The Underground Electric Railways Company of London Limited (UERL), known operationally as the Underground for much of its existence, was established in 1902. It was the holding company for the three deep-level "tube" underground railway lines opened in London during 1906 and 1907: the Baker Street and Waterloo Railway, the Charing Cross, Euston and Hampstead Railway and the Great Northern, Piccadilly and Brompton Railway. It was also the parent company from 1902 of the District Railway, which it electrified between 1903 and 1905. The UERL is a precursor of today's London Underground; its three tube lines form the central sections of today's Bakerloo, Northern and Piccadilly lines.
The UERL struggled financially in the first years after the opening of its lines and narrowly avoided bankruptcy in 1908 by restructuring its debt. A policy of expansion by acquisition was followed before World War I, so that the company came to operate the majority of the underground railway lines in and around London. It also controlled large bus and tram fleets, the profits from which subsidised the financially weaker railways. After the war, railway extensions took the UERL's services out into suburban areas to stimulate additional passenger numbers, so that, by the early 1930s, the company's lines stretched beyond the County of London and served destinations in Middlesex, Essex, Hertfordshire and Surrey.
In the 1920s, competition from small unregulated bus operators reduced the profitability of the road transport operations, leading the UERL's directors to seek government regulation. This led to the establishment of the London Passenger Transport Board in 1933, which absorbed the UERL and all of the independent and municipally operated railway, bus and tram services in the London area.
Establishment
Background
The first deep-level tube railway, the City and South London Railway (C&SLR), opened in 1890. Its early success resulted in a rush of proposals to Parliament for other deep-level routes under the capital, but by 1901 only two more lines had opened: the Waterloo & City Railway (W&CR) in 1898 and the Central London Railway (CLR) in 1900. Construction had started on one other line and then stopped following a financial crisis. The rest of the companies were struggling to raise funding.
The District Railway (DR) was a sub-surface underground railway which had opened in 1868. Its steam-hauled services operated around the Inner Circle and on branches to Hounslow, Wimbledon, Richmond, Ealing, Whitechapel and New Cross. By 1901, the DR was struggling to compete with emerging motor bus and electric tram companies and the CLR which were eroding its passenger traffic. To become more competitive, the DR was contemplating a programme of electrification, although it was not financially strong enough to raise the capital to carry out the work on its own. It also had parliamentary approval for a congestion-relieving deep-level line that was to run beneath its existing route between Gloucester Road and Mansion House.
By 1898, American financier Charles Tyson Yerkes had made a large fortune developing the electric tramway and elevated railway systems in Chicago, but his questionable business methods, which included bribery and blackmail, had finally drawn the disapproving attention of the public. Yerkes had unsuccessfully attempted to bribe the city council and Illinois state legislature into granting him a 100-year franchise for the tramway system. Following a public backlash, he sold his Chicago investments and turned his attention to opportunities in London.
Acquisitions
Yerkes' first acquisition in London was the Charing Cross, Euston and Hampstead Railway (CCE&HR). The company had parliamentary permission to build a deep-level tube railway from Charing Cross to Hampstead and Highgate, but had been unable to raise the finance, selling only a tiny fraction of the shares available. Robert Perks, a solicitor for a number of railway companies and Member of Parliament for Louth, had suggested the CCE&HR to Yerkes and the American's consortium bought the company for £100,000 (approximately £ today) on 28 September 1900.