Did the Management Ever Control Britain's 19th Century Railways?

Alfred Chandler

The rise of what Alfred Chandler called the ‘visible hand’ of management has dominated the business history literature for forty years. Simply put, Chandler argued that managers came to dominate American business in the late nineteenth and early twentieth century. As technology was introduced to companies and markets expanded, their processes of distribution and then coordination became more complex as they increased in size. Consequently, this generated a need for better administrative control of the organisations’ activities, leading to the rise of the ‘visible hand’ of management. Indeed, as managers grew in number within firms, they increasingly steered their destinies, wrestling control of corporate strategy from companies’ shareholders, financiers and directors. Chandler called this ‘managerial capitalism.’[1]

In the United States this process occurred first in the railroads. When faced with challenges such as safety concerns, then the increasing volume, speed and complexity of traffic on the line, companies quickly developed hierarchies of railway managers to coordinate their activities, leading to the rise of the ‘visible hand.’ Ward argued that a situation had developed on the Pennsylvania Railroad by 1873 where ‘paramount executive authority had emerged’, directors were by then ‘pliant acceders,’ and shareholders were virtually impotent.[2] Indeed, there is no doubt that Chandler admired railroads, such as the Pennsylvania, where managers had seized control of the organisation, arguing they were the best managed and innovative. They adopted high-level strategic direction, with considerable authority delegated to operating units and complex administrative practices were developed.[3] Indeed, Zunz also argued similar of the Chicago, Burlington and Quincy Railroad, which he considered an exemplar of good management practice because it was controlled by the company’s management class.[4]

The question, therefore, is to what extent this process was replicated in the British context? How much control did British railway managers have over their companies’ directors and shareholders in the nineteenth century, and, ultimately, their destinies? Chandler argued that because of the nation’s smaller size British railway managers were challenged less than their American counterparts to develop new and innovative management techniques.[5] Therefore, this possibly implies that British railway managers did not secure the same level of control as some American managers. However, Channon countered this by arguing that British railway managers were challenged in different ways because of the country’s high-density, expensive and intensive network, which was, unlike in the United States, complete in its operating and physical details in a much shorter time period after the industry’s establishment.[6] Therefore, while not ruling out a rise of the ‘visible hand’ of management, this may suggest that a different pattern of managerial development occurred within British railways. Nevertheless, neither of these perspectives really answered the question of whether there was a rise in the ‘visible hand’ of management in the British railway industry in the nineteenth century.

No comprehensive history of British railway management before 1914 has been written. Therefore, I have had to compile what I know about the rise of the ‘visible hand’ from case studies. However, some historians have broadly attempted to assess when the railways’ management class, particularly within larger companies, came to dominate the industry’s direction. Cain argued that General Managers, who were usually at the top of railway companies’ hierarchies, were the most important decision-makers in the industry by 1870.[7]  Channon made a similar claim, stating that before 1870 managerial ascendency ‘cannot be assumed.’[8] I believe both were wrong, and using a number of case studies I will suggest that management cannot be said to have ascended into a position of control before the 1900s.

Richard Moon

Terry Gourvish’s book on Mark Huish, the London and North Western Railway’s General Manager between the company’s formation in 1846 and 1858, is an enthralling text. It relates the story of a railway manager who during his administration and after his death was considered ‘unscrupulous, dictatorial and Machiavellian’; controlling the companies' policies. At face value this would suggest he was the first ‘managerial capitalist’ in Britain’s railway industry. Yet, Gourvish’s research showed the reverse. He argued that while Huish had more control of the company’s policies than his contemporaries, he did not possess the ‘dictatorial’ influence in decision-making often ascribed to him.’ Indeed, his resignation was forced on him 1858 as he did not satisfy the board’s requirements regarding inter-company diplomacy.[9]

