This paper reports results from a numerical model to calculate subgrade settlement in railway tracks due to repeated dynamic loading. The trains are modelled as rigid body 2-axle carriages on two layers of springs. The track is modelled as a beam supported on three layers of springs. Permanent deformation of the subgrade layer is calculated on the basis of a power law assumption. Patterns of dynamic forces are calculated on a smooth track and on a track subject to an initial subgrade 'pothole'. The latter is shown to grow with repeated loading and to change the mean patterns of applied force.