Before, however, reaching this stage in their development, the railways had had some other struggles with the Government on questions of State policy arising out of those aforesaid feelings of suspicion and distrust, and due to the same fear as before that the companies would be sure to abuse their position unless they were restrained from so doing.
Following on the recommendations of the Committee of 1840, and with a view to safeguarding the public interests in regard alike to safety and to reasonable treatment, some important statutory powers had already been conferred on the Board of Trade. Under the Regulation of Railways Act, 1840, notice was to be given to the Board of Trade of the opening of all new lines of railway; such lines were to be inspected by Board of Trade inspectors; various returns in respect of traffic, tolls, rates and accidents were to be made to that body, to which, also, all existing bye-laws affecting the public were to be submitted for confirmation. In 1842 a further Act gave the Board power to delay the opening of any new line until they were satisfied that all the necessary works had been effectively constructed. Mr Glyn, chairman of the London and Birmingham Railway, said of this measure: "It is a Bill which I do not hesitate to say is, on the whole, calculated to do the interests of railways very considerable service."
But the attitude of the companies was no longer favourable when Mr Gladstone's Committee of 1844 proposed to confer on the Board of Trade some drastic powers for the periodical revision of railway rates, and likewise sought to lay down the terms on which the State might acquire all future lines of railway. The proposals in question were incorporated in a Bill which was brought in by Mr Gladstone; but the measure met with strenuous opposition from the railway interests, and the modifications introduced before it became law were of such a nature that the Act has never been put into operation.
In regard to the revision of rates, the Act laid down that if, after the lapse of twenty-one years (not fifteen, as proposed in Mr Gladstone's first Bill), any railway sanctioned after the passing of the Act had paid ten per cent for three years, the Treasury (not the Board of Trade) might reduce the rates, guaranteeing, however, a ten per cent dividend tothe company, while the revised rates and the guarantee were to continue for another twenty-one years. Needless to say, railway companies in general do not pay ten per cent dividends, though in 1844 ten per cent was regarded as quite a reasonable dividend for a railway, in view of what the canal companies had been paying; while no such guarantee as that suggested is ever likely to be made by the Treasury. Provisions authorising the Board of Trade to make deductions from the guaranteed income as penalties for what they might regard as mismanagement, and prohibiting a company from increasing its capital pending a revision of rates, without the sanction of the Board of Trade, were so vigorously opposed that they were abandoned.
The clauses of the Act relating to State purchase were to apply only to new lines of railway, the 2320 miles of railway sanctioned prior to the Session of 1844—and including many of the chief links in the great trunk lines of to-day—being expressly excluded. As regarded railways sanctioned in the Session of 1844, or subsequently thereto, it was enacted that after the lapse of fifteen years the Treasury might acquire them for twenty-five years' purchase of the average annual profits for the preceding three years; but if those profits were less than ten per cent, the amount was to be settled by arbitration. It was further enacted that no railway less than five miles in length should be bought; that no branch should be acquired without purchase of the entire railway; that the policy of revision or purchase was not to be prejudiced by the Act; that "public resources" were not to be employed to sustain undue competition with independent companies; and, finally, that no revision of rates or State purchase of lines should take place at all without an Act of Parliament authorising the guarantee or the purchase, and determining how either was to be done.
To argue, as many advocates of the nationalisation of railways habitually do, that the basis for State purchase has already been established by the Act of 1844 is to set up a theory which is obviously inconsistent with the real facts of the situation.
Commenting on this Act of 1844 the Joint Committee on the Amalgamation of Railway Companies (1872) say in their report:—
"It would be impossible to deal with railways made since 1844 without dealing with railways made before that time, since both form part of the same systems.
"As regards the revision of rates, no Government would undertake to try experiments in reducing rates on an independent company whose income they must guarantee; and efficient or economical administration could scarcely be expected from a railway company whose rates were cut down and whose dividend at ten per cent was guaranteed by Government.
"Whatever value there may be in the notice given to the companies by this Act of their liability to compulsory purchase by the State, over and above the general right of expropriation possessed by the latter in such cases, its terms do not appear suited to the present condition of railway property or likely to be adopted by Parliament in case of any intention at any future time on the part of Parliament to purchase the railways."
The proposals contained in the Bill, and modified into the Act of 1844, were, of course, simply a further development of the then established policy of the State in taking precautions against the evils that might result from railway monopoly.
A greater degree of apparent success was, at first, to attend those further precautionary measures which took the form of encouraging the construction of competing lines, leading both to new and to existing companies invading the so-called "territory" of other companies, as distinct from the provision of lines in districts which had no railways at all.
There was at this time much discussion as to the rights of established companies.
