'An Awkward Fence to Cross': Railway Capitalization in Britain in the Interwar Years

This paper examines the related problems of the capitalization and financial performance of the railway companies in the inter-war period. It examines the critics' view that the railways were over-capitalized, and places the debate in context by analysing the dividend and accounting policies of the companies and the consequences for investment. It also examines the conflicting views of railway management and shareholders over capital expenditure. The paper concludes that the railways were both financially over-capitalized and physically under-capitalized, and so faced very serious financial problems that were incapable of resolution within the existing ownership structure.