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Abstract
Large and complex firms combining service and manufacturing functions such as the railways offer an interesting test of the claim that between the world wars British industry sometimes successfully prosecuted industrial research in ways that do not fit the Chandlerian paradigm. In particular, the largest of the inter-war railway companies relied on networks of external technological experts as well as developing its own in-house capability, thereby reducing uncertainties and transaction costs at minimal risk to itself. The chief disadvantage to this approach was the tension generated between the technological community of ‘scientific’ researchers and the engineers who were traditionally responsible for technological innovation.
Acknowledgements
My thanks to Al Churella, David Boughey, Gerald Crompton and an anonymous referee for critical comments, and to Michael Bailey, Sally Horrocks, Alastair Gilchrist and Alan Wickens for various insights and information.
Notes
1 Edgerton, Science, Technology and British Industrial ‘Decline’,32–6; Kirby, “Institutional Rigidities,” 655.
2 Mowery and Rosenberg, Technology and the Pursuit of Economic Growth, 98–119; Mowery, “Industrial Research,” 189–222; idem, “Firm Structure,” 504–31. See also Chandler, Scale and Scope, 14–46, 235–392.
3 Edgerton and Horrocks, “British Industrial Research and Development before 1945,” 213–38. See also Edgerton, Science, Technology and British Industrial ‘Decline’,32–36; idem, “British Industrial R&D, 1900–1970,” 49–68; idem, “Science and Technology in British Business History,” 84–103.
4 Edgerton and Horrocks, “British Industrial R&D,” 224; Edgerton, “British Industrial R&D, 1900–1970,” 59. See also Graham, “R&D and Competition,” 263; Church, “New Perspectives,” 420–21.
5 Mowery, “Relationship between Intrafirm and Contractual Forms,” 351–74; idem, “The Boundaries of the US Firm in R&D,” 147–76.
6 Jeremy, Business History of Britain, 419; Edgerton, Science, Technology and British Industrial ‘Decline’,34.
7 Thomas, “The Service Sector,” 127–32; Wardley, “The Anatomy of Big Business,” 268–96; Pearson, “Towards an Historical Model of Services Innovation,” 235–56.
8 Gourvish, “The Regulation of Britain's Railways,” 117–32; idem, “British Business and the Transition to a Corporate Economy,” 26–34; Hannah, “Scale and Scope,” 297–309; Wilson, British Business History, 22.
9 In terms of market capitalization in 1934–35, first, third, fourth and sixth; Wardley, “Anatomy of Big Business,” Table 4. In terms of employees, in 1935 the four mainline companies ranked second, third, fourth and sixth amongst all firms in Britain; Jeremy, “The Hundred Largest Employers,” 100. Considered on the same basis purely as manufacturing enterprises, they ranked fifth, seventh, twentieth and twenty-seventh among British manufacturers (although this probably overestimates their importance); Johnman, “Large Manufacturing Companies,” 239, 241.
10 Carter, Illustrated History of British Railway Hotels; Pope, “A Consumer Service,” 657–82.
11 Channon, Railways in Britain and the United States, 22–52. The addition from the late 1920s of extensive investments in road transport and, from the mid-1930s, aviation, introduced elements of the H-form. In the case of the LMS it is arguable that managerial reform of the railway businesses involved aspects of the M-form.
12 Crompton, ‘ “Efficient and Economical Working”?,’ 222–37.
13 See, for example, Huxley, Scientific Research and Social Needs, 109–10; Heath and Hetherington, Industrial Research and Development, 219–25. Passing reference to industrial research on Britain's railways can be found in: Sanderson, “Research and the Firm,” 114; Crompton, “The Railway Companies and the Nationalisation Issue,” 137; Edgerton and Horrocks, “British Industrial R&D,” 232, Tables 3 and 4; and Johnson and Long, British Railways Engineering, 439–41.
14 In the mid-1930s the LMS was the largest firm in Britain by market capitalization, and probably second in size only to the GPO as an employer. Jeremy, “Hundred Largest Employers,” 100; Wardley, “Anatomy of Big Business,” Table 4. As an engineering manufacturer, it is placed fifth in Johnman's ranking for 1935. Johnman, “Largest Manufacturing Companies,” 239, 241.
15 Practice on the other railways varied, but by the early 1940s generally embraced a small chemical laboratory, controlled by the mechanical engineers, which also took responsibility for a range of experimental work across the company. The Southern Railway's provision most closely matched the scale of the LMS's, but its four laboratories were controlled by engineers rather than falling under a centralized management. National Archives (hereafter NA), RAIL 1098/32, “Report of the Combination and Centralisation of Railway Research Activities,” Railway Companies' Association Commission Report No.4 (May 1943); Johnson and Long, British Railways Engineering, 437–41; Bonavia, Railway Policy, 135–6. Wise, British Railway Research.
