Motors and Railways. 



421 



WHAT RAILWAY SHAREHOLDERS THINK. 



The Railway Investment Company, Ltd., is 

 a large trust company, having some ;^3,400,ooo 

 invested in railway stock. The Honourable 

 George Peel, speaking at the general meeting of 

 shareholders of the Railway Investment Com- 

 pany, on March 22, 1906, said, after some 

 general remarks about railway stock deprecia- 

 tion : — 



" We accordingly turned our attention to the 

 London and Xorth-Wcstern Railway, in which 

 we p>ossess an interest of ;£.375,ooo, the third 

 largest holding. We found that in the ten years 

 prior to 1901 that company had spent a capital 

 sum which required to earn, in order to maintain 

 the former rate of dividend, an increased net 

 revenue of £'411,000. As a matter of fact, not 

 only was this not earned, but there was a net 

 loss of re\i'nue of ;^2 16,000, or a total loss of 

 ;^627,ooo, in igoi, compared with 1891. This 

 loss w-as due, not to a fall in receipts, but to 

 the increased expenditure in handling the traffic 

 and to the increased cost of materials and coal. 

 It is hardly too much to say that from the years 

 1844 to 1900 the goods traffic of our British 

 railways was handled on expensive, and even 

 extravagant, lines. The Royal Commission of 

 1867 adverted to that subject in its report, but 

 the year 1900 ended with practically nothing 

 accomplished. 



" The great companies, having absorbed 

 smaller ones and agreed together on rates, pro- 

 ceeded to invade each other's territory, to snatch 

 traffic that could not pay, to set up rival and 

 adjacent collecting offices, to engage competitive 

 staffs of canvassers, to lavish money on injuring 

 other comp inies without benefiting 'themselves 

 or the public, and generally to engage in a 

 species of competition which was as wasteful as 

 it was useless. 



" That was the deplorable state of things 

 which we found in 1902. Instead of co-operating 

 to give all f.icilities to the public, it was admitted 

 on all hands that the railways were quarrelling 

 among themselves. In August the Chairman of 

 the London and North-Wcstcrn went so far as 

 publicly to speak of being ' robbed of traffic ' 

 and of being 'robbed right and left.' At the 

 s.ime date the Chairman of the North-Kastern 

 (.Sir George Gibb) h.id to confess that, instead of 

 thinking of the public, they were ' quarrelling 

 over a ton of goods,' while a third chairman 

 admitted tli.it the conduct of the railways was 

 ' ridiculous. ' 



Sir George Gibb has placed it on record ili.it 

 (a) ton-mile figures cost him the morlest sum of 

 ;{rHoo a year to prepare, a railwav official 

 opposed to us having stated it wrmld cost 

 ;^i 5,000; al.so that (b) his officials, once having 



used this whole system of scientific statistics, 

 which, I would specially point out, includes far 

 more than the ton-mile, would not now consent 

 to do without it, so invaluable has it proved. 

 I find that in 1899 the earnings of a North- 

 eastern freight train were only Sod. per train- 

 mile. But by the adoption of a better system of 

 statistics that figure of Sod. has been raised to 

 123d. for 1905, an improvement of 43d. per 

 train-mile, or no less than 55 per cent. To 

 obtain an economy in train mileage of no less 

 than 6,400,000 miles, or 36 per cent., in six 

 years, is a great achievement. 



But let us look at net earnings. In 19015 

 the North-Eastern Company secured ;£r99,ooo 

 more gross earnings than in '1904, yet it reduced 

 its actual expenses by ;^i,ooo. The net gain was 

 thus ;^ioo,ooo, and this it did in spite of the 

 fact that it spent ^^56,000 more upon its per- 

 manent way and equipment. If the London 

 and North-Western had made as much progress 

 in efficiency as the North-Eastern between 1899 

 and 1905, it would have saved for ourselves, the 

 shareholders, the sum of ;,^386,ooo last year. 



" I. In 1900 our railways appeared to be 

 seriously compromised. We felt compelled to 

 inquire into the adequacy of their administration. 

 " 2. That investigation showed to us evidence 

 of most widespread and regretable waste. In 

 the great departments of handling and collecting 

 traffic we had the clearest proofs of most undue 

 and superfluous expenditure. 



" 3. Wc further ascertained that the existing 

 system of statistics, whether published or unpub- 

 lished, was quite inadequate for the purposes of 

 economy, and that shareholders, and even 

 managers and Boards, were not duly informed as 

 regards \ilal matters which we enumerated. 



"4. W^e proposed remedies as regards hand- 

 ling of traflic, also as regards co-operation. 

 Tlicrc was the keenest antagonism. But the 

 first of these remedies is now in process of execu- 

 tion. The second, co-operation, appears to be 

 making some progress. 



" 5. Yet the fimdamental reform of all still 

 remains to be brought home. \\'ithout adequate 

 figures, intelligently used, we maintain that no 

 business so vast and complex as a railway can 

 be adcqu.itcly and economicallv administered. 

 VYc point to the Norlh-E.istcrn as having 

 adopted this better system and as benefiting 

 accordingly. When those figures are furnished 

 by our railways, then, and then onlv, will it be 

 possible to shareholders to estimate and for 

 Boards to rcgtilate and maintain the progress of 

 efliciency. " 



This striking indictment gains enormous force, 



