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Monday, 22 April 2013

South Metropolitan Gas Company

The profit sharing scheme which South Met. inaugurated in 1889 was only one of a series of remarkable events in which the company had been involved since the early 1860s when George Livesey had first become sole manager. Before this time the company had pursued a line - unique in London - in which can be seen the roots of Livesey's policies. Under Livesey South Met.'s role was directly concerned with the gas industry's relationship with central and local government.

Even before George Livesey had become an employee of the Company, it was trying to answer criticism from 'consumers' and to do so by means of voluntary action. In the 1880s George Livesey was able to put forward ideas and policies which were the results of policy decisions taken in the 1840s as a way to meet public criticisms. However flamboyant George Livesey's approach might be, he can be seen in essence to be following policies laid down fifty years before by his father and the Board of the late 1840s and 1850s.

George Livesey's father, Thomas, went to work for South Met. as their clerk in 1839. The Company had had a fairly unstable history up to then. It had been founded to compete with the Phoenix Company in the late 1820s, and to supply cannel gas (gas made with a coalgiving a clearer light - but more expensive). The works was built at the very edge of South London, on the banks of the Surrey Canal between Peckham and Deptford. The early minute books, in so far as they exist, are filled with scandals and disputes - the first Managing Director described as 'a questionable character'.

In 1836 the works was partly destroyed by a major explosion in the course of a dispute on patent rights with the Engineer, George Holsworthy Palmer.
 
The Board was reconstituted in 1839 under the Chairmanship of Alderman Farncombe, a prominent City figure, wharfinger and future Lord Mayor. From that time the Board was dominated by a few families.
 
In the 1880s the major shareholder was Richard Foster, whose family had occupied Board positions since the start of the Company. Foster himself had held shares since the 1820s and although never he never took on Board membership he championed Livesey's his actions, however controversial, against Board decisions. The Company minute books abound in instances in which a Board decision against Livesey would be answered by a letter from Foster, backing Livesey's.

Another important element of Company policy involved a strong body of Christian belief among some members of the Board. At management level this was shared by Thomas Livesey and led the company from the early 1850s to promote a welfare policy for its workforce. The roots of co-partnership lie in maintaining the welfare of employees, and thus buying their co-operation, efficiency could be maintained, and price kept down.
 
By helping the workforce materially they could be morally influenced, which it was hoped would persuade them away from forces outside the Company. 'Loyalty - was at a premium - loyalty to the idea of the Company as a good and giving body.  If the industry's existence was to be threatened then the workforce must be enlisted as supporters lest they should ally with the Company's enemies and undermine it.

Public criticism was about keeping prices down. This policy had evolved between 1842 and 1871 and had been helped by keeping capital low. Bypaying low dividends on capital, profit could be reinvested in works and maintenance: as profit rose there was less capital to service through dividends and therefore more money to re-invest. A company with high profits and low capital could afford to lower prices and still maintain quality.

Thomas Livesey had come to South Met. from a clerkship with the Gas Light and Coke Co. He was not a technician but an administrator and the nephew of another Thomas Livesey who had been responsible for the formation of administration at Gas Light & Coke Co., in its earliest years. George's uncle William, was a Parliamentary agent working for gas companies and an expert in gas legislation. George thus had powerful influences and a background of great expertise in gas affairs on which to build.

Thomas Livesey and his family lived in a cottage alongside the works in the 1840s and he worked under the direction of the Board which never gave him the freedom that it was eventually obliged to give his son. Once he had established his position in office he was trusted by the Board who praised his work frequently. He was the only management level officer of the Company, and as George grew up he began to take over the technical management from his father.

So - in 1839 the Company had £80,000 invested in what was now a mainly useless works. Until 1849 a dividend of less than 2% was paid but in reality a profit of 10% had been made since 1842 and this balance was re-invested in equipment. In 1856 the then Chairman said that 'it is in the best interests of the concern to keep capital down and therefore to use it to extend the works' . In the 1880s George Livesey could boast that the building of the massive new works at East Greenwich ‘had been entirely financed from running profits. As consumer agitation grew in the 1840s and 50s the Board began to reduce prices to pre-empt local authority criticisms.

