Stewart Purkiss 1928

TEMPORARY CRISIS OR STEADY DECLINE OF THE RAILWAYS


Source: The Labour Monthly, Volume 10, November 1928, pp. 653-662 (3,266 words)
Transcription: Ted Crawford
HTML Markup: Mark Harris

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Slowly the British workers are coming to see that “the old pre-war days” are done with; that the condition and the conditions for which they stood are things of the past; that the new economic facts must be faced.

Such a decision will be welcomed by the owning class and by the reformist trade union leaders as “Balm in Gilead,”; for to them the “facing of economic facts” by the workers spells the easy acceptance of wage cuts, the continued maintenance of dividends. But the decision will be welcomed by the revolutionary for an entirely opposite reason; the revolutionary will see in the decision to face economic facts the evidence that the British working class now treads the road which leads to a revolutionary workers’ government.

Our Mistake in the Mining Struggle

From 1921 to 1926 the British workers were not given clearly the revolutionary lead in the mining decline: many minor, factors were stressed; the vital factor was overshadowed by the minor issues.

The discrepancy between pithead price and consumers’ price was emphasised to an extent which caused the workers to suspect that the existence of a special form of middlemen’s extortion (abnormal even to capitalism) was the main cause of the industry’s difficulties, but detailed investigation demonstrated these middlemen’s methods to be the normal profiteering operations of capitalism. Similar propaganda was carried on around “Profits concealed in development,” “Skilful book-keeping” “prices lowered to win huge profits in the by-product industries”; all these ideas in their turn were used by both revolutionary and reformist. The revolutionary used them to prove that “the industry could pay a living wage,” and that immediate militant action was essential; the reformist used them to show that “reorganisation” was the only thing needed and that within six months, or within twelve months, “high wages” would again be available after “co-operation” had righted the industry.

Revolutionary and reformist alike failed to stress the fact that royalties, profiteering and “expert book-keeping” are essential to capitalism and that capitalism cannot, from its very nature, proceed to the task of destroying those things which are a part of itself. Revolutionary and reformist in varying ways carried on campaigns which suggested that “a rationalised mining industry can pay,” both ignoring the fact that mines have reached the point where the problems of marketing and the problems of rationalising are such that they cannot be solved within a “society” which has as its basis the retention of ownership, profits and control in the hands of an owning class.

The reformist message of mining reforms and a “fair wage” for miners within capitalism was preached then by both Right and Left; the consequent disappointment has brought disillusionment, apathy and despair to the mass of mineworkers. But wherever the “economic facts” of the mining industry were faced, the revolutionary could promise nothing save struggle this side of the workers’ conquest of power; where that was done - slowly, painfully, but without the stupidly alternating optimism and pessimisms of reformism - the revolutionary movement has been built up.

The failure to face the economic facts of the mining struggle, to perceive their revolutionary character, and to base our tactic upon a resolute acceptance of them, largely explains our failure to reap the harvest of a strengthened revolutionary organisation from the miners’ struggle. This failure goes far to explain why a mass revolutionary party in Britain has still to be built up. The mining struggle makes it clear that all the facts must determine our tactic; in preparation for the developing railway crisis let us make it our first duty to face all the facts.

No Desire for “Increasing Misery”

Despite the suspicion of the reformist we come to the facts without any hankering after “increasing misery for the whole working class.” It is necessary for this to be made clear, because for a revolutionary to face the fact of capitalist decline and coming wage attacks in his own industry immediately leads to this “increasing misery” slander being brought against him and his party throughout his union by the reformist bureaucracy.

The chief anti-revolutionary vulgarity of the reformists is that the revolutionary eagerly awaits wage attacks throughout industry which will lead to the “increasing misery” which the reformist views as the indispensable urge for revolution and the sole stock-in-trade of the revolutionary. So obsessed is the reformist with this delusion that he is wholly unable to see that, far from welcoming with glee the increasing misery of the British workers, the revolutionary party is intensely concerned that the British workers’ standard of living (higher than the general European and the colonial standards) shall be maintained and improved; and is also vitally alive to the fact that the hundred years of organisation and struggle which has won and retained that standard has produced an economic and social outlook and a preparedness for disciplined common action amongst the British workers which are the great assets in the coming struggle for class power.

