Speyer’s scrutiny, however, must have included some great leaps of faith. Basically railways are fairly simple businesses, but predictions on both lines in the accounts are difficult to make. On the expenditure side, it was possible to devise a fairly robust assessment of the cost of tunnelling, but the bill for stations, which required the acquisition of potentially very expensive sites, was more difficult to calculate. On revenue, predicting numbers was – and indeed remains – a mug’s game. In the event, all the predictions for the new tube lines were massively optimistic and the investors never made any money. The number of passengers travelling on these railways was dependent on many factors, notably the state of the economy and competition from other railways, trams and, increasingly, from the most modern form of transport, the motor bus, which Speyer and Yerkes could not easily have predicted.
The investors approached by Speyer and Yerkes seem to have been convinced that the potential returns in investing in the expanding London underground network were considerable. The Americans, principally from New York and Boston, bought nearly 60 per cent of the shares, with the British taking a third and the rest mainly being purchased by Dutch investors.
The £5m, though, was nothing like enough to fund the three new tube lines and the electrification of the District. A further sum of around £10m was needed and when an attempt to raise money for the Piccadilly was made in 1903, only 40 per cent of the shares were taken up. Here, Yerkes devised his master plan, an Edwardian version of junk bonds. The reasoning was that the tube lines were bound to make a profit and the price of the shares would go up. Therefore, he would raise money through what he called profit-sharing secured notes, a concept halfway between equity and debt. The notes, of which he sold £7m worth, would be redeemable for their value – which ranged between £100 and £1,000 in either dollars or pounds – in 1908 and would pay interest of 5 per cent. But they would also, crucially, go up in value with the shares on which they were secured, ensuring that the investors would see their capital value enhanced if the tube lines were as successful as predicted. The investors could, therefore, hedge their bets by getting a guaranteed rate of return as well as sharing in the profits. Amazingly, despite the scepticism over UERL’s share placings, this scheme, together with a successful rights issue to the original investors, brought in all the money Yerkes required. Needless to say, it was a decision that the investors would greatly regret. In total, with various other issues of debenture stock, Yerkes raised £18m to invest in London’s Underground.
*
But was there a more cunning plan behind Yerkes’s thinking, related not to railways but to property? Did he really expect to earn a fortune through railways or were they a device to make money through increasing land values? Yerkes had always taken a great interest in the property served by his railways. There are several versions of the story of how Yerkes made field studies of the area around Hampstead and Golders Green. The best account describes how, in autumn 1900,
two men drove in a hansom cab over the lofty heights of Hampstead Heath high over London. From time to time, the driver drew in his reins, allowing the men to leave and walk over the open spaces. Barely a rooftop could be seen. Later they took the cab down to see the level fields north of the hill. The only feature here was an isolated crossroad, fringed by a couple of old houses and some farm buildings. They had reached the rural hamlet of Golders Green, not far from Hendon.16
One of the men was Yerkes and his companion, who is the source of this tale, was Harley Hugh Dalrymple Hay. Other accounts suggest that Yerkes actually sent an agent and only visited the site later, but whatever the precise details, Yerkes chose the bleak land over the hill from the Heath as the depot and terminus for his new railway, the Charing Cross, Euston & Hampstead line. Quite possibly, too, he invested considerably in the land, something he had done before in Chicago, to profit from the development. The principal historians of London’s transport postulate that Yerkes profited in this way, though their evidence is thin: ‘many eligible building sites had been acquired by an American-sounding concern calling itself the Finchley Road & Golders Green syndicate’.17 Certainly, if this is the case, Yerkes might have made a lot more money from these property interests than from the building of the line itself.
The Hampstead line, however, had to wait rather longer to be revived than the Baker Street & Waterloo, where work soon restarted after Yerkes took over and had raised the money. Construction proceeded smoothly, apart from the odd glitch such as the Board of Trade requiring enhanced standards of access and safety which forced the company to rebuild Oxford Circus, ‘making it the only tube station to be substantially rebuilt before it even opened’.18 Various additional stations such as Regent’s Park and Lambeth North, allowed by the constant stream of new Acts which enhanced the scheme, also had to be accommodated at a late stage, but towards the end of 1905 empty trains were testing out the system. The Edwardians took as much trouble as their Victorian predecessors to ‘sell’ the new railway to the public. Just before the opening ceremony in March 1906, teams of journalists were given free rides along the line, lunched at the Great Central Hotel at Marylebone and left ‘happily clutching their [publicity] hand-outs’,19 probably not very different to those given to their successors when the Jubilee Line Extension opened in 2000.
