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CHAPTER V.

RAILWAY ENTERPRISE.

Accumulation of Capital.-Railway Investments.-Rise in the Price of Railway Shares.-Economic Advantages of Railway Rates of Carriage.-Moral and Social Effects of Railways.-Progress of Railways.

A LONG period of peace and the improvement of manufacture and commerce was conducive to a large increase of wealth in the United Kingdom. In 1814 the capital subject to legacy duty was 27,290,000l.; in 1844 it was 46,533,000l. Mr. Porter estimated the personal property of the country in 1814 at 1,200,000,000, and in 1834 at 1,800,000,000l. On the same calculation, in 1844 it was estimated at 2,250,000,000l. The income tax on land in 1815 was assessed at the value of 49,660,000l.; in 1843 at 80,519,000l. Mr, Wilson, in his work on Capital, Currency, and Banking,' estimated that the annual accumulation of property in the United Kingdom, between 1840 and 1845, could not be less than sixty millions sterling. And though a large portion of such saving was required in the numerous branches of industry for their own improvement and extension, there was at that time a large surplus of capital in quest of promising employment. In truth, capital in England ordinarily increases more rapidly than the means of safe and profitable employment; and, consequently, from time to time a great competition arises between the owners of capital for the means of investing their surplus stock.

Such competition for investment was offered by railway enterprise in 1845-46. From 1801 to 1825 twenty-nine Acts of Parliament were passed authorising the companies to raise 1,263,000l. in capital and loans. From 1826 to 1835 the number of Acts so passed was ninety-five, authorising the raising of 19,000,000l. in capital and loans. The Eastern Counties Railway was sanctioned in 1834; the London and Southampton, afterwards the London and South-Western, in 1834; the Great Western Railway Company's Bill received its sanction in 1835. At first it was not intended to give to the railway companies the monopoly of the lines; but it was soon found that no competition was possible, and the mail coaches one by one disappeared. In 1838 the mails began to be sent by railway. In that year there were 490 miles of railway open in England and Wales, and 50 miles in Scotland, constructed

at a cost of 13,300,000l. From 1836 to 1843 the number of Acts passed was 179, and the amount of capital and loans authorised was 60,000,000l., and in the latter year the number of miles authorised was 2,036. In 1844 greater activity was shown. The number of Acts passed was 26, involving the investment of 14,793,000l.; and again, in 1845, not fewer than 109 Acts were passed, authorising the raising of 59,613,000l.

But all this was greatly exceeded in 1846, when a perfect mania existed for railway speculation. In that year 1,263 schemes were launched, involving an expenditure of 560,000,000l. All England and nearly all Scotland was mapped out for railways, and an unlimited enthusiasm prevailed for the new method of communication, under which shares, stocks, and scrip were traded or gambled in, in the most reckless manner. The Legislature itself must have been led to expect that railway enterprise would realise enormous profits, since in 1844 provision was made that if the clear annual profits should amount to 10 per cent. on the paid-up capital of any railway authorised, at the end of twenty-one years from the passing of the act sanctioning the line, the Lords of the Treasury might revise the tolls, fares, and charges, so as to reduce the dividend to 10 per cent.

As an evidence of the way in which the spirit of speculation tended to produce fictitious wealth it may be noticed that the Midland stock, amounting to 4,180,000l., was increased at its selling price to about 7,000,000l.; the Great Western shares, issued for 8,168,000l., were worth in the market 13,500,000l.; and the Manchester and Leeds shares, the capital of which was 4,600,000l., at their increased prices represented a capital of upwards of 8,000,000l.1 The Leeds and Thirsk Railway 50l. shares, with 21. 108. paid, were selling in March at 31. 108., and in September at 231. 158. The Bolton, Wigan, and Liverpool 40l. shares, with 47. paid, were worth in January 47. 108., in September 421. 158. Princely fortunes were thus speedily created and lost, and the people became wild with a market so excited. What rigging of the market, what abortive schemes, and what frauds! How could a frenzy like this fail to bring about its own retribution?

