LTSR-why did it become part of the LMS?

[Nearholmer]

Going back to the earlier question about which company operated more services out of Fenchurch Street, a sample can be got from a count of trains 4pm to 7pm on a weekday, as shown in Bradshaw in 1910, which if my failing eyesight (it always fails with Bradshaw!) is to be believed, show the GER as winners with 29, against the LTSR with 11. 
 

Different markets too, the GER is very much inner suburban and docks, only a smattering of outer suburban, whereas the LTS is outer suburban, artisans and labourers on the one, as compared with clerks on the other, I reckon.

[phil-b259]

1 hour ago, The Stationmaster said:

It might have been useful to the MR but the only way they could access it was over the GWR.  The odd thing was that while both the MR and LSWR had Running Powers over the MSWJcnR between Andover Jcn and Andoversford they had no running powers over the GWR between Andoversford and Cheltenham.  Thus at the northern end they could neither get onto or off the MSWJR.  The LSWR could obviously exchange traffic with the GWR at Andoversford but they were then reliant on the GWR to work that traffic to the Midland and vice c versa.  

 

Similarly they had no Running Powers to the GWR at either Savernake or Swindon so again any traffic transferring at those places would automatically be with the GWR.  So little wonder that the Running Powers were not exercised    As far as Post-Group ownership is concerned clearly 'something went on' as the MSWJR did not become absorbed by the GWR until July 1923  and the Absorption Schme for that was not put in place until September that year.  In some respects GWR ownership made sense because the MSWJR exchanged, or potentially exchanged, traffic with the GWR at three places compared with only one point of traffic exchange with the Southern and none with the LMS.  Amnd neither the Midland or the LSWR n nad any sort of wnership or shareholding control over the MSWJR making it very dfferent from the S&DJtR which those two companies jointly owned

But would it not be possible for the Midland to forcably squire running powers over the GWR between Andoversford and Cheltenham?

 

In the south east there were two very public cases where one company refused to grant running powers including chaining locos to the track to prevent the other company from gaining access.

 

see ‘Bartle of Havant’ (LSWR wanting to run over LBSCR owned tracks to reach Portsmouth) ‘Battle of Hastings’ (where it was the SECR which wanted access over LBSCR tracks between Bo-Peep junction and Hastings)

 

https://thespring.co.uk/wp-content/uploads/2021/06/3-sd-railway-in-havant-october-2017-4.pdf

 

 

[bécasse]

Had the MR and LSWR jointly purchased the M&SWJcR (on the assumption that Sam Fay hadn't taken on the management of the line), they would have acquired that railway's running powers over the relevant part of the Banbury & Cheltenham, such as they were.

 

Fay, of course, persuaded the GWR to double that section and allow the M&SWJcR's trains to serve intermediate stations, apparently by threatening to build a by-pass line as had been done earlier south of Marlborough. I don't doubt that the putative new joint owners would have done the same but could well have called the GWR's bluff and actually built the by-pass line. It shouldn't be forgotten that the M&SWJcR route was important to the military and that the LSWR, doubtless because of its own military connections, maintained an excellent relationship with the Board of Trade, thus easing the passage of any Act required for a new line.

[Jeremy Cumberland]

Just now, phil-b259 said:

But would it not be possible for the Midland to forcably squire running powers over the GWR between Andoversford and Cheltenham?

Well, they could get an Act of Parliament.

 

However, there are many examples of railway companies that did have legal running powers being prevented from exercising them, as with the Shrewsbury and Birmingham over the LNWR between Wolverhampton and Birmingham. Obstruction on the part of the LNWR eventually backfired when the S&B decided to team up with the Great Western when they reached Birmingham, and ended up giving the GWR access to the River Mersey.

[phil-b259]

1 hour ago, bécasse said:

Had the MR and LSWR jointly purchased the M&SWJcR (on the assumption that Sam Fay hadn't taken on the management of the line), they would have acquired that railway's running powers over the relevant part of the Banbury & Cheltenham, such as they were.

 

Fay, of course, persuaded the GWR to double that section and allow the M&SWJcR's trains to serve intermediate stations, apparently by threatening to build a by-pass line as had been done earlier south of Marlborough. I don't doubt that the putative new joint owners would have done the same but could well have called the GWR's bluff and actually built the by-pass line. It shouldn't be forgotten that the M&SWJcR route was important to the military and that the LSWR, doubtless because of its own military connections, maintained an excellent relationship with the Board of Trade, thus easing the passage of any Act required for a new line.

