The Sun.
London, England, 1853-07-28 00:00:00

RAILWAY LEGISLATION.

The following is the fifth report of Mr. Cardwell's
committee appointed to consider the principle of amal-
gamation as applied to railway or railway and canal
bills about to be brought under the consideration of
Parliament, and to consider the principles which ought
to guide the house in railway legislation
:
In a former report, your committee submitted to the
house their opinion, that in conceding amalgamation to
the companies who were seeking to obtain the bills then
pending for that object, Parliament would "part with
a power which it might exercise for the purpose of se-
curing to the public one of the greatest advantages that
a commercial country can enjoy—viz., freedom and
economy of transit for persons and merchandise from one
part of the kingdom to another; and that so important
a step should not be taken unless these advantages be
fully secured."
In reviewing the whole of the evidence which has been
laid before them in the course of their inquiry, your
committee have directed their attentions chiefly to the
following considerations—viz., how far the most free,
safe, convenient, and economical transit from place to
place, in respect of passengers and goods, may be secured
to the community by means of the existing railways and
canals ; what regulations may most advantageously be
made for the judicious development of the system by
the construction of new lines ; and, subordinately to
these considerations, whether the property invested in
these undertakings may not be protected from undue de-
preciation and from unnecessary risk. They have exa-
mined the principle of amalgamation, for the purpose of
determining how far the indefinite extension of that
principle may be consistent with these important
objects.

In favour of amalgamation, it is argued that unity of
management will tend to promote the public conve-
nience ; that the persons responsible will generally
direct their attention to the development of the
traffic upon the main line and upon the several branches,
without any regard to those considerations which induce
the managers of rival lines to divert it from the
channel in which the convenience of the public would
naturally have caused it to flow ; that arrangements
will more readily be made for booking throughout
without change of carriage, and for the more certain ar-
rival of trains to meet each other at the points 9f junc-
tion ; that by the retrenchment of duplicate trains, and
by greater economy in the distribution of servants and
of working stock, a saving will be effected, and the com-
pany will, therefore, be enabled to expend money on the
improvement of their works, the development of their
traffic, and the construction of branches, or to reduce
their charges to the public. It may be admitted that all
these considerations are entitled to great weight, and
the witnesses by whom they have been urged will be
found to be among the most experienced and the most
able of the gentlemen connected with the management
of the railways. It follows from general reasoning, and
appear* to your committee to have been established in
evidence, that competition fails to afford to the public
the same security in respect of railway accommodation
which it gives in the transactions of ordinary trade. The
amount of capita) required for the construction of a rail-
way, the exclusive possession of the line of country best
calculated for the purposes of economy and traffic, and
the time required for bringing into active operation any
new competitor, with other considerations too numerous
to detail, tend to remove these great undertakings from
the sphere of ordinary commercial pursuits, and render
it necessary for Parliament to look to other remedies
than competion for any mischief which may arise from
the abuse of power by railway companies. It is true that
the power reserved to Parliament of introducing new and
competing schemes into districts inadequately served by
the established lines, is a weapon the existence of which
will be influential as a moral check; and Parliament may
actually resort to it when other measures fail ; hut the
main consideration still remains, that for the abuse of
power by railway companies, competition, in the ordi-
nary application of the term, affords to the public no
sufficient remedy. In a report recently presented to the
American Congress by a committee, this subject is fully
considered, and the view of the committee is summed up
in the following words :
"It would appear, therefore, that the principle of com-
petition cannot, as a general rule, apply to railroad cor-
porations, and that the interests of the community should
not be left to its operation, as in ordinary business en-
terprises ; that they must, from their peculiar elements,
be, in a greater or less degree, monopolies, and neces-
sarily liable to the evils of monopoly. These evils are
not probably, as great at this time as they may be here-
after, when the system becomes inure perfectly deve-
loped, and placed under the management of persons less
disposed to show deference to public sentiment ; nor are
they as yet very perceptible to the public, from the fact
that they are not apparent in any direct loss to the com-
munity; for railroads under any system must be a great
benefit, but consist rather in depriving it of the addi-
tional advantages it would otherwise obtain. It is never-
theless due to the community that the tendency to these
evils should be checked, and, if the above views are
correct, it is incumbent upon the State to place the
whole system under such control and supervision as may
be deemed necessary to secure the greatest amount of
public benefit compatible with a due regard to the pecu-
niary interests involved in the operations of railroads."
Against indefinite amalgamation, on the other side, it
is strongly urged by persons engaged in trade, and by
the representatives of the property invested in canals,
that the amalgamation of companies in an united inte-
rest naturally leads to an abuse of the power which is
thus conferred upon the directors. It is to be observed
that many of the advantages which are contended for as
belonging to amalgamation, on a moderate scale, do not
apply to cases where the extent of the proposed union
is such as to exceed the compass of one management
properly to direct. On this subject your committee
would refer to the evidence given by Mr. Saunders, to
the effect that in an erroneously large corporation the
variety of details and extent of business is too great to
be satisfactorily transacted.
When many of the lines in an extensive district
are united in one interest, it may become the object
of the managers to secure the traffic over the
greatest mileage, and, consequently, to divert it
from its natural course, if that natural course would
have caused it to flow in part only over their own sys-
tem, and in part over the line of some other railway, or of
some water communication in the same district. Such
an amalgamated company also is armed, by the extent
of its capital, with greater power of destroying competi-
tion in one part of its territory by the temporary lower-
ing of its rates to an unremunerative scale, the partial
loss being of comparative indifference ; while to the
smaller rival, which it is the object of the great incorpo-
ration to destroy, the traffic in immediate contest con-
stitutes the whole source of its revenue.
The desire of the railway companies for amalgamation
may be attributed to two causes perfectly distinct, and
requiring a separate consideration. Originally, amalga-
mation was sought for from Parliament principally on
the ground of economy in the conduct of the traffic.
Latterly, however, new reasons have influenced the com-
panies, and amalgamation has become not so much a
question of economy in the management of the line, as a
matter of offensive and defensive policy in regard to the
unsettled relations subsisting between different compa-
nies. As the practice of Parliamentary legislation stands
at present, it is in the power of one rival company ma-
terially to affect the interest of the other ; or a small
number of speculators, with or without the encourage-
ment of a rival, can injure the position of au established
company by laying out a hne within their neighbour-
hood, and so compel them to bring forward, in self-
defence, and as part of their own system, schemes
which, upon a wider review of the public advantage,
it is probable that Parliament would have refused to
sanction.

