Finance—Public and Private
The Railway Agreement
EXPLAINED a week ago that the decline in prices of railway Ordinary stocks had been accentuated during recent weeks by unfavourable traffic receipts and by apprehensions with regard to forthcoming interim dividends. As against these causes for disquietude had to be set hopes held in some quarters with regard to the outcome of the Conference between the Unions representing railroad workers and the management of the railroads, and, taking a longer view, the possibility of a revival in trade being stimulated by the scheme in the last Budget for the relief of local rates in the ease of distressed industries, such relief to be somewhat anticipated by the coming into operation at the end of the present year of some reduction in railroad charges for the transport of coal.
L.M.S. RESULTS.
Dealing first with the interim railway dividends in so far as they are concerned with the four leading groups, the position can briefly be summarized. The London, Midland and Scottish Company had shown a decrease in receipts for the first half of the year of about £2,100,000, and this, it appears, was almost entirely accounted for by a decrease in the tonnage of iron, coal and steel, and heavy materials for building, while a contributory factor was the new system of charges in operation from January 1st next, the net effect of which has been to snake the general level of freight charges rather lower than that in force last year. On the other hand, many economies are stated to have been made and the reductions in expenditure and improvements in net results of other businesses are estimated to have represented a sum of about £1,000,000. Accordingly, the directors have felt in a position to declare an interim dividend of 14 per cent. compared with 2 per cent. a year ago.
THE SOUTHERN.
• In the case of the Southern Company, there was a decline in goods traffic of about £160,000, offset by an improvement in passenger receipts of over £50,000. The Directors, however, were able to make the reassuring statement that the decline in gross traffics was approxi- mately offset by a reduction in expenditure mainly due to it decrease in the price of coal. The Southern directors usually reserve consideration of the dividend on the Deferred until the end of the year, and the declaration Of an interim dividend at the rate of 5 per cent. on the Preferred Ordinary, the same as a year ago, was just about in accordance with expectations, while the reassuring statement about economies imparts a more hopeful outlook for the current half-year.
GREAT WESTERN.
• In announcing a reduction in its interim dividend frorn 21 to 14 per cent. on the Ordinary stock the Great Western Railway made no comments upon its shrinkage in gross receipts of about £870,000 other than to attribute it " mainly to depression in the coal, iron, and steel industry." No reference in this ease was made to economies, which perhaps may be due to the fact that a year ago, owing to the large stocks in hand, the Great Western Railway was less adversely affected than some others by the pay- ments to be made for foreign coal.
L.N.E.
• Finally, the London and North Eastern Railway, which had shown a total decline in the six months' • earnings of about £1,500,000, declared the -usual half- yearly interest on the First and Second Guaranteed, 4 per cent. First Preference and the 5 per cent. Redeemable Preference, reserving until the end of the year a con- Sideration of the question of payment of dividend upon the Second Preference Stock. This was the course followed a year ago, though in the present instance the heavy fall in revenue must occasion anxiety with regard to the final results for the year. However, the directors were able to announce an active policy of economy and the loss of gross revenue for the half-year is expected to have been offset to the extent of fully one-half by the economies effected, while hopes are held out of increased economies during the second half-year.
AN IMPORTANT DEVELOPMENT.
On the whole, it may be said that these distributions equalled general expectations in the market and those who had sold on fears as to the effect likely to be, produced upon prices by the lower dividends were disposed to cover their commitments, with the result that prices rallied a little. It was at this psychological moment that the announcement was made in Saturday morning's papers of the agreement reached for reducing wages and costs of the railways. Without any actual change in standard wages and general conditions of employment, the National Union of Railwaymen, the Associated Society of Locomotive Engineers and Firemen, and the Railway Clerks' Association agreed upon a 2i per cent. deduction from all wages and salaries, such deduction to apply to the officials as well as to the workpeople of every grade, while the railway directors themselves have intimated that they are prepared to accept a 24 per cent. deduction from their salaries. Good points about the agreement are that it resulted from a very frank exchange of views, that the Conference was characterized by a considerable amount of good feeling,, and that the decisions reached were unanimous. It should -be noted, however, that the arrangement is temporary in the sense that it is binding for one year, and afterwards can be terminated by three months' notice on either side.
PRACTICAL RESULTS.
It would be premature, perhaps, to determine in terms of pounds, shillings, and pence just what the agreement may mean to the revenues of the railways. The Times has already computed an estimate of about £8,000,000 a year and that figure is borne out by calculations of the effect likely to be produced upon the London, Midland and Scottish figures. For my own part, however, 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 manage- ment 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, realizing that it is up to each and all to win back from the public revenues which have been lost. I fancy that some of the humbler members of the rank and file in the railway industry could probably give their chiefs an inkling of some of the many points which cumulatively have made our railways—or, at all events, certain sections of them—less popular with the travelling public, and while there will, of course, be a proper concern on the part of the management for those large measures like the increased power to compete with motor traffic and the proposals of the Budget intended to help industry as a whole, more attention will be given to the power of the railways themselves to attract traffic. Moreover, I cannot help thinking, now that a move has been made in the direction of a common sharing of misfortunes in the shape of an agreement to effect a small reduction in salary and wages, that the counterpart should be furnished in a general sharing of improved revenues. Would it not be possible to lay down a certain standard net revenue, and when it was exceeded, of course after all reserves and deprecia- tion had been attended to, for some proportionate bonus, however slight, to go to the staff ?
ARTHUR W. KIDDY.
Previous page
