Wars inevitably create great strain on resources, increasing demand for second-hand assets and the subsequent rise in prices. The Great War was no exception and the growth in industrialisation provided new opportunities for ‘entrepreneurs’. The Battle of the Somme created a rapidly escalating need for all materials, particularly railway materials. This caused Ernest Moir as Comptroller, Inventions Department at the Ministry of Munitions, to conduct an inquiry, publishing his findings in November 1916.¹

He recommended the Ministry take control of all second-hand railway material. This would be facilitated by establishing the Railway Material Licences Department, formed under the terms of the Railway Material (second-hand) Order of 29/12/16, made possible with powers available by the Defence of the Realm Regulation 30-A.

The Order prohibited buying or selling second-hand railway material without the appropriate licence. The licence was intended to

1 - Restrain or restrict dealings in second-hand railway material to ensure that Ministry, and other government departments, needs were prioritised.

2 – Eliminate as far as possible middlemen.

3 – Restrict, or stabilise the price of material, to prevent material being exported and to prevent hiding or hoarding material to corner the market.

Obtaining a licence required the seller/owner providing full particulars of the sale regarding description, price and destination. Licences could be refused for

1 – Price, including contravention of regulations for materials such as steel rails etc.

2 – Using unnecessary middlemen.

3 - Lack of a Priority Certificate for the work the material was required for.

4 – Delaying sales while investigating other Government department requirements.

Eliminating the middleman was crucial in controlling prices and availability. Middlemen were syndicates, who bought disposal stock then passed it between themselves, often on paper only. The final user therefore paid a much-inflated price. It needs saying that Government policy provided ample opportunity for syndicates to thrive.

The War Office, Admiralty, H.M. Office of Works and the Ministry of Munitions were all buyers of railway materials. The problem was they were all independent and competing against each other. With competition pushing prices upwards, it appeared that the Government was prepared to pay whatever for materials when necessary. Syndicates could, and did, purchase material disposed of by one government department and sell it to another department, such was the lack of inter-departmental communication.

Syndicates were not restricted to Britain. With both France and Russia desperately needing resources, syndicates became international. To quote the RMLD Historical Record,

"A certain French lady was prominent in carrying out a number of transactions in wagons, which resulted in a large number falling into foreign hands.”

The government had committed to send 380 locomotives and 20,000 wagons to France at the end of 1916. Rolling stock was needed for the growing British Sector of the Western Front and also by the ever-busy French Railways, adding to the general shortage in Britain. This offered plenty of scope for international syndicates to operate. Inevitably stock traded on the open market was in uncontrolled quantities, although there is no mention as to how the syndicates were able to obtain the shipping space or berths in either British or French ports. Even before losing rolling stock to France the railway companies were 1,600 locomotives short, with 1,488 awaiting repair and 33,000 wagons short of those routinely needed to replace worn out stock.²

The Court of Appeal, in June 1917, found in favour of the Ministry against the Anglo-Russian Merchant Traders Ltd, the judge stating

^{"The Regulation seems to me to be intended to control not only the market price of this war material, but also the supply, which is limited, whereas the demand is practically unlimited.”}

Needing a licence gave the RMLD the tools to investigate each application. One application involved an agent, appointed by the government to take over worn railway line, dismantle it and supply a large quantity of rail to re-lay. It was found that the railway, which was government property, had been passed through several agents, with each making a substantial profit, before being sold back to the government. The investigation led to a successful criminal prosecution and in over fifty further instances the syndicates involved were successfully prosecuted.

Sometimes, it was the RMLD taken to court. One instance involved a locomotive being disposed of at auction. War Office experts had inspected it and valued it at £1,600 [£96,885 in 2021]³

It eventually sold for £2,790 [£168,944]. When the RMLD refused to issue a licence, the buyer went to court to demand a licence be issued because he had only bought it as he believed the War Office were prepared to pay any price. The court refused to order a licence be issued, although it is not recorded what the buyer did with his expensive, now unsaleable purchase.

Railway companies sold locomotives when they became too worn out for further service. They sold for between £150 [£9,083] and £200 [£12,111] as scrap, compared to a new locomotive costing £8,000 [£484,427]. With new locomotives in short supply, railway companies were forced into buying worn out locomotives and refurbishing them.

After passing through several syndicates, the asking price for these locomotives rose to £1,400 [£84,775] with very little spent on refurbishment. Other instances were quoted where locomotives sold for £500 [£30,277] were resold for £1,000 [£60,553] without any repairs done.

Railway companies had limited workshops, only capable of building 400 of their normal peacetime requirement for 1,000 annually. Contractors, such as the North British Locomotive Co Ltd, Glasgow, provided the balance before the war. Workshops had also been taken over for munitions production, making refurbishing their own locomotives impossible. In all, licences were issued for the sale of 400 locomotives to the War Office.

Railway wagons were in constant and growing demand by the government for the ever-expanding foreign fronts and home front. The growth of the munitions industry with its increasing demands for iron ore, steel, coal, food for canteens, etc. ensured a ready trade for the syndicates. A new wagon costing £67.10.00d [£4,088] in 1914 cost £180 [£10,900] by 1917 after passing through the hands of three or more different syndicates.

A 10-ton wagon in 1914 cost £0.03.06d [£17.50] per week to hire. In 1917, the same wagon cost £0.15.00 [£46] with the subsequent increase in prices to industry and householder. Licensing the hire of wagons regulated the price at £0.07.03d [£21.25]. The South Wales coal mines alone used 550,000 wagons to carry 185,000,000 tons of coal per annum.

Railway sleepers came to the attention of the RMLD when an application was received for a licence to sell sleepers. Investigation revealed that the Ministry of Munitions appointed agents had purchased the sleepers for £0.00.07d [£1.75] in 1917. They were sold and resold through various syndicates before being sold back to the Ministry of Munitions for £0.09.00d [£27.50] each. The price of sleepers was subsequently fixed at £0.07.00d [£21.25] for railway sleepers and £0.04.00d [£12.50] for roadway sleepers.

By July 1916, 277,000 standard gauge, 9ft sleepers had been shipped to France. From then, the Office of Works had agreed an on-going commitment to send 150,000 sleepers to France each month, imported from the USA. These were in exchange for French timber used in British trenches and imported to Britain for use as pitprops.⁴

The quantity of sleepers involved, the transport from USA to Britain and then on to France, and the different agencies involved provided ample opportunity for the middlemen to line their pockets.

Standard gauge rails weighing more than 50lbs per yard were controlled by the Ministry, whereas Light Railway rails, weighing less than 50lbs were not. Syndicates inevitably focused their dealings on light rails, eventually inflating the price to £39 [£2,362] per ton. One ton provided forty-five yards of rail, so each mile of light railway used seventy-eight tons of steel and cost £3,050 [£184,688] for the rails, without sleepers, labour or transport costs. The RMLD subsequently limited the price to £14 [£848] per ton, or £1,092 [£66,124] per mile. There was 1,000s of miles of Light Railway laid in France during 1917 and 1918.

Inevitably the scale of the war created a situation that professional fraudsters could take advantage of. The only surprise is that it took until 1917 for anything to be done about it. Even then some prices did not change until 1918. Even allowing that the Ministry of Munitions did not take over the contracts for railway materials from the War Office until August 1915, an extraordinary amount of money was lining fraudsters pockets before the situation was resolved.

It was estimated that the licences would save the government £2,000,000 [£121,106,747].