16 Edgerton and Horrocks, “British Industrial R&D,” Tables 3 and 4. The expenditure figures for 1945 ranked the company sixteenth, but as explained below in note 58, the LMS's return is dubious. As Edgerton and Horrocks point out, all these figures and rankings should be taken as indicative only.
17 For example, Piore and Sabel, The Second Industrial Divide, 264–5; Boyce, Co-operative Structures in Global Business.
18 See, for example, Hughes, Networks of Power.
19 Edgerton and Horrocks, “British Industrial R&D,” 228–9. Their idea of a technological community, akin to the contemporaneous communities of academic scientists (with which technologists interacted), is derived from Ed Constant. See Constant, Origins of the Turbojet Revolution.
20 Mowery, “Relationship between Intrafirm and Contractual Forms,” 351–74.
21 It might be that the organizational structure and technological requirements of all railways (or at least their British and US variants) tend to produce a set of attitudes and practices regarding technical research that is specific to the industry. But even if this were to prove the case, this study of the LMS is still of value in demonstrating the limits of the Chandlerian criticisms of British arrangements for R&D, namely that they do not wholly apply to an important sector of the industrial economy before about 1950. Demonstrating that North American railroads did not fit the Chandlerian model either would, given their importance for the US economy, simply extend the critique to the Chandlerian heartland.
22 Jones, Josiah Stamp, 177–90, 281–91, 304–18; Dictionary of National Biography (hereafter DNB), 1941–1950, 817–20; Dictionary of Business Biography (hereafter DBB), Vol.5, 260–73.
23 The Midland, Lancashire &Yorkshire, and London & North Western Railways.
24 No other serving general manager in the inter-war period took a place on the board, although in the early 1940s it was intended that James Milne of the Great Western Railway should act as managing-director. Gourvish, “The Railways and the Development of the Managerial Enterprise in Britain,” 190, 201; Channon, “Milne, Sir James,” 240–47; Hughes, “The Board of Directors of the London & North Eastern Railway,” 162–79; Channon, Railways in Britain and the United States, 176–7.
25 Stamp was the company's secretary (1920–26) and a director (1922–26).
26 Williamson, A British Railway, 177–90; Gourvish, “Railways and Development of Managerial Enterprise,” 194–95; DBB,Vol.5, 268; Pearson, Man of the Rail, 43–57; Bonavia, The Organisation of British Railways, 28–9; idem, Railway Policy, 3, 5, 10–11, 15–16, 27–8; Crompton and Jupe, ‘ “An Awkward Fence to Cross”,’ 451–2.
27 Hannah, Rise of the Corporate Economy, 27–40, 101–22.
28 The secondary literature is huge, if uneven. For an overview, see Simmons, The Railway in England and Wales, 142–238.
29 LMS Magazine 6 (1929), 146.
30 As well as mechanical engineering, the main departments were civil engineering, carriage and wagon (merged with mechanical engineering in 1931) and, from 1929, signals and telegraph. From 1934 the company's electrical engineer came under the CME. Bond, A Lifetime With Locomotives, 83; Nock, History of the LMS: The First Years, 88; idem, History of the LMS: The Record-Breaking,’ Thirties, 25.
31 ‘Sir Henry Fowler, KBE, LLD, DSc,’ 1195–6; DNB, Missing Persons, 232–3; Rutherford, “The Era of Sir Henry Fowler,” 501–9; Chacksfield, Sir Henry Fowler.
32 NA, RAIL 418/102, LMSR Reports to the Board, “LMSR Co.: Scientific Research: Report to the President,” 29 June 1929.
33 LMS Film Unit, “Scientific Research.”
34 “Laboratory and Testing Facilities,” appendix to LMSR Co.: ‘Scientific Research.’ The technical staff included 20 or so qualified chemists, defined as being in receipt of a salary of at least £250 and holding a honours degree in chemistry or possessing ‘long experience’ in the company's laboratories. See also, ‘Chemical Laboratory, Crewe,’ 342–4.
35 Mowery, “Relationship between Intrafirm and Contractual Forms,” 351–74.
36 Hartley, “Scientific Research on the LMSR,” 15. See also Herbert, “The LMS Research Department,” 516–17.
37 LMS Magazine, 7 (1930), 75; DNB, 1971–1980, 387–9; DBB, Vol.3, 89–93; Everard, History of the Gas Light and Coke Company, 363, 374.
