22 
LAND 6? WATER 
December 5, 1918 
The Railway Shareholder : By Hartley Withers 
IN comparison with all that the flower of our manhood 
has suffered at the front during the war, tlie minor 
exasperations of those left at home are a small matter. 
But there they are, and they cannot, and should not, 
be ignored. Among them the experience of the railway 
shareholder has been particularly uncomfortable. He has 
seen his property- taken over by the Government, worked in 
a hopelessly uneconomical and unscientific manner, and 
reduced to a condition of scandalous physical neglect and a 
financial position which onlj' a magician could put right ; 
and in the meantime, although his property has rendered a 
service to the coinmunity without which it could not possibly 
have won the war, he has been getting (if lucky) the same 
dividend as before the war, paid in money which has steadily 
depreciated in buying power. All this, being, we may hope, 
a patriotic fellow, he would have borne with reasonable 
cheerfulness if the same treatment had been applied all 
round. But, as everybody knows this was not so. When 
the railway shareholder contemplates the enormous profits 
gained at the expense of the country in this crisis by the 
sliipowner, shipbuilder, munition maker, brewer, draper, 
farmer, and even by the maker of flags for flag-days, he is 
fully justified in expressing blasphemous astonishment at 
his own lot, and wondering what worse treatment he could 
expect from the most flamboyant form of Bolshevism. 
It was a great bargain that the Government drove with 
the railway companies when it took them over for the war, 
guaranteeing them their pre-war revenue ; but when we 
sympathise with the railway shareholder in the light of all 
that that bargain has subsequently been shown to involve, 
we must remember that at the time when it was made, he 
was entirely satisfied with it. It enabled the Government 
by unification of the various railway systems to carry more 
passenger and goods traffic than ever before, apart from the 
enormous amount of work done by the railways for the Army 
and Navy, and to do this, by dint of packing the passengers 
like sardines in a tin and otherwise making travel a quite 
disgusting process, with depleted staffs and rolling stock. 
Prices of most of the goods and services that we buy have 
been, roughly, doubled since the war. The price of transport 
has been raised to the passenger by 50 per cent., and to goods, 
it is said, not at all ; just because transport is an essential 
service, the Government has not had the courage to face the 
facts with regard to it, but has introduced a system under 
which the railways are run at a loss, which the taxpayer has 
had to make good. What is to happen to the shareholder 
when he gets his property, out of which he once used to get 
a fahr return, back i t his own hands, with no taxpayer to 
draw on, with travellers clamouring for a return to the old 
level of fares and with the railway workers urging claims to 
an improvement in working conditions and, at least, the 
maintenance of their present scale of wages, unless a con- 
siderable fall in prices can meantime be brought about ? 
Clearly, if the property is given back to him something will 
have to be done to put him back into something like the 
position he was in in 1914. It is also probable that 
the present miserably inadequate service (which we all put 
up with as a necessary war nuisance) will be more or less 
perpetuated, and that the injustices inflicted by official 
stupidity on hard-working folk who had season tickets will 
continue to adorn the bureaucratic programme. 
This is rather a dismal prospect both for the taxpayer and 
the traveller, but it is very difficult to see any other way out 
of the hopeless 'position created by the Government's action 
with regard to the railways complicated by its performances 
with regard to the currency. If you force prices up against 
yourself and, at the same time, have not the face to charge 
more for certain work that you sell, your only possible des- 
tination is Queer Street. If you are a private' producer, you 
just go bankrupt ; if you are a Government, you just make 
the taxpayer pay, though sometimes you arrange the figures 
in such a way that he thinks he is paying for something else. 
