1897: W J Ainsworth on Nationalisation of Railways
From the Swindon Advertiser, 4th December 1897
SHOULD OUR RAILWAYS BE UNDER STATE CONTROL?
DEBATE AT SWINDON
At the meeting of the Swindon Victoria-street Debating Society, held in the Reading Room, Victoria-street, on Monday evening last, Mr. W. J. Ainsworth moved a resolution advocating the desirability of placing the railways of the United Kingdom under the entire control of the State. Mr. J. Crewe Wood took the negative view, and an interesting debate followed the reading of the two papers. Mr. J. Baker presided, in the absence of Mr. G. M. Butterworth, who had been announced to preside, but was unable to attend.
THE RESOLUTION.
Mr Ainsworth, in introducing the subject, submitted the following resolution:-
“That in view of the power and magnitude of the railway interests of the United Kingdom, and their vital influence upon the commercial and agricultural prosperity of the nation, it is desirable that they should be placed under the entire control of the State”.
In submitting this, Mr Ainsworth said he was aware he was introducing a topic which might not have received much consideration at the hands of many members of this Debating Society, but his purpose would be served if a lively interest was awakened in a subject of great importance to the community.
The history of railways reads like a romance; their development had been almost miraculous in its rapidity and success; 75 years ago no railway existed anywhere! Mr Ruskin's Paradise had not then been invaded and polluted by that demon “Steam”. Now, however, all was changed; that mighty force had been caught and harnessed, and tamed by the skill of the Englishman. It had covered England, Europe, and the world, with an iron network. The cold of Siberian deserts could not check it, nor the heat of the Torrid Zone.
Taking the United Kingdom alone, the total mileage of railways was no less than 21,000 miles, representing a capital of a thousand millions sterling, an annual revenue of ninety millions, and carrying each year about a thousand millions of passengers, in addition to 350 million tons of merchandise.
This vast system, or multitude of systems, was managed by over 250 boards of directors, each with its own extensive emoluments which were usually paid to directors and leading officials, and each representing immense financial and social influences. It was understood there were about 200 members of Parliament officially connected with railway companies. Sir H. Tyler once said, “If the State does not soon control the railways, the railways will soon control the State”, and that was well within the range of possibility.
This great railway monopoly, under the protection of legislation, had attained such magnitude and acquired such power that as a matter of public policy and prudence it should be placed under the entire control of the State.
After pointing out what injuries the railways had done to canals [NOTE: the GWR had bought both the Kennet & Avon and Thames & Severn canals with the object of letting them deteriorate and preventing them from being converted into railways], Mr Ainsworth pointed out that Parliament was obliged to step in before the ruin was completed, and enacted by the measure of 1888, that no Railway Company should in future acquire any interest, direct or indirect, in a canal undertaking. In the course of some remarks on railway rates, Mr Ainsworth quoted extracts from blue books, and said that the Select Committee who were appointed to consider this question of railway rates, showed that under the influence of a resolution of the House of Commons and strong Board of Trade pressure the Companies gave way and reverted ostensibly to their old rates.
But the Committee shewed that even then the G.W.R. not only recouped themselves the £80,000 a year loss by reverting to the old rates, but they made a profit of £14,000 a year beyond it.
To put this in plain terms, the Legislature said, “You are making excessive charges to the public to the extent of £80,000 a year; we will reduce your maxima, and prevent this extortion.” The Railway Company smiled and bowed, and forthwith made arrangements to recoup itself, not only the £80,000 a year, but a further £14,000 a year for the trouble – a forcible illustration of the principle enunciated by Mr Lorimer at the recent discussion at the Article Club, viz., that the railways existed primarily for the benefit of the shareholders, and secondarily for that of the public.
THE INTERVENTION OF PARLIAMENT...
in such circumstances was most difficult. About a thousand Acts had been passed to protect the public against the Companies, but the protection was still inadequate. The first and chief objection to the present system, therefore, was based upon the ground of public policy. It affirmed that the railways were a State-granted monopoly, with dangerous political influence, backed by enormous financial resources, affecting in the most vital manner every interest in the kingdom, and that these powers and resources were used not in the interests of the community which created and maintained them, but in the interests of private shareholders.
After pointing out that America furnished a striking illustration of one of the evils of private ownership of great railways, the speaker proceeded to say that the Light Railways Act was a practical and striking admission that the present great railways did not meet the needs of the country. After enlarging on this aspect of the question, Mr Ainsworth proceeded to his next argument in favour of the State having control of the railways viz., on the grounds of economy.