38 The LMS's telegraph superintendent, J. Sayers, also joined the committee on his retirement. Jackson and Rintoul both died in 1936, being replaced by Sir Joseph Barcroft and Dr T.R. Merton. Post-war appointees included C.H. Desch, professor of metallurgy at the University of Sheffield; Gilbert Cook, professor of engineering at the University of Glasgow; and G. Wesley Austin, professor of metallurgy at the University of Cambridge. NA, RAIL 418/169, Minutes of the LMS Advisory Committee on Scientific Research (hereafter ACSR), 1930-33, and RAIL 418/170, 1934‐39. NA, RAIL 418/70, Minutes of the LMS Scientific Research Committee (hereafter SRC), 24 July 1946, 23 April 1947.
39 Hartley, “Scientific Research,” 15–18; ACSR, 1930–39; SRC, 1939–47.
40 Hartley, “Scientific Research,” 18.
41 ACSR, 1930–32.
42 Author's Collection, LMS, “Research and Development Department, Derby,” RD. 101/P.35, Memo. P.57, 1 June 1932.
43 NA, RAIL 418/8, Minutes of the LMS Board, 24 Nov. 1932; Wise, British Railway Research, 11–12.
44 Minutes of the LMS Board, 24 Nov. 1932.
45 Pritchard, “The LMS Research Department,” 66–68; Fancutt, “The LMS Paint Laboratory,” 592–3; “The New Research Laboratory at Derby,” 651–6; “Paint Research on the London, Midland and Scottish Railway,” 290–92; SRC, 26 Jan. 1939, 24 July 1941, 27 April 1944; Wise, British Railway Research, 25–48; Johnson and Long, British Railways Engineering, p.439; Edgerton and Horrocks, “British Industrial R&D,” Table 3. Neither the LMS's published annual returns nor those of the Ministry of Transport give numbers of research staff.
46 SRC, 26 Jan. 1939. The Committee consisted principally of junior board members and was usually attended by Hartley and Herbert.
47 Roberts, The Last Steam Locomotive Engineer, 148; Wise, British Railway Research, 50.
48 Sanderson, “Research and the Firm,” 107–51.
49 Hartley, “Scientific Research,” 15.
50 Crompton and Jupe, “Railway Capitalization,” 439–59.
51 NA, RAIL 418/171, LMS Research Memoranda, Memo. 157, “Review of Research Programme,” 13 April 1937.
52 Hartley, “Scientific Research,” 15. Mark Aldrich has made the point about safety and regulation in the US context: Aldrich, ‘“The Peril of the Broken Rail”,’ 263–91; idem, “Regulating Transportation of Hazardous Substances,” 267–97.
53 Williamson, A British Railway Behind the Scenes, 191–210; LMS Film Unit, “Scientific Research”; Supplement to The Times, 20 Sept. 1938. The opening of the Derby laboratories was celebrated with a modest pamphlet; National Railway Museum (hereafter NRM) G8/2, “LMS Research Laboratory, Derby: Official Opening Ceremony by Lord Rutherford, Tuesday, December 10th, 1935” (another copy is held at NA, RAIL 429/31).
54 Crompton, ‘ “Good Business for the Nation” ’, 141–59.
55 This judgement is based on a detailed examination of Research Department memoranda for the period 1937–38, lodged at NA, RAIL 418/171, and of a longer, but less complete, run of research reports from 1932 to 1947 in the author's collection.
56 ACSR, 10 Oct. 1933; 10 April 1934; 13 Oct. 1936. Lemon had briefly been CME after Fowler; see LMS Magazine 7 (1930), 400; 9 (1932), 5; DNB, 1951–1960, 620–21. There is–perhaps–a contrast here with the USA where, at least in the last decade of the nineteenth and the opening decade of the twentieth century, indices of operating efficiency such as the ton-mile tended to supplant those of financial economy as a measure of railroads' general performance. Usselman, Regulating Railroad Innovation, 335–7.
57 ACSR, 10 Oct. 1933; NA, RAIL 418/171, LMS Research Memoranda, Memo. No.157, “Review of Research Programme,” April 1937, and Memo. No.175, “Research Department Progress Report,” April 1938. See also Dale, “An Example of Chemical Research,” 273–5.
