Railway Rationalization and Profits (1932)

From the December 1932 issue of the Socialist Standard

Ten years ago the British Railway Companies were amalgamated into four large groups, with a view (so it was said at the time) to more efficient working, better services, abolition of competition, etc., and greater profits.

During that period we have seen a rationalising process take place which has been of equal intensity with that in many industrial concerns, and the effects of the grouping are now, after ten years, beginning to be only too manifest to the railman and to “the man in the street.”

This policy has been carried out with the usual plausible tales of company poverty and the necessity of working shoulder to shoulder with the employers, as witness Sir Josiah Stamp’s famous letter to the L.M.S. staff, two or three years ago, asking the men to conserve stores and to work hard in this trying time. Also it has been well boosted for some years that traffic was falling and that things were going from bad to worse. This was, of course, “owing to the depression” and to road transport. Many large works, like Newton Heath and Crewe Steel Works and others, have been permanently shut down. Men have been stood off, and reduced in grade, and trains are now made up to greater weights. Various appliances have been brought into use to make men superfluous, and many who have been discharged have given long years of service. Also, last year, a reduction of pay was forced on the wages staff “to help out in this hour of trial.” And now the Companies demand another cut, basing their claim on “the decline of dividends on the ordinary shares”: (Reynolds’, October 23rd, 1932).

It is true that in the last year ordinary stock dividends fell, and that profits are rather lower, but not to the extent the Companies would have us believe. During the last five years, in spite of the depression, the profits have been well maintained until 1931. The following tables, taken from Reynolds’ (October 16th, 23rd and 30th, 1932), show the total dividends paid by three Companies on the various classes of stock in the past five years.

Southern Railway Dividends
(Figures represent thousands of pounds)

	1927	1928	1929	1930	1931
Loan & Deb.	1,754	1,754	1,754	1,753	1,753
Guar. & Pref.	2,501	2,601	2,601	2,676	2,751
Ordinary	2,009	2,009	2,167	1,773	1,103
Total	6,264	6,364	6,542	6,202	5,607

G.W.R. Dividends

	1927	1928	1929	1930	1931
Loan & Deb.	1,549	1,550	1,550	1,550	1,550
Guar. & Pref.	3,348	3,348	3,348	3,348	3,348
Ordinary	2,972	2,123	3,220	2,351	1,288
Total	7,869	7,021	8,118	7,249	6,186

L.N.E.R. Dividends

	1927	1928	1929	1930	1931
Loan & Deb.	3,910	3,985	4,033	4,083	4,255
Guar. & Pref.	7,203	7,203	7,203	7,203	5,129
Ordinary	159	106	1,271	106	0
Total	11,272	11,294	12,507	11,393	9,384

It will be seen that, up to 1929, the profits showed a tendency to increase, but since then, although the dividends on Ordinary shares have fallen, the total distribution of profits was not far short of what it was before that year, and is by no means a slump, and not a bad bill at all for a “period of depression” and “crisis.”

So much for the profits. Now what about the losses due to road competition? The “competition” shows signs of becoming more apparent than real, for all this time, quietly behind the scenes, the Companies have acquired controlling interests in many of the principal road companies, both passenger and goods, and in many cases openly run in alliance with them. Moreover, the rail companies have taken to the road themselves, under their own name and using their own stock in many places. There is obviously no danger of the Companies having to “sell up” just yet. All this propaganda of theirs is largely part of an attempt to force worse conditions on the railway workers.

Arising out of the redundancy of labour comes the cry of compensation for loss of employment and being “degraded.” An inquiry into this and other matters has recently taken place at the Law Courts, and the railway managers stated their attitude to this demand in no uncertain terms. It should be here stated that the companies have “guaranteed” that men who were “permanent” in July, 1931, would not be discharged as a result of the pooling. Sir Josiah Stamp, of the L.M.S., stated at the Law Courts inquiry that “if things improved on the railways, it could be reasonably supposed this guarantee would be enlarged” (Daily Herald, November 3rd, 1932).

But the companies’ advocate, Mr. Bruce Thomas, K.C., was frankly hostile to any further dabbling, and Sir R. Wedgwood, of the L.N.E.R., considered any such thing as “unnecessary and undesirable.” This was to the Union demand for an outside arbitrator re discharges owing to the pool, and Sir W. Jowitt, on behalf of the Unions, summed up the position by saying that the companies wished to be plaintiff and judge at the same time.

But if the Unions gain their point, what then? Have they not had enough of “independent chairmen” and “arbitrators” and “umpires” to know what to expect? Is it not a lot of useless tattle? The only thing certain seems to be 38s. per week for the railman’s basic rate. Why not set about looking for something better? Namely to organise for Socialism, and for society to run its own industries for its own benefit? It will take no more trouble than all this niggling and quibbling. And the result, not 38s. per week and still insecurity, but a system whereby all can lead a happy and care-free existence, surrounded by plenty.

C. V. R.