Enormous waste, he said, was involved in the present multiplication of managements, for there were 250 Boards of Directors, 250 central offices, and a vast number of separate factories and departments, all maintained at a heavy cost, in doing the work which a department of State could do at infinitely less cost and with more effectiveness. Large sums were also spent by railway companies in advertising their routes, and in canvassing for traffic. In all large towns, offices were maintained and canvassers employed for the purpose merely of diverting traffic from other lines. The total working expenses of our railway systems was about fifty millions annually. Unification would save about ten millions a year in working expenses, and enable great reductions in the tariffs to be made.
The fares on the Austro-Hungarian Railways, which were State controlled, were three miles for a penny, and the passenger traffic under this system rose from nine millions in 1888, to 28½ millions in 1891 – a rise of 300 per cent, in three years. A moment's reflection would reveal what this implied, looked at either from the point of view of trade facilities or from that of the over-crowding of our towns. Duplicate trains would be saved because for every passenger now carried, seven seats were run vacant, thus involving immense useless expenses.
Pointing next to the benefits accruing from the State control of telegraph and postal arrangements, Mr Ainsworth said the telegraphs, under six directorates, afforded an exact parallel to the railways, under about 250 directorates. In 1870 the telegraph companies had 3,000 stations, other places being ignored on the non-paying principle, and the average message cost 2s 2d. In 1894, under the State, there were 10,000 stations, irrespective of profit, and the average cost per message was 7½d. Instead of mileage charges, the rate was made uniform for one mile or 800 miles. This economy represented over four millions per annum. A similar result upon a larger scale would follow in the case of railways.
Mr Ainsworth's third objection to the present system of private ownership of railways was on the ground of effectiveness. He objected to the duplication of the service. Two trains were run from one town to another on different lines, each much less than half full, and each involving a separate staff, stations, &c.
Passing on to another point, Mr Ainsworth said one of his greatest was in its effect on the land question. Every patriotic Englishman deplored the depopulation of the country districts, the serious depression of the agricultural interests, and the fall in land values from which the country now suffered.
“BACK TO THE LAND”...
was the universal cry, and many were the proposals made to bring about this much desired result. Nothing would facilitate this more than State Railways. The present system, being a private one, worked for private profit; it gave splendid facilities to large towns, and neglected the small ones. Wantage was compelled to construct a tramway of its own, and Lacock had no station at all. [NOTE: Lacock was later provided with a Halt in 1905, which remained open until 1966.]
The railways concentrated their energies on the great centres, and thus assisted the centralising tendency of our population, which would soon make this country a mere collection of great towns connected by railways, and rural life a thing of the past. But worse even than that was the incidence of the charges for merchandise traffic, which fatally handicaps the home producer in competition with the importer of foreign shipments in large quantities. Mr Ainsworth enlarged upon this point considerably and also urged that the widespread belief existing that the public interests were secured by the competition of railways was a complete delusion.
In the course of further remarks, Mr Ainsworth said the most perfect and extensive organisations in existence, having regard to the areas covered, and the complexity, of their duties were the British Army and Navy, both of which were organised and controlled by the State. Then the service which required more promptitude and despatch than any other was the Telegraph service, and it was successfully managed by the State. Then there was no other business in the country dealing with a greater mass of small items than the postal service, and it was managed and controlled by the State with signal success and at a profit of over four millions per annum.
Most, if not all, of these organisations were once owned and managed privately. Ages ago the army itself was owned in separate sections by separate feudal lords in their private interest. Competition prevailed extensively, though the object was not to cut rates but to cut throats (laughter).
In conclusion, Mr Ainsworth said his proposal presented no practical difficulties beyond those which it was the duty and business of statesmen to overcome. As to acquirement, nine-tenths of the railway stock had a marketable price, and as regards the rest it would be easy to appoint a Commission to determine its value. Then, as to control, an enlargement of the Board of Trade might do, or possibly union with the Telegraph and Postal Department, with of course, one of the Railway General Managers as Under Secretary, occupying the same position as the late Sir Arthur Blackwood at the Post Office or Sir Courtney Boyle at the Board of Trade, but these were points upon which it was now unnecessary to decide, and on which only an expert in departmental affairs could speak with authority. The unification of the working arrangements would also be a matter of technical detail well within the compass of the able men who now managed our railway affairs.