58 “New Research Laboratory,” 651–6; “Paint Research,” 1290–92. By 1943 expenditure on research had more than doubled, to £33,952; the capital cost of the Derby laboratories, including equipment, was £27,699. SRC, 26 Jan. 1939; 27 April 1944. These figures are broadly comparable with those given by Edgerton and Horrocks, and based on near-contemporary returns and estimates, for spending in 1930 (£13,000), 1935 (£23,000), 1938 (£28,000) and 1941 (£30,000). Their figure for 1945, taken from a FBI survey, is £200,000, which clearly implies either a very significant increase in the scale of activity, which seems unlikely (unless it included research specific to the war effort) or the use of a different basis for compiling the statistics. Edgerton and Horrocks, “British Industrial R&D,” Tables 3 and 4. The LMS's records appear to be silent on the matter, but the most likely explanation is that testing was included in the total for 1945.
59 ACSR, 10 Oct. 1933; 12 Oct. 1937; Memo. No.157, “Review of Research Programme,” April 1937. See also the reports in NA, RAIL 417/8, Minutes of the LMS & LNER Joint Committee for Experiment and Research, 1934–35.
60 Bailey, thesis, esp. 126–9. The injunction was not lifted until 1968.
61 An adequate survey of the LMS's patenting record must await a full investigation of all its technical departments, not just the Research Department.
62 SRC, 25 July 1940; 1 May 1946.
63 It is possible to argue that the LMS could have exploited patents for devices specific to the railway through royalty payments, which remained legal. But its failure to do so–if indeed a fuller investigation shows this to be the case–could indicate no more than a willingness among the four mainline companies to pool technical information in the pursuit of reduced costs generally. However, company employees did occasionally patent devices designed for the industry, which might then be subject to test by the Research Department, for financial as well as technical viability. See Author's Collection, LMS Research Department Memorandum (Engineering Section), ER.49, Memo. K.10, “Experimental Carriage Axlebox,” 27 Oct. 1938.
64 Butterfield, “Grouping, Pooling and Competition,” esp. 27–32, 41–3. On the railways' earlier pools, see Bagwell, The Railway Clearing House, 250–68; Channon, Railways in Britain and the United States, 110–27.
65 Butterfield, “Grouping, Pooling and Competition,” 27–32, 37–43.
66 Minutes of the LMS & LNER Joint Committee, 1934–45; Memo. No.157, “Review of Research Programme,” April 1937.
67 While it has so far proved impossible to determine precisely when and why the LMS entered into legal agreements with external research bodies, it is clear that some work involved payment and thus, presumably, some kind of contract.
68 See Edgerton and Horrocks, “British Industrial R&D,” 228–31 for the more general significance in the inter-war period of these technological networks.
69 Wise, British Railway Research, 11–12.
70 Cambridge Instruments Co. (products of combustion); London General Omnibus Co. (nitrogen hardening of steel); Pilkington Glass (electrical insulators); ICI Billingham and Liverpool Refrigeration (refrigeration); Scottish Central Power Co., the Post Office and the Central Electricity Board (electro-magnetic interference); NPL (wind tunnel tests); Chemical Research Laboratory (water softening and boiler corrosion); Meteorological Office (fog forecasting); the railway committee of the British Electrical and Allied Industries RA (telegraph insulators etc.); the Linen Industry RA (wagon sheets); the British Cast Iron RA (foundry cokes); and the British Non-Ferrous Metals RA (firebox stays). ACSR, 1930-39; SRC, 1939–47; Hartley, “Scientific Research,” 21.
71 For example, ICI, British Aluminium, Ferodo Brakes, Bell Howell and United Steel. ACSR, 1930–39; SRC, 1939–47.
72 For example, the Iron and Steel Institute's committee on corrosion.
73 Birmingham, Cambridge, London (Imperial College), Manchester (Manchester Municipal College of Technology), Oxford, and Sheffield.
74 The Air Ministry and the War Office.
75 The Ministry of Agriculture and the DSIR (National Physical Laboratory, Chemical Research Laboratories, Fuel Research Board, Building Research Station, Food Investigation Board, Industrial Fatigue Board, Water Pollution Research Board, Forest Products Research Board, Low Temperature Research Station).
76 SRC, 26 Oct. 1944; 26 July 1945; 24 July 1946.
77 In addition to those in the United States, overseas bodies included Canadian National Railways; German State Railways; Indian State Railways; Japanese Government State Railways; and the Société des Transports et Entrepots Frigorifiques (a joint body of the French railway companies). ACSR, 1930–39; SRC, 1939–47. Information on the visits made to the USA between 1932 and 1947 is contained in these minutes; in NA, RAIL 418/106, LM&SR Reports to Board, 1933, and RAIL 418/118, 1946; RAIL 418/208, “Report on Operating Practices and Problems by S.H. Fisher, etc.,” 1933. See also NRM, A2/368L, H. Hartley, “Report on a Visit to the United States, 23rd May–8th June, 1938,” 1938.
