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A British Business Elite: The Chief Executive Managers of the Railway Industry, 1850-1922*

Published online by Cambridge University Press:  11 June 2012

Terence R. Gourvish
Terence R. Gourvish
Affiliation:
Lecturer in Economic History, University of East Anglia
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Abstract

An examination of the chief executives of leading British railways from 1850 through 1922 indicates that they emerged from predominantly upper-middle and upper class origins, and that they represented a new kind of bureaucratic business elite which enjoyed rising incomes and growing social status. In addition, available evidence reveals nothing to suggest that “executive immobility” was characteristic of British railway management, or that the railways were particularly inefficient or unprogressive in their choice of senior managers.

Type
Research Article
Information
Business History Review , Volume 47 , Issue 3 , Autumn 1973 , pp. 289 - 316
Copyright
Copyright © The President and Fellows of Harvard College 1973

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References

1 Erickson, Charlotte, British Industrialists: Steel and Hosiery, 1850–1950 (Cambridge, 1959)CrossRefGoogle Scholar.

2 For example, Cochran, Thomas C., Railroad Leaders, 1845–1890: The Business Mind in Action (Cambridge, Mass., 1953)Google Scholar; Chandler, Alfred D. Jr., “The Railroads: Pioneers in Modern Corporate Management,” Business History Review, XXXIX (Spring, 1965), 16–40CrossRefGoogle Scholar.

3 For example, Mitchell, Brian R., “The Coming of the Railways and United Kingdom Economic Growth,” Journal of Economic History, XXIV (September, 1964), 315–336CrossRefGoogle Scholar; Reed, Malcolm C., ed., Railways in the Victorian Economy (Newton Abbot, 1969)Google Scholar; Kellett, John R., The Impact of Railways on Victorian Cities (London, 1969)Google Scholar; Hawke, Gary R., Railways and Economic Growth in England and Wales, 1840–1870 (Oxford, 1970)Google Scholar; and Vamplew, Wray, “Railways and the Transformation of the Scottish Economy,” Economic History Review, 2nd series, XXIV (February, 1971), 37–54CrossRefGoogle Scholar.

4 A recent attempt to meet this deficiency is made in Gourvish, Terence R., Mark Huish and the London & North Western Railway (Leicester, 1972)Google Scholar.

5 In the 1850s and 1860s very few industrial companies exceeded a capitalization of £500,000, and in 1905 there were still only three concerns with assets of £10,000,000– Imperial Tobacco (£17,500,000), Watney (£15,000,000), and J. & P. Coats (£11,200,000). In the railway industry, however, nineteen companies had a raised capital in excess of £3,000,000 by 1850, and by 1870 the number was twenty-five. By 1920, twenty-one companies had a raised capital of over £10,000,000 (thirteen over £30,000,000), the three largest being the Midland (£204,000,000), London & North Western (£128,000,000), and Great Western (£100,000,000). See Payne, Peter L., “The Emergence of the Large-Scale Company in Great Britain, 1870–1914,” Economic History Review, 2nd series, XX (December, 1967), 539Google Scholar, and British Parliamentary Papers [hereafter B.P.P.], 1851, LI, 1871, LX, 1921, XXX.

6 Edwards, Ronald S., “Some Notes on the Early Literature and Development of Cost Accounting in Great Britain,” The Accountant, CVII (1937), 193Google Scholar.

7 Gourvish, Mark Huish, 262–67.

8 Ibid., 258.

9 Perkin, Harold, The Age of the Railway (Newton Abbot, 1971), 172Google Scholar.

10 For example, Grierson, James, Railway Rates, English and Foreign (1886)Google Scholar; Butterworth, A. Kaye, A Treatise on the Law Relating to Rates and Traffic on Railways and Canals (1889)Google Scholar; Findlay, George, The Working and Management of an English Railway (1889)Google Scholar. The authors were all chief executives of large railways.

11 For example, Stevenson, David, Fifty Years on the London & North Western Railway (1891)Google Scholar; Neele, George P., Railway Reminiscences (1904)Google Scholar; Tatlow, Joseph, Fifty Years of Railway Life (1920)Google Scholar. An exception is Felix J. C. Pole: His Book (1954); Pole was general manager of the Great Western Railway, 1921–1929.

12 A particularly fertile local source is The Bailie, a Glasgow paper established in 1872, with its series “The Men You Know.”