Archibald Scott

Indeed, it was the career of the man who instigated  Huish’s resignation, LNWR director Richard Moon, that truly shows that the ‘visible hand’ of management did not really control policy on the British railway network until long after it had on many American railroads. Moon was appointed chairman of the company in 1861 and stayed in the post for thirty years. Before his ascendency becoming chairman, he had a reputation for taking a highly detailed interest in most of the company’s operational affairs, even when they were beyond his remit. Indeed, most railways’ boards met twice monthly, with directors meeting in committees the day before. Yet, Moon would be active in the company’s affairs every day of the week. Thus, when made chairman his controlling instincts were let loose. His biographer, Peter Braine, described him as being ‘not only a managing director, but also effectively his own General Manager,’ throughout his chairmanship. [10] Indeed, the company’s General Manager between 1858 and 1875, William Cawkwell, was very much under his and the board’s control.[11]

But directors having control of companies’ strategic direction was not unusual in the period. Lord Salisbury, chairman of the Great Eastern Railway between 1868 and 1871, looms large in the company’s history. On his appointment the GER was in chancery. Yet, he successfully turned it around and it began paying dividends again in the 1870s.[12] On the London and South Western Railway, as I will explain in my thesis, policy was dominated by directors until the 1881 when they gave the General Manager, Archibald Scott, more ‘general control’ over the concern’s affairs.[13] However, even then he was still under their control and did not have a decisive role in corporate decision-making. Lastly, on the Great Northern Railway in the 1850s, 60s and 70s it had directors who ‘thought they knew more about the business than the company’s senior officers.’[14] Therefore, this would suggest that the dominance of company boards was still present in the industry as late as the 1870s.

Indeed, from the 1860s there also appeared controlling positions within companies which would now be described as managing directorships. In most cases the individuals taking these positions were ex-managers, who on retirement became controlling directors. The most prominent examples of this were Edward Watkin and James Staats Forbes. They were fierce rivals, with Watkin chairing the Manchester Sheffield and Lincolnshire (1864-1894), South Eastern (1866-1894) and Metropolitan Railways (1872-1894); while Forbes was chairman of the London, Chatham and Dover (1873-1898) and Metropolitan District Railways (1872-1901). Both men had served as railwaymen and then had moved onto railways’ boards where they dominated policy.[15] The other example of this was the managing directorship of the Daniel Gooch on the Great Western Railway. Gooch had been the company’s Locomotive Superintendent between 1837 and 1864, and when he resigned took up a position on the board. He then became the company’s chairman, and had a position akin to a managing director between 1865 and his death in 1889.[16] Furthermore, James Ramsden on the Furness railway also was in such a position between 1866 and 1883.[17]

Myles Fenton

But by the late 1880s the dominant power of railway managers was coming through more widely within the British Railway industry. Between 1885 and 1897, as my thesis will show, Charles Scotter was the dominant General Manager of the London and South Western Railway, controlling almost all aspects of policy, large and small. Cornelius Lundie, General Manager and Superintendent of the Line of the Rhymney Railway between 1858 and 1904, ran the railway as he wished with little or no reference to the board’s interests.[18] Even Watkin  relied on the General Managers at each of his companies for their safe and efficient operation. They were the SER’s Myles Fenton, William Pollitt at the MSLR and John Bell at the Metropolitan.[19] Indeed, Hodgkins argued that because Pollitt and Bell were rivals a proposed link between the MSLR and Metropolitan in the 1890s would have been difficult to arrange. Therefore, this suggests that despite Watkin’s domineering chairmanship of his companies, his chief executives still heavily influenced their railways’ policies.[20]

George Gibb

These cases were, however, only the start of a shift of towards the absolute control of the ‘visible hand’ of management within Britain’s railways. In 1891 George Gibb was appointed General Manager of the North Eastern Railway. Gibb reformed the company’s operations and, through dominating the company’s board and staff, dragged it into a position where experts acknowledged it was a model of good management practice.[21] But Gibb was just the first of a new breed of railway executives. Indeed, as a crisis hit the industry around 1900, as passenger, goods and revenue growth stalled, the cost of fuel and materials increased, and railway securities became less favoured as investment opportunities, the role of reversing  the industry’s financial situation fell onto the shoulders of executives.