 

The only snag with this (and my suggestion of forcibly acquiring running powers) is that with joint ownership of the SDJR which directly linked LSWR and Midland owned metals would the MR see it worth the trouble and expense?

[DenysW]

20 hours ago, DCB said:

by offering shareholders  three for one share exchange worth 6% Pa  (Other Midland shareholders had to make do with 2%) 

The Midland (deviously) duplicated its stock in line powers in with its 1897 Act that allowed it to quote dividends as if they were unduplicated*. It also had both Preferred shares that typically paid 4% (pre-1897 basis) and Ordinary stock that paid 5-6% (pre-1897-basis). As a result the duplicated shares halved in price on the stock market, and paid the same 4-5% against the purchase price as the unduplicated had.  This doesn't make what @DCB said wrong, but it does make it more difficult to understand the LT&S transaction. This is also why the Midland's Capital apparently doubled 1897-1900 without any major investments. The Victorian investors were aware of all of this and Board of Trade actually published summaries (by year) of how much 'nominal' stock had been created. The Midland and the MS&L were probably the worst offenders, but almost all of the companies seem to have done some either duplication or splitting.

 

So the Midland paid the LT&S shareholders marginally more  (fixed) than the dividends the LT&S itself had been paying (variable), but only at a 1.5:1 ratio not a 3:1 ratio. Enough of a reason to accept the sale.

 

* Reason: Otherwise they would have dropped below the 10-years-of-at-least-3% returns that was a requirement for many trustees operating Pension and other trusts.

[DenysW]

1 hour ago, Jeremy Cumberland said:

railway companies that did have legal running powers being prevented from exercising them,

Also of the excerciser of the running powers being given zero priority compared to the trains run by the donor of the rights. See the Midland into Euston, the same into King's Cross, and the ploys used to make sure that the correct train pulled into Aberdeen first in the 'Race to the North'.

[bécasse]

5 minutes ago, phil-b259 said:

 

The only snag with this (and my suggestion of forcibly acquiring running powers) is that with joint ownership of the SDJR which directly linked LSWR and Midland owned metals would the MR see it worth the trouble and expense?

The "prize" offered by the M&SWJcR at that time was effective direct access (by continuing over the Sprat & Winkle) to the ever growing port of Southampton. Military traffic grew too in time but that growth probably wouldn't have been foreseen at the period when the MR & LSWR would have been likely to take over an ailing MSWJcR in the absence of Sam Fay. Indeed, my guess would be that the S&DJR would have become the poor relation of the two joint lines. In practice, of course, Sam Fay did run the M&SWJcR for a sufficient length of time to turn it into an effective and productive link between the MR and LSWR and it served them, and during the Great War the country, well without the expenditure of management effort that would have been required if it were a joint line.

[rodent279]

Although we've strayed somewhat from the original topic, this is very interesting stuff-keep it up!

[JimC]

18 hours ago, Jeremy Cumberland said:

" - but on the whole the "Subsidiary Companies" are ones that had a separate legal existence but which were in fact operated by another company. 

I suspect that was more of an inevitable result than an aim. In his book, Sir Felix Pole of the GWR, who was deeply involved in the politicking, says “the broad basis being that the large companies in each group - styled Constituent Companies - should amalgamate and absorb the smaller companies which were called Subsidiary. " it was of course inevitable that concerns too small to run their own railway would end up as subsidiaries, but I doubt that was a direct aim of the policy. 

Because it was all done by takeovers and share ownership splitting up a Constituent or even a Subsidiary to take the components into different groups would have greatly added to the complexity and I doubt would have been practical. Judging by what Pole has to say there was enough trouble agreeing the relative values of different classes of share as it was. He notes a particular problem with 'ordinary' Cambrian shares which had not paid a dividend in years. The owners of such got £3 of GWR stock for every hundred plus no dividend for some years. 

[phil-b259]

1 hour ago, JimC said:

 

Because it was all done by takeovers and share ownership splitting up a Constituent or even a Subsidiary to take the components into different groups would have greatly added to the complexity and I doubt would have been practical. Judging by what Pole has to say there was enough trouble agreeing the relative values of different classes of share as it was. He notes a particular problem with 'ordinary' Cambrian shares which had not paid a dividend in years. The owners of such got £3 of GWR stock for every hundred plus no dividend for some years. 