When the proposal for the appointment of the Committee of 1840 was under discussion in the House of Commons, Sir Robert Peel had contended that a material distinction was to be drawn between new companies approaching Parliament for the first time and companies which, relying on the faith of Parliament, had invested their capital in the construction of railways. "Parliament, it was true, might repent of the indiscretion and levity with which it had granted those powers ... but he would advise Parliament to be very cautious how it interfered with the profits or management of companies which had been called into existence by theauthority, and had invested their money on the faith, of Parliament." Mr Gladstone's Committee of 1844 also declared that they had been "governed throughout their consideration of the subject by the strongest conviction that no step should be taken by Parliament which would either induce so much as a reasonable suspicion of its good faith with regard to the integrity of privileges already granted, and not shown to have been abused, or which would prospectively discourage the disposition now so actively in operation to extend the railway system by the formation of new lines."
On the other hand, there was that ever-present and ever-active dread of whatmighthappen if the railway companiesdidbecome grasping and merciless monopolists. There was, also, the fact that while there would be direct competition between two railways having the same terminal points, each line might further serve a more or less considerable and important intermediate stretch of country which otherwise would be left without railway accommodation at all.
For one or other of these reasons competing lines continued to be sanctioned, notwithstanding Special Committees' recommendations and railway companies' protests. One such protest, giving a specific example of the tendencies of the day, was made in a memorial to the Board of Trade, dated June 26, 1857, and headed, "Proposed Remedies for Railway Grievances." The memorial, signed by Sir John Hall, Bart., and six others, and addressed to Lord Stanley of Alderley, president, and Mr Robert Lowe, vice-president, of the Board of Trade, had been drawn up at the request of those two gentlemen as a more detailed statement of facts to which their attention had already been called. Five specific grievances were dealt with, and the first of these was "The Tendency of Parliament to concede competing or otherwise unnecessary lines." Under this head the memorialists state:—
"It is not our desire that the railway system should be legislatively restricted within its present limits, or that existing shareholders should by any process whatever be nominally or practically gifted with a monopoly of the means of railway transit. We should submit to the introduction of new lines of railway wherever called for by absolute public necessity.... In such cases, however, we consider that the Legislature would only be doing justice to its previous enactments ingiving former applicants time to complete their engagements so that they might be able, at the proper time, to exhibit their ability and their willingness to consider the wants of the public as well as their proper remuneration."
The memorialists mention the fact that in 1853 several new lines were sanctioned, the period fixed for their completion being 1858, and they proceed:—
"Already, however, before these lines are opened, others are promoted in competition with them—promoted, not by a complaining locality, but in some cases by existing companies, in others by persons whose only apparent object is to sell the schemes to advantage when Parliament has sanctioned their construction. In such instances as these we humbly submit that the Legislature should not permit the introduction of new lines until it has seen whether or not the company in possession can fulfil its engagements, and whether, also, such company should not be permitted an opportunity of electing to extend its undertaking, or to leave further effort to the discretion of the Legislature."
Whilst the State was thus maintaining its own policy of competition, the railway companies were equally persistent in keeping to their policy of amalgamation; so that, as the Joint Committee of 1872 remarked, "A new line was sure sooner or later to join the combination of existing railways, and to make common cause with them."
Practical railway experience was showing that the ordinary ideas of competition, as regarded commercial undertakings in general, did not and could not be made to apply to railways beyond a certain point. The capital sunk alike in obtaining a railway Act, in acquiring and adapting land, with provision of embankments, cuttings, viaducts, bridges, tunnels, etc., for the railway lines, and in supplying the various necessary appurtenances, railway stations, and so on, was irredeemable, since, in the case of failure of the line, due to competition or otherwise, the capital invested could not be realised again, the land, rails, buildings, etc., on which it had been spent being of little or no value for other than railway purposes. There could thus be no transfer of capital from one undertaking to another, as in ordinary commercial affairs.
In addition to this it might be that interest would have to be paid on two lots of railway capital in a district where thetraffic was sufficient to allow of the financial obligations of only a single company being efficiently met, any success achieved by the new company depending (until the available traffic increased) on its power to divert business and profits from the other company.
Hence it might well occur that "the best laid schemes" of Parliament and Parliamentary Committees, in approving competitive lines, resulted only in the companies concerned coming to, at least, a friendly understanding; and it might even be that the public did not eventually benefit at all, because, as the Joint Committee of 1872 say, "The necessity of carrying interest on the additional capital required for the new line tends sometimes, in the end, to raise rather than to reduce the rates."
Economic considerations, again, apart altogether from those monopolistic tendencies on the fear of which the policy of the State had been founded, were quite sufficient to account for the absorption of one company by another, and especially of small companies by larger ones, not so much to avoid competition as to ensure the provision of through routes operated under one and the same management, involving less outlay on working expenses, and providing greater advantages to the public than if the same length of line belonged to a number of different companies.