After 1900 a raft of new and innovative managers came to the fore within British railways. Sam Fay, an ex-LSWR employee, became the Great Central Railway’s General Manager in 1902, and through his dynamic leadership transformed it from being a poorly performing to concern into one that, while never rich, made great advances and innovations in operational practice.[22] On the Midland Railway Cecil Paget, the company’s Chief Operating Officer, devised a whole new method of train control that added greatly to the company’s operating efficiency,[23] reducing delays to freight trains from 21,869 hours in 1907 to 7,749 hours in 1913.[24] Lastly, in 1912 Herbert Walker became the LSWR’s General Manager. Through dominating the company’s directorate he reformed its management and introduced electric traction onto its ailing suburban network.[25]

Of course, not all railways had General Managers that were as dynamic as these three. However, generally by the early twentieth century executives controlled the strategic direction of most of the largest companies within the British railway industry. Furthermore, the process of the rise of the ‘visible hand’ was also helped, as my thesis will relate and as Channon discussed,[26] by directors having less time to dedicate to the companies they served. Before 1900 the many took an active interest in their railway companies as they had little else to occupy their time. However, from around 1900, as the British corporate economy grew, they took on other external responsibilities, such other directorships. Thus, large numbers of directors were occupied by these activities, leaving vacuum of control into which railway executives could step.

Herbert Walker

Therefore, it is not surprising that on the formation in 1912 of the Railway Executive Committee, established to organise Britain’s railways in wartime, all its members were General Managers of the country’s largest companies. Indeed, the diminished role of the railway directors in the administration of the industry by that time was reflected by the fact that not one was present on the REC. Consequently, Britain’s railways in World War One was completely managed by the ‘visible hand’ of management,[27] the final proof that it had secured strategic control of the industry by 1914.

Overall, this survey [tentatively] disproves Channon and Cain’s claims that railway managers were universally important to British railways’ policies by 1870, and there was much variance in who controlled their direction. Overall, in the contrast with experience of the American railroads, the rise of the ‘Visible Hand’ of management occurred relatively late in the British context; only truly emerging after 1900. But why this was so?

I think that Chandler was correct to some extent in arguing that British railway managers were challenged less than their American counterparts because of the country’s smaller size. Despite the dramatic traffic growth throughout the century, the smaller size of British railway companies meant that there was never a point until after the 1890s when the internal administrative control required by them was beyond the ability of one director or their boards to organise. Indeed, the highly centralised management structures of British railway companies throughout the period, where decisions could be made by a small group of directors or managers at the top of the hierarchy,[28]  meant that dynamic and knowledgeable individuals, irrespective of whether they were directors or a managers, had the possibility of controlling their railways. Thus, this is why it is unclear before 1900 if management had 'ascended' within the industry. Indeed, one factor in an individual controlling a railway in the period was his personality; and all of the men mentioned were certainly characters. 

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[1] Channon, Geoffrey, Railways in Britain and the United States, 1830-1940: Studies in Economic and Business History, (Aldershot, 2001), p.5

[2] Ward, James A., ‘Power and Accountability on the Pennsylvania Railroad, 1846-1878’, Business History Review, XLIX (1975), p.58

[3] Channon, Railways in Britain and the United States, 1830-1940, p.5

[4] Zunz, Oliver, Making America Corporate: 1870-1920, (Chicago, 1990), p.47

[5] Chandler, Alfred D., Scale and Scope: the Dynamics of Industrial Capitalism, (London, 1990) p.253

[6] Channon, Railways in Britain and the United States, 1830-1940, p.29

[7] Cain, P.J., ‘Railways 1870-1914: the maturity of the private system,’ in Freeman, Michael J. and Aldcroft, Derek H. (eds.) Transport in Victorian Britain, (Manchester, 1988), p.112

[8] Channon, Railways in Britain and the United States, 1830-1940, p.44

[9] Gourvish, T.R. Mark Huish and the London & North Western Railway, (Leicester, 1972), p.167-182

[10] Braine, Peter, The Railway Moon – A Man and His Railway: Sir Richard Moon and the L&NWR, (Taunton, 2012), p.477

[11] Channon, Railways in Britain and the United States, 1830-1940, p.44

[12] Barker, T.C., 'Lord Salisbury, Chairman of the Great Eastern Railway 1868-1872' in Marriner, S., Business and Businessmen: Studies in Business, Economic and Accounting History, (Liverpool, 1972)

