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Railway Mania

From Samuel Smiles, Life of George Stephenson, Chapter 31 (1857)

The extension of railways had, up to the year 1844, been effected principally by men of the commercial classes, interested in opening up improved communications between particular towns and districts. The first lines had been bold experiments - many thought them exceedingly rash and unwarranted; they had been reluctantly conceded by the legislature, and were carried out in the face of great opposition and difficulties. At length the locomotive vindicated its power; railways were recognized, by men of all classes, as works of great utility; and their vast social as well as commercial advantages forced themselves on the public recognition. What had been regarded as but doubtful speculations, and by many as certain failures, were now ascertained to be beneficial investments, the most successful of them paying from eight to ten per cent on the share capital expended.

The first railways were, on the whole, well managed. The best men that could be got were appointed to work them. It is true, mistakes were made, and accidents happened; but men did not become perfect because railways had been invented. The men who constructed, and the men who worked the lines, were selected from the general community, consisting of its usual proportion of honest, practical, and tolerably stupid persons. Had it been possible to create a class of perfect men,
a sort of railway guardian-angels, directors would only have been too glad to appoint them at good salaries. For with all the mistakes that may have been committed by directors, the jobbing of railway appointments, or the misuse of patronage in selecting the persons to work their lines, has not been charged against them. We have never yet seen a Railway Living advertised for sale; nor have railway situations of an important character been obtainable through "interest." From the first, directors chose the best men they could find for their purpose; and, on the whole, the system, considering the extent of its operations, worked satisfactorily, though admitted to be capable of considerable improvement.

The first boards of directors were composed of men of the highest character and integrity that could be found; and they almost invariably held a large stake in their respective undertakings, sufficient to give them a lively personal interest in their successful management. They were also men who had not taken up the business of railway direction as a trade, but who entered upon railway enterprise for its own sake, looking to its eventual success for an adequate return on their large investments.

The first shareholders were principally confined to the manufacturing districts, - the capitalists of the metropolis as yet holding aloof, and prophesying disaster to all concerned in railway projects. The stock exchange looked askance upon them, and it was with difficulty that respectable brokers could be found to do business in the shares. But when the lugubrious anticipations of the City men were found to be so completely falsified by the results, when, after the lapse of years, it was ascertained that railway traffic rapidly increased and dividends steadily improved, a change came over the spirit of the London capitalists: they then invested largely in railways, and the shares became a leading branch of business on the stock exchange. Speculation fairly set in; brokers prominently called the attention of investors to railway stock; and the prices of shares in the principal lines rose to nearly double their original value.

The national wealth soon poured into this new channel. A stimulus was given to the projection of further lines, the shares in the most favourite of which came out at a premium, and became the subject of immediate traffic on 'change. The premiums constituted their sole worth in the estimation of the speculators. As titles to a future profitable investment, the tens of thousands of shares created and issued in 1844 and 1845 were not in the slightest degree valued. What were they worth to hold for a time, and then to sell? what profit could be made by the venture? - that was the sole consideration.

A share-dealing spirit was thus evoked; and a reckless gambling for premiums set in, which completely changed the character and objects of railway enterprise. The public outside the stock exchange shortly became infected with the same spirit, and many people, utterly ignorant of railways, knowing and caring nothing about their great national uses, but hungering and thirsting after premiums, rushed eagerly into the vortex of speculation. They applied for allotments, and subscribed for shares in lines, of the engineering character or probable traffic of which they knew nothing. "Shares! shares!" became the general cry. The ultimate issue of the projects themselves was a matter of no moment. The multitude were bitten by the universal rage for acquiring sudden fortunes without the labour of earning them. Provided they could but obtain allotments which they could sell at a premium, and put the profit - often the only capital they possessed [1] - into their pockets, it was enough for them. The mania was not confined to the precincts of the stock exchange, but infected all ranks throughout the country. Share markets were established in the provincial towns, where people might play their stakes as on a roulette table. The game was open to all, - to
the workman, who drew his accumulation of small earnings out of the savings' bank to try a venture in shares; to the widow and spinster of small means, who had up to that time blessed God that their lot had lain between poverty and riches, but were now seized by the infatuation of becoming suddenly rich; to the professional man, who, watching the success of others, at length scorned the moderate gains of his calling, and rushed into speculation. The madness spread everywhere. It embraced merchants and manufacturers, gentry and shopkeepers, clerks in public offices and loungers at the clubs. Noble lords were pointed at as "stags"; there were even clergymen who were characterized as "bulls"; and amiable ladies who had the reputation of "bears " in the share markets. The few quiet men who remained uninfluenced by the speculation of the time, were, in not a few cases, even reproached for doing injustice to their families, in declining to help themselves from the stores of wealth that were poured out all around.

