I have recently purchased the six copies of The Railway Magazine which were issued in 1948. The first of these coincides with the formation of British Railways, and the January/February 1948 issue of the magazine  highlights for the readers a little of the history of railways in Britain which led up to that momentous occasion. A copy of the article is reproduced in Appendix 1 to this article.
The Railway Magazine was not alone in seeing the 1st January 1948 as a significant landmark in railway history. The Guardian carried an article on 30th December 1947 which said: “Of all the landmarks in Britain’s railway history, January 1 1948 will probably be outstanding. It is over a hundred years since railway nationalisation was first advocated. Since then enthusiasts for State ownership have never ceased to proclaim the benefits to be obtained, though in 1867 Sir Rowland Hill in a minority report as a member of a Royal Commission on Railways gave a warning of the “undue enlargement of expectation”. The clamour became louder towards the end of last century when the trade unions took it up strongly and after the first world war nationalisation nearly became a fact. Since then the pressure has continued to grow, culminating in the Transport Act of last August which provided for the transfer of the railways to the State on January 1. Thus after more than a century of controversy the decision has been taken.” 
That article in the Guardian asserted that: “Originally, the main planks in the argument were private versus public ownership and the effects on production and distribution supported by allegations of railway inefficiency: now the emphasis is placed on coordination of all forms of transport.” Indeed, apart from political dogma, that does seem to have been a significant factor in the decision-making of the time. The article in The Railway Magazine states that on that day: “The four mainline railways, the various joint lines, and those minor railways … under government control since the outbreak of the recent war, pass into the ownership of the British Transport Commission, under the provisions of the Transport Act, of August 6, 1947.” [1: p1] … “The Act provides for setting up bodies called Executives, … to assist the Commission as its agents. … As at present contemplated there will be the following: Railway Executive; London Transport Executive; Docks & Inland Waterways Executive; Road Transport Executive; and (from a date to be fixed) Hotels Executive.” [1: p2]
Interestingly, The Railway Magazine article suggests that the history of public railways in Great Britain up to 1948 (a period of around 150 years) could be divided into a series of eras each about 25 years in duration. [1: p1]
First, a period of horse-operated railways; second, the transition to steam-power; third (1848-1873), an era of competition; fourth, was a time of increased desire on the part of the industry to reduce competition through amalgamation which was not supported by Parliament; fifth (the early 20th century), was largely non-competitive with an increased tendancy towards grouping. [1: p1]
The last quarter-century before 1948 followed the Great War. The government’s outlook was changed by the War. Grouping was imposed by Statute, amalgamating 123 existing companies into the Big 4 of the GWR, The Southern, the LNER and the LMS. [1: p2]T.R. Gourvish, writing in the mid-1980s , said: “The origins of some of the difficulties facing nationalised railways when the newly created British Transport Commission took over in January 1948 lie in the inter-war years and, indeed, in the industry’s position before the First World War.” [6: p1] Government intervention in the industry and other factors, from 1900 on, limited railway companies freedom to choose and charge for the traffic they carried:
- A public service obligation was laid on railway companies.
- Labour costs were the subject of government control
- A steadily increasing capital burden.