In 1860 the Chairman said that 'in order to satisfy the people we have reduced the price of our gas 4d. per 1,000 - we are not compelled to reduce the price.' The Company began to enjoy a remarkable reputation with the local authorities whose areas it served. It had been founded to compete with the Phoenix Company and the Surrey Consumers Company and its prices were lower than either. In 1850 the Camberwell Vestry could say that they were 'quite happy with the South Met. - they had never heard a single complaint' and in 1875 a petition from Camberwell to the Metropolitan Board of Works said in part; 'this parish is supplied with gas by the South Met. which by reason of its small capital and good management has been for many years enabled to supply to its customers 14 candle gas at 2/ld. per cubic foot ... your honourable board will take such steps as are necessary to maintain the privilege now derived from being supplied by the South Met.'

Such praise was not being given to other companies in London and in the 1880s Camberwell was to lead a deputation protesting to the Board of Trade that South Met, must not be contaminated by those other Companies whose prices were not all the local authorities desired.

It had been said of Thomas Livesey that his ambition was to 'take the lead'. This lead was defined by George Livesey in 1875 as: 'the lead of the London Gas Companies as to price - the lower the price the more secure the property and the investment'. This statement also shows Livesey's ambition that South Met., was to be the best company and show the way as to how gas companies should be run.
 
In 1839 South Met. was small and failing, it was the ambitions of the Liveseys, father and son, which, took it to pre-eminence in world terms by 1900.

'Consumer' agitation in Southwark in the 1850s was led by John Thwaites, later Chairman of the Metropolitan Board of Works. George Livesey in later years described how as a teenager he had attended meetings agitating for change: 'I remember quite as a youngster attending a public meeting and hearing Sir John Thwaites speak .... if the companies had been reasonable and reduced [the price of gas] it by 1s. to 5s. I think it would have stopped the agitation'.

So some of Livesey's earliest political impressions concerned these meetings which called for changes in gas company policy in the public interest. The meetings were lively ones and an early Journal of Gas Lighting published a letter, mysteriously, from 'Live and Let Live' which gives some of their flavour: the meeting was 'numerous and uproarious'; one was 'ejected by a policeman', and the conclusion that 'a little knowledge and much assertion (usually combined) are very dangerous things!. People had produced pamphlets - 'What's Up!' ... 'What a Lark!' ... 'What's the Price?' - all good stuff for a teenage boy to take to heart.

Following the agitation in South London the Surrey Consumers Company had been founded in Rotherhithe and soon after acquired the works of the old Deptford Company. The Boards of both South Met. and Phoenix Companies responded with lower prices and soon Surrey Consumers were finding their guaranteed low prices difficult to maintain. Livesey quoted John Thwaites 'I see competition is a failure' and soon districting agreements had been informally finalised in South London.

In 1848 George Livesey became an employee of the Company as 'the boy' and during this period the Company's policy on pricing was hardening. Price reductions were announced at this time

South Met. was not only proud of its pricing policy but of its 'efficiency' and technical innovation. Thomas Livesey built gasholders by direct labour, introduced canvassing for customers, and began to re-use fireclay retorts. George Livesey as his father's assistant acted as Engineer in the works and soon began to acquire a string of patents. Working with a local firm of chemists. Hills of Deptford, he began a long series of experiments to perfect a new method of purifying gas. This method ultimately failed but in the process he gave several technical papers to the professional institute and made his name as an engineer.
 
It was in the field of gasholder construction that George Livesey really made his name - and in this way showed a grasp of administrative application to technology which meant that it was used to its best advantage. South Met. began to build bigger and bigger gas holders culminating in the 1880s in the giant gasholders still to be seen at East Greenwich. Livesey explained that such holders are more economical because by storing gas in giant amounts in the air the amount of expensive land used was reduced. In the same way gasholders could be used to store gas over the weekend and thus cut down on Sunday working with all its difficulties.

Journal of Gas Lighting was rather cynical about Livesey's technical prowess: 'the paper contains several declarations of principle and a scarcity of theoretical knowledge'. but it was this ability to grasp the wider problems of manufacture which made South Met the premier company that it became under the Liveseys.

In evidence to various Commissions of Enquiry, and Select Committees, George Livesey was at pains to explain the financial reasons for many of his Company's actions. Always clear:, they are a vivid illustration of the administrative means and the thought that went into South Met.'s policies. Policies formulated in the 1850s were designed with an eye to the future. A vivid illustration of this is in districting policy. Thomas Livesey was reported as having fought street by street for as large a growing suburban area as possible. This was a big factor in making the Company so successful in the 1880s and 1890s.

