One Month in 1886 - The Traffic and Trade of Britain's Railway Industry

From December 1885 to March 1886 the London and South Western Railway’s staff magazine, The South Western Gazette, published each month a breakdown of the gross receipts of Britain’s major 14 companies for the previous four weeks. Why they did this is uncertain, however, the statistics do make for interesting reading and tell us some things about the nature of the British Railway industry at a single point in history. In this post I will look at the statistics for the four weeks ending 20^th March, 1886, (for some railways the statistics were up to the 21^st) and discuss what they reveal about the relationship between company revenue, mileage and traffic.

Firstly, the statistics showed the route mileages of the 14 companies. The two largest were the Great Western Railways (GWR), which had 2,366 route miles, and the London and North Western Railway (L&NWR) at 1,801 miles. The smallest companies listed (however, smaller ones did exist in Britain) was the North London Railway (NLR), with only 12 route miles, and the Metropolitan District Railway (MDR) at only 13 route miles.

However, interestingly, the NLR generated the most gross revenue per route mile on the list, and for each one the company made £665. This was followed by the Metropolitan Railway, whose every rout mile earned it £566, and then the MDR, which earned £548. However the two largest railways in the country, the GWR and the L&NWR only earned £52 and £92 per route mile respectively. Indeed, the GWR was the worst performing company in this respect, an honour it shared with the London and South Western Railway, who also earned £52 per route mile.

The reason for the NLR, MDR and Metropolitan’s tracks earned the most revenue was that these companies served the London district. The Metropolitan and MDR in March 1885 seemingly did not carry any freight traffic, yet, served the densely populated areas of central, South West and North West London. Thus, over their small networks they hauled vast numbers of passengers commuting to and from work daily. The same can be said of the NLR, however, they were also graced with considerable through freight traffic going from the north of the country to the south. It should also be noted that these three railways also ran some services over other companies’ lines. Thus, their revenue per route mile may have been inflated, and if the revenue they earned per route mile they operated was calculated, the figures may have been lower.

This said, these figures would have been still high in comparison with the worst earners per route mile. The North Eastern Railway earned £50 per route mile,* whereas the L&SWR and GWR only earned £52 per route mile. Indeed, all three companies had lines that covered sparsely populated areas. Indeed the same could be said of the Great Eastern Railway (GER), which earned £62 per mile, and the London, Brighton and South Coast Railway (LB&SCR), which made £61* per mile.

There could, therefore, be an argument that main line railways which principally carried passenger traffic generally earned less per route mile. Four Railways fell into this category. 73.72% of the London, Chatham and Dover’s (LC&DR) revenue came from passenger traffic, as did 66.78% of the LB&SCR’s , 64.16% of the South Eastern’s (SER) and 61.77% of the L&SWR’s. Yet there is considerable variance between how much they earned per route mile, which were £103, (which was calculated erroneously by the individual compiling the statistics - many thanks Jeremy for pointing this out) £61, £73* and £52 respectively. Therefore, the two railways that served South East London and Kent, the SER and LC&DR, benefited from serving commuter areas and densely populated countryside. Indeed, the LC&DR earned the second highest gross revenue per route mile of the companies listed.

Similarly, there is variance in the gross revenue earned per route mile amongst the railways that made most of their money from goods traffic. The MS&LR earned 78.045% of its revenue from goods traffic, the MR’s proportion was 76.51%, the North Eastern Railway (NER) earned 70.73%, the L&NWR generated 67.71% and the Great Northern Railway’s (GNR) proportion was 67.31%. Nevertheless, of the five the NER generated the lowest amount per route mile, earning only £50*, whereas the MR earned £106. Thus, having large proportions of freight traffic did not necessarily equate to companies naturally earning more revenue per route mile. However, the total revenue per route mile of these ‘freight-dominated’ companies was £82, whereas for the four ‘passenger’ companies it was only £64.

This is an obvious thing to state really, but this evidence shows that the revenue earning capacity of each company per route mile was dependent on how densely populated or industrialised the area they served was. Indeed, clearly, what they hauled was less of a factor. Consequently, it would be interesting to see whether different management techniques, styles and structures within railway companies developed dependent the different population and industry densities they served.

Additional Note 24/07/2011: As has been pointed out by Jeremy (and many thanks), the gross revenue earning potential is not necessarily the same as profitability. Thus, for this to be determined, more information on the companies' costs and traffic levels has to be found. Victorians, as I have repeatedly discovered, sometimes showed to the public very basic ways of measuring of the revenue earning power of their companies. Thus, this is simply one example where the full information is not present. As I have the Board of trade returns for 1886, this may be a project in the future.

Furthermore, the figures were calculated incorrectly in a number of cases, and where a figure is marked with a * it is the correct figure, rather than what was printed in the text at the time.

