March 2021 REVISED DRAFT Watkin’s Struggle at the S.E.R. Board 1876–79, and R.W. Perks By Owen E. Covick* * An earlier version of this paper was presented to a seminar at the Flinders Business School, Flinders University, Adelaide, Australia, in May 2014 Telephone: 61 8 8272 2693 Email: [email protected] Abstract Becoming a trusted confidante to Sir Edward Watkin was a key step in the business career of Sir Robert William Perks (1849–1934): a career that included the financially successful ‘rescue’ of the Barry Railway during 1887–1889; the rather less financially successful rescue of the Lancashire, Derbyshire & East Coast Railway from 1894; and securing the commitment of C T Yerkes and his backers to the expansion and electrification of the London Underground from 1900. How did Perks become Watkin`s right-hand man? The 1909 biography of Perks by ‘Denis Crane’ (pen-name of Walter T Cranfield, 1874–1946) tells us that the trigger was a telegram from Watkin received by Perks as he sat eating Christmas dinner in 1878 with his wife of eight months, at his father-in-law’s house in Banbury. Crane tells us that Perks cut short his family festivities and travelled to meet Watkin at 6.00 p.m. that same day in London. But Crane is evasive about what the ‘important business’ was that Watkin wanted to see Perks about with such urgency. All we get is: ‘From that day forward for fourteen years Sir Robert was by Sir Edward Watkin`s side in all his battles’ (pp 72–73). That sentence does give us a hint however: Watkin`s Christmas Day summons was for Perks to assist him in a ‘battle’. That ‘battle’ lasted through the whole of January 1879, and into early February. It was the decisive engagement in a ‘civil war’ that had been raging (with varying degrees of intensity) on the board of the South Eastern Railway Company since 1876. To appreciate the value Watkin placed on the contribution made by Perks during the weeks following Christmas Day 1878, it is useful to look more closely into that whole ‘civil war’. That is the purpose of this paper. Why was it that such strong antagonism developed among men who had apparently co-operated and collaborated with one another on a basis of mutual respect prior to 1876? What was it that drove and fuelled that antagonism? How was the struggle waged? How close did Watkin come to losing? Why was it that he prevailed? And what were the broader consequences for Watkin of that outcome? This paper does not purport to give definitive answers to those questions. But it attempts to critically review the available evidence – including previously unpublished material from the personal diaries of one of the central protagonists, Edward Knatchbull-Hugesson. And it attempts to draw some tentative conclusions. Among these, one concerns the issue of ‘corporate governance’, arguably as contentious a matter in the 1870s as it is in twenty-first- century capitalism. It is suggested that whereas previous writers have sought to understand and explain the 1876–79 SER board struggle in terms of ‘matters of company policy’ on which views diverged at board level, it might be wiser to focus on a core question of governance as such: namely when the company chairman’s view is at variance with the view held by a clear majority of the board, what can both sides reasonably expect should happen next? If on this question the company chairman’s view is at significant variance with the views of a majority of his or her colleagues, it may simply be a matter of time before enough ‘issues’ emerge to trigger a break-out of hostilities and a breakdown of ‘normal’ board functioning. Watkin’s Struggle at the S.E.R. Board 1876-79, and R.W. Perks Page 1 Introduction Edward Watkin was chairman of the South Eastern Railway (SER) from March 1866 to May 1894, having first joined its board at the beginning of 1865.1 For the bulk of the period of Watkin’s chairmanship, the board of the SER appears to have functioned in a “normal” way, in terms of the conventions and mores regarding corporate governance prevailing in Britain at this time. But from about 1876 to 1879 the situation was not thus. Towards the end of 1878 dissension on the board reached a crescendo of acrimony, which was played out in public during January 1879 as the two factions on the SER board sought shareholder proxies for use at the general meeting called for Saturday 1 February.2 The lead editorial of Herapath’s Railway Journal on the Saturday preceding that meeting said of the SER: The accounts are in excellent condition, and a satisfactory dividend is paid, yet the Company is in dire trouble. The