The Railwaymen’s Tradition

It seems that railway workers are to be the storm centre of the next British struggle. It is of tremendous importance in calculating their reliability as “shock troops” to remember that the last twenty years have seen for them real gains achieved by organisation and by militant action. During the last twenty years - while the mass of the workers have lost ground - they have pressed on to a higher standard of living; the fruits reaped by organisation and. militancy. True that they started from a very low standard of living level, but they are still close enough to successful conflicts to be in good training; the tradition of struggle and the organisation for struggle are the concern of the revolutionary: he can leave “increasing misery” to be automatically provided by the capitalist and welcomed by the reformist as “sacrifice,” “a thousand times better than the brute force of withdrawing labour.”

The capitalist and the capitalist’s associates on the General Council in this imperialist stage of capitalism are driving the workers back into “increasing misery”; the revolutionary is not asking: “How soon can the workers be got into a degree of misery which will guarantee revolt?” but, “How will our class react to this onslaught of capitalism; at what stage will our class realise that the present method of production acts as a fetter upon production; at what moment shall we be nerved to face the vital issue of class power?” Increasing militancy, not increasing misery, is the objective of the revolutionary trade unionist. This is the end to which he considers the economic facts of the railway industry and the organisation of the railway workers are leading.

Rail Unions’ Leaders Discover a Crisis

In June, 1928, the rail unions’ leaders discovered a “crisis.” So grave was its character that even the poorest paid railway worker was appealed to to make a wage sacrifice to save “our” railways. But only the simplest soul would be certain of “crisis” on evidence from such a source; those who have seen Frank Hodges, Spencer, Adamson and Herbert Smith follow Havelock Wilson along the path of “industrial peace” realise that many of those who have not yet fully declared themselves have taken Havelock Wilson as their guide. So the pleas of Bromley, Walkden and Thomas are not in themselves sufficient evidence of a temporary crisis in the railway industry.

It is important to remember that less than three years ago - in November, 1925 - Bromley, Thomas and Walkden appeared at the National Wages Board with a demand for improvement in the conditions, wages and. salaries of railway workers which was estimated to cost 39,000,000 yearly. So effervescing was Walkden’s attack on railway finance that the Daily Herald flared into huge headlines: “RAILWAY FINANCE RIDDLED; POVERTY PLEA THAT IS UNJUSTIFIED”; he argued that the increased dividends on Ordinary Stock (3.95 per cent., 1920; 3.99 per cent., 1921; 4.83 per cent., 1922; 5.25 per cent., 1923; 5.20 per cent., 1924).were “an unfair tax” of an extra three to four million pounds a year on the workers and that it “was not quite fair to ask the workers to maintain it.” At a later stage he went even further: “We suggest,” he said, “that with the companies’ very strong financial position the companies are not really justified in coming here and asking that raids should be made on the cupboards of the railway workers.”

Such was the judgment upon the financial position of the companies made by the railway trade unions’ officials in 1925.

Rail Leaders and Danger to “Our” Railways

Walkden was a valiant “Leftist” in 1925 (it was a militant period!), but the General Strike of 1926, with its glimpse of civil war, has terrified the “militancy” out of such pseudo-Leftists as Bromley and Walkden. July, 1928, finds J. H. Thomas in the reformist saddle, and he is able to greet the rail companies’ wage-cut demand with cynical humbug about “Peace in Industry,” and to announce the 3,000,000 wage-surrender with characteristically insolent nonsense about “A lesson to the world,” “I am content to be denounced, but I say that we have not only got the co-operation of the directors, but we have contributed something to make hundreds of homes happier... The settlement is the best ever made.”

Bromley says the arrangement “being only for twelve months” can be altered; Walkden claims that “It is intended that the arrangement should stand for at least twelve months”; but the Telegraph emphasis is right to the point: “No one will grudge the railwaymen the restoration to their full scale if economic conditions make it possible.” The concessions were given as if for an urgent temporary need. The facts bear no relation to the “temporary need” suggestion; they offer no prospect of permanent revival after temporary difficulty; the facts of the railway position are not those of temporary difficulty but the cumulative facts of steady decline. The following table, giving the receipts from railway working, controverts the theory of startling collapse during the period to the end of 1927; superficially they give no clear support to our own theory of steady decline. In considering these figures it is important to remember that the changes in freight charges affect the receipts and consequently the financial day-to-day position of a railway company, but the ultimate test of the condition of the railway industry is the amount of traffic it is dealing with; this important fact is not disclosed by this table.

