Abstract: Which Was the Best-Managed Railroad in Britain a Century Ago?

Timothy Leunig, Nicholas Crafts, and Abay Mulatu

Abstract

This paper reviews the record of privately owned British railway companies in the period before World War I. Quantitative evidence is presented on profitability, total factor productivity growth, cost inefficiency and speed of passenger services. The results indicate wide discrepancies in performance across companies with return on capital employed, TFP growth and cost efficiency all falling over time in the majority of companies. Without the discipline of either strong competition or effective regulation weak shareholders were unable to prevent substantial managerial failure. This important industry is a clear exception to the conventional wisdom that late-Victorian Britain did not fail.