Board of Directors are at sixes and sevens. Great dissension exists amongst its members, and so long as this internal warfare lasts can we expect that the business of the line will be well-managed? If the line is managed as it should be during this absorbing turmoil at the Board it follows that the Board does not do much by way of management, and that the Shareholders would be as well off without a Board. The production of the mass of letters, papers, circulars etc., which emanate almost daily from both sides in this unseemly contest, can afford little time to the Board for attending to the affairs of the line. The Board being split into two sections which are at daggers drawn to each other what hope can there be that the business of the Company will be properly attended to while this fierce contest lasts?3 The battle for shareholders’ proxies was won by the pro-Watkin faction. This represented an important landmark for Watkin. The SER was the biggest of the companies of which he was chairman at this time, its 1879 total revenues of £1.82 million comparing with £1.49 million for the Manchester, Sheffield & Lincolnshire Railway (MS&LR) and £0.54 million for the 1 Edward William Watkin, born 26 September 1819, was knighted in August 1868 (for services to the Crown regarding Canadian confederation) and awarded a baronetcy in 1880. For a full account of his life and career see David Hodgkins, The Second Railway King: The Life and Times of Sir Edward Watkin 1819-1901, Merton Priory Press, Cardiff, 2002. 2 Hodgkins gives the date as 3rd February (op. cit. p. 470) but that was the date on which the daily newspapers published their reports of the Saturday meeting. 3 Herapath’s Railway (and Commercial) Journal, 25 January 1879, p. 88. Herapath’s was one of three weekly newspapers specialising in railway matters during this period, alongside Railway News and The Railway Times. All three appeared on Saturdays. Watkin’s Struggle at the S.E.R. Board 1876-79, and R.W. Perks Page 2 Metropolitan Railway.4 In October 1876, as will be discussed further below, Watkin had fought and lost a battle for shareholders’ proxies aimed at securing for him control of a bigger company; the Great Eastern Railway (GER). And it appears that in late 1878 Watkin was fearful that an adverse outcome in the SER contest would have knock-on consequences for his other board positions. R.W. Perks, who served as one of Watkin’s lieutenants during the SER proxies battle, later wrote that Watkin had told him at his initial briefing that: If they [his opponents] succeeded on the South Eastern Railway they would attack him on the other two lines [the MS&LR and the Metropolitan] … If they won the coming elections Sir Edward Watkin’s days were over.5 The primary purpose of this paper is to explore further the stages in, and the nature of, the 1876–1879 struggle at the SER Board. The writer’s interest in this subject has arisen from his researches into the life and career of R.W. Perks (1849–1934). Perks was a young man when recruited by Watkin to join his campaign team. By the time the campaign was over, he had won great respect in the eyes of Watkin. And this was to operate to the advantage of Perks in the next stages of his business career. The secondary purpose of this paper is thus to shed some further light on how Perks came to be in Watkin’s team and on what his contribution to the SER campaign consisted of.6 There were two bouts of intense and active dissension on the SER board during the period under consideration, separated by a “truce” brokered during December 1877. Part I of this paper summarises the situation prevailing on the SER board following the unravelling of that truce: i.e., the situation prevailing at the time of the Herapath’s editorial quoted earlier. This scene-setting section also briefly compares the situation on the SER board in December 1878 with the position twelve months earlier. Prominent in the second intensive phase of the SER board struggle was the issue of what the SER’s stance should be towards attempting to develop increased traffic through the Thames tunnel at Wapping, over the East London 4 Figures taken from Hodgkins op. cit., Table 6, p. 475. The figures are for total ‘operating’ revenues (both passenger and goods) but do not include revenues from ‘other’ sources such as property rentals. 5 Robert William Perks, Sir Robert William Perks, Baronet, Epworth Press, London, 1936, p. 63. (This book is a series of autobiographical notes made by Perks during the latter years of his life, collected and published by his widow eighteen months after his death.