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Sunday, 19 February 2012

'The Railway Company do not want it.' - The L&SWR's Purchase of the Southampton Docks

One of the biggest events in the London and South Western Railway’s (L&SWR) history was the company’s purchase of the Southampton Dock Company (SDC) in 1892. This was not just important for the company, in that it secured the company’s traffic flows, but it also turned Southampton into one of the world’s great trading ports by World War One.

Originally, in the 1830s the London and Southampton Railway (which would become the L&SWR) had been promoted with a docks portion attached to the plan. However, for various reasons, in 1835 the two projects were split into separate railway and dock companies, forcing each to become liable for their own profit and losses. Yet, throughout its history the L&SWR relied on the Dock Company for a large portion of its traffic. As Charles Scotter, the L&SWR’s General Manager, stated in 1892, the railway had ‘no interest in any other port’ and it was ‘entirely in the interest of the L&SWR to develop trade at the port.’[1]

However, by the mid-1880s the L&SWR was a successful company, despite internal management problems, while the SDC was losing money because of poor management. This was because it did not possess a deep water dock that could accommodate the newest and largest kinds of vessels, and its dock-side technology was antiquated. Scotter stated that in his opinion the Docks at Southampton were ‘twenty or thirty years behind nearly every other port in the country.’[2]

Thus, major shipping companies were removing their business from the docks. The L&SWR’s staff magazine, The South Western Gazette, reported in August 1882 that the Union Steam Ship Company had removed their services from the port and the L&SWR’s General Manager at the time, Archibald Scott, was negotiating with Peninsular and Oriental (P&O) for them to stay there. The Gazette reported that 'traffic...is rapidly and surely declining...' and '...dock companies were availing '...themselves of the dock accommodation which London [Docks] alone can supply...’[3]  This was problematic for the L&SWR. In the five years between 1881 and 1886 the tonnage of goods coming through the docks as a percentage of the total hauled on the L&SWR dropped from 16.92 per cent to 9.88 per cent. 

Ultimately, the SDC did not have the capital or capital raising ability to make the improvements to attract trade back to the port. Its declining profitability meant that the dividend it paid fell from £2.00 per ordinary share in 1881, to nothing in 1885.[4] This affected the level of capital that the dock company could attract and its Chairman, Steuart McNaughten, revealed in 1892 that the capital the company was authorised to raise totalled £2,037,547, but that £386,298 had not materialised. Thus, the L&SWR was faced with one its main sources of traffic rapidly heading towards ruin, with no hope of a revival of its fortunes without external help.[5]
Firstly, in 1886 the L&SWR lent a financial hand to the Dock Company. In 1885 the dock company and the Corporation of Southampton attempted to pass an act of parliament whereby the Corporation would lend the SDC £220,000 for a new deep water dock.'[6] This failed, and later that year the SDC made an agreement with the L&SWR which effectively turned it into a vassal state of the railway company. The L&SWR would raise a stock of £250,000 which would be subscribed to the SDC, and the money would be spent on a deep water dock and all necessary equipment. Additionally, four L&SWR directors would sit on the Dock Company’s board and all designs and works were to be approved by the L&SWR engineer. There would also be the option, for fairness sake, for the Great Western Railway to come in on the agreement within three years.[7]

The bill passed in May 1886[8] and the new “Empress Dock was opened on 26th July 1890 by Queen Victoria. However, it was without equipment of any sort and required £200,000 to £300,000 extra to make it fully functional.[9] Furthermore, the L&SWR’s investment had not improved the dock’s trade significantly.  In the seven years between 1886 and 1891 the goods coming through the Southampton Dock Company as a percentage of the total goods the hauled on the L&SWR had only marginally increased to 12.13 per cent. Indeed, this had fallen from a higher point of 13.89 per cent in 1889. Yet, by 1890 all the money agreed to have been spent, despite the L&SWR raising £50,000 extra in 1889. Furthermore, the SDC had been unable to raise any new capital through a second preference issue in 1891 of £84,000, of which only £34,265 was subscribed.[10]