RECEIPTS FROM RAILWAY WORKING ONLY

Gross Receipts Expenditures Net Receipts
1913 116,581,407 73,962,437 42,618,970
1923 198,896,358 161,416,953 37,479,405
1924 196,286,637 162,196,794 34,089,843
1925 199,652,875 165,024,012 34,628,863
1926 171,852,239 153,980,141 17,872,098
1927 200,848,821 161,010,554 39,838,267

These figures suggest a considerable measure of prosperity; the rise in gross receipts from 1923 is important, and the big drop in expenditure from 1925 - a large measure of which is due to economies in labour - undermines the case for a temporary crisis in railway finance.

The economies achieved in 1927 (despite a heavy mileage increase for 1927 over 1925) are largely due to economies in labour as is evidenced by the following:-

1921* 1925 1926* 1927
Railworkers Employed 736,000 702,000 689,000 683,000
Engine Miles Run 466,000,000 590,000,000 502,000,000 603,000,000

*Coal disputes and General Strike

This combination of figures shows a most desirable state of affairs from the point of view of the railway companies; a smaller number of railway workers carrying on a greater amount of work in 1927 than in 1925.

Accepting 1925 as the period of prosperity which Thomas, Bromley and Walkden contended that it was; and in view of the fact that 1927 gives figures of increased receipts and decreased expenditure against 1925, the tentative figures of decreased expenditure and receipts for the forty weeks of 1928 (January to October) do not negative the prosperity of railway companies to a degree which should enable even Thomas “to raid the workers’ food cupboards” in the interests of the shareholders. The figures of receipts on railway working do not justify the clamour of “temporary crisis,” and render farcical the demand for “temporary sacrifice of workers’ wages.”

Clouds on the Stock Exchange Horizon

Is it then suggested that things are “set fair” for the railways? Far from it! Despite the “fair weather” suggestions of railway working receipts, despite the economies which railway rationalisation has secured, there exists a “deep depression” in railways on the Stock Exchange.

A comparison of the amalgamation date and present-day values of railway stocks yields such startling results as:

At Amalgamation September, 1928
L.M.S. Ord. 104 57
L.N.E. 5 per cent. Pref Ord 76 29
Gt. Western Ord 109 87

These special instances become still more interesting when backed by the total figures of values for the four groups.

Market Price Market Price
Par Value 1923 September 1928
1,088,142,000 887,649,000 719,887,000

So, despite the passing into law of the Railways Road Powers Bill, despite the indirect aid to railways through the new rating proposals, despite the “co-operation” of the railway workers by the 2 per cent. cut, despite the active propaganda on behalf of railway shares in the finance columns of the daily Press (“Stock can be bought to yield 9 per cent.”; “Southern Preferred yields 7 per cent.”; “L.N.E. can be bought to yield 9 per cent.”; “Such rates will not be obtainable for long”; “At the present level home railway stocks yield better opportunities for investors than many industrials”); despite all these factors railway stocks go from bad to worse.

Reserves, Road Transport and Collapsing Industry

One or two factors largely explain the pessimism which the Stock Exchange figures reveal. The table of figures given above indicate the net receipts on railway working of the four groups, but they are not the figures of the net receipts of the railway groups from all sources. (The net receipts will include, of course, the income on reserves, &c.)

The following table, adapted from one given in the Monthly Circular of the Labour Research Department, shows the important part which reserves and the interest on reserves has been playing in railway finances; a comparison between the “Net Receipts on Railway Working” and “Net Railway Receipts” in the table below will help to keep to the fore the extent to which the railway income, other than receipts on railway workings, has been employed to ensure the railway shareholders’ dividends.

