Railway Mania
Railway Mania was a stock market bubble in the rail transportation industry of the United Kingdom of Great Britain and Ireland in the 1840s.[1] It followed a common pattern: as the price of railway shares increased, speculators invested more money, which further increased the price of railway shares, until the share price collapsed. The mania reached its zenith in 1846, when 263 Acts of Parliament for setting up new railway companies were passed, with the proposed routes totalling 9,500 miles (15,300 km). About a third of the railways authorised were never built—the companies either collapsed due to poor financial planning, were bought out by larger competitors before they could build their line, or turned out to be fraudulent enterprises to channel investors' money into other businesses.[2]
Results[edit]
Unlike some stock market bubbles, there was a net tangible result from all the investment: a vast expansion of the British railway system, though perhaps at an inflated cost. Amongst the high number of impractical, overambitious and downright fraudulent schemes promoted during the mania were a good number of practical trunk routes (most notably the initial part of the Great Northern Railway and the trans-Pennine Woodhead route) and important freight lines (such as large parts of what would become the North Eastern Railway). These projects all required vast amounts of capital, all of which had to be raised from private enterprise. The speculative frenzy of the mania made people much more willing to invest the large sums required for railway construction than they had been previously or would be in later years. Even many of the routes that failed when the mania collapsed became viable (if not lucrative) when each was in the hands of the larger company that had purchased it. A total of 6,220 miles (10,010 km) of railway line were built as a result of projects authorised between 1844 and 1846—by comparison, the total route mileage of the modern UK railway network is around 11,000 miles (18,000 km).
Comparisons[edit]
Railway and Canal Mania can be compared with a similar mania in the 1990s in the stock of telecom companies. The telecom mania resulted in the installation and deployment of a vast amount of fibre-optic telecommunications infrastructure, spurred on from the realisation that the same railway rights-of-way could make affordable conduits for fibre optics. Yet another boom occurred in the period 1995–2000, during the development of the Internet, when many companies were established to promote new services on the growing network. The dot-com bubble collapsed in 2000, and the much more extensive telecoms bubble in 2002 with the bankruptcies of Enron, WorldCom, Global Crossing, and QWest, although some platform companies such as Google and Amazon grew and prospered, diversifying into backbone fibre networks and cloud computing services.