"Past amalgamations have not brought with them the evils which were
anticipated."
"Competition between railways exists only to a limited extent, and cannot
be maintained by legislation."
"Combination between railway companies is increasing and is likely to
increase, whether by amalgamation or otherwise."
"It is impossible to lay down any general rules determining the limits or
the character of future amalgamations."
In support of their views in regard to the first of these conclusions, the
Committee pointed especially to the North-Eastern and the Great Eastern
Railway Companies, each of which had so far pursued a policy of
amalgamation that the report speaks of the former as "pervading and
possessing one of the wealthiest and most important districts of the
Kingdom," and of the latter as having "almost exclusive possession of the
principal centres to which it extends."
The Committee did not suggest that either of these companies had abused its
powers, or taken undue advantage of such "monopoly" as it had secured in
the districts concerned. In fact, of the North-Eastern Railway they said:--
"That railway, or system of railways, is composed of thirty-seven lines,
several of which formerly competed with each other. Before their
amalgamation they had, generally speaking, high rates and fares and low
dividends. The system is now the most complete monopoly in the United
Kingdom ... and it has the lowest fares and the highest dividends of any
English railway." As for the Great Eastern, instead of abusing their
"almost exclusive possession" of the Eastern Counties, everyone knows that
the Company have won for themselves the credit of pioneering the movement
for offering {288}exceptionally low rates and other special facilities for
the transport of agricultural produce, and, also, of having done more,
perhaps, than any other single railway company to enable working men to
live in healthy suburbs around London.
The whole position in regard to the prospective abuse of a so-called
monopoly due to railway amalgamations is, in fact, much misunderstood.
A railway company which controls, or practically controls, the traffic in a
certain section of the country is especially interested in developing that
traffic because it will enjoy all the advantages thereof, without having to
share them with a rival. For this reason, instead of restricting
facilities, such a company seeks to increase them; instead of imposing
extortionate fares and rates it aims, not merely at immediate profits on
the transport of particular commodities, but at encouraging such a
development of the district in general as will ensure its prosperity,
increase its population, expand its trade, _and_ create more traffic of all
kinds in a not far distant future.
It was precisely this idea that led the Great Eastern Railway Company to
set the example it did in seeking to develop the interests of its
agricultural districts. The more these interests expanded, and the more
profitable the agricultural industry became to the people living in those
districts, the greater would be the demand for household supplies, for
furniture, for pianos, for building materials, and for countless other
commodities, most of which would bring additional traffic to the line apart
from the greater amount of agricultural produce carried, and apart, also,
from the further inevitable increase in passenger traffic.
Cornwall, again, might be regarded as the "monopoly" of the Great Western
Railway; but what person would suggest that the Great Western have not
sufficiently boomed "the Cornish Riviera"?
Nor is there necessarily a "monopoly" simply because a particular district
is served by a single railway. If the Great Eastern did not take people to
East-coast resorts at reasonable rates, or if the Great Western charged
excessive fares for the journey to Cornwall, holiday-makers would, in each
case, go elsewhere. If either company, or any other company, sought to get
too much for carrying milk to London, milk {289}would be obtained by the
metropolitan dealers from other districts, instead; and so on with most
other commodities.
Indirect competition, on sound economic lines, may, therefore, still exist
even when a railway company is, after many amalgamations, in the possession
of an apparent monopoly. The law of supply and demand will still regulate
both prices and charges. When, on the other hand, an attempt is made to
enforce an artificial and non-economic competition by Act of Parliament,
the inevitable result is that the companies concerned find it to their
advantage to combine, or to agree, rather than to compete in rates and
fares under conditions that would not only be mutually disadvantageous, but
confer no lasting benefit on the public they seek to serve.
How the ultimate result of railway policy, as here described, has been to
bring about the creation of great systems out of small ones may be seen
from the following typical examples, showing in each case the number of
lesser companies absorbed, leased or worked as the result of amalgamations,
of leases in perpetuity, or otherwise; though the figures do not include
railways which have been vested in two or more companies jointly:--
COMPANIES
NAME OF COMPANY. LENGTH OF LINE.[45] AMALGAMATED
Miles. OR LINES LEASED.
Great Central 753 15
Great Eastern 1133 26
Great Northern 856 22
Great Western 2993 115
Lancashire and Yorkshire 589 14
London and North-Western 1966 59
London and South-Western 964 40
London, Brighton and South Coast 454 19
Midland 1531 35
North-Eastern 1728 41
South-Eastern and Chatham 629 29
Caledonian 1074 41
North British 1363 45
Great Northern of Ireland 560 14
Great Southern and Western (Ireland) 1121 19
{290}The process of amalgamation has been carried even further than these
figures suggest, some of the companies absorbed into the great systems
having themselves previously amalgamated a number of still smaller
companies. The North-Eastern, for example, came into existence in 1854,
through a combination of three companies--the York, Newcastle and Berwick,
the Leeds Northern, and the York and North Midland--which three companies
then represented between them what had originally been fifteen separate
undertakings. Since 1854 the North-Eastern Company have purchased or
amalgamated thirty-eight other companies, one of which, the Stockton and
Darlington (absorbed in 1863), was already an amalgamation of eleven
companies.[46]
That the conveniences of travel and the advantages to traders have been
greatly enhanced by the substitution of these few great companies for a
large number of small ones is beyond question, and actual experience has
shown that the fears of grave evils resulting from prospective abuses of
the railway "monopoly" brought about by amalgamations such as these have
been mainly imaginary, notwithstanding the fact that they have formed the
basis of so much of the policy of the State in its dealings with the
railways.