Net Receipts To Fixed Charges To Guaranteed and Pref div. To Ord. div. Total Payments to Capital
(Millions of s)
1923 48.2 13.9 19.9 15.2 49.3
1924 44.1 14.0 20.0 15.3 49.3
1925 41.6 14.4 20.9 13.6 49.9
1926 23.7 14.6 21.0 5.9 41.5
1927 45.9 15.1 21.1 9.7 45.9

These figures serve to remind us that while 1927 receipts on rail working showed an increase on 1925, it is very important to remember in considering the total railway income that in 1925 ɥ6,892,888 and in 1926 17,199,139 were “added to net income by transfer from reserve funds and profit on the realisation of investments,” and that this has had a most serious effect on the reserve and depreciation funds. These reserve figures are so variously presented that it is necessary to use them with great care, but a fair comparison indicates that the class of reserves which in 1925 was 103,341,313, in 1926 was 86,430,675 and in 1927 was down to 78,600,943.

So, while it is true that there stands in reserves a sum which renders farcical the panic of J. H. Thomas and renders criminal the recommendation of the 2 per cent. cut as a measure against immediate temporary collapse, it is also true that these figures evidence the fact that reserves have played a great part in the “prosperity” of British railways in the past seven years, and the added fact that the past distribution of reserves to go to pay the dividends on “Ordinary” and other stocks has largely destroyed the possibility of reserves being employed to save the railway position during the decline which faces them. In taking the long view of the future of British railways the question of reserves is of real importance.

Road transport is a feature of railway decline which has been greatly over-emphasised. The Southern Group, which, for instance, should have been most badly hit by road competition, is doing so well that it proves that the gravity of road competition has been exaggerated.

But together with the loss of reserves one other factor in the railway situation is of importance, and of much greater significance: the figures of the actual tonnage carried.

General Merchandise Coal, Coke & Fuel Other Minerals
Tons Tons Tons
1913 67,755,470 225,601,127 71,067,357
1921 50,529,878 128,298,861 39,066,544
1922 52,844,466 200,102,316 48,678,846
1923 58,979,989 222,234,412 62,023,237
1924 60,947,377 209,160,559 65,392,967
1925 59,739,284 193,661,991 62,549,965
1926 53,439,125 114,098,398 48,059,504
1927 60,567,490 199,306,792 65,586,367
Jan-Jun
1927 32,240,000 100,790,000 34,210,000
Jan-Jun
1928 30,040,000 93,570,000 30,710,000

These figures are the key to the developing crisis in the British railways. They are the final answer to the pleas for “sacrifice,” “gradualism,” “waiting for a revival of industry” and “an industrial change of air,” which are the only arguments of the railway unions’ leaders. The inroads made upon reserves in the last few years have told upon the “constitution” of British railways: a complete change of “industrial air” is the only suggested remedy, but the news from South Wales, from Notts, from Fife, from Northumberland, from Lancashire and from Durham; the figures of mining, shipbuilding, textiles and engineering, show no prospect of the much-heralded industrial revival. The capitalist system in Britain now acts as a fetter on production; the outstanding fact for the workers is that, under capitalism, British heavy industry cannot be rationalised into prosperity; the friction essential to the process would wear British industry to pieces.

Because capitalism in Britain now acts as a fetter on production; because the nature of capitalism renders impossible drastic rationalisation; because the conflicts inherent in capitalism (international, industrial, social) rapidly reach the stage at which they must be resolved, it is plain that to sacrifice now and to wait for a happy future in a world beyond the next Labour Government (There is a happy land, far, far away) is a futile policy. There is no salvation for British industry in wage cuts with struggle; there is no salvation for British railways in 21 per cent. sacrifices without struggle. British railways rose with British heavy industry; on the fate of heavy industry rests the future of the British railways.

As with mines, so with railways. British mines cut wages to compete with European mines, so British railways cut wages to compete with road transport. Mining has now discovered that wage cuts cannot create markets; railways have now to learn that lesson. Mining rationalisation has led to mass unemployment amongst miners; railway rationalisation will produce the same effect. The attack on miners’ hours was essential to capitalist mining; the attack on the railwaymen’s day will inevitably come. Hodges, Spencer, Adamson and Herbert Smith have chosen their side in the struggle; where Bromley, Walkden, Cramp will stand there is now no doubt.

The British railway worker is faced by developing crisis. The railway leadership is hopeless. The owning-class Government will be against him even more openly than Baldwin is against the miners. A revolutionary party in Britain has as its first duty to get the railway workers to prepare for the struggle ahead, the duty of convincing the rail worker of the class character of the approaching struggle, with the ensuing task of making plain the necessity of a revolutionary workers’ government.