13 The companies studied were: Great Central (until 1897 Manchester Sheffield & Lincolnshire), Great Eastern (until 1862 Eastern Counties), Great Northern, Great Western, Lancashire & Yorkshire, London & North Western, London & South Western, London Brighton & South Coast, London Chatham & Dover (until 1859 East Kent), Midland, North Eastern, South Eastern [England]; and Caledonian, Glasgow & South Western, North British [Scotland]. From 1898 the managements of the London Chatham & Dover and South Eastern railways were merged as the South Eastern & Chatham.

14 Before 1850 traffic managers, engineers, secretaries, solicitors, and occasionally even committees of directors assumed the role of executive head. Neele recalls that in 1847 there were only two officers with the title of “General Manager;” Neele, Railway Reminiscences, 7. The situation changed rapidly in the 1850s, and although some companies were slow to appoint a “general manager” as such (as late as 1865 four major companies — the Great Eastern, Lancashire & Yorkshire, London & South Western, and London Brighton & South Coast — had yet to do so) the chief executive was a readily identifiable figure on most lines. His precise functions continued to vary, however. Before about 1870, some men were little more than traffic managers, lacking overall executive responsibility. The general manager of the Great Western was particularly slow to achieve primacy; until the 1920s other key officers, such as the secretary and solicitor, enjoyed independent access to the board of directors. See Pole, His Book, 40–42, 45.

15 The Act provided for the grouping of companies into four large and essentially non-competitive concerns, the changeover to be completed by July 1923. In fact, all four companies, though not fully constituted, were operational by 1 January 1923. However, the industry's independence was affected by the outbreak of World War I, and from 1914 to 1921 the Government exercised control through an Executive Committee of general managers.

16 Compare the methods adopted by Newcomer, Mabel, The Big Business Executive (New York, 1955), 9Google Scholar, and Erickson, British Industrialists, 6–7.

17 The fifteen companies satisfied the following minimum criteria:

18 There were 180 railway companies in the U.K. in 1850. This number increased steadily to a peak of 476 in 1867, then fell to 250 in 1900 and 220 in 1914; Bradshaw's Railway Manual and Shareholders' Guide, 1851 et seq.

20 Gourvish, Mark Huish, 22–23, 26–28.

21 Those with experience of canals and carrying firms were particularly useful; ibid., 28, and see Turnbull, Gerard L., “A Note on the Supply of Staff for the Early Railways,” Transport History, I (March, 1968), 3–7Google Scholar.

22 Railway Official Gazette, January, 1884.

23 Robbins, Michael, The Railway Age (London, 1962), 92Google Scholar, and see also Pollins, Harold, Britain's Railways (Newton Abbot, 1971), 68Google Scholar. For chief executive experience, however, see Table 5.

24 Of a total sample of eighty-three managers (men who held more than one major post during their careers are here counted only once). Information is too slight to permit a confident analysis of trends over time.

25 Aldington was born in Aspley, Warwicks, in 1862, and educated at the nearby Packwood School. It is interesting to note that the railway journals describe his background as “upper middle-class” — a puzzle which suggests a number of possible explanations (adoption, patronage, etc.).

20 Erickson, British Industrialists, 230–32.

27 Inevitably, the classification of some occupations is rather arbitrary (for example, in distinguishing between Class II and Class III). Information from birth certificates was available for only seven executives. Elsewhere, it was assumed that the father's occupation was that current on the birth of the executive.

28 In support of this view, it is significant that information on four of the six managers from Class IV/V backgrounds came from birth registration data. On the other hand, note Newcomer (Big Business Executive, 61): “Biographers appear to have a bias in favor of poverty, perhaps because this adds to the achievements of their subjects.” This may well be true of some accounts of managers who rose from “humble origins.”

29 Fifteen out of thirty-five cases.

30 Of a total of fifty-nine managers.

31 A similar proportion had attended Headmasters' Conference Schools (public and grammar) listed in the Public Schools Year Book of 1900. It is, of course, difficult to attach precise labels to schools over a period encompassing significant changes in educational standards and availability. Here, “grammar” schools include all those so described, plus Scottish “Academies,” and two London schools. “Public” schools include the H.M.C. schools (minus the H.M.C. “grammars”) plus the Royal Naval School and Beaumont College. Other private fee-paying schools of obscure status (for example, Cranford Hall, Hounslow) are excluded.

32 Of twenty-nine managers recruited after 1870 who joined the industry straight from school, sixteen were over the age of fifteen (twelve over the age of sixteen).