Statistics for Managers on the 1830s Stockton to Darlington Railway

The Stockton to Darlington Railway (SDR), which was promoted by local businessmen, was authorised as an act of parliament in 1821 and was completed in 1825. Its significance is because it was the first railway to be permitted to carry goods and passengers by steam traction. However, some historians dispute that it was the railway that started the ‘Railway Age’ and only consider it a precursor to it. These views have been formed on the basis that initially the railway ran from collieries to Stockton via Darlington, a mere 30 miles. Secondly the bulk of the early traffic was heavy minerals, and lastly the company sub-contracted portions of its operations. Yet, while many comparisons are made with the Liverpool and Manchester Railway, opened in 1830, the SDR did help George Stephenson to refine locomotive design, track building techniques and rail profiles.

However, the SDR it soon became more than just a short line, and in 1828 the company extended its line to Middlesbrough. [1] However, it was in 1833 that the company started to truly resemble a modern railway. Prior to this date the company had only used locomotives on mineral trains, with horses pulling the passengers. Furthermore, the company owned only a few trains, and the majority of individuals could pay to use their own traction to pull their own trains on it. Thus, the line was managed in much the same manner as a canal or toll road, and there were no timetables or safety mechanisms.

In 1833, this all changed and the management of the SDR took control of the line. Firstly, double tracks were laid to allow trains to run in opposite directions. Timetables were introduced, as well as a crude system of signalling.[2] Lastly, the Shildon works, which had been established on a small scale in 1825 to build and maintain the company’s own locomotives, came to resemble what we would now know as a locomotive works under the charge of the company’s new locomotive superintendent, Timothy Hackworth.[3] Subsequently, the SDR became a standard railway and was a huge success.

While outwardly appearing like a conventional railway, it cannot be ignored that the company also started to use management techniques that were akin to other early companies. Within the files of the SDR at the National Archives can be seen the SDR’s early attempts at statistical gathering. The data that has survived pertains to the number of passengers conveyed and how far they went. While it is unknown what other data the company kept (at this point at least) the statistics do suggest that very quickly after establishment early railway companies were gathering metrics beyond just revenue and expense.

The first page of data showed me the monthly totals of passengers conveyed and how far they travelled. In 1833 12,829 passengers travelled 101,288 miles on the SDR (7.90 miles per passenger). However, between January and September 1834 the railway conveyed 143,672 passengers 1,049,370.5 miles (7.30 miles per passenger). Thus, while the company was conveying more passengers in 1834 than in 1833, on average they were going shorter distances. Subsequently, financial information (which I do not have at the moment) may reveal that the effect that this had on the company’s profitability. What is for certain is that the company was rapidly becoming more popular, and this also may have had an effect on the statistic of miles travelled per passenger.

In addition, how the passengers were carried was also noted. While we are familiar with the distinctions of First, Second and Third class carriage from later on in British railway history, it seems that the early SDR distinguished the customers by ‘inside’ and ‘outside’ passengers. The evidence, which again showed the monthly totals, indicates that from the 1^st January 1834 to the 17^th December, 11,270 (25.54%) passengers paid more to travel ‘inside.’ However, 32,857 (74.46%) travelled by the evidently cheaper ‘outside’ accommodation.

Furthermore, by 1835, it is clear that the managers were demanding more complex statistics, and another document evidences the number of passengers each month travelling under specific headings: ‘Number of Passengers on Market Days,’ ‘Number of passengers not including market days’ and ‘total number of passengers.’ For that year 23,485 (45.54%) passengers travelled on market days, with 28,082 (54.46%) conveyed at other times.

Lastly, a document from 1836 shows that the SDR was not just recording the volume of passengers across the line, but was also recording specific detail were passengers were travelling to and from (however, this can be inferred from the details communicated by the first document). Between April and October that year, the company earned £202 10s 0d from passengers conveyed from Stockton to Darlington (58.96%), £41 10s 0d from passengers going from Shildon to Darlington (12.08%), £85 6s 4d from those going from Shildon to Middlesbrough (24.84%) and £14 2s 8d was spent by individuals making other journeys (4.12%). Thus, the management could gauge what their most popular journeys were, and where extra capacity in trains may have been needed.[4]

Overall these documents indicate that even in the early days of railway operation railway managers were using statistics to measure demand, pricing and uptake of their services. Indeed, on the bottom of the first sheet, which showed the number passengers conveyed and the number of miles they travelled, there is a calculation in pencil of how far, on average, each passenger travelled. Later documents also show that these calculations were made. Thus, what these documents indicate is that systems of management accounting were developed very quickly in the early railway industry. Furthermore, as they started at the beginning of the SDR’s proper operation it can be deduced that management recognised, based on prior experience that management accounting was important.

[1] Kirby, Dr Maurice, ‘Stockton & Darlington Railway’, The Oxford Companion to British Railway History, (Oxford, 1997), p.478

[2] http://en.wikipedia.org/wiki/Stockton_and_Darlington_Railway

[3] Ransom, P.J.G, ‘Works, railway manufacture and repair’, The Oxford Companion to British Railway History, (Oxford, 1997), p.569

[4] The National Archives [TNA], RAIL 667/1364, Statistics of passenger journeys: numbers carried, mileages, receipts etc., 1833-1837