The lines between London and Liverpool, for example, were originally divided between three companies, and the same was the case with the lines between Bristol and Leeds. In some instances the companies were not on good terms with one another, and they ran their trains to suit their own convenience. Even when they were on good terms, they might not have any interests in common, apart from (at one time) offering as few comforts and conveniences as possible to the third-class traveller, and compelling him at least to complete his journey by going first class, if he wished to get to his destination the same night.
As early as 1847 attempts had been made by some of the companies to overcome the glaring defects of the original system of railway construction by establishing the Railway Clearing House, with a view to facilitating through traffic and allowing of a better adjustment of accounts when passengers or goods were carried over various lines in return for asingle payment. The companies persevered, however, in their further policy of amalgamation and consolidation, and in 1853 the number and magnitude of schemes with these objects in view created such alarm on the part both of politicians and of traders that a further Select Committee—known as Mr. Cardwell's Committee—was appointed.
The members of this Committee pointed out in their report that the whole tendency of the companies was towards union and extension, that competition ended in combination, and that the companies were able in great measure to attain these ends by agreements with one another without the authority of Parliament. The economy and the convenience resulting from amalgamation were admitted by the report; but, though still no proof was offered, or suggestion made, that the companies were actually abusing the greater powers they had thus secured, there was an obvious under-current of alarm in the minds of the Committee as to the many undesirable things which large concernsmightdo.
The Committee were opposed to any "districting" of the country between different companies, and they recommended that, while working agreements might be allowed, amalgamations between large companies should not. As an example of the combinations they deprecated, I might mention that they pointed with evident feelings of much concern to the fact that if the amalgamation schemes then being proposed by the London and North-Western Railway Company were conceded, they would involve the union under one control of a capital of £60,000,000, a revenue of £4,000,000, and 1200 miles of railway, with the further result of "rendering impossible the existence of independent rival trunk lines." One wonders what the members of this Committee would have said had they been told that by the end of 1910 (as shown by the Board of Trade "Railway Returns") the London and North-Western would control a total authorised capital of (in round figures) £134,000,000, have gross receipts in a single year amounting to £15,962,000, and be operating 1966 route miles of line, equivalent to 5490 miles of single track (including sidings), besides being only one of half a dozen great trunk lines.
A much more practical result of the deliberations of this Committee was seen in certain provisions of the Railway and Canal Traffic Act, 1854, which laid down that everyrailway company should afford proper facilities for receiving and forwarding traffic; that no undue or unreasonable preferences should be given; and that where the systems were continuous the companies should afford due and reasonable facilities for the interchange of traffic, without undue preference or obstruction. In this way it was sought to bring about greater co-ordination between the numerous small lines, and secure a better provision for through traffic. The Act is well described by the Select Committee of 1872 as "a measure valuable in fact and most important in its scope and intention." It may have been further anticipated that companies which, as the result of the Act, secured running powers or free interchange of traffic over the lines of other companies—and especially as regards lines having access to London—would be less ready to agree to absorption by them; but if this expectation were, indeed, entertained, it was not realised.
The companies, in fact, continued to develop their commercial undertakings in accordance with what they regarded as commercial principles, and the Joint Committee on the Amalgamation of Railway Companies, 1872, taking a much broader view of the situation than previous Committees had done, pointed out how small had been the effect of the policy sought to be enforced against the railways, since the combinations which had enabled the great trunk lines to attain to the position they occupied at that date had been effected "contemporaneously with reports against large combinations," those reports having had "little influence upon the action of Private Bill Committees," and not staying "the progress of the companies in their course of union and amalgamation." The Committee further said, on the subject of "districting":—
"Among the various suggestions which naturally occur when dealing with the question of amalgamation, one of the most obvious and most important is to the effect that for the future some endeavour should be made to compel railways in amalgamating to follow certain fixed lines or principles.... If at an earlier period in railway history such an attempt had been successfully made, there is no doubt that it might have provided us with a railway system, if not more efficient, at any rate far less costly than that which we now possess. But consideringthe policy, or want of policy, which has hithertobeen pursued, and the interests which have grown up under it, the difficulties of laying down any fixed policy for the future are very formidable."
The words in this extract which I have put in italics, representing, as they do, the views of a Joint Committee of the House of Lords and of the House of Commons, justify, I would suggest, much of the criticism in which I have here ventured to indulge.
Among the conclusions at which the Committee arrived were the following:—
"Past amalgamations have not brought with them the evils which were anticipated."
"Competition between railways exists only to a limited extent, and cannot be maintained by legislation."
"Combination between railway companies is increasing and is likely to increase, whether by amalgamation or otherwise."
"It is impossible to lay down any general rules determining the limits or the character of future amalgamations."