33 Railway Fly Sheet, November, 1874. Shaw, the son of A. Shaw, Esq. of Mottram, Cheshire, was educated at a local grammar school.

34 Ellis, C. Hamilton, “Lewin Papers Concerning Sir George Gibb,” Journal of Transport History, V (November, 1962), 226CrossRefGoogle Scholar, and North Eastern Report on General Reorganization, 1902, NER4/56, British Transport Historical Records (hereafter BTHR). Wedgwood, a member of the famous pottery family, became general manager of the company in 1922 and general manager of the newly created London & North Eastern in 1923.

35 Gibb to Marshall, 19 April 1902, quoted in Sanderson, Michael, The Universities and British Industry, 1850–1970 (London, 1972), 184–85Google Scholar.

36 Pole, His Book, 144–45. The comparatively slow growth of these professions in the late nineteenth and early twentieth centuries coincided with a rapid increase in middle-class numbers. See Musgrove, Frank, “Middle-Class Education and Employment in the Nineteenth Century,” Economic History Review, 2nd. series, XII (August, 1959), 104–111Google Scholar.

37 Pollins, Britain's Railways, 105–106. Note the example of the London & South Western, which guaranteed the L.S.E. £100 per annum in 1910 in return for the right to send fifty students to the School — L.S.W. Mins, 15 April 1910, 6 October 1911, LSW1/38, BTHR.

38 Pollins, Britain's Railways, 105; Pole, His Book, 146–47, and Great Western Mins, 7 January 1921, GW1/53, BTHR.

39 This is strictly true, although Charles Saunders, secretary and general superintendent of the Great Western, 1840–1863, had been educated at Winchester and Oxford.

40 The University men were A. Kaye Butterworth (North Eastern), Guy Granet (Midland), and James Inglis (Great Western), appointed before 1910; and Donald Matheson (Caledonian), Percy Tempest (South Eastern & Chatham), Henry Thornton (Great Eastern), Arthur Watson (Lancashire & Yorkshire, London & North Western), and Ralph Wedgwood (North Eastern), appointed after 1910. All but one of these men had joined the industry after 1885. The exception was Inglis, who began his railway career in 1875.

41 As defined above.

42 Note, for example, the appointments of Charles Davidson (lawyer) by the North British in 1844 and James Williams (actuary) by the Caledonian in 1846.

43 Hawke, Railways and Economic Growth, 384.

44 Pollins, Britain's Railways, 68. Both Pollins and Hawke appear to limit the discussion to the period before 1870.

45 Allport's letter to the board, 25 May 1857, Midland Mins, 7 March 1860, MIDI/17, BTHR.

46 August, 1886.

47 Pole, His Book, 2. All the G. W. chief executives were internal recruits, from Saunders (1840), to Pole himself (1921). The same was true of the North Eastern managers, from William O'Brien (1854) to Wedgwood (1922).

48 For these companies, all but one of their chief executives were imports.

49 Compare Robbins, The Railway Age, 94–95, and Pollins, Britain's Railways, 100–106.

50 Thompson joined the Caledonian at the age of fourteen as a junior clerk. After thirty-five years' service with the company he was appointed general manager in 1882.

51 Compare Robbins, The Railway Age, 92.

52 See, for example, the company's report on management reorganization of 1902, NER4/56, BTHR.

53 Gibb, born in 1850, had experience of both engineering and law before first joining the railways as a solicitor with the Great Western in 1877. He left to take up private practice in 1880, rejoining the industry as solicitor of the North Eastern in 1882. Butterworth, born in 1854, acted as a barrister and solicitor before joining the railways in 1883, also with the Great Western. He became clerk to Bedfordshire County Council in 1890, leaving to join the North Eastern in 1891.

54 Granet, born in 1867, spent much of his early career as a barrister. His first connection with railways came in 1900, on his appointment as secretary to the Railway Companies' Association. His first experience of a railway company came with his appointment as assistant general manager of the Midland in 1905.

55 That is, Robert Turnbull (London & North Western), and Percy Tempest (South Eastern & Chatham). Turnbull, about to retire, was persuaded to become general manager in 1914 as a temporary measure while Guy Calthrop, successor to Frank Ree, reached Britain from South America.

56 Forbes was general manager of the South Eastern, 1862–1898 (from 1873 he also acted as chairman); Oakley was general manager of the Great Northern, 1870–1898. Both men retired at the age of seventy-five.

57 Forbes served for thirty-six years (see above); Scott was superintendent of the London & South Western, 1852–1870, and general manager of the same company, 1870–1885 — a total of thirty-three years.

