Railway Mania

Railway Mania was an instance of speculative frenzy in Britain in the 1840s. It followed a common pattern: as the price of railway shares increased, more and more money was poured in by speculators, until the inevitable collapse. It reached its zenith in 1846, when no fewer than 272 Acts of Parliament were passed, setting up new railway companies, and the proposed routes totalled 9,500 miles (15,300 km) of new railway. Around a third of the railways authorised were never built – the company either collapsed due to poor financial planning, was bought out by a larger competitor before it could build its line, or turned out to be a fraudulent enterprise to channel investors' money into another business.

Causes

Britain's (and the world's) first recognisably modern inter-city railway, the Liverpool and Manchester (the L&M), opened in 1830 and proved to be highly successful for transporting both passengers and freight. The late 1830s and early 1840s saw the British economy slow down. Interest rates rose, making it more attractive to invest money in government bonds – the main source of investment at the time, and political and social unrest deterred banks and businesses from investing the huge sums of money required to build railways; the L&M cost £637,000 (£54,680,000 today).