[13] The South Western Gazette, December 1881, p.2

[14] Simmons, Jack, The Railway in England and Wales 1830-1914, (Leicester, 1978), p.247

[15] Gourvish, T.R., ‘The Performance of British Railway Management after 1860: The Railways of Watkin and Forbes’, Business History, 20 (1978), p.198

[16] Cain, P.J., ‘Railways 1870-1914: The maturity of the private system’, in Freeman, Michael J. and Aldcroft, Derek H. (eds.) Transport in Victorian Britain (Manchester, 1988), p.113

[17] Simmons, The Railway in England and Wales 1830-1914, p.247

[18] Simmons, The Railway in England and Wales 1830-1914, p.247

[19] Gourvish, ‘The performance of British railway management after 1860’, p.188-191

[20] Hodgkins, David, The Second Railway King: The Life and Times of Sir Edward Watkin, (Melton Priory, 2002), p.609

[21] Irving , R.J., The North Eastern Railway Company: An Economic History, 1870-1914,  (Leicester, 1976)  p.261-264

[22] Dow, Andrew, ‘Great Central Railway,’ The Oxford Companion to British Railway History, (1997, Oxford), p.191-192

[23] Burtt, Philip, Control on the Railways, (London, 1926), p.144-151

[24] Edwards, Roy, ‘Divisional train control and the emergence of dynamic capabilities: The experience of the London, Midland and Scottish Railway, c.1923-c.1939, Management and Organisational History, 6 (2011), p.398

[25] Klapper, C.F., Sir Herbert Walker’s Southern Railway, (London, 1973), p.33-76

[26] Channon, Railways in Britain and the United States, 1830-1940, p.187-188

[27] Pratt, Edwin A., British Railways and the Great War: Organisation, Efforts, Difficulties and Achievements – Vol. 1, (London, 1921), p.40-50

[28] Bonavia, The Organisation of British Railways,p.17-18

When Two Transports Go To War... Trams vs Trains in the Late 19th and Early 20th Centuries

In the late 19th century the number of passengers that Britain's railways carried increased so rapidly that the companies’ infrastructure became desperately stretched. Indeed, I have described previously the London and South Western Railway’s troubles in adapting to this traffic growth; and how the company’s general manager was forced to resign because of complaints in The Times regarding the quality of the company’s service. (Found HERE) In 1870 British railways carried 336,545,397 passengers. By 1880 this had risen to 603,885,025, an increase of 79.44%. In 1890 817,744,046 passengers travelled, a 35.41% increase. Lastly, in 1900 British railways conveyed 1,142,276,686 individuals, equating to further growth of 36.69%.[1]

With such growth, and with the promise of consistently increasing passenger revenue, it is no wonder that in the late 19th century railway directors and managers were happy to make continual investment in improving their infrastructure, rather than hold back and cause overcrowding, poor services and slow train speeds. Thus, the railways invested heavily in improving stations, yards and sidings to improve their services and to accommodate future traffic increases. Furthermore, the Manchester, Sheffield and Lincolnshire Railway’s extension to London, started in 1895 and opened in 1899, could not have been initiated without the company’s managers judging that traffic would continue to increase, unabated. Indeed, despite criticism at the time that the extension was unnecessary, they perceived that it would be highly profitable in the future.[2]

Then, in 1900, the unimaginable happened and passenger (along with goods) traffic stopped growing rapidly on Britain’s railways. Between 1870 and 1900 the number of passengers conveyed grew by an average of 7.98% per year. Yet, in 1910 1,248,792,604 passengers were conveyed, a growth of only 9.32% over the decade. Indeed, the average yearly traffic growth between 1900 and 1910 stood at only 0.93%.

This change in the speed of traffic growth was because the street trams started to attack the railways’ short-distance third class passenger traffic. The increased numbers of railway passengers between 1870 and 1900 had principally travelled by third class accommodation. In 1870 they constituted only 67.88% of the total passengers conveyed in the country. Yet, by 1900 90.67% of all railway passengers travelled third class. Subsequently, many of the improvements to the infrastructure of the British railway network after the mid-1880s, and all the expectation of increased revenue and potential profits from future projects, had been built on this low-paying, short-distance, class of passenger.

