Finance—Public and Private
Sir Josiah Stamp on the Railway Position
FROM the moment that Sir Josiah Stamp's appointment, first as President of the Executive, and subsequently as Chairman of the London Midland and Scottish Railway, became known, it was certain that a feature of the new Chairman's addresses would be a presentment, on lines easily to be comprehended by the shareholders, of the inwardness of the financial position of the company. There are probably few greater experts, not merely on statistics, but upon clear balance-sheets, than Sir Josiah Stamp, and I am emphasizing this point because, while a dear balance-sheet may not in itself solve the many difficult problems with which the Railroad industry is confronted to-day, it is most essential as a preparation for clear thinking with regard to the settlement of those problems.
Naturally enough, the Chairman of the L. M. and S. Railway did not occupy much time by comparing the results for 1927 with the abnormal Coal Stoppage year of 1926. Instead he made his comparison with the somewhat more normal year of 1925. For that year he showed that passenger and administrative receipts de- clined by £2,472,000, while Merchandise, Coal and other minerals increased by £1,979,000, leaving a net decline of £493,000. Analysing and commenting upon these figures, Sir Josiah had no difficulty in attributing a considerable part of the fall in passenger revenue to the losses sustained by the general public as a result of the Coal Stoppage, and he emphasized the point by showing the manner in which the decline in receipts was heaviest in those districts chiefly affected by the coal troubles. Then, in common with other companies, passenger receipts also suffered in contrast with 1925, owing to the abnormal Wembley traffic in that year. Good receipts, and especially coal and minerals, were favourably affected by arrears arising out of the conditions in 1926, while they also benefited by the fact that a general small increase of rates came into force.
DIVIDEND EARNING POWER.
The most satisfactory feature of last year was the reduction in working expenses, the total saving on the L. M. and S. system being £2,077,000, of which £544,000 occurred in Locomotive Running and £499,000 in Traffic Expenses. The reduction in Locomotive expenses was achieved in spite of more train miles having been run than in any year since the War, consuming 140,000 more tons of coal for the steam trains. It must be remembered, however, in reckoning up the net result to the company of the year's working, that a heavy loss in revenue was suffered by the sales which had to be made in the previous year of investments, when reserves in that form were drawn upon to maintain dividends. This item of interest, no doubt, figures largely in Miscellaneous Receipts, where the total shrinkage for the year was £863,000. Moreover, while the net revenue of the company was better in 1925 by £722,000, new capital issued involved in interest an amount of £206,000, while this year no draft was made on the Reserve, whereas in 1925 dividends were assisted by transfers from Reserves to the extent of £1,647,000. This explains why, in spite of the improved Revenue, the dividend is 11 per cent. less on the present occasion than for 1925. The position was very well summed up by Sir Josiah when he said that in the five years of the company's existence in its present form, the dividends earned and paid on the ordinary stocks, including that for 1927, amounted to an average of 831 per cent., while there has been added from Reserves an amount of 110,597,000, representing an average in dividend on the ordinary stock of 2.28 per cent: ROAD COMPETITION.
The Chairman of the L. M. and S. Railway was, of course, making his speech within a few days of the debate in Parliament on the Companies Bill for giving powers to meet motor competition, and it was only natural there- fore that he should use the opportunity to make a powerful plea for the justice of the case of the Railroads. In many respects his task was an easy one, because the public, with its innate sense of justice sympathizes with the manner in which railways are penalized by the share they have to take in meeting local charges in connexion with the upkeep of roads used by motor competitors. He expressed the case for the Railroads most admirably and tersely when he affirmed :—(a) That road traffic, like railway traffic, should bear its economic cost. (b) That railway and road traffic should not bear such unequal charges for rates and taxes. (c) That great main roads should not be built without full public enquiry and criti- cism somewhat analogous to the procedure for new railways. (d) That if the construction of roads will materially affect other transport facilities authorized by Parliament they should then decide how the latter are to continue. At the same time and while accepting these points made by Sir Josiah, the question is whether the interests of the public would be better served by granting to the railroads the facilities desired, or by curbing the facilities at present available in the matter of motor competition.
STAFF CO-OPERATION.
I must confess, however, that the portion of Sir Josiah's speech which interests me most is the lengthy—but not too lengthy—reference to the general question of staff co-operation. The public was rather expecting some such statement, in view of the fact that very soon after Sir Josiah Stamp joined the Company he took the initiative in bringing about informal conferences between the staff and the management, with a view to possible economies and increased efficiency resulting therefrom, to say nothing of the cultivation of good relationship between all ranks of the service. The experiment has not been proceeding very long, but it seems already to have brought good results.
SERVING THE PUBLIC.
Reading, moreover, carefully between the lines of Sir Josiah's speech, I am inclined to attach far more importance to possibilities in the direction of intelligent co-operation between the management and the staff, than I am to any matter of retaliatory action with regard to motor competition. Had this co-operation under skilful leadership existed earlier, it is probable that a good deal of traffic which has been lost to the roads might have been retained, or, to put the matter somewhat differently, a more efficient local service, especially as regards passengers, would have afforded less excuse for the introduction of local motor buses. In fact, as has often been asserted in these columns, there has been an indifference to the requirements of the travelling public which has cost the Railways dearly. It is an indifference which unquestionably has been emphasized by what may be termed the monopolist aspect of the system of " groupings," and I venture to think that it is a position which was grasped far more quickly by the rank and file of railway staffs than by the directors of the railways themselves. Irate pas- sengers may have regarded it as waste of time to write to the management concerning their grievance, but in moments of anger their feelings have probably been expressed to sympathetic, or unsympathetic, porters, as the case may be, to an extent which has left these minor officials with a pretty clear sense of how the travelling public was feeling with regard to the railway services in many districts.
If, therefore, Sir Josiah Stamp and those who are acting with him can restore that sense of service to the public which in the long run is essential to the prosperity of any undertaking which professes to serve the public interests, we may perhaps hope for a better outlook for our railroads, from the standpoint of the travelling public, the traders, and the railway stockholders themselves.
ARTHUR W. KIDDY.
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