "fair remuneration" for (in effect) the wear and tear of the rails; but,
lest this payment might be too much for the Post Office, the
Postmaster-General was further authorised to recoup himself by carrying,
not simply the mails, but _passengers_, in the trains he might think fit to
command or to run, thus competing on the railway lines with the companies
whose property he was virtually to annex.
{265}The companies declared they were willing to render every reasonable
facility to the Post Office; but they protested most vigorously against
what they called "the absurd and tyrannical clauses" of the Bill.
These were, nevertheless, defended in the Commons on behalf of the
Government, the Attorney-General saying "he had no doubt if the prerogative
of the Crown were put in force, the Post Office and the troops and stores
might be transmitted along the railroads without the payment of any tolls
whatever; though he thought the companies should have a fair remuneration
for the accommodation given."
Sir James Graham, on the other hand, wanted to know what were the Queen's
rights on the Paddington Canal. He understood that troops were frequently
moved from Paddington to Liverpool by canal, but were always paid for as
passengers. Lord Sandon, too, declared that the question was whether the
public interest conferred a right upon the Post Office to take possession
of railroads, and make use of them without the slightest remuneration
whatever. That the railways should be subject to control he readily
admitted; but there was a wide difference between justifiable control and
absolute sway, between fair remuneration and robbery, for such it would be
to use the property of these companies without paying for it.
The companies, according to a statement in the "Railway Magazine" for
August, 1838, where a summary of the debate will be found, had been
"prepared not merely to petition but to act"--whatever this may mean. The
Government, however, adopted a more conciliatory attitude towards them by
either withdrawing or amending the clauses which had evoked these protests,
and an amicable settlement of the future relations between the railways and
the Post Office was then effected.
The rejection of Morrison's Bill and the withdrawal of the Duke of
Wellington's motion, following on their adverse criticism by the railway
interests, had committed the Government still more to their policy of
stimulating competition between the railway companies themselves, thus,
they considered, diminishing the risk of seeing any of them become too
prosperous a monopoly. It was in full accord with this policy that
encouragement was given to the creation of {266}many small, independent,
and more or less competing lines, and that no attempt was made to encourage
the provision, either by individual companies or by groups of companies, of
"trunk lines" of the type which Thomas Gray and others had been urging on
the country with so much though with such futile persistence.
The advent of the new means of transport was, in fact, marked by the
complete absence of any centralised effort with a view to securing the
network of a railway _system_, so planned or so co-ordinated as to make the
best possible provision for the country as a whole, and especially for the
rapidly increasing necessities of trade, commerce and industry. The failure
to act on these lines was, however, only in accordance with the previous
policy, or no-policy, which had successively left the improvement of
rivers, the making of roads, the construction of canals and the provision
of turnpikes either to private benevolence or to private enterprise,
influenced mainly by considerations of local or personal interests.
Much had certainly been done in these various directions by those to whom
the State had thus relegated the carrying out of public works which in most
other countries--as regards main routes, at least--are regarded as a matter
of national obligation. But, apart from any question of providing State
funds, the lack even of intelligent direction and efficient supervision by
a central power, qualified to advise or to organise private effort, had led
both to a prodigious waste of money and to results either unsatisfactory in
themselves or in no way commensurate with the expenditure incurred. The
same conditions now were to lead, in regard to the railways, to a further
waste of money, to disastrous speculation, to infinite confusion, to the
piling up of a huge railway debt, and to the provision of innumerable small
lines which were to remain more or less independent and disconnected
_fragments_ of a railway system until the more enterprising companies
began, on their own initiative, to amalgamate them into through routes of
traffic.[43]
The general position at the period here in question was well stated by G.
R. Porter in his "Progress of the Nation" {267}(1846), where he wrote, on
the subject of railway development:--
"The _laissez faire_ system which is pursued in this country to such an
extent that it has become an axiom with the Government to undertake nothing
and to interfere with nothing which can be accomplished by individual
enterprise, or by the associated means of private parties has been pregnant
with great loss and inconvenience to the country in carrying forward the
railway system. Perhaps there never was an occasion in which the Government
could with equal propriety have interfered to reconcile the conflicting
interests involved, and to prevent public injury arising from the false
steps so likely to be made at first in bringing about a total revolution in
the internal communication of the country. It is not meant by these remarks
to infer that Government should have taken into its own hands the
construction of all or any of the railroads called for by the wants of the
community; but only to suggest the propriety and advantage that must have
resulted from a preliminary inquiry, made by competent and uninterested
professional men with a view to ascertain the comparative advantages and
facilities offered by different lines for the accomplishment of the object
in view. If this course had been adopted before any of the numerous
projects were brought forward for the construction of lines of railway
between all imaginable places, and if it had been laid down as a rule by
the legislature that no such projected line could be sanctioned or even
entertained by Parliament which was not in accordance with the reports and
recommendations of the Government engineers, the saving of money would have
been immense. The expensive contests between rival companies in which large
capitals had been so needlessly sunk would then have been wholly avoided;
and it might further have followed from this cause that, a kind of public
sanction having been given to particular lines and localities, much of that
personal opposition which has thrown difficulties in the way of works of
great and acknowledged utility would never have been brought forward."
In making these remarks, Porter was only giving expression to views
entertained in various influential quarters, and to a certain extent he did
but anticipate, or re-echo, according to the precise date at which his
observations had been {268}written, certain views and proposals put forward
by the Select Committee of 1844, of which Mr Gladstone (then President of
the Board of Trade) was chairman. In the Fifth Report of this Committee it
is said:--
"The Committee entertain very strongly the opinion that in the future
proceedings of Parliament railway schemes ought not to be regarded as
merely projects of local improvement, but that each new line should be
viewed as a member of a great system of communication, binding together the
various districts of the country with a closeness and intimacy of relation
in many respects heretofore unknown."