Electric trams had been introduced into Britain in 1883 when Magnus Volk had constructed the Brighton Tramway, which still exists today. By 1885 the first street tramways were installed in Blackpool. Yet, it should also be remembered that there was not just an increase in electric trams in the period, and horse-drawn trams also played a significant role in urban transport. Thus, after 1885 the trams spread like wildfire. While I have not found statistics for tram mileage growth before 1900, between then and 1910 it grew from 1,041 to 2,434 miles, a 133.81% increase.[3] Thus, by 1896 street tramways in Britain carried 759,466,000 passengers. Yet, by 1910 this had risen to 2,907,177,000, an overall growth of 282.79% or an average 20.20% per year. Indeed, it was in 1900, the year in which passenger growth on the railways slowed, that more individuals travelled by tram than bought third class railway tickets.[4]

Short distance travellers had always existed between 1870 and 1900, and, as Cain pointed out, the majority of commuters did not use public transport. For example, by 1900 in South London only 1 in 10 individuals used public transport to get to work.[5] Yet, as the tram network spread, and access to them was widened in urban areas, their speed, comfort and reasonable ticket prices provided people with a service that the railways could not match easily for very good reasons.

With fixed routes, aged technologies and heavy costs to modify the infrastructure, the railways were in a very difficult position. The heavy investments in infrastructure of the 1890s, which made sense at the time as the railways had little competition in the transport market, looked far more foolhardy after it. None of them were made to deal with the new challenge to their business and most were to address capacity problems or make further profits. Indeed, many investments in improving stations and yards for future use were found to be unnecessary after 1900 as traffic growth slowed. Furthermore, after 1895 railway profitability, through rising costs, government legislation and poor management practices (See my PhD, when finished), had declined significantly, and after 1900 the companies found it hard to raise enough capital to respond to the tram challenge through defensive investment.

Yet, faced with calls from passengers after 1895 for faster, more frequent and more comfortable services, the railways developed responses to the challenge of the trams. These will be covered in part 2.

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[1] Board of Trade Returns.
[2] Harris, Michael, ‘The Great Central Railway,’ The Oxford Companion to British Railway History, (Oxford, 1997), p.188-189
[3] Munby, D.L. and Watson, A.H.(eds.), Inland Transport Statistics, Great Britain, 1900-1970, (Oxford, 1978) p.338
[4] Board of Trade Returns.
[5]Cain, P.J., ‘Railways 1870-1914: The maturity of the private system,’ in Freeman, Michael J. and Aldcroft, Derek H. (eds.), Transport in Victorian Britain, (Manchester, 1988), p.101

Did the Great Central Railway Indoctrinate Children?

Probably the weirdest thing I have come across in any railway company staff magazine was ‘Auntie Agnes,’ who wrote for the staff magazine of the Great Central Railway, the Great Central Railway Journal (GCRJ). This wasn’t an agony aunt column for railway workers, nor was it an article on gardening tips. Rather, her column was for railway employees’ children and, to my knowledge, was an anomaly amongst the pages of railway company staff magazines more generally.

The GCRJ started in June 1905, and was, in some sense, child of the London and South Western Railway’s (L&SWR) own staff magazine the South Western Gazette (SWG). Both had been created by Sam Fay, who had been an L&SWR Clerk in 1881, when he had started the former, but by 1905 was General Manager of the GCR, taking the staff magazine concept with him.[1] Yet, while the SWG was set up for the benefit of the L&SWR’s ‘Widows and Orphans Fund,’ there was seemingly no similar justification for setting up the GCR.[2]

By 1905, staff magazines were no longer simply being published by the employees, for the employees, as the SWG and Great Western Railway Magazine had been. Amongst all the sports, entertainment and staff news, staff magazines were used by railway company managers to inform their employees of their priorities and agendas, and to educate them. This clearly evident in the first issue of the GCRJ, where there were articles under the headings of ‘Control of Engine Working,’ ‘The Washington Railway Congress,’ ‘Death of an Old G.C. employee,’ ‘Locomotive Notes’ and ‘American Methods of Railway Inspection.'[3] Yet, the ‘Auntie Agnes’ articles also show that the world of the railway worker was not something that ended when he clocked off. Rather, his family were ‘railway families,’ and the home and workplace were intrinsically bound up together. However, it is surprising that while the kournal had something for the children of railway workers, there was nothing for their wives.