- Lower and lower operating margins
Interestingly, “Such realities were masked by the railways’ continuing dominance of inland transport and their ability to provide reasonable returns to investment. In 1910-12, for example, the net rate of return on capital raised (excluding nominal additions to capital) averaged 4.23 per cent, and this was much the same as 40 years earlier when interest rates were higher.” [6: p1]
Increasingly, after the Great War, and particularly after the years of depression which followed, “the transport environment changed radically. Road transport began to challenge rail successfully in a number of markets, but especially in short-distance passenger and short- and medium-distance freight. Although the railways retained their traditional predominance in the long-distance freight business, even here profits were reduced by the instability and shrinking output of Britain’s staple industries which came with the slump in world trade. Coal output, for example, which had averaged 270 million tons in 1909-13, was 16 per cent lower in the ‘recovery’ years, 1934-8.” [6: p1]
However, these changes were not reflected in any relaxation in government control of pricing and marketing policy. “The Railways Act of 1921 had rejected outright nationalisation in favour of regulated regional monopolies; the four ‘main-line’ railways, the Great Western, London & North Eastern, London Midland & Scottish and Southern, established in 1923, represented the amalgamation of no less than 123 companies. This search for the efficiency believed to be inherent in regulated, large-scale business units marked the end of the government’s faith in inter-railway competition as a protection for consumers.” [6: p2]
Inevitably, “the continued obligation to accept traffic, publish charges, provide a reasonable level of service, avoid ‘undue preference’ in the treatment of customers and submit to government regulation of wages and conditions, left the railways vulnerable to their more flexible and less constrained competitors.” [6: p2]
Gourvish goes on to explain that by 1938, “the main-line companies were pressing vigorously for more equitable treatment. In that year net revenue fell by nearly 25 per cent. Although the trade depression was primarily responsible, the railways put some of the blame on the government’s one-sided control of freight traffic charges. The ‘Square Deal Campaign’, initiated by the ‘Big Four’ railway companies in November, demanded an end to the legal disabilities under which the railways were operating in comparison with the road hauliers – classification, publication of rates, etc. – and the case had been accepted in government circles before the outbreak of war interrupted the legislative programme.” [6: p2]
The Second World War made matters much worse. Railways were “placed under the control of 88the Ministry of Transport (from May 1941 the Ministry of War Transport), but operational management was retained by a Railway Executive Committee of railway managers. An agreement with the government established the basis of payment for traffic carried, but charges were frozen and maintenance and renewal were largely sacrificed to the war effort. The final agreement with the government, reached in September 1941 and back-dated to 1 January, gave the railways a guaranteed net revenue of £43.5 million. The government were to take any surplus earned above this figure, but it was agreed that an accumulating trust fund would be established to meet deferred repairs and renewals. Fares and rates were stabilised at the level of April 1941.”[6: p3]
In 1944 the net ton-mileage of freight carried was 50% higher than in 1938, and passenger-mileage was up by 67%. However, these statistics “obscured the underlying realities of the industry’s weakening financial position as wear and tear increased sharply without adequate provision being made for replacement and renewal. When the companies’ net earnings fell from £62.5 million in 1945 to only £32.5 million in 1946, there could be no doubt at all as to the potential severity of the post-war situation.” [6: p3]
Gourvish comments that labour costs had risen during the War by 75% coal by 92% and materials by 83%, yet charges which could be levied by the railway companies were not increased form 1939 until 1946 and then only by between 7 and 14%. However, “whatever the government had decided to do about profits and prices, there would still have remained a serious problem of under-investment as a result of war-time shortages. The companies were probably in a weaker position to initiate early provision for repairs and renewals than they might have been, and there is good reason for criticising the extent to which the railways were allowed to run down during the war, not least because Ministry officials were themselves aware that post-war replacement costs would be both high and incapable of being cleared in the short run.” [6: p4]