 

This is an important point which should not be overlooked.

 

The 1921 grouping was not nationalisation and as such the Government couldn't simply ride roughshod over shareholders or force companies to split themselves up because from a legal perspective the Government did not own any of the companies involved!

 

The only way such radical changes could have been done was for the Government to nationalise all the companies, bash them about as they saw fit then sold them off again - an expensive exercise and also given that permanent nationalisation was considered but rejected not something which the Government would wish to do as a principle.

 

 

[kevinlms]

20 minutes ago, phil-b259 said:

 

This is an important point which should not be overlooked.

 

The 1921 grouping was not nationalisation and as such the Government couldn't simply ride roughshod over shareholders or force companies to split themselves up because from a legal perspective the Government did not own any of the companies involved!

 

The only way such radical changes could have been done was for the Government to nationalise all the companies, bash them about as they saw fit then sold them off again - an expensive exercise and also given that permanent nationalisation was considered but rejected not something which the Government would wish to do as a principle.

 

 

By the same token, it couldn't have been a voluntary grouping, as by 1921, it was well-known that many of the smaller railways and not so small, were never going to be profitable. 

So the government had to group them in such manner, to spread them out.

The government could hardly allow a new system, where some were unwanted by the larger companies and have no alternative but closure. 

 

There weren't that many Col. Stephens around!

[phil-b259]

21 minutes ago, kevinlms said:

By the same token, it couldn't have been a voluntary grouping, as by 1921, it was well-known that many of the smaller railways and not so small, were never going to be profitable. 

So the government had to group them in such manner, to spread them out.

The government could hardly allow a new system, where some were unwanted by the larger companies and have no alternative but closure. 

 

There weren't that many Col. Stephens around!

 

Correct, the 1921 grouping wasn't a voluntary act by the companies concerned* but equally there are plenty of examples of small loss making railways taking ages to be absorbed into their nominated 'big 4' company precisely because they had to be done so in a manor which didn't undermine the share value of the larger concern they were folded into.

 

This is important precisely because the point of grouping was to end up with 4 profitable private companies and not 4 which were completely impoverished because shareholders in the new groups had dumped all their shares as they had been devalued!

 

The GWR (as highlighted by Jim's post above) is the best example of this but even with the newly created companies like the Southern, there are cases of tiny companies taking ages to be absorbed because their shareholders wanted an unrealistic share holding in the SR while those who had shares as a result of previously having held LBSCR shares didn't want to see their new shares devalued by the takeover.

 

 

* we shouldn't lose sight of the fact that some mergers like the L&YR merging with the LNWR were straight commercial decisions by the boards of both companies plus I believe the NER and GNR were seriously looking merging even moves started to group the railways in the first place.

Edited January 18 by phil-b259

[Dungrange]

3 hours ago, phil-b259 said:

we shouldn't lose sight of the fact that some mergers like the L&YR merging with the LNWR were straight commercial decisions by the boards of both companies plus I believe the NER and GNR were seriously looking merging even moves started to group the railways in the first place.

 

I don't know about the NER and GNR, but the GNR, GER and GCR had proposed to merge back around 1909 (but were blocked by Government at the time) and the NER and H&B had merged before grouping on commercial terms in the same way as the LNWR & L&YR did.

 

On 17/01/2024 at 08:00, Jeremy Cumberland said:

It depends what alternative history played out between 1912 and 1921. Schedule 1 of the Act, which lists all the grouped companies, divides them into "Constituent Companies" and "Subsidiary Companies". There are only 27 "Constituent Companies", and three of these represent the SECR as I mentioned above. The division isn't quite as I might expect - the Maryport and Carlisle (which I think was still fully independent in 1921) is listed as a "Subsidiary Company" - but on the whole the "Subsidiary Companies" are ones that had a separate legal existence but which were in fact operated by another company. As far as I can tell, "Subsidiary Companies" were all grouped with their operating company.

 

I've never really understood the distinction between "Constituent" and "Subsidiary" Companies, beyond the fact that the Constituent Companies seemed to be represented on the Board of the new Grouped Company, whereas there was no board representation for the Subsidiary Companies.  How it was decided which companies were significant enough to get Board representation, I don't know.