There are still various small and even diminutive companies which have
escaped the fate of being swallowed up by their big neighbours. One of the
smallest engaged in a general traffic--as distinct from dock or mineral
lines--is the Easingwold railway, Yorkshire, which connects with the
{291}North-Eastern at Alne, but still maintains an independent existence.
According to the Board of Trade Returns for 1910 the Easingwold Railway
consists of two miles of line, or three miles if we include sidings, and it
owns one locomotive, two carriages for the conveyance of passengers and one
goods waggon. It carried in 1910 a total of 33,888 passengers, 5547 tons of
minerals and 11,214 tons of general merchandise. Its total gross receipts
from all sources of traffic for the year amounted to £2358, and the net
receipts, after allowing for working expenses, were £936. The authorised
capital of the company is £18,000, of which £16,000 has been paid up.
Small as this line is, it serves a useful purpose; but the policy of
amalgamation, followed up by leading companies with such pertinacity, and
in spite of so much distrust and opposition, has, happily, saved the
railway system of the country from remaining split up among an endless
number of companies of the Easingwold type--even though they might have had
more than three miles of railway and a single locomotive each.
Other developments of State policy towards the railways have applied to
ensuring both perfection of construction and safety in operation.
In the former respect the English lines have been built with a solidity and
a completeness not to be surpassed by the railways of any other country in
the world. Even in sparsely populated districts where, under similar
circumstances, the American or the Prussian railway engineer would lay down
only such a line as would be adequate to the actual or prospective traffic,
would give the passengers no platform, would provide little more than a
shed for a railway station, and would expect the public to be content with
a level crossing and look out for the trains, a British railway company is
obliged to respect State requirements by laying down a line equal to the
traffic of a busy urban centre, give the passengers such platforms as will
enable them to enter or leave the trains without the slightest
inconvenience, erect well-built and more or less commodious station
buildings, and, it may be, arrange for bridges, viaducts or underground
passages such as in other countries would be found only in centres having a
substantial amount of traffic.
Apart, in fact, from any question as to expenditure on {292}Parliamentary
proceedings and on the acquiring of land, the cost simply of building the
railway itself has, generally speaking, been far greater in this country
than, under corresponding geographical and traffic conditions, has been the
case elsewhere. Judging from the example of the Prussian State Railway
administration it is extremely doubtful if, had the British railway system
been constructed, owned and operated by the State, instead of being left to
private enterprise, any responsible Chancellor of the Exchequer would have
authorised so great a degree of expenditure, in the interests of an
absolute perfection of construction under all possible conditions, as that
which has been forced upon commercial companies dependent for their capital
on the money they could raise from investors.
Less scope for criticism is offered by the provision of the most complete
of safety appliances in regard to signalling and other phases of railway
operation. The desirability of reducing the risk of railway accidents to an
absolute minimum is beyond the range of all possible dispute. Yet, as a
matter of detail, the substantial cost of ensuring this all-important
element of safety, no less than the exceptionally heavy outlay on the lines
themselves, has helped still further to increase that capital expenditure a
return on which is only to be secured by the investors from the revenue the
companies can get from the railway users.
When we look for the ultimate and combined results of the various
conditions touched upon in this and the preceding chapter--excessive cost
of land, abnormal expenditure on Parliamentary proceedings and various
aspects of State policy and control--we find them in the fact that, whether
or not the British railways are really the best in the world, they have
certainly been the most costly.
Comparisons with other countries may be misleading unless we remember that
published statistics as to the cost of construction of the world's railways
apply to route mileage--or, otherwise, "length of line"--and that the
English lines have a large proportion of double, treble and other multiple
track, while in more sparsely populated countries the railways, except in
and around the large towns, consist to a far larger extent of single track.
The actual position is not, therefore, quite so bad as the comparative
figures appear to show. But, even allowing for these considerations, the
following table--which {293}I compile from data published in the "Bulletin
of the International Railway Congress Association" for February, 1911--may
be regarded as conveying the moral of the story I have here been seeking to
tell:--
CONSTRUCTION COST OF THE RAILWAYS OF
DIFFERENT COUNTRIES.
CONSTRUCTION CAPITAL
COUNTRY. SYSTEM. YEAR. MILES. TOTAL. PER MILE.
Great Britain £ £
and Ireland Entire 1905 22,843 1,272,600,000 55,712
Germany " 1908 35,639 813,300,000 22,821
France Main lines 1906 24,701 706,700,000 28,611
Belgium State lines 1907 2,523 93,600,000 37,088
Netherlands Entire 1897 1,653 28,700,000 17,350
Denmark State 1909 1,218 13,250,000 10,884
United States
of America -- 1908 233,632 3,521,200,000 15,071
Canada -- 1907 22,447 269,850,000 12,022
{294}CHAPTER XXII