OUR RAILWAYS AND THE INVESTORS

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ON another page will be- found a summary of some of the thief pbints in the speeches of the Chairmen of the London Midland and Scottish and Southern Railways at the annual Meetings held last week, and so far as they demonstrate that the systems are being well maintained, that there is efficiency in working, and that gross receipts are expanding as a result of trade activity, they will undoubtedly be found satisfactory both by the public and by the stockholders.

Nevertheless, I am inclined to think that the latter would desire that at these annual meetings there should be a clearer recognition of the fact that stockholders have come to the meeting to learn more directly what are the prospects of these conditions being translated into terms of dividends. It is true that both in the case of the L.M.S. and the Southern net receipts showed a material improvement last year, and that the Ordinary stock of the former line received a dividend of z I per cent., being the first distribution since '1932, while in the case of the Southern line there was a dividend of 4 per cent. on the Deferred Ordinary Stock, being the first distribution since 1930. Even so, how- ever, these are very small distributions after so many years of waiting, and the stockholders of the L.M.S. Railway would scarcely be cheered by Sir Josiah Stamp's terse sum- ming up of the situation when towards the end of his speech he said : " I see no reason why 1937 should not be a still further advance, and this should reflect itself in our grins receipts. But whereas our receipts per unit of work done do not rise, but may be even still further depressed by competition, our costs per unit - of work done are going up. For example, on material purchases alone we can see three-quarters of a million additional in price advances. Although economies in methods of operation will continue to fructify and to offset this factor to some extent, it is becoming increasingly difficult for us to get back to a figure of net receipts, compared with 1929, on a gross traffic volume equivalent to that year. But in the way in which our recovery is taking place we can compare with the railways of any other countries of the world, though many of our difficulties are greater."

I am far from underestimating the difficulties with which our railways have to contend, but I cannot help. thinking that in the matter of wages, for example, it might have been well if the railway Chairmen at the recent meetings had discussed the matter a little more fully with the stockholders, EVIDENCE OF EFFICIENCY.

On the other hand, the Chairman of the L.M.S. and the Chairman of the Southern line are to be congratulated upon the ample evidence put forward with regard to the efficiency of their respective systems and the manner in which those companies are fulfilling the requirements of the pablic. The organisation of that great undertaking, the London Midland and Scottish, would seem, under the control of Sir-Josiah Stamp, to be as near perfection as can be reached, and the management must be congratulated upon the manner in which over a period of years of depression reduced revenue has been matched by skilful economies without in any way impairing efficiency, and, great as is the undertaking, it is evident that every part of the System it" controlled• with a watchful eye both for efficiency and economy. In such huge concerns it must necessarily be that even such matters as unfavourable weather have a surprising effect not merely on. receipts but on expenditure. Thus, Sir Josiah Stamp mentioned in the course of his speech, that the unfavourable weather of 1936, with fogs, snowstorms and floods in some parts of the system, involved additional hours of work, representing 40 per cent. above the preceding three years' average, such extra outlays exceeding L200,000. In one period of four iveeks, said Sir Josiah, ".when our gross receipts improved on the previous year by some £80,000, nearly the whole went in- additional expense through weather conditions." Roan COMPETITION.

No small part of the speech of the Chairman of the London Midland and Scottish Railway was devoted to the question of road competition, and, indeed, not only the. L.M.S., but (Continued on page 452.)

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(Continued from page 450.) other railroads too have reason to be grateful to Sir Josiah Stamp for his clear grasp of this most difficult problem and his energy in dealing with it. While fully recognising the legitimate claims of those engaged in the carriage of goods by road, Sir Josiah Stamp is able to put his finger upon the point where, in his opinion, the claims are inconsistent with the justice to which the railroads are entitled, and not the least interesting part of his references to the question of the road competition was contained in his mention of the challenge by Sir William Beveridge of the policy of road regulation con- sidered from the standpoint of possible war conditions. The Chairman of the L.M.S. Railway said : " Sir William Beveridge would have no such restrictions on the expansion of heavy road vehicles to fit the economic conditions of peace, because freedom from all restriction would be an additional safeguard in time of war. The Act should, therefore, he thinks, be revised in the light of war policy. Now a stiff price can properly be paid for war preparation in time of peace. But that price ought to be paid by the right people, and that price for wartime ought never to be chaos in peace time. There is no reason why a national war insurance should be paid solely by railway shareholders and the coal and heavy industries and the other road users. Moreover, any- thing that weakens the railways financially (and, therefore, physi- cally) in time of peace is a far greater risk in time of war, than can be made good by a mere surplus of road vehicles. Sir William Beveridge has the wrong end of the stick in this matter. In an emergency he wishes to invoice the potential surplus of expansion, but though it is of crippling importance in time of peace, it is quite small in relation to the main corpus of 450,000 vehicles in the country (about which little question arises), and the number in question by Sir William would be available by mere deflection from other uses. He has remedy and disease in the wrong proportions."