58 See values of means, Tables 6, 8, and 9.

59 For example, Robbins, The Railway Age, 91. Company practice varied, but the traffic department usually embraced operating and commercial functions, although not the provision and maintenance of locomotives and rolling stock (locomotive department). Compare Bonavia, Michael R., The Organisation of British Railways (London, 1971), 14–19Google Scholar.

60 Pole, His Book, 138. The preference for traffic recruits was also a reflection of the dominance of the traffic committee in the hierarchy of directors' committees. Compare Gourvish, Mark Huish, 167, 174.

61 See above.

62 In the period 1850–1922 there were at least five such cases, involving the Great Eastern, North British, South Eastern, Manchester Sheffield & Lincolnshire, and London Chatham & Dover companies.

63 The average rise experienced by sixteen managers for whom information exists was 53 per cent.

64 Railway superannuation, based largely on civil service practice, began effectively with the London & North Western scheme of 1853. By 1887 ten of the fifteen major companies had established such schemes, together with the Railway Clearing House, whose pension fund of 1873 was open to employees of railway companies (by 1887 twenty-five companies were contributors to it). See Mills, W. F., The Railway Services: Its Exigencies, Provisions, and Requirements (London, 1867)Google Scholar; MacGregor, D., Railway Superannuation Funds: Their Operation and Suggested Improvements (Edinburgh, 1887)Google Scholar; and evidence of C. Ansell, Select Committee on Civil Service Superannuation, B.P.P. 1856, IX, QQ. 3176–3232. Executives received life annuities, related to length of service and average salary (payments varied between about 25 per cent and 60 per cent of salary). They were often supplemented by additional bonuses. Managers with limited pension rights were usually granted lump sums, representing six months' or a year's current salary. After 1900 some managers were able to negotiate fixed-term employment contracts, with compensation to be paid if the contract were terminated prematurely. It cost the Midland £19,500 to end Frank Tatlow's contract when the company was wound up in 1922 — Midland Mins, 1922, MIDI/30, BTHR.

65 Pollard, Sidney, in The Genesis of Modern Management (London, 1965), 144Google Scholar, suggests that “top managers” were earning between £500 and £2,000 per annum in the period 1790–1830. However, he concedes that “many, if not most, of these men were partners in their firms.”

66 Routh, Guy, Occupations and Pay in Great Britain, 1906–60 (Cambridge, 1965), 70Google Scholar, and compare Table 11. Note that Routh was concerned with current earnings and not with starting pay.

67 Ellis, “Lewin Papers,” 227, and North Eastern Mins, 1900–1906, NER1/19–20, BTHR.

68 Routh, G., “Civil Service Pay, 1875 to 1950,” Economica, new ser. XXI (August, 1954), 206Google Scholar, and compare Table 11.

69 Report of the Committee Appointed to Advise as to the Salaries of the Principal Posts of the Civil Service (July 20, 1920), B.P.P. 1921, IX; Routh, Occupations and Pay, 62. The civil servants' war bonus of £500 was not included in the analysis.

70 Edward Watkin (1868), James Allport (1880), and Myles Fenton (1889). The first “railway knight” was not a general manager, however, but a locomotive engineer. Daniel Gooch, locomotive superintendent of the Great Western, 1857–1864, was knighted in 1866 for his contribution to Atlantic cable communication (he was chairman of the G. W., 1865–1889).

71 Richard Creed and C. R. Moorsom, both of the London & North Western, are notable exceptions to the rule.

72 Lawson, William R., British Railways, A Financial and Commercial Survey (London, 1913), 219Google Scholar.

73 Compare Joseph Tatlow, general manager of the Midland & Great Western Railway of Ireland, who on retirement in 1912 became a director. He later wrote: “I had long cherished the hope that when in the course of time, I sought to retire from the active duties of railway management, I might perhaps be promoted to a seat on the Board of the Company.” Tatlow, Fifty Years of Railway Life, 197.

74 Lawson, British Railways, 218.

75 The second sample was employed to enable trends over time to be more exactly pinpointed.

76 Pole left the Great Western in 1929 to become chairman of the newly-formed Associated Electrical Industries (A.E.I.); Pole, His Book, 176.

77 That is, thirty of ninety executives recruited 1850–1922, and twenty-nine of ninety-seven executives who left office over the same period.