The journalists were informed about the host of innovations – all of US origin – which helped improve both performance and safety, such as automatic signalling using track circuits to indicate when a train was in a particular section of the line, a system that became universal throughout busy sections of Britain’s railways; and a train stop system, a mechanical device which stopped trains automatically if they went through a signal at red.20
There were clever little innovations for passengers, too. One was the use of compressed air to allow lift operators, who also collected tickets, to open the gates at the far end so that there could be a oneway flow, with people using different sides to enter and exit. While such ‘people management’ concepts may seem trivial, they were the kind of improvement which made a tremendous difference to the everyday operation of a system that had to cope with massive numbers at rush hours.
The lessons of the Central had been learnt and the rolling stock consisted of multiple units, rather than carriages hauled by heavy locomotives. The cars, a term which betrayed their origins in the USA where they were built, were assembled in Manchester, then taken by rail to Camden Town in north London and then onto the tracks near Elephant & Castle after being hauled, partially dismantled, through London by horses in the early hours of the morning to avoid disrupting the traffic.
The first section of the line, between Lambeth North (then called Kennington Road) and Baker Street, opened on 10 March 1906 with a standard speech, this time from Sir Edwin Cornwall MP, the chairman of the London County Council.21 There was little ceremony, except a luncheon at the Great Central at Marylebone, ‘served in faultless style in the charmingly decorated dining-hall’ according to a contemporary account. Sir Edgar Speyer, who had replaced the ailing Yerkes as chairman of UERL, must have thought that the Progressives, who had been swept out of office by the Conservatives, were still in power at the LCC because his speech was clearly geared to their agenda. He told the audience in offering the Loyal Toast to the King and Queen: ‘This line will furnish great advantages to the poor people of this great metropolis, and I think it will be the first step towards the solution of the problem of the housing of the poor which the Queen has so much at heart.’
The London Evening News called the line ‘Baker-loo’ in one of its early stories about the new railway and the moniker caught on quickly, but the precise authorship of the first use of the name remains one of those little mysteries which historians of the system love to debate. Other suggestions, such as the ‘Loo’ proposed by the rival Star newspaper, were ignored and ‘Bakerloo’ was adopted officially by the railway in July 1906. This incurred the wrath of the haughty editor of the Railway Magazine, G.A. Nokes,2
2 who complained that ‘the announcements placed outside the stations of the Baker Street & Waterloo Railway that it is the Bakerloo Railway are not likely to increase the popularity of this struggling concern. Some latitude is allowable, perhaps, to halfpenny papers, in the use of nicknames, but for a railway to adopt its gutter title is not what we expect from a railway company. English railway officers have more dignity than to act in this manner.’ This was a thinly disguised attack on the Americans who clearly were not going to receive any gratitude from the likes of xenophobes such as Nokes for having financed and built a railway which the British had singularly failed to support.
The stations were the first built to a design pattern created by Leslie Green which was used on all the new Yerkes tubes, a style familiar to any Londoner today who looks above the fascia of many central Underground stations where the ruby-red glazed tiles characteristic of Green’s designs can still be observed. They were nearly all originally two-storey buildings with arched windows at mezzanine level but the flat roofs were designed to allow future development. The colour was deliberately chosen to make the buildings stand out from their neighbours, but one history suggests, rather unfairly, that ‘their art nouveau and sombre dark rhubarb [sic – the colour has been given various descriptions] elevations soon palled’. Not so. While not as striking as their art deco 1930s successors and, indeed, rather restrained, they are a dignified and elegant early example of branding, and their uniform appearance helped to create an identity for the Underground system.