So long, the Report continued, as railways were considered to be of
problematical benefit, and were in general subject to extensive opposition
on the part of the owners and occupiers of land, and of the inhabitants of
the districts they traversed, there might have been reasons for ensuring a
very full, and, in some points of view, a disproportionately full,
representation to local interests; but "The considerations which tend to
attach to railways a national rather than a local character gain weight
from year to year as those undertakings are progressively consolidated
among themselves, as the points of contact between them are multiplied, and
as those that were first isolated in comparison are thus brought into
relation with gradually extending ranges of space, traffic and population."
The Select Committee went on to give their reasons for considering that the
ordinary machinery of Private Bill Committees, with their separate and
unconnected proceedings, and an individual existence commencing and ending
with each particular Bill, was inadequate and unsatisfactory; and they
especially pointed to the fact that hitherto it had not been customary to
examine railway Bills "systematically and at large with reference to public
interests." There were various questions which could not be thoroughly
sifted under the mode of procedure then in vogue, and the Committee
recommended that, with a view to assisting the judgment of the Houses of
the Legislature, all future railway Bills should, previously to coming
before Parliament, be submitted to the Board of Trade for their report
thereon. They further said--and these observations have a special
significance in view of events that were to follow:--
{269}"The Committee entertain the opinion that the announcement of an
intention on the part of Parliament to sift with care the particulars of
railway schemes, to associate them with the public interest (in the cases
of all future schemes and of all subsisting companies which may voluntarily
accede to such an arrangement) ... will produce very beneficial effects in
deterring parties from the attempt to entrap the public by dishonest
projects, in securing railway projects against the shocks to which in
periods of great commercial excitement it must otherwise be liable from
such causes," etc.
Praiseworthy as was the design thus put forward by Mr Gladstone's
Committee, it failed to bring about the results anticipated.
In accordance with the recommendations made, a special department of the
Board of Trade, under the direction of Lord Dalhousie, was created, in
August, 1844, to inquire into and report to Parliament on all new railway
schemes and Bills, with a view to guiding the Private Bill Committees of
both Houses. The special department was more especially to report as to the
positive and comparative advantages to the public of any Bills proposed for
the construction of competing lines.
A great deal was hoped for from this new arrangement, and the decisions of
the department as to which of the schemes then being promoted they would
recommend for first consideration by Parliament were keenly awaited.
The expansion of the railway system had, by this time, proceeded so far
that by the end of 1843 Parliament had authorised the construction of 2390
miles of railway, of which 2036 miles were then open for traffic. The
capital of these lines was £82,800,000, and of this amount about
£66,000,000 had been raised. A good deal of wild speculation in 1836-7 had
been followed by a reaction, and the railway market was still depressed in
1843; but in 1844 interest in railway enterprise was greatly stimulated by
the announcement that the Liverpool and Manchester, the Grand Junction, the
London and Birmingham and the York and Midland were paying dividends of
from ten to twelve per cent each, and that the Stockton and Darlington was
paying fifteen per cent. The shares in existing companies rose in value, a
number of new companies were formed, and companies already operating
{270}projected branches in defence of their own interests against
threatened competition. It was at this juncture that Mr Gladstone's
Committee presented its Report and that, following thereon, the special
department of the Board of Trade was called upon to undertake its
responsible duties.
On November 28, 1844, the department intimated that the points it would
particularly inquire into in regard to railway Bills then before it were
(1) ability and _bona fide_ intentions of the promoters to prosecute their
application to Parliament in the following Session; (2) national advantages
to be gained; (3) local advantages; (4) engineering conditions; and (5)
cost of construction, prospective traffic and working expenses. On the last
day of the year the department announced which Bills they proposed to
recommend, and subsequently they issued reports giving their reasons.
Strong protests were raised by the disappointed projectors, and on the
opening of the Session of 1845 Sir Robert Peel announced that the
Government intended to leave railway Bills, as before, to the judgment of
the Private Bill Committees.
This meant the virtual setting aside of the newly-formed department, though
its actual existence was not terminated until the following August. It
meant--since each Private Bill Committee would deal only with the merits of
a particular scheme--the definite abandonment of any opportunity for
securing, through an authority dealing with railway projects as a whole,
the realisation of the ideal of Mr Gladstone's Committee that "each new
line should be viewed as a member of a great system of communication,
binding together the various districts of the country with a closeness and
intimacy of relation" previously unknown. It meant, also, the adoption of a
policy of free trade in railways, without protection for established
interests, and to any and every honest promoter or dishonest speculator who
had a scheme to propose it gave, in effect, _carte blanche_ to bring it
forward.
Much disappointment was felt at this collapse of Mr Gladstone's apparently
well-devised scheme, and the policy adopted in regard to it was keenly
criticised. Francis quotes, for instance, the following passages from
"Railway Legislation," the authorship of which, however, I have been unable
to trace:--
"Swayed by motives which it is difficult to fathom, the {271}two Houses,
with singular unanimity, agreed ... to give unrestricted scope to
competition.... Little regard was paid to the claims and interests of
existing railway companies, still less to the interests of the unfortunate
persons who were induced to embark in the new projects for no better reason
than that they had been sanctioned by Parliament.... The opportunity of
confining the exceptional gauge within its original territory was also for
ever thrown away. By an inconceivable want of statesmanlike views and
foresight, no effort was made to connect the isolated railways which then
existed by new links into one great and combined system in the form in
which they would be most subservient to the wants of the community and to
the great ends of domestic government and national defence. Further, the
sudden change from the one extreme of determined rejection or dilatory
acquiescence to the opposite extreme of unlimited concession gave a
powerful stimulus to the spirit of speculation, and turned nearly the whole
nation into gamblers."