LORD HORNE ON GREAT WESTERN PROSPECTS
First among the railway chairmen to vouchsafe us his views, Lord Home opens up a moderately hopeful prospect for Great Western stockholders. Last year's sharp fall in net revenue he attributed to " a very severe recession in trade, whose effect was felt in the territory served by the company in a worse degree than in almost any other part of the United Kingdom." He instanced the fact that last year the production of pig-iron and steel ingots in Monmouthshire and South Wales decreased by 864,900 tons, or 32.9 per cent., whereas for the United Kingdom as a whole the fall was 19.9 per cent. A similar sharp contraction took place in other sources of the company's traffics, and there was a heavy falling-off in business at the South Wales docks. It is interesting to compare this railway view of last year's trade with that expressed by the bank-chairmen, all of whom admitted moderate recession, but showed no awareness of any general or severe setback. The contrast obviously reflects a wide difference in experience ; the railways have taken the full brunt of the depression on the side of gross receipts, and at the same time been faced by higher expenditure.
Lord Home prefaced his 1939 forecast with that now familiar phrase, " leaving international politics aside," but subject to that proviso he detected certain factors which give a chance of better trade, and therefore of better traffics. He looks for benefits from the recently concluded coal agreement between Great Britain and Germany, and the Anglo-Ameri- can Trade Treaty. He also takes the view that last year manufacturers were living on accumulated stocks of raw material with the result that the railways had less to carry. Now he believes—and there is evidence to support this view —these stocks have run down, and will soon require re- plenishing ; hence the prospect of increased demand for haulage of new supplies. Add to these influences the addi- tional business implied by the establishment of 71 new fac- tories on the Company's system last year, and you have a fairly firm basis for a better traffic experience in 1939. Then, again, there will be the continuing advantage of the economies introduced in the latter half of 1938, which Lord Home dis- closed would make " a substantial difference " in this year's accounts. I feel, in the light of these prospects, that Great Western stockholders are justified in retaining their holdings.
(Continued on page 328)
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