BRITISH RAILWAYS AND THE WAR
revenue should be the same as in 1913, except when the net receipts for the first half of 1914 were less than the first half of 1913; in that case the sum payable was to be reduced in the same proportion. The entire Government traffic—men and freight—was to be carried without any direct charge being made for it or any accounts rendered. This plan was considered satisfactory by both sides. In the majority of cases there had been a reduction of earnings in the first half of 1914 over the previous half-year, and companies were contemplating a still further reduction. The interests of their shareholders being assured, they were able to devote themselves to the work of economical and efficient distribution, quite apart from the usual financial problems. The one weak side of this agreement was that it made no allowances to cover increased interest payments on account of new investments, new capital expenditure since the war began. This point was afterwards met by an arrangement that the Government should pay interest at 4 per cent. on all new capital invested by the railways since August 4, 1914, on new lines, branches, terminals, equipment, or other facilities put into use since January 1, 1913.
SOME EFFECTS OF COMBINED ACTION
The conclusion of the financial agreement between the Government and the companies automatically brought about a great economy in
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