Finance—Public & Private
Railways and the Investor WHEN commenting in these columns from time to time upon the prospects of British railway stocks from the investor's point of view, I haye so -frequently maintained that the path to recovery of revenues and of the confidence of investors in the stocks was barred by the monopolist spirit displayed by the railways under the grouping system that I feel bound, in fairness, to take notice of the important developments of the last few weeks. They may not be of a character to have occasioned any imme- diate improvement in stock quotations, but all the same, they are sufficiently important to be taken into, very careful consideration by existing holders of railway stocks, and also by those who may be considering whether to acquire railway securities at their present low level.
RECENT DEVELOPMENTS.
The first development to which I refer is, of course, that connected with the agreement reached between the railroad management and employees in the matter of wages and salaries during the coming year, while the latter is concerned with the travel facilities offered to the public. To the first of theie I have already made a brief reference in a previous issue of the Spectator, and I cannot help feeling that one comment I made with regard to it may not be withOut its connexion with the second and later development. In the Spectator of the 4th instant, when referring to the agreement reached whereby all ranks, including high• Officials and directors, agreed to sacrifice a small portion of their income for a year, I said : " I am inclined to lay chief emphasis not so much upon the actual total represented by this particular saving as upon the effect likely to be produced upon all concerned in the management of the railways. I cannot help thinking, or, at all events, hoping, that it may go to the root of matters by occasioning those who earn their daily bread from the railway system, from the highest to the lowest in the ranks, to realize that it is up to each and all to win back from the public revenues which have been lost."
RESTORED FACILITIES.
It is now clear from the latest departure in railway policy that the companies have taken their courage in both hands and are determined once more to make' a bold bid for public favour. For the past two years the view has been constantly expressed in these columns that popularity was being lost and habits of travel were being broken by the curtailment of many facilities to which the public was accustomed before the War, and prominent among these facilities was the week-end ticket, whereby the traveller was permitted to depart at any time on the Friday and return at any time on the Tuesday. For some time this privilege was restricted to the departure not taking place before 5 p.m. on the Friday and the return being restricted to the Monday night. Even when this time was extended to noon for the day of departure, the restriction was such as practically to prohibit long distance travel for so short a week-end. Now, however, the companies have restored in simple and straightforward fashion all the pre-War facilities in the matter of these week-end tickets, and while time, no doubt, will be required to restore the old travel habits which have been broken, I. shall be surprised if sooner or later this action does not bring back to the railways much of the lost revenues.
FURTHER RATE CUTTING.
In addition, the companies have also cut their rates for short distances severely where it is a case of endeavour- ing to defeat motor competition, and if only the fare cutting can be supplemented by some quick service of light trains in the particular district, the effort alsd seems likely to be a successful one, although doubtless there will be some districts where motor competition can only be met by road competition on the part of the railways owing to the peculiar facilities offered in certain districts between village and village by that mode of transit.
ECONOMICAL WORKING.
By an extended system of special excursion trains, the railways have also, evidently endeavoured to provide for the needs of those requiring cheap transit, but it may be doubted whether these cheap crowded trains meet the desire of the travelling public so well as week-end tourist and other facilities over a well arranged and sufficiently regular service with which the public gradually becomes familiar and relies upon. It is facilities of that nature, as well as everything pertaining to increased comfort and punctuality in travel, which are most likely not only to bring back revenues but to ensure their being reliable and permanent in character. Moreover, it must be supposed that a regular rather than an irregular flow of traffic must be the more conducive to economic working.
A NEW SPIRIT.
However, in these matters the railroad management may doubtless be trusted to work out their own salvation and the salvation of those who have invested money in railway undertakings. The fact which I am glad to welcome and bring to the notice of railway shareholders is the new and better spirit evinced by the two important developments to which I have referred. Having regard to the growth in population and the congestion of our roads, it is impossible not to believe that there is ample opportunity for the further extension of our railway enterprises. Indeed, it might fairly be said that for every passenger which is got back from the road to the railways, not only the railway shareholder but the general public also is the gainer through the removal of unnecessary traffic from the streets and roads. After all, the great railway tracks have already been constructed and can do no more harm to the beauties of the country, but it is otherwise with the arterial roads and motor thoroughfares which are now making it increasingly difficult to escape from the noise and rush of city life because it is more or less perpetuated through- out the highways and byways of England.
SHAREHOLDERS' PROSPECTS.
Translating now these general observations into a word of guidance to the railway stockholder, one is inclined to say that those who have held on for so long and have seen stocks fall to record low levels will do well to exercise further patience even if the first result of the cutting of fares may be a diminution not in the number of passengers carried, but in receipts, while those who may be considering the best market where stocks can be acquired with a view to ultimate capital appreciation, might do worse than carefully watch future developments in the section for English Railway Prior Charge and Ordinary stocks. It must be remem- bered when considering net revenue prospects that if the result of improved facilities should be increased gross revenues, there will have to be added to them the savings resulting from the small cut in wages and salaries. Moreover, looking still further ahead to the end of the years when in connexion with the rebate to the railways in the matter of local rates the concessions by the railways in freight rates on coal will commence, the railways, although receiving no immediate pecuniary advantage from the rebates themselves, must inevitably benefit in the long run by the stimulus which it is hoped will be
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