78 Note, for example, the influence of James Allport in the Midland Railway's decision to construct its own line to London; Channon, Geoffrey, “A Nineteenth-Century Investment Decision: The Midland Railway's London Extension,” Economic History Review, 2nd series, XXV (August, 1972), 448–470CrossRefGoogle Scholar.

79 Lawson, British Railways, 218, and compare Newcomer, Big Business Executive, 14, and Cochran, Railroad Leaders, 65–70, 87–91.

80 Watkin was chairman of the M. S. & L., 1864–1894, South Eastern, 1866–1894, and Metropolitan, 1872–1894. Forbes was chairman of the L. C. & D., 1873–1904 (between 1862 and 1898 he was general manager of the company). Note also Daniel Gaoch, ex-locomotive superintendent of the Great Western, chairman of the company, 1865–1889.

81 For Watkin, see above. Gibb was chairman & managing director of the London Underground Electric Railways Co. and chairman of the Metropolitan District Railway. Bury (ex-Great Northern) was chairman of the Leopoldina Railway of Brazil and the Peruvian Corporation (which controlled about 75 per cent of Peru's railways). Thornton, an American, left the Great Eastern to become managing director of the Canadian National Railroad.

82 For example, 63 per cent of the sample of directors in Table 16.

83 That is, eleven of ninety executives recruited 1850–1922, and eleven of ninety-seven executives who left office in the same period.

84 Electricity supply; J. S. Forbes, Granet, Pole, and Wedgwood. Insurance: Allport, J. S. Forbes, and Granet.

85 On Pole, see above. A.E.I., a consortium of Metropolitan-Vickers, British Thomson-Houston, and Edison & Swan, had an authorized capital of £6,400,000 in 1931. Sir Sam Fay (ex-Great Central) was for ten years chairman of Beyer Peacock, a leading engineering and locomotive building firm. Its authorized capital was £1,400,000 in 1931. (Capital data from Johnson & Sanderson's Stock Exchange Investment Handbook [London, 1931], 541, 1149Google Scholar).

86 Allport was chairman of United Asbestos and a director of Samuel Fox & Co. and Lion Fire Insurance. He was also chairman of Brown Marshalls and the General Hydraulic Power Co.

87 Granet was a director of Lloyd's Bank, partner in Higginson & Co. (merchant bankers), and a director of A.E.I., London Electricity Supply Co., Provident Mutual Assurance Assoc, Provident Accident & Guarantee Co., and the Times Publishing Co.

88 Tatlow was chairman of Carpet Trades Ltd. and G. R. Turner Ltd., and a director of British Soda, Staveley Coal & Iron Co., and Yorkshire Main Colliery Co.

89 These activities were mostly confined to matters of communication after 1900. George Gibb, for example, sat on the Committee to consider the reorganization of the War Office, 1901, and the Royal Commission on London Transport, 1903. He became chairman of the Road Board in 1910. Similar functions were fulfilled by Butterworth, Calthrop, Matheson, and Wedgwood.

90 Hawke, Railways and Economic Growth, 384–85, and see Gourvish, Mark Huish, 265–66.

91 Compare Erickson's findings for the British steel industry over the same period, in British Industrialists, 188–191, and the analyses of American business leaders in the 1870s and 1900s, for example Frances W. Gregory and Irene D. Neu, “The Industrial Elite in the 1870's,” Miller, William, “American Historians and the Business Elite,” and “The Business Elite in Business Bureaucracies,” all in Miller, William, ed., Men in Business (New York, 1962), 193–211, 286–337Google Scholar; and Newcomer, Big Business Executive, 52–82.

92 This sometimes had the effect of delaying the establishment of the general manager as unchallenged head of the executive. See, for example, the histories of the Great Western (referred to above) and the Lancashire & Yorkshire (where the formal recognition of the general manager as leader of the executive was delayed until 1899; L. & Y. Mins, 31 May 1899, LY1/450, BTHR).

93 Compare Railway Official Gazette, January, 1884: “He is in almost every instance a man risen from the ranks, who has come to the front, not on the introduction of a friend at court, or from the influence of adventitious circumstances, but has simply taken the place won for him by his manly character and circumspect conduct….”

94 Compare Miller, “The Business Elite in Business Bureaucracies,” in Men in Business, 287–88.

95 This is in accord with the more general suggestion that there was a close relationship between chief executives and the owners of capital. Compare Mills, C. Wright, The Power Elite (New York, 1956), 118–146Google Scholar, and Bottomore, Thomas B., Elites and Society (London, 1966), 77–82Google Scholar.