Down below, there was the clever device of using different colours for the patterns of tiles in each station, perhaps to help illiterate passengers identify their stop. The station names, too, were marked out in coloured tiles, set against the mostly white background. It was neat and unadventurous but effective styling. Green, who designed all the stations on the three tubes, died aged only thirty-four in 1908, just a year after the completion of his last one.
For Londoners, the line was a boon. The journey from Piccadilly Circus to Baker Street cost just twopence and took seven minutes. On a horse omnibus, the fare was the same but the minimum journey time was twenty minutes. The horse cab took fifteen minutes for a fare of one shilling and sixpence. Yet, despite this advantage, the Bakerloo, the first of Yerkes’s new lines, proved an unhappy but accurate augury for his other schemes. Ridership was well below expectations: although 37,000 travelled on the first day, in subsequent weeks the line appeared almost deserted. In April, the Daily Mail23 recorded that only eighty-six people were on a train leaving Baker Street in the evening rush hour and other newspapers seemed to take a delight in publishing photographs of empty trains. These numbers suggested that the investors were never likely to get the promised returns and, indeed, would be lucky to receive any. Yerkes had decreed that there should be a single flat fare, as when the Central opened, of twopence. This was part of a much wider concept espoused by Yerkes, who argued that flat fares had an important social effect. In terms which suggest that Yerkes was something of a transport visionary, and not just a rather money-grabbing entrepreneur, he had told the Royal Commission on London Traffic which sat between 1903 and 1905 that ‘the acme of railway transportation in the City of London and its suburbs would be that a person could travel from any one point to any other point, making connections from one line to another, all for a single fare. That would be the perfection of travel and it will never come about unless there is an amalgamation of the railways.’ Yerkes argued that until then, people were confined to one particular zone or line, whereas on the lines he controlled in Chicago, ‘a person could travel from the heart of the city five blocks away where the well-todo people lived for twopence halfpenny and for the same fare could continue his ride further, which took him out on the prairie’. His aim, he said, ‘had always been not only to build up the suburbs, but to induce the working classes to go there’ and his vision for London was the same: ‘What London needs for its working classes is fresh air and green grass, and they will never get either with the railways and tramways in the condition that they are, at the present time, or being run as they are.’ Maybe one has to take all this with a pinch of salt, given Yerkes’s past, but there is a well-articulated philosophy here that is not much different from the one espoused by the first underground pioneer, Charles Pearson. Indeed, the journalist R.D. Blumenfeld confirms that Yerkes was always forward-thinking. In his diary for 1900, Blumenfeld says of Yerkes: ‘he predicted that a generation hence London will be completely transformed; that people will think nothing of living 20 or more miles from town owing to electrified trains. He also thinks that the horse and omnibus is doomed.’ Blumenfeld was not convinced, adding: ‘Although he is a very shrewd man, I think he is a good deal of a dreamer.’24
The second of the Yerkes tubes to open was the Great Northern Piccadilly & Brompton railway, an amalgam of a series of schemes conceived in the five years before work started in 1902. The first outline for this route had been put forward by the perennially broke District as a way of relieving traffic on its busy section between Earls Court and Mansion House. It was to be an underground express line, with just one stop at Charing Cross, and it obtained Parliamentary approval in August 1897, despite the District showing no ability to finance it. On the same day, Parliament also approved plans for a more conventional tube line between South Kensington and Piccadilly Circus, which included stops at Knightsbridge and Hyde Park Corner, under the name of Brompton & Piccadilly Circus. The latter tried to raise capital the following year, but failed and was taken over by the District which obtained powers to connect the two schemes in August 1899. The various sections of the line began to coalesce into a coherent concept but still without any sign of finance being available. Simultaneously, an entirely separate tube railway system, the Great Northern & Strand, had obtained parliamentary powers and it was intended to stretch between the Aldwych and Wood Green, via Finsbury Park. Despite its name, it was not promoted by the Great Northern although that railway appears to have been supportive of the idea. Merging these two proposals created what would be London’s longest tube line but inevitably the proposals for the termini varied. The section to Wood Green from Finsbury Park was dropped but the western section from South Kensington was extended to Hammersmith, providing extra connections. All but a tiny section, at the western end, was to run underground.
