Finance—Public & Private
Plight of the Railways—Statement by Sir Josiah Stamp
I suALL make no apology for returning so quickly in this column to a consideration of the plight of railway stock- holders. Altogether something like £1,100,000,000 of British capital is invested in our railway undertakings, and I believe that the number of individual stockholders is very nearly one million. This capital has been invested by large and small investors alike and the money has been placed in undertakings subject to various State and Board of Trade regulations which in themselves have given to the railways a very special position in the eyes of the investors, while until quite recent times the prior charge stocks of the railways ranked among the most favoured and most trusted of the trustee securities. Moreover, no industry, perhaps, has been more handi- capped than the railways by the artificial wage system fostered during the period of Government control during the War, a handicap for which the sums paid over by the Government when the railways were released have proved to be but a feeble compensation.
THE L. M. AND S. MEETING.
I am more especially constrained, however, to refer this week once more to the subject of the railways by reason of the very able speech which was delivered on February 24th at the annual meeting of the London Midland and Scottish Railway Company by the Chairman, Sir Josiah Stamp. In The Spectator of a fortnight ago I referred to the remarkable economies achieved by the London Midland and Scottish Railway during the past few years, but for which the plight of the stockholders would have been much worse than it is. It is, of course, quite true that the greatest problem of all against which the railways are fighting is that of trade depression, and the point was very well brought out by Sir Josiah in a series of graphs showing the manner in which the fall in national production and gross railway revenues has pro- ceeded almost on parallel lines. Nevertheless, in the same graph it is also shown how, during the period of the five years covered by this descent in national production and railway receipts there has occurred a steady growth in the number of motor vehicles. Concerning this question of road competition Sir Josiah Stamp not unnaturally complained of the delay on the part of the Government in giving attention to the unanimous recommendations of the Salter Conference.
The essential features of the Report of that Conference were that " each class of road user should defray the road costs attributable to its use, that a licensing system should ensure freedom from abuse in over-loading, wage condi- tions, excessive wear and congestion of the roads." These, said Sir Josiah, " are the minimum conditions of a sane system. They would do something to redress the existing balance against the railways, but by themselves they do not by any means complete the process. For the freight motor service can pick and choose its traffic, need not publish its rates, has no obligation to treat all its customers alike and conducts its business without specific responsibility to trade and industry." Sir Josiah Stamp also maintained that there is evidence of need for stricter supervision to be exercised by the various authorities upon the carrying out of the Road Traffic Act. He main- tained that " in speeds, weight of loads, and hours of duty of men employed, there are daily flagrant breaches which, by facilitating the operations of our competitors, are unfair to the railway undertakings."
THE WAGE QUESTION.
On the subject of wages Sir Josiah Stamp also spoke in strong but carefully measured terms. It will be recalled that although the railway companies were prepared to accept even the trifling reduction in wages recommended by the National Wages Board, the wage-earners refused to accept the finding, although the point is not challenged
(Continued on page 810.) Finance—Public and Private (Continued from page 814.) that the great reduction in prices and in the cost of living during recent years has brought. about an actual rise in real wages. It would seem, therefore, that the machine for settling wages disputes, although it was one which had been accepted by the workers as well at the railroad managements, has for the time being broken down. At the same time, while these facts had to be fairly and squarely stated to the stockholders, there was nothing in the temper of Sir Josiah Stamp's speech which sug- gested a vestige of ill feeling between railway workers and the management.
POSITION OE STOCKHOLDERS.
There has been published during the last week by the British Railways Press Bureau a small pamphlet which also sets out in very striking fashion the present plight of the railway stockholders. Among other things, it is pointed out that railway capital has never been remu- nerated at a high level and even in the year before the War the net revenue was only 4.38 per cent, of the capital receipts. During the last four years the per- centage of capital receipts to net revenue has descended steadily from 4.18 to 2.44 for 1932. This progressive diminution is attributed to the heavy decrease in receipts due to road competition and trade depression, the receipts for 1932 being 148,500,000 less than those- for 1929. Against this, however, savings in expenditure of £25,000,000 were incurred, still leaving a net decrease of 118,500,000. For the year 1932 out of every £1 of revenue lls. 4d. went in salaries and wages as compared with 7s. ficl. in 1918. The amount available out of every £1 of revenue for dividends on the Ordinary Stocks in 1918 was 2s. 8d. ; in 1932 it was 2d.
Altogether, Sir Josiah's speech at the meeting of the London Midland and Scottish Railway and the facts and figures just quoted have -brought out in 'unmistak- able fashion the urgent claim which the railways have upon the Government to give speedy attention to the recommendations of the Salter Conference.
"ARTHUR W. KIDDY.
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