Without holding any brief for the railway companies, I cannot help thinking that, apart from the question of fairness or otherwise of road competition with the railways, even the man in the street has some reason to complain not only of the traffic congestion of the main roads of the country, but of the unsightly nature of the vehicles responsible for the congestion, while the taxpayer, if he happens also to be a railway stock- holder, may well be exasperated at the extent to which he is called upon to contribute to the repairing of the damage to the roads occasioned. by those who are competing for _traffic more suitable for being carried over the metals than over ihe public highways.

SPEED. In view of the prospect of ever-increasing expenditure, I am glad to see that Sir Josiah Stamp, while referring to increased speed on the railways, made it quite clear that there was to be no kind of wastage such as would be involved in a mere competitive race (with the L.N.E.R.) to the North. On the contrary, he showed that there was the closest co-operation between the two systems, and it is evident that nowadays, where the question of increased speed is being considered, it is from the standpoint of attracting passenger traffic, for it must be remembered that in some of the long distances it is the question of the speed of the railways which is still able to triumph over the motor-car. In this matter of speed and, indeed, in almost every detail of the working of the railway, Sir Josiah Stamp was able to convey the conviction that whatever might have to be faced. in the way of increased wages, there would be no wastage in working expenses as a whole.

" SOUTHERN."- ELECTRIFICATION RESULTS.

Quite the outstanding feature of the very able address by Mr. R. Holland-Martin to - stockholders of the Southern Railway was the revelation of the excellent results which have followed the electrification of large portions of the CoMpany's system. Each year the evidence of the success of electrification from the revenue point of view seems to become more apparent, and while during the past year the passenger receipts between London and stations outside the electrified area showed an increase of £80,000, the increase in receipts in the electrified area was £245,000, and the number of passengers in the area increased by over 81 millions. And again, when com- paring the position with 1932, the Chairman of the Southern Railway stated that the increase in the number of passenger journeys throughout the system was 43,000,000, out of which the electrified area claimed 35,000,000, representing a growth in the number carried in the electrified area of 15 per cent. and an increase in the passenger receipts in that area of no less than £1,054,000, or nearly 17 per cent. Passenger travel across the Channel increased, and, 'as indicating the many influences which can affect adversely or. otherwise the revenues of Transport companies, it is interesting to note that Continental traffic has increased since the devaluation of the French franc in the autumn of last year.

ACTIVITY AT THE DOCKS.

A further feature in Mr. Holland-Martin's address was the reference he was able to make to the ever-increasing activity of Southampton Docki. Moreover, though, of course, the matter was examined largely from the standpoint of the revenues accruing to the Southern Railway, it is also a matter directly affecting the trade of the country as a whole. It appears that the number_ of ships in and out of the Docks during the year showed an increase of just over 9 per cent., while the tonnage of shipping entering the Docks was the highest ever recorded, as was also the number of passengers dealt with. Contributing influences to the increased traffic were the improving conditions in the North Atlantic passenger trade and the introduction of larger and faster ships into the Union Castle Mail fleet. In 1935 the Port of Southampton claimed- 41 per cent. of the ocean passenger traffic of the United Kingdom, and Mr. Holland-Martin expressed confi- dence that when the figures for 1936 are known, the claim of Southampton would be even greater.

A HOPEFUL OUTLOOK.

As regards the future, the Chairman of the Southern Railway was able to speak in very hopeful terms, being no doubt partly encouraged by the prospect of increased traffic this year in connexion with the Coronation celebrations and with the great Naval Review at Spithead in the month of May. Moreover, there is no doubt that the Southern Railway is reaping the reward of its enterprise in recent years,- both

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as regards electrification of large parts of the system and also as regards the increased attention given to the requirements of passengers in the matter of comfort, speed and punctuality. In view of the success which has followed upon the electrifica- tion of sections of the system, it is not surprising to learn that the process of electrification is to be extended to other parts of the line. During the next five years practically the whole of the amount of the Loan recently obtained from the Railway Finance Corporation (about k6,000,000) will be spent in electrifying the Company's system from London to Portsmouth and certain other sections, including the line from Staines to Reading and Sevenoaks to Hastings, via Orpington,