The English railway system was unique in its complexity and costliness, and in the volume of goods and passenger traffic it carried. He (Mr Ainsworth) ventured to claim that it was unique also in the splendid business capacity shewn by its managers – a capacity which, if places at the service of the State, would secure even greater advantages for the community than those he had indicated in his paper that evening. As facilities for transit and intercommunication between States were increased, international competition would become more and more severe, and the United Kingdom, in order to keep in the front rank, should take in its own hands the great carrying service upon which its existence as a commercial community depends (applause).
THE NEGATIVE SIDE OF THE QUESTION
Mr J. Crewe Wood, in opposing the resolution, said he did so on many grounds, the first being that no necessity existed for the proposed change, because recent legislation had already brought about nearly all that could be accomplished by making railways State property. After referring to the different Railway and Canal Traffics' Acts, regulating charges, &c., Mr Wood pointed out that the railway companies were almost compelled to run cheap workmen's trains where a demand for such existed, as by not doing so they were in effect fined five per cent. on the takings of their passenger traffic. These and many other similar provisions exist, whereby the public were protected, and the railway companies prevented abusing their powers. Beyond this, there were numerous regulations enforced through the medium of the Board of Trade for ensuring, as far as possible the safety of the passengers.
So far from our railway companies being irresponsible bodies they are in all essential points already under the the control of the State. He (Mr Wood) objected to the scheme on the broad principle that the State should not take upon itself the management of any industry unless such control became an absolute necessity in the interests of the community. The mere act of the State acquiring a business was an evil and had an unsettling effect both in the trade of the country and on the people themselves.
In dealing with this question he would like to bring before the meeting what might be termed the “momentum of a policy”, which, to him, had a most important bearing on the subject under discussion. What he meant by “the momentum of a policy”, was much the same thing as the idea conveyed by the expression, “the thin edge of the wedge”. The policy of the State or public bodies acquiring industrial undertakings was originally of very slow growth, but with each fresh acquisition another precedent was established, which was used as an argument why other industries should be publicly controlled. These in their turn were held up as reasons for extending the system to other trades, and so with each new addition the policy gathered force at an ever increasing ratio, and the power of resisting it was proportionately lessened; so that to-day we had a demand that the greatest industry in the kingdom should be worked by the State.
If this was done there was no knowing where it would stop. The State would next become the owner of the land, the mines, &c., and the system would be extended until the State would obtain control of the chief manufacturers, and then become distributors and retail dealers, ad the French Government already were in the tobacco trade. From such a state of things to complete Socialism would be but a very short step, and to those who did not believe that all our troubles on this earth will cease with
THE ADVENT OF SOCIALISM,
this tendency could not but be a matter of very grave concern. Another evil which was closely allied with the one just mentioned was the evil which would arise through the State becoming an employer of labour, to the enormous extent it would do if it took over the railways of the kingdom. In the first place we might certainly anticipate an increase in wages. This would come about partly owing to the fact Government employés as a whole were paid rather more than other workers of similar skill, and partly because the railway vote, coupled with the vote of Government employés in other departments, would become such a powerful factor in elections that each party would strive to outbid the other in concessions to Government servants in order to secure the vote, and we should soon find that the railway servant would be obtaining more for his services than those services would be really worth in the open labour market.
So may snug offices would be eventually a bad thing for the country as a whole, just as in France at the present time it was found to check private enterprise. Mr Wood enlarged considerably on this point, and went on to show that he was not prophesying a purely visionary state of things by calling attention to the recent bye-election at Deptford, where both the candidates pledged themselves to support measure for increasing the wages and shortening the hours of employment of the Government workers in that town.
Passing on to his next objection to the resolution, Mr Wood said that if the State purchased the railways they would have to pay for them. The war cry of the Social Democratic Federation was State appropriation of railways with or without compensation, but honest men would not discuss the latter proposition. They would have to be paid an enormous sum, and the profits made by the State working our lines, instead of going as dividends to the stockholders would go as interest on Consols, which the shareholders would hold.