The massive increase in housing in South London meant that sales of gas rose dramatically. At the same time the expensive investment in mains had already been made and new customers could be connected quickly and efficiently Profit could be quickly maximised. It was the foresight of Thomas Livesey and the South Met.'s Chairman which had laid the groundwork for this enormous expansion. The Chairman in the 1850s was yet another member of the Foster family.

In the 1850s the Board were not themselves local men - while some may have had country homes in South London they were mostly from the City and none of them had addresses in South East London - Peckham or Camberwell. The Livesey's did however become identified with the area which the works supplied. Thomas Livesey, once he had moved to South London, never moved out. From the cottage in Canal Grove near the works he moved to Consort Road in Peckham and from there to Dulwich. He served as a member of Camberwell Vestry; was a local churchwarden and a supporter of local schools.

George lived in Peckham and in Denmark Hill but, at his official retirement, moved to Reigate. He continued with his father's tradition of local involvement and good works - he supported local churches and temperance organisations and in 1889 gave a library to Camberwell vestry. Sited opposite the Old Kent Road works this was naturally well stocked with works on gas technology but it was as a point of principle to be a free library for the working classes of Camberwell, who, Livesey thought, had 'strong claims on a library'. The Livesey family claimed to know and understand South London and part of what George Livesey said when he put forward arguments in favour of co-partnership was that he knew and understood the men who worked for South Met; that he understood their culture and environment .

Thomas Livesey deferred to the Board and followed their instructions in every way. When he was offered a Directorship of the neighbouring Crystal Palace Company he turned it down on the Board's instructions. It. was said of George Livesey that this incident determined him not to be so directed by the Board. When his father was told not to become a Crystal Palace Company director, George Livesey immediately began to hope for. a directorship of that Company for himself - which in due course he was offered and accepted. In George Livesey’s early years as manager of South Met. at Old Kent Road he frequently quarrelled with the Board on policy matters and carried on the battle until he won.

Livesey's first public dispute with the Board concerned his evidence, against South Met.’s policy, to the Select committee of 1875 on the subject of the sliding scale. Livesey claimed that he had been forced to give this evidence by the Board of Trade. The incident also gives some indication of George Livesey’s standing at that time as the manager of a relatively small and obscure works in post for only four years. This demonstrates the way in which George Livesey had become the pacesetter in regard to his aging Board. He was pushing policies to their logical conclusions which had long been laid by the Board and was prepared to use the power of shareholders meetings to change Board policies, which he did not like.

The 1870s saw South Met.’s management expanding and innovating: company meetings often involved major confrontations between Livesey as Company Secretary and Board members. As Company Engineer he was an employee and could have been dismissed; as Company Secretary he was elected by the shareholders - and Livesey was sometimes accused from the platform of having packed meetings with employees.
 
The 1872 Gasworkers strike was a factor which helped to consolidate Livesey's position at South Met. Alone in London South Met. workers did not strike: Livesey claimed thereafter that the reason for this was that he 'understood' the workforce and that this had diverted strike action. This claim will be discussed later.

As South Met. expanded so Livesey began to push efficiency as the reason for this success. Throughout the period of the 1870s he gave numerous papers on various subjects to professional bodies in the gas industry. To start with these papers were on technical subjects but gradually they took on matters more related to administration and in due course to worker relations. In Livesey's year as Chairman of the Institute of Gas Engineers, 1876, he made several speeches of an overtly political nature. The message throughout these papers is cost effectiveness and efficiency - but in so far as worker relationships are concerned these must be tempered by allowing workers some rights, like that of worship on a Sunday and that this in turn will give the worker the commitment to the Company to work in a more positive way.

In the course of the amalgamations with Surrey Consumers, the Phoenix Company and the two Woolwich Companies, Livesey retired from his employment with the Company. Once the presentations to himself and his wife at the various 'works were over he took up a place on the Board. Within six months he was Chairman and from then on his career continued without the restraints imposed by being an employee - but nonetheless still in opposition to many on the existing Board. This Board was now greatly enlarged and augumented with members from the other constituent companies. In South Met.'s name he began to champion a number of political causes. One of these was the abolition of the coal taxes. At that time all coal which came into London was taxed and obviously for the gas companies whose main raw material it was these were a burden they did not want. Livesey argued that prices could fall if the tax was lifted and that this was the only sensible course. He argued that tax was collected by local authorities who then paid it back to him in the form of increased prices higher than they need be because of the tax. South Met. was however the only company pledged to lower its prices should coal taxes be abolished.
 