Your committee referred in a former report to the
circumstance, that about 2,000 miles of railway, in-
volving an outlay of upwards of 40 millions, have been
sanctioned by Parliament, and afterwards abandoned by
the promoters without the leave of Parliament.
most competent witness has estimated the loss of
money to the railway shareholders, unnecessarily in-
curred in obtaining Parliamentary authority for and in
constructing the railways now in existence, and in op-
posing rival schemes, at 70 millions ; and though it
may, perhaps, be considered that this is a high estimate,
when taken in regard to the lines actually made, it is
no sufficient measure of the loss which has been really
sustained, since ninny lines have been constructed which
probably are not laid out in the way best calculated
to promote the general convenience, and so to develope
the greatest amount of traffic. On the other hand, it is
difficult to estimate the amount of benefit which is de-
rived to the public even from railways which are not re-
munerative to the shareholders, by the facilities which
are afforded for transit, and by the saving of capital
which arises from the shortening of time required for
the transmission of goods, and the diminished necessity
for holding considerable sums locked up in the stocks of
tradesmen.
Amalgamation (that is to say, the consolidation of
greater capital and of greater power in the hands of an
united heird of directors) is sought for as a protection
against The risks to which the proicerty,invested in the
existing z-,ilway is exposed and this amalgamation con-
templates, in the mind of Sir W. Cubitt, and other wit-
nesses, the eventual union of all railway property in a
common stock ; while in the mind of others it is limited
to what is called territorial division ; that is,
to the
groupin,g of the several railways into a small number of
great incorporations, perhaps seven for Great Britain,
to each of which should be assigne a regulated
'tuated. monopoly
of the district in which it is si
With regard to the first of these plans, the union of
rty present all the railway property, and future, in one
stock, it seems to your committee that the following
considerations would require to be carefully weighed by
liaat.
Parliament before so important a change could be per.
witted. The railway property held in
the end of 1851, the latest period to which great Bai
rn ther Pt a
mentary returns are complete, was 2,18,240,8971., and
will receive continual and ,indefinite additions as the
traffic of the country is from tim • e to time developed.
on account of
The amount received by the companies _ _
passenger traffic for the year 1851 was 7,940,7641., and
on account of goods traffic 7,056,6951., making a total
gross revenue of nearly 15,000,0001., which appears to
be steadily increasing. The number of persons directly
employed in the service of the existing companies in June,
1852, was 67,601, while the number employed in con-
structing new railways at the same date was 35,945;
and the numbers whose living is indir • ctly depen-
dent upon them in the various trades employed
for the service of the railways is probably greater.
There is no political division of the kingdom in which
they might not be expected, through the medium either
of their sharOolders.. qr otf their patronage, or of special
wpvantages which they might render to particular indi-
viduals, to, exercise an influence, while, if they were all
united in one common stock, it is no injustice to the
railway directors as a body to suppose that they would
wield their ,extensive powers rather for the promotiOn of I
the interests epecially entrusted to their charge than