 

On 17/01/2024 at 07:12, rodent279 said:

So were any companies split or partitioned under the RA1921? Was it simply an exercise in reduce the number of controlling interests, rather than an attempt at reshaping the geography?

 

Geography didn't matter.  The issue was that there were many companies that prior to WW1 were not exactly flush with cash.  The war effort had taken its toll on all companies and there was a real risk that a number of companies would go bankrupt once they left Government control in 1921.  During the war companies had continued to receive payments from the Government based on their pre-war income and it wasn't clear what would happen moving back to a competitive market.  The Railways Act 1921 was therefore a mechanism to force many struggling companies that were at risk of bankruptcy into the arms of their more profitable neighbours before they failed.  Full nationalisation was considered as was different groupings of five, six and even seven companies.  I can't remember what these all were but one or more of the suggestions had a separate Scottish company.  Ultimately, the merger into four was considered the optimum way to create four profitable private companies and the Railway Act 1921 was to take forward that proposal.

 

[DenysW]

The share prices of the LT&S did not indicate a need to seek take-over, If anything the market post-1897 viewed it appreciably more favourably than the larger England & Wales companies ( the Midland was included on its pre-1897 basis). Maybe it just felt the cost and project management of electrification was beyond it. In which case it should probably have approached the NER, not the Midland!

 

For those unused to this stuff, when the price of your £100 Ordinary stock drops below £100 you have trouble issuing more without giving a discount. The next resort is therefore to issue Preferred stock at a fixed interest rate better than Government bonds. When you stop reliably paying the interest on these (example: the Great Central Railway post 1897), the last resort is debt. The GCR was actually in control of its fate and by 1912 had almost reached the point of paying all of its Preference shares and the interest on its debt, but wasn't at the point of retiring much debt.

 

Data digitised by Yale University.

 

[JimC]

2 hours ago, Dungrange said:

I've never really understood the distinction between "Constituent" and "Subsidiary" Companies,... .  How it was decided which companies were significant enough to get Board representation, I don't know.

According to Pole, Constituents were merged and Subsidiaries taken over, which presumably explains the Directors. As for Constituent or Subsidiary, much intrigue and politicking in and around Parliament committee rooms! 

As Pole tells it the GWR had proposed they should be the only constituent in their group, but as a compromise agreed the Welsh Constituents to be amalgamated into the GWR without the GWR being wound up as all other companies were. 

Hence this contemporary cartoon in the South Wales News. 

 

(from https://www.railwayaccidents.port.ac.uk/never-even-blew-me-cap-off-railway-grouping-accidents-pt-1/) 

[Nearholmer]

2 hours ago, DenysW said:

it. In which case it should probably have approached the NER, not the Midland!

The Midland was “well up” on electrification, and using a more advanced system than the NE; their electrical team were smart cookies.

[Nearholmer]

A subsidiary was a company already controlled by one or more of the others, while those that had no controlling interest above them became constituents.

 

Railway companies had multiple subsidiaries, not just apparently separate railways over which they’d secured control but things like shipping lines, harbour companies, hotels, etc. Quite a few things that we think of as “part of” particular railway companies were actually constituted as separate enterprises, with the railway owning a controlling block of shares.

 

That caused some Late Arrivals at the Railwsy Grouping Ball, like The Newhaven Harbour Company, which looked for all the world like part of the LBSCR, but was actually separate, and which didn’t become part of the SR until (IIRC) 1928.

 

The grouped companies themselves ended-up having major interests in not-railway things too, notably  ‘bus companies. For this reason the huge ‘bus operator Thomas Tilling, which owned multiple fleets that we think of as separate companies, ended-up becoming largely nationally owned when BR was created. Railways owned such large stakes in the subsidiaries of the other big ‘bus outfit, British Electric Traction, there was significant influence over them too. We think of ‘bus nationalisation as having happened much later, when NBC was created, but that was more a ‘final tidying up’, and BET actually sold-out its interests in buses to the government voluntarily, rather than by legal compulsion.

 

I don’t know about the other grouped companies, but the SR had on its board a Director who effectively had a full-time job, in that he acted as their representative on the boards of all these not-railway outfits, so picked-up multiple Directors fees. He was very instrumental in Railway Air Services, for instance, and the SR’s scheming around a new London Airport, wisely getting them to pull out of that when he became convinced that war was inevitable.

 

Long ramble, but the point is that the railways were transport and travel businesses, not just railway businesses.