Again facing ruin, the SDC’s proprietors acted. At an Annual General Meeting in February 1891 a motion passed that 'the directors be requested to open negotiations with the London and South Western Railway Company with a view to taking over the Docks.'[11] Yet, the L&SWR was clearly reluctant to do this. In 1891 the L&SWR’s Chairman, Dutton, wrote to the Dock Company stating, 'it should be distinctly understood that the Railway Company are not to be regarded as in any sense seeking to acquire the Docks...'[12] Furthermore, in 1892 at the Parliamentary enquiry into the L&SWR’s purchase, Scotter was asked if 'this was the sort of harbour which should be handed over to a railway company rather than be kept in the public interest?' His response was that 'The Railway Company do not want it.'[13]

Yet, the railway company had no option than to purchase the docks, save it from ruin and secure their traffic flows. Dutton’s letter to the SDC’s board stated that the L&SWR would acquire the docks 'in the belief that it would be an advantage to the Dock Company and to the trade generally of the town of Southampton.'[14] Yet, Scotter was more categorical about the reasons for the purchase. After his above response was asked 'then why do you take it [the docks]?'  He replied the acquisition was imperative 'because we see that the trade of the town and of the port will diminish unless we do.'[15]

The take-over of the Docks received Royal Assent in July 1892,[16] the transfer of control being active from the 21 October 1892.[17] Over the next eighteen years the L&SWR expended 26.96 per of its capital improving and expanding the docks, vastly increasing the trade flowing through them.[18] Indeed, the L&SWR’s purchase saved the docks and eventually turned Southampton into one of the nation’s great trading ports.

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[1] The National Archives [TNA], RAIL 1066/2735, Parliamentary Bills and Minutes of Evidence, etc., Southampton Docks, 1892, Mr Charles Scotter, 2 May 1892, p.104
[2] TNA, RAIL 1066/2735, Parliamentary Bills and Minutes of Evidence, etc., Southampton Docks, 1892, Mr Charles Scotter, 2 May 1892, No. 1004 p.107
[3] South Western Gazette, August 1882, pp.4-5
[4] TNA, RAIL 1066/2735, Parliamentary Bills and Minutes of Evidence, etc., Southampton Docks, 1892, Mr Steuart McNaughten, 28 April 1892, p.24
[5] TNA, RAIL 1066/2735, Parliamentary Bills and Minutes of Evidence, etc., Southampton Docks, 1892, Mr Steuart McNaughten, 28 April 1892, Nos.5 and 6 p.3
[6] TNA, RAIL 411/7, L&SWR Court of Directors Minute Book, 26 March 1885, Minute No.1675
[7] TNA, RAIL 411/211, L&SWR Special Committee Minute Book, 28 October 1885
[8] TNA, RAIL 411/7, L&SWR Court of Directors Minute Book, 13 May 1886, Minute No.1982
[9] TNA, RAIL 1066/2735, Parliamentary Bills and Minutes of Evidence, etc., Southampton Docks, 1892, Mr Steuart McNaughten, 28 April 1892, No.139, p.34
[10] TNA, RAIL 1066/2735, Parliamentary Bills and Minutes of Evidence, etc., Southampton Docks, 1892, Mr Steuart McNaughten, 28 April 1892, No.15 p.4
[11] TNA, RAIL 870/4, General Meetings of the Southampton Dock Company, 17 February 1891, p.114
[12] TNA, RAIL 870/22, Southampton Dock Company, Court of Directors, 1 October 1891, p.294
[13] TNA, RAIL 1066/2735, Parliamentary Bills and Minutes of Evidence, etc., Southampton Docks, 1892, Mr Charles Scotter, 2 May 1892, No. 1259 p.135
[14] TNA, RAIL 870/22, Southampton Dock Company, Court of Directors, 1 October 1891, p.294
[15] TNA, RAIL 1066/2735, Parliamentary Bills and Minutes of Evidence, etc., Southampton Docks, 1892, Mr Charles Scotter, 2 May 1892, No. 1260 p.135
[16] TNA, RAIL 411/8, L&SWR Court of Directors Minute Book, 7th July 1892, Minute No.1118
[17] Pannell, J.P.M, Old Southampton Shores, (Newton Abbot, 1967) p.127
[18] TNA, RAIL 1110/283/RAIL 1110/284, L&SWR Reports and Accounts, 1880-1923

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