In support of their views in regard to the first of these conclusions, the Committee pointed especially to the North-Eastern and the Great Eastern Railway Companies, each of which had so far pursued a policy of amalgamation that the report speaks of the former as "pervading and possessing one of the wealthiest and most important districts of the Kingdom," and of the latter as having "almost exclusive possession of the principal centres to which it extends."
The Committee did not suggest that either of these companies had abused its powers, or taken undue advantage of such "monopoly" as it had secured in the districts concerned. In fact, of the North-Eastern Railway they said:— "That railway, or system of railways, is composed of thirty-seven lines, several of which formerly competed with each other. Before their amalgamation they had, generally speaking, high rates and fares and low dividends. The system is now the most complete monopoly in the United Kingdom ... and it has the lowest fares and the highest dividends of any English railway." As for the Great Eastern, instead of abusing their "almost exclusive possession" of the Eastern Counties, everyone knows that the Company have won for themselves the credit of pioneering the movement for offeringexceptionally low rates and other special facilities for the transport of agricultural produce, and, also, of having done more, perhaps, than any other single railway company to enable working men to live in healthy suburbs around London.
The whole position in regard to the prospective abuse of a so-called monopoly due to railway amalgamations is, in fact, much misunderstood.
A railway company which controls, or practically controls, the traffic in a certain section of the country is especially interested in developing that traffic because it will enjoy all the advantages thereof, without having to share them with a rival. For this reason, instead of restricting facilities, such a company seeks to increase them; instead of imposing extortionate fares and rates it aims, not merely at immediate profits on the transport of particular commodities, but at encouraging such a development of the district in general as will ensure its prosperity, increase its population, expand its trade,andcreate more traffic of all kinds in a not far distant future.
It was precisely this idea that led the Great Eastern Railway Company to set the example it did in seeking to develop the interests of its agricultural districts. The more these interests expanded, and the more profitable the agricultural industry became to the people living in those districts, the greater would be the demand for household supplies, for furniture, for pianos, for building materials, and for countless other commodities, most of which would bring additional traffic to the line apart from the greater amount of agricultural produce carried, and apart, also, from the further inevitable increase in passenger traffic.
Cornwall, again, might be regarded as the "monopoly" of the Great Western Railway; but what person would suggest that the Great Western have not sufficiently boomed "the Cornish Riviera"?
Nor is there necessarily a "monopoly" simply because a particular district is served by a single railway. If the Great Eastern did not take people to East-coast resorts at reasonable rates, or if the Great Western charged excessive fares for the journey to Cornwall, holiday-makers would, in each case, go elsewhere. If either company, or any other company, sought to get too much for carrying milk to London, milkwould be obtained by the metropolitan dealers from other districts, instead; and so on with most other commodities.
Indirect competition, on sound economic lines, may, therefore, still exist even when a railway company is, after many amalgamations, in the possession of an apparent monopoly. The law of supply and demand will still regulate both prices and charges. When, on the other hand, an attempt is made to enforce an artificial and non-economic competition by Act of Parliament, the inevitable result is that the companies concerned find it to their advantage to combine, or to agree, rather than to compete in rates and fares under conditions that would not only be mutually disadvantageous, but confer no lasting benefit on the public they seek to serve.
How the ultimate result of railway policy, as here described, has been to bring about the creation of great systems out of small ones may be seen from the following typical examples, showing in each case the number of lesser companies absorbed, leased or worked as the result of amalgamations, of leases in perpetuity, or otherwise; though the figures do not include railways which have been vested in two or more companies jointly:—
The process of amalgamation has been carried even further than these figures suggest, some of the companies absorbed into the great systems having themselves previously amalgamated a number of still smaller companies. The North-Eastern, for example, came into existence in 1854, through a combination of three companies—the York, Newcastle and Berwick, the Leeds Northern, and the York and North Midland—which three companies then represented between them what had originally been fifteen separate undertakings. Since 1854 the North-Eastern Company have purchased or amalgamated thirty-eight other companies, one of which, the Stockton and Darlington (absorbed in 1863), was already an amalgamation of eleven companies.[46]
That the conveniences of travel and the advantages to traders have been greatly enhanced by the substitution of these few great companies for a large number of small ones is beyond question, and actual experience has shown that the fears of grave evils resulting from prospective abuses of the railway "monopoly" brought about by amalgamations such as these have been mainly imaginary, notwithstanding the fact that they have formed the basis of so much of the policy of the State in its dealings with the railways.