Folly and knavery were, for a time, completely in the ascendant. The sharpers of society were let loose, and jobbers and schemers became more and more plentiful. They threw out railway schemes as mere lures to catch the unwary. They fed the mania with a constant succession of new projects. The railway papers became loaded with their advertisements. The post-office was scarcely able to distribute the multitude of prospectuses and circulars which they issued. For the time their popularity was immense. They rose like froth into the upper heights of society, and the flunky Fitz Plushe, by virtue of his supposed wealth, sat amongst peers and was idolized....

Parliament, whose previous conduct in connection with railway legislation was so open to reprehension, interposed no check - attempted no remedy. On the contrary, it helped to intensify the evils arising from this unseemly state of things. Many of its members were themselves involved in the mania, and as much interested in its continuance as were the vulgar herd of money-grubbers. The railway prospectuses now issued - unlike the original Liverpool and Manchester, and London and Birmingham schemes - were headed by peers, baronets, landed proprietors, and strings of M.Ps. Thus, it was found in 1845, that not fewer than 157 members of Parliament were on the lists of new companies as subscribers for sums ranging from £291,000 downwards! The projectors of new lines even came to boast of their parliamentary strength, and of the number of votes which they could command in "the House." The influence which landowners had formerly brought to bear upon Parliament in resisting railways when called for by the public necessities, was now employed to carry measures of a far different kind, originated
by cupidity, knavery, and folly. But these gentlemen had discovered by this time that railways were as a golden mine to them. They sat at railway boards, sometimes selling to themselves their own land at their own price, and paying themselves with the money of the unfortunate shareholders. Others used the railway mania as a convenient and, to themselves, comparatively inexpensive mode of purchasing constituencies. It was strongly suspected that honourable members adopted what Yankee legislators call "log-rolling," that is. "You help me to roll my log, and I help you to roll yours." At all events, it is matter of fact, that, through parliamentary influence, many utterly ruinous branches and extensions projected during the mania, calculated only to benefit the inhabitants of a few miserable old boroughs accidentally omitted from schedule A, were authorized in the memorable sessions of 1844 and 1845.

This boundless speculation of course gave abundant employment to the engineers. They were found ready to attach their names to the most daring and foolish projects - railways through hills, across arms of the sea, over or under great rivers, spanning valleys at great heights or boring their way under the ground, across barren moors, along precipices, over bogs, and through miles of London streets. One line was projected direct from Leeds to Liverpool, which, if constructed, would involve a tunnel, or a deep rock-cutting through the hills, twenty miles long. No scheme was so mad that it did not find an engineer, so called, ready to indorse it, and give it currency. Many of these, even men of distinction, sold the use of their names to the projectors. A thousand guineas was the price charged by one gentleman for the use of his name; and fortunate were the solicitors considered who succeeded in bagging an engineer of reputation for their prospectus.

Mr. Stephenson was anxiously entreated to lend his name in this way; but he invariably refused. Had he been less scrupulous, he might, without any trouble, have thus earned an enormous income; but he had no desire to accumulate a fortune without labour and without honour. He himself never speculated in shares....

Among the characters brought prominently into notice by the mania, was the Railway navvy. The navvy was now a great man. He had grown rich, was a landowner, a railway shareholder, sometimes even a member of parliament; but he was a navvy still. He had imported the characteristics of his class into his new social position. He was always strong, rough, and ready; but withal he was unscrupulous. If there was a stout piece of work to be done, none could carry it out with greater energy, or execute it in better style according to contract - provided he was watched. But the navvy contractor was greatly given to "scamping." He was up to all sorts of disreputable tricks of the trade. In building a tunnel, he would, if he could, use half-baked clay instead of bricks, and put in two courses instead of four. He would scamp the foundations of bridges, use rubble instead of stone sets, and Canadian timber instead of Memel for his viaducts; but he was greatest of all, perhaps, in the "scamping" of ballast. He had therefore - especially the leviathan navvy - to be very closely watched; and this was generally entrusted to railway inspectors at comparatively small salaries. The consequences were such as might have been anticipated. More bad and dishonest work was executed on the railways constructed in any single year subsequent to the mania, than was to be found on all the Stephenson lines during the preceding twenty years.


1. The Marquis of Clanricarde brought under the notice of the House of Lords in 1845, that one Charles Guernsey, the son of a charwoman, and a clerk in a broker's office at 12s. a week, had his name down as a subscriber for shares in the London and York line, for £52,000. Doubtless, he had been made useful for the purpose by the brokers, his employers. [back]


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