Faced by the prospect of Nationalisation after the Labour Party victory in 1945, the four main railway companies, battered by six years of war, lack of investment and a backlog of maintenance, reacted in different ways. At first, the GWR, virtually unscathed by the 1923. Grouping and led by their brilliant General Manager, Sir James Milne, did nothing, and hoped that the problem would go away. The Southern, secure in hefty sums of passenger revenue from an economic electric suburban network and growing revenue from Southampton Docks, assumed that the Government would pay a fair price, and awaited detailed proposals with equanimity, as did the LMS. This last had always been too big to be managed effectively, without some areas like station maintenance missing out in respect of management attention.
The LNER was different. Financially it was much weaker than the other three, it had been forced to include the overcapitalized and revenue weak Great Central, on the grounds that the massive revenue from the heavy freight traffic carried by the North Eastern would compensate. The other two English components were sound but hardly financial giants. The Great Eastern had a heavy suburban passenger business, but inefficiently steam hauled, hardly any heavy freight flows, apart from coal coming down the GN GE joint line, and a continental traffic, greatly diminished in the aftermath of WWI, even more so after WW2. The GNR served he agricultural areas where traffic, both passenger and good s was sparse, bur apart from that could be described financially as a good “second rank” railway.
The prospect of the NER being a financial crutch for the others lasted only a matter of months, before the post WWI recession began decimating freight revenue, followed by the depression of the 1930s making matters even worse. The LNER Directors became concerned that their shareholders would be poorly compensated by nationalization, the more so when it became apparent that compensation for arrears of maintenance were likely to be paid at 1939 prices, not the grossly inflated costs of the Attlee Austerity Era. (The money being required to develop a British Atomic Bomb, start paying the Americans for “Lease Lend” during the war, pay for a war in Korea and provide free wigs and false teeth to the masses).
Before the war the “British Railways” – the first time that the tem was used, had initiated a “Square Deal” campaign aimed at securing fairer competition with the road traffic industry.
The point being that despite the Road Fund Licence, road hauliers had their track, signalling and basic infrastructure subsidised by the taxpayer, while the railways bore all these costs themselves. This pamphlet was a return to the same theme, suggesting that as an alternative to full nationalization, Government should take over the infrastructure, including the arrears of maintenance, and the railway companies should pay rental or tolls for access to the track.
An oddly prophetic idea, for following a false start with Railtrack, this is broadly the system which we have today, with state-owned Network Rail looking after the infrastructure and the train operators paying for access. One wonders how many wasted billions would have been saved if this option had been taken in 1948.
By the way, the LNER Director’s fears for their shareholders were amply justified. A holder of £100 worth of Great Central preference shares in 1922, would get only £20 worth of low-yield British Transport Stock in 1948…