There are still various small and even diminutive companies which have escaped the fate of being swallowed up by their big neighbours. One of the smallest engaged in a general traffic—as distinct from dock or mineral lines—is the Easingwold railway, Yorkshire, which connects with theNorth-Eastern at Alne, but still maintains an independent existence. According to the Board of Trade Returns for 1910 the Easingwold Railway consists of two miles of line, or three miles if we include sidings, and it owns one locomotive, two carriages for the conveyance of passengers and one goods waggon. It carried in 1910 a total of 33,888 passengers, 5547 tons of minerals and 11,214 tons of general merchandise. Its total gross receipts from all sources of traffic for the year amounted to £2358, and the net receipts, after allowing for working expenses, were £936. The authorised capital of the company is £18,000, of which £16,000 has been paid up.
Small as this line is, it serves a useful purpose; but the policy of amalgamation, followed up by leading companies with such pertinacity, and in spite of so much distrust and opposition, has, happily, saved the railway system of the country from remaining split up among an endless number of companies of the Easingwold type—even though they might have had more than three miles of railway and a single locomotive each.
Other developments of State policy towards the railways have applied to ensuring both perfection of construction and safety in operation.
In the former respect the English lines have been built with a solidity and a completeness not to be surpassed by the railways of any other country in the world. Even in sparsely populated districts where, under similar circumstances, the American or the Prussian railway engineer would lay down only such a line as would be adequate to the actual or prospective traffic, would give the passengers no platform, would provide little more than a shed for a railway station, and would expect the public to be content with a level crossing and look out for the trains, a British railway company is obliged to respect State requirements by laying down a line equal to the traffic of a busy urban centre, give the passengers such platforms as will enable them to enter or leave the trains without the slightest inconvenience, erect well-built and more or less commodious station buildings, and, it may be, arrange for bridges, viaducts or underground passages such as in other countries would be found only in centres having a substantial amount of traffic.
Apart, in fact, from any question as to expenditure onParliamentary proceedings and on the acquiring of land, the cost simply of building the railway itself has, generally speaking, been far greater in this country than, under corresponding geographical and traffic conditions, has been the case elsewhere. Judging from the example of the Prussian State Railway administration it is extremely doubtful if, had the British railway system been constructed, owned and operated by the State, instead of being left to private enterprise, any responsible Chancellor of the Exchequer would have authorised so great a degree of expenditure, in the interests of an absolute perfection of construction under all possible conditions, as that which has been forced upon commercial companies dependent for their capital on the money they could raise from investors.
Less scope for criticism is offered by the provision of the most complete of safety appliances in regard to signalling and other phases of railway operation. The desirability of reducing the risk of railway accidents to an absolute minimum is beyond the range of all possible dispute. Yet, as a matter of detail, the substantial cost of ensuring this all-important element of safety, no less than the exceptionally heavy outlay on the lines themselves, has helped still further to increase that capital expenditure a return on which is only to be secured by the investors from the revenue the companies can get from the railway users.
When we look for the ultimate and combined results of the various conditions touched upon in this and the preceding chapter—excessive cost of land, abnormal expenditure on Parliamentary proceedings and various aspects of State policy and control—we find them in the fact that, whether or not the British railways are really the best in the world, they have certainly been the most costly.
Comparisons with other countries may be misleading unless we remember that published statistics as to the cost of construction of the world's railways apply to route mileage—or, otherwise, "length of line"—and that the English lines have a large proportion of double, treble and other multiple track, while in more sparsely populated countries the railways, except in and around the large towns, consist to a far larger extent of single track. The actual position is not, therefore, quite so bad as the comparative figures appear to show. But, even allowing for these considerations, the following table—whichI compile from data published in the "Bulletin of the International Railway Congress Association" for February, 1911—may be regarded as conveying the moral of the story I have here been seeking to tell:—
DECLINE OF CANALS
Considering that, in spite of the unreasonableness, the exactions and the large profits of many of the canal companies in the later days of their prosperous monopoly, the canals themselves had rendered such invaluable service to the trade, commerce and industry of the country, the question may well have arisen why they were not allowed, or enabled to a greater extent than was actually the case, to continue their career of usefulness.
There has, indeed, for some years been in the United Kingdom a canal-revival party which favours the idea that either the State or the local authorities should acquire and improve the canals with a view to enabling them better to compete with the railways—which, as the story of the Liverpool and Manchester line shows, were at one time expressly designed as competitors of and alternatives to the canals.
So far has this resuscitation idea been carried that in December, 1909, the Royal Commission on Canals and Waterways reported in favour of the State acquiring, widening and otherwise bringing up to date a series of canals radiating from the Birmingham district, and establishing cross-country connections between the Thames, the Mersey, the Severn and the Humber. The reasons for the decline of the canals and the practicability, or otherwise, of reviving them may thus be regarded as questions of more than merely historical or academic interest for (1) the traders who might benefit from the said revival; (2) the traders who certainly would not benefit, but who, in conjunction with (3) the general taxpayer, might have to contribute to the cost if the State did acquire the canals and failed to make them pay.
