I know that discussions about Dr. Beeching tend to generate more heat than light, even 50 years later, but I would like to add a little to the background about the railways' finances at the time, especially for those that were not there!
The basic problem was that the British Transport Commission had no effective management accounts - they knew to a penny how much their locomotives cost per mile in maintenance but they had not a clue about which services and lines were generating the income and how much the routes were costing to operate. How did this state of affairs arise?
Well, it all started a
very long time ago^
The Rail and Canal Traffic Act of 1854 (and, no - I wasn't there either!) obliged the railways to carry any and all goods offered to them (with some minor exceptions) at rates which were government regulated. These rates were based on the weight and value of goods carried - rather than the costs of operation, and they made any effective form of management accounting for freight superfluous. Even if the costs and income were accurately known for each station, terminal and train - nothing could be done as the railway /had/ to carry the traffic.
As long as the railways had effectively a monopoly of inland transport the charges could be set so that the railways could make a return - but it was marginal. But as soon as the lorry started taking the remunerative freight traffic the railways started their slide to financial ruin.
Then in 1947 the railways were nationalised and were run by the Railway Executive of the British Transport Commission. They were given what must be the wooliest financial objective ever - the BTC was required to break even 'taking one year with another'!
Rather than appoint a businessman to run the railways, in 1948 a career civil servant (Cyril Hurcomb) was given the job of Chairman of the British Transport Commission and in 1953 the Government appointed a retired general (Brian Robertson) as Chairman. He had previously been Deputy Military Governor of Germany after the war and then, from 1947, the Military Governor and British member of the Allied Control Council for Germany.
By definition civil servants can't run businesses and although Robertson had had some experience of industry his background made him, I submit, equally unsuitable for the post.
What was needed was someone with an eye for the future and with the mind of an accountant: civil servants from the Ministry of Shipping and a military man were unlikely to meet the job description. As a result nobody had any more than a vague idea where the money was coming from and where it was being spent until Beeching carried out his traffic surveys. These were subsequently much criticised, but they were the
only hard data available at the time.
The railways stopped being profitable in the early 1950s and by the end of 1955 stopped covering their operational costs. By 1960 the annual loss reached ^68 million, ^1,130 million in today's money. In spite of the losses, in 1955 the Government of the day (the Churchill/Eden administration) made available ^1.2 billion - the equivalent to ^25 billion to ^30 billion today - to modernise the railways and restore their financial stability. Most of the money was wasted as can be seen from the steadily increasing losses - in effect the Modernisation Plan made no difference whatsoever to the railways' financial position. This being the case the Beeching approach (or if not him then somebody else with accounting skills and a clear idea of what the railways should be doing) was inevitable.
The 1854 (and later amendments) Common Carrier obligation was finally lifted in 1957, at least 40 years too late.
It's well worth reading the Beeching Report, actually both of them (scanned copies are available on-line, go to
http://www.railwaysarchive.co.uk and search for 'Beeching Report'), to see how clear sighted he was. As Red Squirrel says, essentially he wanted the railways to do what they were best at doing. His conclusions are still valid.
The only possibly valid criticism of Beeching was that although he took the first steps at identifying where the money went, he did not seem to see any possibilities of reducing the costs of operation of some of the marginal lines. This is another subject, but the forces of inertia were enormous, no significant changes had been made in operations for a century or more, so changes would take time. Getting the finances back on track was a matter of urgency and it was quicker to cut the costs by closing the line than by changing the methods of operation. In any event changes would have needed capital investment and as the Modernisation money had already been blown to no great effect the politicians didn't trust the railwaymen to make the necessary changes. Money for investment became very tight in the subsequent years - but the railways had only themselves to blame.