And, in any case, it is generally agreed that a complete 
return to the old regime of the railway companies is neither 
possible nor desirable. Uni cation has been shown to make 
traffic management so much easier that its abandonment 
would be a retrograde step. Besides, as Mr. Pierpoint 
Morgan once said, when it was proposed that he should be 
ordered to resolve one of his "combines" into its component 
parts: "You cannot unscramble scrambled eggs." The 
second report of the Select Committee on Transport advises, 
from a purely technical point of view, that unification is 
desirable in the case of the railways not merely of manage- 
ment, but also of ownership. "War conditions of working,'' 
it says, "and the complete eliminafiori of competition in the 
public interest have, in many cases, revolutionised old- 
established practices and habits. Traffic has been encouraged 
to follow unaccustomed routes, the clienteles of individual 
companies have been disturbed, their ideas have been changed, 
and the respective goodwills of the various companies have 
consequently been altered. Difficulties such as these seem 
to require solution by some process of continued unification." 
So the committee proceeds to the conclusion that the main 
railway sj'stems of the United Kingdom should be brought 
under a unified ownership and managed as one system "if 
the question of the improvement and development of the 
internal transport facilities is to be considered from the 
standpoint of efficiency and economy, and with due regard 
to the interests of the proprietor, the railway staffs, and 
the general community." 
Competition and Courtesy 
Very well, then. We need not waste many tears over the 
old system. It had certain virtues and certain very obvious 
faults. Competition was carried to an absurdity in some 
places and at certain seasons — as, for instance when the 
companies were racing one another to Scotland to catch 
holiday traffic — and in places where there was no competition 
the service even on the best lines was often astonishingly 
bad. In one apparently minor detail, which is really one of 
the things that really count in fife, the railways were excellent 
under the old competitive system — namely, in the courtesy 
and helpfulness of all their officials from the stationmaster 
at a great terminus to the porter at a wayside station on a 
branch. Even in war time the railway workers have not 
wholly lost the old tradition of kindly and decent treatment 
of the travelling public. It will be interesting to see how- 
soon, if they blossom into real bureaucrats, they will acquire 
the Post Office manner, and make getting one's luggage as 
pleasant a business as (for example) getting through on the 
telephone. 
The Transport Committee, which throughout its report is 
very tentative and discreet, points out that unification of 
management and of ownership does not necessarily involve 
nationalisation. But it is very doubtful whether the public 
would tolerate the handing over of this great monopoly that 
would be involved by unification into the hands of priv 'te 
enterprise, and still more doubtful whether it would be fair 
to the railways to ask them to take back a business which 
has been reduced, by Government action, to so hopelessly 
unbusinesslike a position. And so a burning question is 
likely to arise as to the terms on which, if naturalisation is 
carried out, the shareholders are to be asked to surrender 
their property to the State. The Railway Clerks' Association 
has taken time by the forelock and produced a draft Bill to 
carry out the whole operation. Its first seven clauses pro- 
vide for the establishment of a Ministry of Transport and 
Communications ; clause 8 for the transfer to the Ministry 
of all the railway companies, the Railway Clearing Houses 
and such canals as can most conveniently be utilised "without' 
any formal conveyance being necessary" ; then clause 9 
tackles the question of purchase price. Under this scheme 
the purchase is to be carried out by the issue to the share- 
holders cUrect (and not through the companies) of a specially 
created Government Railway and Canal Stock, which shall 
bear such a rate of interest as would enable it at the time of 
issue to be reaUsed at par. The amount of this stock which 
each shareholder would receive would be based on the mean 
price of the railway' or canal stock that he owns during the 
year 1913," subject to a reduction proportionate to the 
amount by which at the date of transfer securities generally 
will have depreciated in value. The measure of this depre- 
ciation is, apparently, to be the price of consols which at 
present show a fall of 22 , per cent, on the pre-war price. 
So that the railway shareholder is to be asked, according to 
the framers of this scheme, to give up his stock in return 
for about three-quarters of its price in 1913, to be paid in a 
3^ per cent. Government security. He will naturally ask 
why consols — a security with a fixed rate of interest — should 
be taken as the gauge of depreciation, and not some of the 
industrial and shipping companies that have benefited by 
the war, as the railway companies would have benefited if 
they had been allowed to charge higher prices for their 
services. If the process of nationalisation is to begin, let its 
start at least be on an equitable basis. 