The "real commercial prosperity of England" has well been dated from the period of early canal development, when artificial waterways began to supplement the deficienciesof navigable streams limited to certain districts and liable to floods, droughts and other disadvantages, and of ill-made roads which even the turnpike system had failed to adapt to the requirements of heavy traffic. In these conditions the movement either of raw materials or of manufactured articles other than those which could be carried on packhorses had, as we have seen, been rendered all but impossible in many parts of the country on account either of the difficulties or of the excessive cost of transport. Canals, constituting a great improvement on any other existing conditions, came to the rescue, and supplied the first impetus to that industrial revolution which the railways were to complete.
This was a great work for the canals to have accomplished, and it was a work that was essentially done by private enterprise. Clifford says that "Parliament, by its legislation in furtherance of canals and of agriculture, probably contributed more largely to the national prosperity than by any group of public measures passed towards the close of the last [eighteenth] century." There is here not a word of recognition for Brindley, the Duke of Bridgewater and the other pioneers of the canal movement, or for the private investors who provided the £14,000,000 spent on the actual "furtherance" of canals. Parliament did not inspire, originate or in any way improve the canals; it found none of the money which they cost, nor did it even seek to direct their construction on any such well-organised system of through and uniform lines of communication as would have made them far more useful, and assured them, probably, a longer lease of life. Yet Mr Clifford has no hesitation in giving all the praise to Parliament because itallowedthe canal promoters and proprietors to carry out the work on their own initiative, and at their own risk, as the improvers of rivers and the providers of turnpike roads had done before them.
"Canals in this country," says the Final Report of the Royal Commission on Canals and Waterways, "were constructed upon no general scheme or system. As soon as it was seen that they were a profitable investment, independent companies were formed in every district, and, according to their influence or their means, obtained from Parliament Acts conceding powers to make canals of the most varying length and character." If, in conceding these powers, Parliamenthad established some central authority with a view to securing such uniformity in construction and such connected routes as were practicable, it would have rendered a greater service than by simply approving schemes put forward in what the Final Report itself describes as a "piecemeal" fashion. This, however, was not done; nor, in fact, was action taken to prevent the canal companies, after they had shown their enterprise and risked their millions, from becoming in the pre-railway days grasping monopolists whose one idea was to exploit the trader to their own advantage, leading him to welcome the railways, as an alternative to the canals, still more cordially than he had previously welcomed the canals as an alternative to the roads and rivers.
So long as the locomotive remained in a comparatively undeveloped stage, the canal companies refrained from regarding railways as serious rivals, and continued to look upon them in the light, rather, of contributors of traffic to the waterways; but in proportion as the locomotive was improved and the rivalry of the railways became more and more pronounced the canal companies grew alarmed for the prospects of their own concerns. They entered on no new undertakings—the last inland canal, as distinct from ship canals, was completed about 1834—and they got anxious as to the future of those they had on their hands. They had first scoffed at the railways as "nothing but insane schemes," or as costly "bubbles," and they had then worked up a powerful opposition against them. Having failed in each of these directions, they next took steps which they would have done well to take earlier—they reduced their tolls, and they also began to consider how they could improve their canals.
In 1835 there was a general reduction of rates on the Old Quay Navigation between Liverpool and Manchester, but this belated policy of seeking to make terms with the traders did not prejudice the fortunes of the new railway between those places. As regards the improvements sought to be introduced on the canals, Nicholas Wood, in the third edition (1838) of his "Practical Treatise on Rail-Roads," says:—
"Canals, ever since their adoption, have undergone little or no change; some trivial improvements may have been effected in the manner of passing boats from one level to another, and light boats have been applied for the conveyanceof passengers; but in their general economy they may be said to have remained stationary. Their nature almost prohibits the application of mechanical power to advantage in the conveyance of goods and passengers upon them; and they have not, therefore, partaken of the benefits which other arts have derived from mechanical science.
"The reverse of this is the case with railroads; their nature admits of almost unrestricted application of mechanical power upon them, and their utility has been correspondingly increased....
"At the time of the publication of the first[47]and second[48]editions of this work scarcely any experiments had been made on a large scale to elucidate the capabilities of canal navigation—none, certainly, satisfactory; since then the competition of railways has aroused the dormant spirit of the canal proprietors, and various experiments have been made to ascertain the amount of resistance of boats dragged at different velocities; attempts have been likewise made to adapt the power of steam to propel the boats upon them, and other experiments have been adopted to increase their activity as a mode of traffic, and especially for the conveyance of passengers."