After giving details of the financial aspect of the subject, Mr Wood combated the idea that there would be a great saving of expense if the State took over the railways. He instanced Carlisle Station, which is the terminus of seven different railway companies, which all run into the station, but not one of which runs through. The station is owned by two of the companies, and the joint use was leased to the other five at fair rentals based upon the total cost of building the same. He (Mr Wood) had personally, in the course of his duties, gone into the working expenses of this station, and he failed to see how these expenses could be materially reduced by the amalgamation of the seven lines. [NOTE: a State railway system – of which there were many examples in,say, Germany, in 1897 - would have ensured that there were through train services at a station like Carlisle, and would have eliminated some of the duplication.]
Another very real objection to the resolution was the lack of enterprise which would follow its adoption. The State would have an immense monopoly, and what incentive would there be for it to experiment with and carry out fresh improvements, such as were now constantly taking place. He supposed that few people imagined that finality had yet been reached in the matter of railways. The present system might not always remain the best, for electric traction had come to the front very much of late, and electric railways were being worked very satisfactorily in different parts of the country at the present time. There were many engineers who considered that electricity or some other agent might yet prove a more efficient motive power than steam. Without competition would the State be found ready to make the necessary changes? [NOTE: The GWR was very much a local monopoly, and electric traction failed to be used anywhere on the GWR network until a full century later. However, just a few years earlier, the GWR had been forced to abandon its superior broad gauge in favour of the standard gauge used by all other mainland railway companies.]
After submitting that there was no true analogy between the railways and the Navy or Post Office, Mr Wood said that in regard to our Navy, whose existence depended upon its being ahead of all other navies, the Admiralty showed a lamentable apathy in recognising any invention which did not originate in certain circles. He instanced a case to prove this, and then concluded by stating what he considered was an unanswerable argument in favour of private as opposed to State railways, viz., that the two countries in which railway facilities were those in which the State had not possession of the lines, viz., the United Kingdom and the United States.
To sum up, he opposed the resolution on the ground that it was an enormous extension of a principle which was capable of most disastrous effects on the country, that it would not pay, but would be an additional burden to the taxpayer; that those who owned the railways would obtain no benefit, and that it would be a bar to future improvement and development, and that travelling would be a constant source of irritation to the traveller (applause). [NOTE: The first real experiment of State control of railways was the formation of the London Passenger Transport Board of 1933, whose radically efficient Underground system would in time stand in stark contrast to several of Mr Woods' points.]
DISCUSSION.
Mr Johnston opened the discussion by speaking in support of Mr Ainsworth's proposition, and pointing to the success of the State management on the Continent. He also contended that by running steam trains at cheaper rates travellers would use them oftener, and so fill the seven vacant seats which Mr Ainsworth referred to.
Mr Kimber had four objections to the proposition. In the first place he objected from a financial point to the State stepping in and saying to the proprietors of an industry which was prospering, “We will take this off your hands”.
His second objection which he felt still more strongly, was from the shareholders' point of view, being a limited shareholder himself. Mr Ainsworth had talked about the waste, but if there was it came out of the shareholder's pocket.
On the financial aspect, he might say that if the State took over the railways they would have to give stock corresponding in value, and did they wish to increase the National Debt by 1,300 million pounds, viz., from 550 to 1,850 millions?
His fourth point was a morality objection, and in this matter he referred to the Deptford election in similar terms to what Mr Wood had spoken. Mr Kimber also instanced how the Post Office was not perfect, but most slow sometimes in the dispatch of telegrams.
In conclusion, Mr Kimber said the two most abused classes were railway companies and lawyers, and yet these were the only classes who were not allowed by law to overcharge, but had fixed charges prepared for them (laughter and applause).
Mr Badcock also opposed Mr Ainsworth, and the two gentlemen who had read papers then replied to the discussion, after which a vote was taken, with the result that the resolution was lost by a large majority, only two voting with Mr Ainsworth.
A vote of thanks to the Chairman terminated a pleasant evening.
[NOTE: In the newspaper report of this discussion, in a town dominated by the GWR, there appeared to be no mention of the Midland & South Western Junction Railway, which had been extremely hampered by the anti-competitive practices of the GWR, a feature of which Mr Ainsworth was painfully aware. Eventually, there had to be parallel lines for the GWR and the M&SWJR between Marlborough and Savernake, and of course there was a very awkward interplay between Swindon's GWR station and Swindon Town Station. Although a short link between the two existed in 1882, it only ran for three years before closing due to the extremely high cost charged by the GWR for this link. It was only re-opened in 1924 after the GWR had absorbed the operations of the M&SWJR.]