The first edition of the GCRJ carried under the heading ‘Children’s Page,’ the first letter from Auntie Agnes. In the corner was the note, ‘for three months we will try the experiment of a children’s page, and if appreciated will make it a permanent feature.’ Yet, its continuation throughout the first year, indicates that it was deemed a success.

In the first letter to the children, Aunt Agnes, whose real identity is unknown, asked that the children tell her about themselves. Information was requested on their ‘pets, what you like to do best of all, your favourite games, how you spend your holidays or anything you think will be of interest to other little boys or girls.’ They might, as a result, have their letter printed, space permitted. All letters were to be sent to ‘Auntie Agnes, c/o the Editor, Great Central Railway Journal, Central Station Leicester.’ There had already been one letter though, and the first contribution (shown), was from a girl by the name of ‘bubs’ who was aged 5.

Agnes finished her column by talking about how they must have enjoyed Whitsuntide and were looking forward to the upcoming holidays.[4]

However, Agnes did not miss the opportunity for a little promotion of the railway company. In the July edition one of her new ‘nephews,’ as she called them, had won a scholarship and was about to go on holiday to Yorkshire. ‘Of course,’ she said, ‘he will travel by our railway, the GCR, which you all know is the quickest and best in the North.'[5] It strikes me that that this statement chimed very well with the overall educational nature of the journal.

In later entries Aunt Agnes described the letters that she had received, and in the July edition she was inundated with stories of the children’s holidays[6] In August, she received poems from one girl who had taken them from a new book she had received called Alice in Motorland. This book was apparently much like Alice in Wonderland. From September onwards, Aunt Agnes also described parts of her trip to America and Canada.[7] She wrote a number of letters described her train journey from Boston to California[8]and what she did while she was there[9] She also answered many questions from her ‘nieces and nephews’ as to what the United States was like[10] True to form, she also never missed an opportunity to compare North American railways with the Great Central, consistently referring to the latter as ‘our railway.’ Indeed, at the current time I have not got images of the GCRJ beyond June 1906, and it is unknown as to when Aunt Agnes returned.

So what can we make of the ‘Children’s Page’ (admittedly with limited information). I will speculate that the ‘Children’s Page’ was possibly established by the GCR’s management in an attempt to indoctrinate its employees’ children. It is known in the period that being the child of a railway worker guaranteed employment with the railway company. Therefore, isn’t it plausible, given the constant references to 'our railway,' that the GCRJ was trying to breed loyalty to the company amongst their future servants? I admit that I may be on shaky ground here without more evidence. However, this explanation would tie up nicely with the educational nature of the GCRJ more generally. Whatever the answer, the ‘Children’s Page’ shows that the railway company’s management was, at very least, trying to reach into their employee’s homes to blur the lines between that space and the workplace.

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[1] http://en.wikipedia.org/wiki/Sam_Fay

[2] The National Archives [TNA], ZPER 18/1, Great Central Railway Journal, June 1905

[3] The National Archives [TNA], ZPER 18/1, Great Central Railway Journal, June 1905

[4] TNA, ZPER 18/1, Great Central Railway Journal, June 1905, p.15

[5] The National Archives [TNA], ZPER 18/1, Great Central Railway Journal, July 1905, p.38

[6] TNA, ZPER 18/1, Great Central Railway Journal, July 1905, p.38

[7] TNA, ZPER 18/1, Great Central Railway Journal, August 1905, p.58

[8] TNA, ZPER 18/1, Great Central Railway Journal, September 1905, p.78

[9] TNA, ZPER 18/1, Great Central Railway Journal, February 1906, p.196

[10] TNA, ZPER 18/1, Great Central Railway Journal, March 1906, p.216