The man who pulled these disparate schemes together was, of course, Yerkes. And, as with the Bakerloo, it was Yerkes who managed to get work started, some five years after the idea had first been approved by Parliament. But first, this time, he had to beat off a fiercesome opponent, no less than John Pierpont Morgan, the most powerful financier in the USA. And amazingly, because he was prepared to play it dirty – even more so than J.P. Morgan who himself attracted considerable opprobrium for his business methods – Yerkes, a smalltime hustler in comparison with his rival, won. Predictably, the way Yerkes achieved this victory attracted controversy and criticism.
Morgan, like many US financiers and industrialists, had begun to look east for business opportunities and spent some time in the UK in 1902, including attending the coronation of King Edward VII. Morgan had made his banking fortune during the American Civil War by continuing to do business while many rivals did not dare, but also later specialized in rescuing and amalgamating bankrupt railroads. Most famously, he bailed out the US government when it found itself short of reserves and he organized the United States Steel Corporation, the largest combination in the world, with a capital of $1,400,000,000, the first billion dollar corporation. He also established the shipping combine in the North Atlantic trade, including the White Star Line, and his reputation for being able to make money was such that ‘peddlers on the London streets were selling for a penny a “licence to stay on the Earth” signed J. Pierpont Morgan’.25
When Morgan backed a scheme for about forty miles of tube railway in London, including a line from Tottenham and Southgate in north-east London to Hammersmith in west London, pretty much the same
route as the two main proposals which constituted the eventual Piccadilly Line, he expected to get his own way. But Morgan and Yerkes were not the only ones with an interest in this route. A third player was London United Tramways (LUT), a company which was keen to run a line through Kensington and Westminster, the two snobbish boroughs which had banned tramways from their streets and were therefore ripe markets for underground lines. In order to smooth the Parliamentary process, Sir Clinton Dawkins, the man leading Morgan’s bid, agreed to share with LUT a section of the planned railway between Charing Cross and Hammersmith, on the understanding that LUT would have a 50 per cent stake.
Morgan promised trains which would travel at an average of eighteen mph while Yerkes’s were to be slower, at sixteen mph. Asked about this, his engineer James Chapman showed the extent to which Yerkes’s team were prepared to be economical with the truth. In reality the slower speed was due to the lack of power in the motors but Chapman, in evidence to the committee, claimed that the matter was ‘not a question of engineering or the manufacture of apparatus, it is a question of the endurance of the passengers. A passenger cannot be handled like a bullet in a gun.’26
Both sets of plans were accepted by Parliament, even though the peers appointed to scrutinize the bills must have realized that there was no chance of two such similar routes being built. Indeed, they imposed a condition that was to be fatal to Morgan – the schemes had to be completed in their entirety or else Parliamentary approval was not valid. But even they probably had not realized that Yerkes was prepared to play quite so dirty in order to scupper his rival’s scheme. Yerkes and Speyer found a weak point in Morgan’s plan, the link with LUT. Speyer approached LUT, which apparently could not reach a final agreement with Morgan over the finances, and bought a controlling interest. The reasons for LUT betraying its partner are unclear, though there is speculation that the directors were keen to cash in their shares at a good price. Once Speyer had acquired control, the LUT/Morgan plans were doomed because the part of the scheme for which that consortium was responsible, Hammersmith to Hyde Park, would not now get built and thus their Parliamentary powers fell. Morgan’s other tube plans swiftly collapsed and he withdrew from the scene with a bloody nose. From the USA, he telegraphed his British partners: ‘deeply sympathetic with you in your bother over Tubes. Would seem to be the greatest rascality and conspiracy I ever heard of …’27 As the authors of the history of London’s transport suggest, ‘a weighty comment indeed coming from the man who was then the world’s leading authority on such matters’. MPs were infuriated by the underhand move by Yerkes and Speyer and there were several pained speeches in the Commons in a debate in October with much talk of a ‘dirty transaction’ and ‘a scandal which had probably no precedent’.28 But by then, work was well under way and there was little that could be done. In any case, there is a hint of cant about the MPs’ readiness to criticize Yerkes, prompted by a xenophobic attitude towards the American financiers who were pressing to develop railway lines in the capital.
The Subterranean Railway Page 20