78 LMSR Co.: ‘Scientific Research,’ 1–12; ACSR, 2 July 1930; SCR, 29 Jan. 1941.
79 For reviews of the literature, see Lee, ‘Corporate Behaviour, 163–79; Smith, “The Scientific Tradition,” 121–31; Dennis, “Accounting for Research,” 479–518.
80 SRC, 1 May 1946. Of the rest, 22 per cent was spread between seven other departments.
81 Ibid.
82 A post he held until retirement in 1933. “Sir Henry Fowler,” 1195–6.
83 Ellis, London Midland & Scottish, 134–5; Nock, William Stanier, 58; DNB, 1961–1970, 975–6; Chacksfield, Sir William Stanier, 47.
84 Oston, “Harold Brewer Hartley,” 349–73.
85 Pearson, Man of the Rail, 49. See also Cox, Locomotive Panorama, 108–11; Bulleid, Master Builders of Steam, 150–52.
86 Cox, Locomotive Panorama, 110; Bond, A Lifetime, 122.
87 Detailed planning of the plant was left to staff from both mechanical engineering and the Research Department: financial difficulties and the Second World War delayed its opening until 1949. ACSR, 10 July 1934; Minutes of the LMS & LNER Joint Committee, 1934–35; Bond, A Lifetime, 121–3; Wise, British Railway Research, 15–20.
88 For example, Chandler, Scale and Scope, 604.
89 SRC, 1 May 1946.
90 ACSR, 1931–39; Hilken, Engineering at Cambridge University, 170; Wise, British Railway Research, 26, 35.
91 ACSR, 10 Oct. 1933; 10 April 1934; 9 Oct. 1934; 8 Oct. 1935; 13 Oct. 1936; 13 July 1937; 12 April 1938; 12 July 1938.
92 Wise, British Railway Research, 35; Williams, APT: A Promise Unfulfilled, 8; Potter, On the Right Lines, 46–51.
93 ACSR, Oct. 1931–April 1939; Bond, A Lifetime, 105–6; Johnson and Long, British Railways Engineering, 440; Wise, British Railway Research, 17–18.
94 Wise, British Railway Research, 31–2. In practical terms the results were mixed; the work on locomotive tyres was fully implemented, while the studies of coach axles yielded some technically acceptable solutions that were impracticable to implement under the then-prevailing conditions of war.
95 Ibid., 35.
96 Ibid., 35; ACSR, 11 Oct. 1938; Author's Collection, LMS Research Department Memorandum, ER 1Z/1, Memo. No.104, “LMS Research Department Report,” 4 Sept. 1939.
97 LMS Magazine, 10 (1933), 221.
98 Ibid., 37–40; Minutes of the LMS & LNER Joint Committee, 1934–35.
99 Pearson, Man of the Rail, 49, 70, 77–8; Johnson and Long, British Railways Engineering, 440–41; Wise, British Railway Research, 37–9; Milligan, The Resilient Pioneers, 14–15.
100 Porter, Competitive Advantage, 172.
101 The last point is made by Mowery with regard to US manufacturing before 1940. Mowery, “Boundaries of the Firm,” 148.
102 For example, Jones, ‘Transaction Costs,’ 9–25.
103 On such issues in the US context, see McGrath, Scientists, Business and the State.
104 See, for example, Boyce, Co-operative Structures in Global Business; Brown and Rose, Entrepreneurship, Networks, and Modern Business; Piore and Sabel, Second Industrial Divide, 264–5.
105 Yet the LMS's system of cost accounting did underpin the company's experiments with diesel traction in the 1930s and 1940s. Divall, “Learning from America?,” 124–42.
106 For an excellent exemplar of this kind of analysis in the US context, see Usselman, Regulatory Railroad Innovation.
107 Railway Companies' Association, Report No 4, 1943.
108 For example, Railway Age, 14 June 1930.
109 For example, Railway Age, 1 July 1933. In the late 1930s Hartley and Herbert thought the LMS's facilities superior to the Pennsylvania's; nor did they think much generally of the railroads' attempts at collaborative research. ACSR, 11 Oct. 1938; Hartley, “Report on a Visit to the United States,” 1938, 26–28. In fairness, however, the PRR's facilities were at this time at a particularly low ebb. Usselman, Railroad Innovation, 199–211, 355–359.
110 For example, Graham, “R&D and Competition.”
111 See, for example, Bailey, thesis. For excellent studies of American examples, see Churella, From Steam to Diesel; Brown, The Baldwin Locomotive Works.
112 For example, Dunlavy, Politics and Industrialization.