THE RAILWAY OUTLOOK
FINANCE
IN the adjoining column of Financial Notes will be found a reference to the recent profit statement by the Southern Railway, and before this article appears in print the results will have been announced of the workings for the past year of the London Midland and Scottish Railway. As regards the L.M.S., hopes have been running high, though, should the expectations of a distribution of anything from 1 to 1 per cent. on the Ordinary Stock be fulfilled, it may be well to remember that this is the first distribution that long-suffering stockholders have received since the year 1932 (then only per cent:), and over a period of years they have seen the price of their stock fall from about 120 to 91, while in former days the Ordinary Stock of the London and North Western Railway stood at well over 200. Holders of Home Railway Ordinary stocks, therefore, may, perhaps, be excused for not feeling enthusiastic about the distributions now taking place.
THE STOCKHOLDERS' CASE.
In the current issue of The Railway Stockholder, which is the organ of the British Railway Stockholders' Union, there is an article from the pen of Mr. Ashley Brown and, of course, it must be remembered that just as the railway unions represent not the interests of the railway stockholders but of the railway workers, so Mr. Ashley Brown, in this article, is thinking mainly of the interests and claims of the railway stockholders.
While, however, it is necessary to bear this fact in mind, there are certain points in his article which I think are worthy of attention, not only from the railway stockholders, but from the railroad managements and even from the railway workers themselves. At the outset Mr. Brown calls attention to the fact that in 193o the net revenue of the railways had fallen to £37,700,000 and in 1931 the National Wages Board awarded certain wage deductions. In 1933 the net revenue further decreased to £28,800,000, yet by an agreement dated August, 1934, the companies voluntarily returned, as from January, 1935, approximately one-half of the deductions, representing- over i1,000,000 per annum. In 1935 the net revenue had risen slightly; but was still £4,779,000 less than the £37,700,000 of 1930, which, in the proceedings of March, 1931, had been considered to justify the deductions in full.
None the less, in 1936, with effect from the middle of August, the Railway Staff National Tribunal returned a considerable proportion of the deductions still outstanding. Commenting upon these facts, Mr. Brown says : " I am not concerned with the logic that inspires Tribunals to award deductions when things are bad and to return them when things become worse. For the moment we can disregard that. What to my mind is intensely significant is that the moment the return of the last farthing of the wage deductions becomes a certainty —even before the final award has been made—labour flings aside all pretence of regarding the wage deductions as a maximum demand and boldly formulates proposals which, if they are granted, will involve the four companies in an increased annual expenditure of from L30,000p00 to £50,000,000. The figure is so prodigious that it can make very little difference to the holders of Preference or Ordinary stocks whether it is merely thirty million pounds per annum or the full fifty—in either case their hope of dividends will vanish for ever. This fact and one other constitutes all that is really significant at the moment in the history of the wage deductions. The other fact is the utter lack of any real policy such as would have permitted the boards and stockholders to take a stand and to say : Thus far and no farther.' None The less we must recognise that things hive now gone so far did ill/mire refusal of the exorbitant claims which the men will most certainly put forward can no longer constitute a solution to the problem which these demands represent.'
Up to this point Mr. Brown's observations will doubtless command the approval of railway stockholders. For my own part, however, I am more concerned with the suggestions made (Continued on page 291.) FINANCE (Continued from page 29o.) by him in the matter of seeking a solution of the problem, and there is one point where there should be unanimity on the part of all concerned in this vexed question of the respective claims of railroad workers and stockholders who have provided, and, indeed, are still providing, the capital necessary for carry- ing on the enterprise. If the railroad industry is to retain the confidence of present and future stockholders, it is necessary that there should be a reasonable prospect of a limit to the demands of the workers, a limit also which must have some kind of relation to the return which the holder of railway stocks has a right to expect in the way of income.
STIUKES AND INDUSTRY.
Moreover, not only railway stockholders but the industries of the country and the travelling public have a right to demand conditions which shall, as far as possible, remove all fears of wages agitation resulting in any kind of strike movement In urging this point of view I am reminded that it usually evokes the retort that it is now some years since we experienced anything in the shape of an important strike. The vehemence with which this assertion is sometimes made comes, however, as a revelation of the imperfect appreciation of the far-reaching and enduring effects of a strike, and as regards some of our more important strikes of mcdem times, we have not even yet recovered from their after-effects upon our industry, and especially upon our export trade.
Co-PARTNERSHIP.
When, therefore, any suggestion is offered having for its object the attaining of settled conditions over a prolonged period, it calls at least for careful consideration. The wretched history of refusals, followed by concessions, of the " buying off " of attacks, must, says Mr. Brown, be brought to a definite end. " If an offer can be framed, acceptance by the employees should be in such terms as to preclude the possibility of further agitation. Any attempt by either side to vary the terms of the agreement during its currency should be made a statutory offence." It is suggested that the companies them- selves _should call into being a small committee consisting of representatives of the men's unions and the stockholders,which, with the assistance of a few knowledgeable railway officials, should explore the possibility of a solution to the wages problem on a co-partnership basis. It is not suggested that the committee should have any duty beyond that of submitting proposals, as it would be for the Boards on the one side and the men's unions on the other to decide later how far the proposals were acceptable. Mr. Brown merely suggests that before we plunge into the uncertainties of a wage feud, or proceed farther upon the disastrous path of more and more concessions, " we shall make one serious effort to ascertain whether we cannot terminate this wretched controversy once and for all." If, he continues, " we can give the men an interest in the welfare of the companies, if they know that of every pound of net revenue they themselves will take their allotted proportion, if further they are aware that this arrangement will on no account be modified for a space of five years, it may be that by the end of that time we shall all have acquired the kind of outlook that will make strikes and threats of strikes not merely unnecessary but absurd."
A COMPLICATED PROBLEM.
As I have already said, the situation in the railway world is one which may well justify 'any proposition which coutains within it the hope of a permanent settlement, though I rather fear that the situation is considerably complicated by the fact that' the difficulty of reconciling the respective claims of railway workers as a whole with those of the stockholders is even surpassed by the difficulty of settling the respective claims of the different classes of railway workers. However, the attempt may be worth making, for undoubtedly in many of our important industries where the co-partnership principle has been adopted the results have proved to be of a highly satisfactory character. As matters stand at present, any increase in railway dividends, even though as at the present moment it may represent along overdue reward to the stock- holder, only awakens apprehensions of some fresh wages demand of a character calculated to• kill expectations of a continuance of income of any kind.
A,RTHUR W. KIDDY.
(Financial Notes on page i92.)
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