 

Didn't the railways own Thomas Cook by the time of nationalisation?

 

Yes, here we are:

 

”In 1942, Thomas Cook & Son was sold to Hay's Wharf Cartage Company, which was owned by the four major British railway companies. The company was nationalised along with the railways in 1948, becoming part of the British Transport Commission.[3]”

Edited January 18 by Nearholmer

[JimC]

1 hour ago, Nearholmer said:

A subsidiary was a company already controlled by one or more of the others, while those that had no controlling interest above them became constituents.

I don't know about the other companies, but in the Western at least a Subsidiary at the grouping wasn't at all the same thing as a subsidiary in normal business terms. To the best of my knowledge the majority of the GWR Subsidiaries were independent, and not owned by one of the Constituents companies. 

[Compound2632]

On the M&SWJR question, it's worth noting that the Midland had lent the company considerable sums of money for doubling its line - it's very clear that the Midland had a strong interest in it as providing a route to Southampton. I'm not certain what happened to those loans at grouping but when the NER absorbed the H&B, it got a bit of a shock when the Midland requested repayment of its loans to that company!

 

The Midland had been a long-term shareholder in the Great Western, from its early investment in the South Devon Railway. 

 

The Midland seems to have had several approaches to expansion by take-over. Where it felt that the company it had its eyes on was financially sound in its own right, it bought it: Swansea Vale, Belfast & Northern Counties, LT&S. Where the company was financially weak but had the potential to open up a profitable traffic route, it propped it up by means of loans: M&SWJR, H&B. Where the company was on its knees but still offered the prospect of traffic profitable to the Midland, it went in for a joint arrangement, making sure there was a partner company to share the burden: S&DJR, M&GNJR, Portpatrick & Wigtownshire. 

 

Then there were the 'political' alliances: with the Chatham against Watkin's South Eastern, with the South Western against the Great Western, and with the G&SWR and NBR in Scotland - including propping up the Forth Bridge.

 

Finally, once the writing was on the wall for railway profitability, the alliance with the LNWR and L&YR in 1908 - which made the LMS an inevitability.

Edited January 18 by Compound2632

[rodent279]

8 minutes ago, Compound2632 said:

The Midland had been a long-term shareholder in the Great Western, from its early investment in the South Devon Railway

So did that mean the LMS was a shareholder in the GWR?

[Compound2632]

1 minute ago, rodent279 said:

So did that mean the LMS was a shareholder in the GWR?

 

Yes. I suspect that one way or another all the grouping companies had holdings in each other, as a consequence of such historic arrangements. 

Edited January 18 by Compound2632

[DenysW]

21 minutes ago, Compound2632 said:

The Midland had been a long-term shareholder in the Great Western, from its early investment in the South Devon Railway. 

This actually looks to me like the (very) early Midland in  the second half of 1847 making good on a commitment by either the Bristol and Gloucester (Broad Gauge) or the Birmingham and Gloucester (standard gauge) to support the (Broad Gauge) South Devon, and to see if its atmospheric railway could solve the Lickey Bank. There was £60,000 on the Capital account for South Devon shares in 1847,  as well as slightly more again split across the MS&L, the South Staffs, and the Manchester, Buxton, Matlock And Midland Junction.

 

As to the Midland being a GWR shareholder, I'm not so sure. The South Devon payments appear in the Net Revenue part of the accounts until the first half of 1881, but not the second half. The income from the MS&L disappears in 1875, and the South Staffs at the end of 1872.

[DenysW]

8 hours ago, Nearholmer said:

The Midland was “well up” on electrification, and using a more advanced system than the NE; their electrical team were smart cookies.

Agreed.

 

But the NER started declaring  a steady 1.2 million passenger electric train-miles/year in 1905, about 8% of their steam passenger train-miles. The Midland didn't have enough to declare them separately. For down-and-dirty passenger-service experience, I'd partner with the NER. The NER electrical goods was negligible, at about 6,000 train-miles/year.

[pH]

1 hour ago, Compound2632 said:

..,

Then there were the 'political' alliances: with the Chatham against Watkin's South Eastern, with the South Western against the Great Western, and with the G&SWR and NBR in Scotland - including propping up the Forth Bridge.

..,

The G&SWR was not involved in the Forth Bridge Railway Company. In addition to the NBR, the NER, GNR and MR were partners in the company.