Railway Mania

1845–1847 CE — British Isles, Britain

Today: Britain

Parliament let anyone propose a railway, newspapers ran pages of prospectuses, and the middle classes — clergymen, widows, Charlotte Brontë among them — poured savings into schemes for lines that were never surveyed and often never built. Investors paid a deposit and owed the rest on call; when the calls came and the money was gone, they were ruined. At the peak, proposed railways would have cost roughly twice the nation's annual income. About a third of the approved lines were never constructed, and the ones that were built are largely the network Britain still uses.

Worth knowing: The mania's central figure, George Hudson, controlled a third of Britain's rail and paid dividends out of capital rather than profits — an arrangement that works until it doesn't. He died in obscurity; the tracks he laid are still carrying trains.

Pattern: Mania & panic — A speculative belief detaches asset prices from fundamentals; the belief breaks and prices collapse.

Entry 190 of 240 in Precedent, a walk through the whole human story in order.