These various experiments had little practical result, and the navigation companies found it more to their advantage, in many instances, to make good use of their position and influence, while they were still a power in the land, and force the railway companies either to buy them out entirely or to guarantee them against loss. Such results were generally secured either by first threatening opposition to the railway Bills, and then stating the price for withdrawing therefrom, or, alternatively, by projecting schemes for the competitive lines of railway specially favoured by the State policy of the day, and likely, therefore, to be readily conceded.
When, in 1845, the Oxford, Worcester and Wolverhampton Railway Company—afterwards amalgamated with the Great Western Railway Company—were seeking powers of incorporation, they were opposed by the Severn Commissioners, who represented that they had spent £180,000 in improving the waterway, in anticipation of securing a revenue of £14,000 a year. In order to overcome this opposition and get their Bill, the railway company agreed to make up to the SevernCommissioners any deficit between the amount of their tolls and £14,000 a year. Under this obligation the railway company paid £6000 a year for many years; but in 1890 the obligation was commuted by a payment by the Great Western Railway Company of £100,000, and by the giving up to them of certain mortgages to which they had become entitled in consideration of the Commissioners discharging them from the liability under their guarantee. In stating these facts in evidence before the Royal Commission on Canals and Waterways, Mr T. H. Rendell, chief goods manager of the Great Western Railway Company, added (Question 23,834): "It is desirable to mention that, because it is rather suggested that State aid should be given to enable this very waterway to come into fresh competition with the railway. Of course, if that were so, it would be only fair that the Severn Commissioners should re-imburse the railway company the compensation they have received."
The acquiring of the Stratford-on-Avon Canal by the Oxford, Worcester and Wolverhampton Railway was another of many instances of purchase by a railway company being the price of withdrawal of canal opposition to railway Bills.
By threatening to apply to Parliament for powers to build an opposition railway, the Kennet and Avon Canal Company, in 1851, also induced the Great Western to buy them out, the railway company agreeing to pay £7773 a year for the canal, which has been a loss to them ever since.
In the same way the London and Birmingham Railway Company, now the London and North-Western, originally acquired control over the Birmingham Canal Navigations as the result of a declared intention on the part of the canal company, in 1845, to seek for powers to build a competing line of railway through the Stour valley. The railway company only overcame the threatened opposition by guaranteeing the canal company £4 per share on their capital, obtaining, in return, certain rights and privileges, in regard to control and operation, in the event of their having to make good any deficiency in the revenue. This they have had to do every year since 1874, with the single exception of 1875; and down to 1910 the total amount paid by the London and North-Western Railway Company to the proprietors of the Birmingham Canal Navigations, under this guarantee, had beenno less than £874,652. The payments for the years 1906-10 were as follows: 1906, £37,017 14s. 9d.; 1907, £22,262 2s. 7d.; 1908, £44,690 3s. 11d.; 1909, £45,697 10s. 3d.; 1910, £39,720 3s. 9d.
There has been much talk in the past of railway companies having obtained possession of canals in order to "strangle" the traffic on them. It is difficult to see why, except under pressure, railway directors, who count among the shrewdest of business men, should have incurred such substantial obligations towards canals which, at the time, everyone regarded as doomed to extinction before a superior means of transport. It is equally difficult to believe that, having incurred these costly obligations, the companies deliberately "strangled" the traffic on the canals, instead of allowing them to earn—if they could—at least sufficient to cover the cost of their upkeep.
Whatever the precise conditions under which they acquired control, the railway companies were compelled by Parliament to incur obligations in regard to maintenance which have had the effect of continuing the existence of many a little-used waterway that would long ago have become hopelessly derelict if it had remained under the control of an independent canal company, instead of being kept going out of the purse of a powerful railway company in accordance with the statutory obligations imposed by Parliament.
These obligations were, of course, based on the principle of ensuring competition even though canals and railways passed under the same control, the former being supported and kept more or less efficient out of the revenues of the latter. This policy, however, was regarded as only an alternative to another, to which Parliament gave the preference—that, namely, of maintaining, if possible, a still more effective competition by strengthening the position of the canals, now the weaker of the combatants in the economic struggle, and enabling them to continue their independent existence, in preference to seeking absorption by the railways.
In 1845 an Act (8 & 9 Vic. c. 28) was passed, the preamble of which, after alluding to the provision in the Railway Clauses Consolidation Act, 1845, giving power to railway companies to vary their rates, declared that "greater competition, for the public advantage, would be obtained" if canalcompanies, etc., were to have like powers granted to them in respect of their canals, etc.; and the Act therefore conferred upon them the necessary powers for varying their tolls.
The preamble of another Act passed in the same Session (8 & 9 Vict. c. 42) recited the powers given to railway companies as carriers of goods on their own lines, and stated that "greater competition, for the public advantage, would be obtained if similar powers were granted to canal and navigation companies." The Act accordingly extended to them the same powers. With a like object, and again adopting the principle sanctioned in the case of railway companies, the Act further authorised canal companies to make working arrangements between themselves, and, also, to lease their canals to other canal companies, with a view to a better provision of through water routes, and, consequently, a more active competition with the railways. Two years later another Act (10 & 11 Vict. c. 94) was passed, giving the canal companies power to borrow money for the purposes here specified.