The results of war-time use and neglect were clear. “By 1945, there was a large backlog of repairs and renewals, and this greatly impaired railway operations for the rest of the decade. Despite the considerable increase in traffic, renewal of the permanent way in the years 1940-4 was reduced to under 70 per cent of pre-war levels, and by the end of 1945 the deficiency amounted to nearly 2,500 track miles, or about two years’ work under normal (i.e. pre-war) conditions. A similar reduction was evident in the work on structures — tunnels, bridges, buildings, etc.” [6: p4]
One example of the drastic impact of the war years on the railways is in the condition of rolling stock. According to a British Transport Commission internal memo, before the War rolling stock awaiting repair or under repair was: 6% of Locomotives; 6.5% of Coaching Stock; 2.8% of Wagons. By the end of 1946, the same memo indicated that these figures were: 8% of Locomotives; 12.5% of Coaches; 10.8% of Wagons. Respective increases of: 32%, 92% and 281%! (Sir Ian Bolton, memo., 21st November 1947, B.T.C. 517-1-1A, B.R-B. ) [6: p5]
“The difficulties of maintaining the stock of freight wagons were greatly exacerbated by the requisition and pooling of about 563,000 privately owned vehicles at the beginning of the war. These were markedly inferior to the railway companies’ own wagon fleet. At the end of 1946 over 50 per cent of them were more than 35 years old, as compared with less than 10 per cent of the companies’ own wagons; so of the total pool of stock nearly 28 per cent were over 35 years old.” [6: p5]
Gourvish comments: “The postponement of essential maintenance and renewals, coupled with the more intensive use of the network and the effects of war damage, proved to be a most unfortunate legacy for post-war managements. The results were felt well into the period of nationalised railways.” [6:p5]
The years 1946 and 1947 presented difficulties which were certainly as acute, if not more acute, than those experienced in wartime. In the words of Christopher Savage, the official historian of inland transport during the war: the problems of restoration and organisation which faced British inland transport when the war ended were scarcely less formidable than the transport problems encountered in the most difficult war years. [6: p6]
Four months after the Labour Party took office, a clear commitment to nationalisation was made public by Herbert Morrison in a statement on 19 November 1945.[6: p6] The railway companies, together with the London Passenger Transport Board, remained under formal government control until they were vested in the British Transport Commission on 1 January 1948. In 1948, the British Transport Commission delegated to the Railway Executive its functions in relation to the 4 railway companies, their steamships and other ancillary businesses but reserved to itself engagement with parliament and the government and the issue of stock. … The Executive did not have “powers to acquire undertakings, or to borrow money, nor any power to hold investments.” [1: p2]
The Railway Magazine article, with which we started this post and which appears in the Appendix below, looked forward from January 1948 to the way in which The Railway Executive would organise its responsibilities. It envisaged the creation of six regions on the mainland of Great Britain, with the railways of Northern Ireland being delegated to the London Midland Region. [1: p2, p72]
‘British Railways’ came into existence as the business name of the Railway Executive of the British Transport Commission (BTC). “The first priority of the new British Railways Board was to repair the infrastructure of the railways damaged by bombing, clear the backlog of maintenance that had built up, and make good losses in locomotives and rolling stock.” 
Though there were few initial changes to the service, usage increased and the network became profitable. 
The decades after nationalisation in 1948 brought major change in the railway network. Successive governments were committed to the elimination of steam in favour of diesel and electric traction. “Over time, with the growth of the road haulage sector, passengers replaced freight (especially coal transport) as the railways’ main source of income, and, as rationalisation took hold in the 1960s, one third of the pre-1948 network was closed.” 
- British Railways; The Railway Magazine, Vol. 94, No. 573, January and February 1948, p1, 2, 72.
- State Ownership of Railways – The Passing of and Era; The Guardian, 30th December 1947, https://www.theguardian.com/world/1947/dec/30/transport.uk, accessed on 3rd December 2019.
- https://en.m.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain_1948%E2%80%931994, accessed on 3rd December 2019.
- https://en.m.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain, accessed on 3rd December 2019.
- http://www.rail.co.uk/british-railway-history/british-rail, accessed on 9th December 2019.
- T.R. Gourvish; British Railways 1948-1973; Cambridge University Press, Cambridge, 1986.
- T.R. Gourvish; Railways in the British Economy 1830-1914; Macmillan, London,1980, p52ff.
- Sir N. Chester; The Nationalisation of British Industry 1945-51; H.M.S.O., London, 1975, p701.
- C.I. Savage; Inland Transport; H.M.S.O., London, 1957, p639.
- Parliamentary Debate (Commons), Volume 416 (Session 1945-6), 35.
Appendix No. 1￼￼￼￼