In 1889 this cause took him directly into the political arena when all candidates for the LCC were lobbied on this issue. The same battle was carried on against rates - rates in Livesey.s arguments were yet another local tax pushing up gas prices to the ratepayer. South Met. made a policy of opposing all rating assessments and Livesey appeared at hearings to argue that since South Met. was a partnership of consumers and company under the sliding scale that rates were then an unnecessary bureaucratic procedure. After the formation of the Metropolitan Boroughs in 1894 Livesey carried this campaign even further and it eventually led him to a personal involvement with the. Municipal Reform Society in the 1900s.

Increasingly throughout the 1880s and 1890s he turned his attacks towards the other major London gas company: Gas Light and Coke Co. Livesey began a major campaign of criticism against every aspect of their management and policy. As a shareholder he began to turn up to their Company meetings to make long and detailed speeches on most aspects of their work and would claim to demonstrate changes, which would lead to economies. This was augumented by letters to the press and by political lobbying.

By 1889 at the time of the Gas Workers strike this quarrel was at its height. A dispute had arisen between the two companies over the supply of gas to the Nine Elms Goods Yard. The Railway Company had taken advantage of South Met's lower prices to get their supply of gas from them but most of the premises lay in the area of Gas Light and Coke's agreed supply. The case eventually went to the House of Lords and despite previous judgements in favour of South Met. damages were awarded to Gas Light and Coke Co.

During the period of the 1889 strike South Met. were being pressed by Gas Light and Coke for payment of these damages and relations were very bad indeed. This incident is only important in that it illustrates how far Livesey was prepared to go in order to prove that the gas industry could supply gas in a way that was not against the public interest. To do so he had broken up any form of
 
Another source of friction in the London gas industry in 1889 was the situation which had given rise to the break up of the professional institute. A scandal had grown out of the 1883 Crystal Palace Gas Exhibition. Even before the exhibition had been held certain appliance manufacturers had accused him of partiality towards others . This became a major row led by an appliance manufacturer called George Bray. Bray attacked Livesey through the professional institute and also in the pages of the gas press - some issues of Gas World have four and five page articles against Livesey. An underlying cause of the attack seems to have been the suspicion by some provincial gas men that the Institute was being run by a small group of Londoners 'the London coterie' ' - in fact Livesey and his associates. An argument developed round the issue of whether appliance manufacturers should be allowed into the professional body. The eventual outcome followed High Court actions and accusations of masonic inspired deals – Livesey resigned along with the 'coterie' and a rival professional body was formed.
 
Linked to sales of gas through meters and the push in gas sales was the positive involvement of the workforce. It is here that policies of expansion and technogical advance interface with co-partnership. As sales of gas to the public increased, the Company needed more and more to have an acceptable public face. Large numbers of employees were used outside the works and directly involved with the public; these workers must be totally loyal to the company in order to promote a favourable Company image. Co-partnership was the means of buying this loyalty. Allied to this was a positive policy of encouragement to all workers to become gas salesmen among their friends and relations. Workers were offered a bonus for new customers and any appliances sold through them earned commissions.

George Livesey talked a lot about partnership in relation to the sliding scale. Perhaps the biggest move that South Met. made in this direction during the 1880s was in the policies of share sales to consumers. Legislation required gas companies to offer new stock for sale only through tender or by auction and South Met. varied this policy in that tender notices were deliberately excluded from the financial and business press and instead put into the local papers. Invitations to buy were sent out with gas bills and notices sent out by the Company. Figures for the amount of company stock sold in this way are not available but nevertheless it was a positive plank in Livesey' arguments that the public were partners in the company under the sliding scale and one in which he could easily extend to share sales to company employees.

References
Journal of Gas Lighting
Gas and Water Times
Gas Gazette
Metropolitan Board of Works Minutes
Select Committee into the Metropolitan Gas Companies 1899
Gas World
South London Press
 

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