In his presidential address to the Institution of Civil Engineers in 1885, Sir Frederick Bramwell, dealing with various matters relating to the transport conditions of the country, said: "This addition to the legal powers of the canal companies made by the Acts of 1845 and 1847 has had a very beneficial effect upon the value of their property, and has assisted to preserve a mode of transport competing with that afforded by the railways."
It is true that the powers to act as carriers were taken advantage of by leading canal companies, who worked up a good business as carriers, although, to a certain extent, with a result directly at variance with the widely accepted view that canals should carry heavy and bulky commodities, and railways the lighter and more compact goods. What actually happened was that the canal companies, as carriers, competed with the railways in the transport of domestic supplies, while the railways still carried most of the coal, iron-stone, etc., for which many people supposed that canal transport is specially adapted.
While, however, as the result of these particular powers, some of the canal companies improved their financial position, and were enabled to maintain a better competition with the railways, very little use was made of the authority given tothem to combine among themselves and establish through routes, converting series of small canals into connected waterways under one and the same control, if not actually owned by one and the same company, as was being so actively done with the railways.
Some action had certainly been taken in this direction. The Birmingham Canal system of to-day is composed of three canal companies which had amalgamated prior to 1846, supplemented by a fourth which joined them in that year. The Shropshire Union, also, is formed of four canal companies originally independent. But these are only exceptions to the rule, for though the Joint Select Committee of 1872, following up what had already been done at an earlier period, recommended that the utmost facilities should be given for amalgamations between canal companies, few of such amalgamations have, as the Final Report of the Royal Commission on Canals and Waterways points out, taken place since the full establishment of railways. Goods sent to-day by canal from Birmingham, for instance, to London, to Liverpool or to Hull will pass over waterways controlled by from six to eight different authorities, according to the route followed.
One must, however, recognise the fact that the securing of uniformity of gauge and the establishment of through routes presented far greater difficulties in the case of artificial waterways than in that of railways. The physical geography of England is wholly unfavourable to efficient cross-country water transport, and this fact, in itself, is sufficient to render impracticable any such scheme of canal resuscitation as that which has been put forward by the recent Royal Commission.
The physical condition of England in relation to the building of canals is well shown in the article on "Canals" published in "Rees' Cyclopædia" (1819) where it is said, in this connection:—
"Great Britain ... has a range of high land passing nearly its whole length, which divides the springs and rain waters that fall to the opposite coasts: we shall call this range dividing the eastern and western rivers of Britain thegrand ridge.... No less than 22 of our canals now do or are intended to pass this grand ridge, forming as many navigable connections between the rivers of the east and west seas!... The Dudley canal crosses this grand ridge twice, the two endsbeing on the eastern side, and the middle part on the western side thereof; the Kennet and Avon crosses the eastern and western branches, into which it divides on the Chalk Hills, west of Marlborough, by which parts of this canal are in the drainage of the west, the south and the east seas! The Coventry Canal, also, by means of its Bedworth branch, crosses the grand ridge twice. The populous and remarkable town of Birmingham is situate on high ground, near to the grand ridge, and has six canals branching off in different directions, either immediately therefrom or at no great distance, and, what is singular, owing to a loop, or sudden bend of the ridge at this place, no less than five of them traverse the grand ridge, either by means of tunnels or deep-cutting."
While the grand ridge here in question presents no difficulty to powerful locomotives, the position is altogether different with canals fed by streams of water that will not flow up-hill. In the case of the Birmingham Canal, specially referred to in the extract just given, there are three separate "levels." The lowest is 209 feet, and the highest 511 feet above sea level. Boats doing the cross-country journey, or passing between Birmingham and the coast, would have to overcome such heights as these by means of locks, lifts or inclined planes.
Here we have a very different proposition from that which is presented by canals on the flat surfaces of Holland, Belgium and North Germany—with, also, their abundant water supplies, from great rivers or otherwise—whereas the upper levels of the Birmingham Canal are kept filled with water only by means of costly and powerful pumping machinery, supplemented by reservoirs.
When the original builders of canals had to cross the grand ridge, or any other elevation over which they required to pass, they sought to economise water consumption and to keep down both cost of construction and working expenses by making the locks on the top levels only just large enough to pass boats of a small size. The dimensions of any boat making a through journey are thus controlled by those of the smallest lock through which it would require to pass. On lower levels where the water problem did not arise—or not to the same degree—the locks could well be made larger, to accommodate larger boats engaged only in local traffic.