PhD Historiography Snippet - Forward Planning by Railway Companies

The Midland Railway's St. Pancras Station

Numerous historians have touched on the lack of accurate forward planning in railway companies’ investment policies in the nineteenth century. Irving argued that in the 1870s the NER’s investment was higher than the line’s traffic demanded and in the 1880s only kept pace with it. Consequently, with traffic increasing rapidly in the late 1880s, investment policies failed by 1888 as network capacity was inadequate.[1] Hodgkins argued that Sir Edward Watkin’s attempted expansion of the small Manchester, Sheffield and Lincolnshire Railway in the1880s added lines that were ‘too much for it to digest’. Ultimately these extensions were expensive failures as they were 'not properly weighed up as investment opportunities.'[2] 

Channon’s study of the Midland Railway’s extension to London in 1869 provided the most detail on what decision-makers knew when formulating a major policies. He argued that those who made the decision, the General Manager and a small group of directors, could not be considered traditional ‘profit maximisers’ as their ‘knowledge of costs revenues, and alternatives was either too rudimentary or too incomplete to form the basis of accurate profit forecasts.’ Indeed, construction costs, especially in London, were particularly hard to predict.[3] Therefore, if Channon's assessment of the knowledge Midland Railway decision-makers' had is applied to the cases above, it suggests that those directing policy within nineteenth century railway companies possessed rudimentary information regarding the cost of, and potential revenues from, their ventures.

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[1] Irving, R.J., The North Eastern Railway Company, (Leicester, 1976)  , p.166

[2] Hodgkins, David, The Second Railway King: The Life and Times of Sir Edward Watkin, (Melton Priory, 2002)  , p.486

[3] Channon, Geoffrey, Railways in Britain and the United States, 1830-1940: Studies in Economic and Business History, (Aldershot, 2001), p.107

PhD Historiography Snippet: The Power of the Victorian Railway Chief Executive

Naturally, as companies expanded physically the management class grew to coordinate the increased operations. Studies have shown how this, in some cases, brought it into conflict with directors which Wilson and Thomson called ‘trustees of investors’ proprietorial rights.’[1]  Amongst early railway managers, London and North Western Railway General Manager, Mark Huish, had a reputation for being ‘unscrupulous, dictatorial and Machiavellian’ in his control of company policy between 1846 and 1858. Yet, while Gourvish argued that none of Huish’s contemporaries had his ‘predominance in railway affairs’, he also made the case that ‘Huish was not the company’s sole policy maker and he did not possess the ‘dictatorial’ influence so often ascribed to him.’ Indeed, he encountered the resistance of the directors to delegate power to salaried officials[2] and in 1858 his resignation was forced upon him as he could not satisfy the director’s requirements regarding inter-company diplomacy.[3] Lastly, on his resignation his successor, Cawkwell, had far greater controls placed on his freedom of action by the board.[4]

Indeed, this case shows that whether managers controlled or influenced policy were two different matters. Clearly, by the 1860s the influence of senior managers, verses those of directors, varied within different companies. Decision-making could become heavily influenced by chief executives, a small group of directors, or both. When Channon examined the building of the Midland Railway’s main line to London, opened in 1868, he argued the decision was formulated by a small number of directors who were influenced heavily by the General Manager, James Allport.[5] Furthermore, Gourvish argued in respect of the railways managed by Watkin and Forbes that ‘company strategies are usually presented in terms of either the directorship of a managing director or of one or two active directors.’[6]

Despite Cain arguing that by the 1870s Chief Executives were ‘the single most important decision-makers in the industry,’[7] the reality was that different managers continued to have varied levels of control over  company policies after 1870. In his study of Edward Watkin, chairman of the Manchester, Sheffield & Lincolnshire Railway (1864-1894), South Eastern (1866-1894) and Metropolitan Railways (1872-1894), and James Staats Forbes, chairman of the London, Chatham and Dover (1873-1898) and Metropolitan District Railways (1872-1901), he wrote of two railwaymen who remained in control of the companies’ policies, even when promoted onto their boards. Nevertheless, there were attempts by the SER board to oust Watkin in 1878-79 and 1885-86. [8]

Sir George Gibb

Furthermore, despite Watkin dedicating a large portion of his time to railway work, he was unable to directly control the three companies he was managing director of, relying on the senior executives at each to run operations; Myles Fenton at the SER, William Pollitt at the MS&LR and John Bell at the Metropolitan.[9] Hodgkins even described how Pollitt and Bell had a long standing rivalry which would have made a proposed link between the MS&L and Metropolitan Railways in the 1890s difficult,[10] and suggesting that even under Watkin’s domineering leadership these chief executives had the status and influence to direct their railways’ policies.

As late as the 1890s management’s ability to influence and control policy was different from company to company. Irving argued in his study of the North Eastern Railway (NER) that when Gibb became General Manager in 1891 he almost completely controlled company decision-making, dominating the staff and board, and allowing him to drag the company ‘to a position where it was acknowledged by experts to be a model on which successful railway management might be based.’ Nonetheless, on his departure in 1906 a vacuum was left and that thereafter the new General Manager, Butterworth, did not have the handle on company affairs, allowing the board to reassert its position at the heart of company policy.[11] Furthermore, Klapper’s portrait of Sir Herbert Walker’s administration of the London & South Western Railway from 1912 is one that highlights the primacy of the General Manager in policy, rather than the directorate.[12]

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[1] Wilson, John F. and Thomson, Andrew, The Making of Modern Management: British Management in Historical Perspective, (Oxford, 2009), p.57

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

[3] Gourvish, Mark Huish and the London & North Western Railway, p.257-260

[4] Gourvish, Mark Huish and the London & North Western Railway, p.177

[5] Channon, Railways in Britain and the United States, 1830-1940, p.107

[6] Gourvish, T.R. ‘The performance of British railway management after 1860: The railways of Watkin and Forbes’, Business History, 20 (1978) p.188-189

[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] Gourvish, ‘The performance of British railway management after 1860’, p.188-189

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

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

[11] Irving, R.J., The North Eastern Railway Company, (Leicester, 1976)  p.261-264

[12] Klapper, C.F., Sir Herbert Walker’s Southern Railway, (London, 1973)