Nor was the impulse to railway speculation confined to this country. On the Continent of Europe and in the United States of America, everywhere, the same eagerness was shown. In 1845

'The fluctuation in prices of the three leading lines may be seen from the following facts :

July, 1844 July, 1845 July, 1846 July, 1847 July, 1848

Price Paid Price Paid Price Paid Price Paid Price Paid

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Belgium had already 343 miles of railways, at a cost of 5,872,000l.; France 552 miles, at a cost of 10,232,000l., with projects and authority for 1,900 miles more, involving an expenditure of 30,000,000l. additional. Germany had 2,000 miles of railway, made at a cost of 15,500,000l., and 2,300 miles more were authorised. And the United States of America had completed 3,688 miles, at an expenditure of 17,702,000l., and in construction 5,624 miles, involving an expenditure of 26,995,000l. Here then was an abundant outlet offered for any surplus capital. There was a peculiar feature, however, in this new mode of investment, that it took away a large amount of capital available for the work of trade and manufacture, technically called 'floating capital,' to be employed in plant, rail, and other forms of 'fixed' capital, the consequence of which was to increase largely the price of loanable capital, or in other words to raise the rate of discount, and thereby to produce a crisis. The result of the railway speculation was on the one hand greatly to increase the liabilities or commitments of the country for capital, and on the other to diminish that portion of capital in the money market most necessary for purposes of

commerce.

But the rage for speculation was carried too far. Whatever foundation there might have been for the extension of railways, the prospects of profits had been greatly exaggerated, in consequence of the greatly increased expenditure in expenses for getting the acts, for land compensation, and also from the severe competition which ensued by the construction of duplicate lines and the undue or too sudden addition of branches. Add to this that the removal of so much capital from floating to fixed-that is, from the ordinary employment for commerce and manufactures to the construction of roads, in plant, rail, and other forms not capable of returning into general use-and we need not be surprised if a crisis ensued which threw to the wind many a bubble project, and brought railway property down to more reasonable proportions in relation to its real worth.

Apart from all speculation, the railway was working a moral reformation in the country. At the close of the last century the internal transport of goods was so very slow and expensive as to prevent the transport of all goods except manufactured articles or goods of light weight, which could bear a high rate of transport. Not many articles could well stand a charge of 40s. a ton from Liverpool to Manchester, and 137. a ton from London to Leeds. Heavy goods and minerals were transported by sea only, and mar of the richest districts of the country remained unproducti awaiting the tardy advancement of the art of transport. When the railway was introduced, all this was changed. By the facility afforded for passenger traffic, and by the certainty and rapidity of conveyance of goods, however burthensome and heavy, the resources

of the country were being developed in an extraordinary manner.2 Districts hitherto secluded and unknown were found to possess advantages for commerce and industry which the inhabitants themselves had never dreamt of. An immense economy of capital and labour was the necessary attendant of such a change in locomotion. A man could do more in one day than he could have done formerly in three or four. The merchant could look for his returns in much less time than he had been in the habit of receiving them. Altogether the nation saw that the railway system was a wonderful engine of material progress, and it became evident that every town of any importance, and every district possessing either agricultural or mineral wealth, must sooner or later have its railway.

The influence of railways on the material and moral interests of the United Kingdom has indeed been very considerable. Agriculture gained immensely by the easy and more economic transport of manure, cattle, sheep, and farm produce. A piece of land was recently considered quite unproductive. A railway went near it, and immediately a bed of asparagus was planted, which, being rendered available for the London market, raised the value of the land to 10l. an acre. A railway was recently constructed in the highlands of Scotland, and forthwith their enormous woods were rendered most valuable. As an example of the way in which the railway benefits the farmer and increases public wealth, see how it acts on the transport of fat stock to the London market. ForThe economy of railway transport as compared with carriers and canals will be seen by the following facts:

BRISTOL TO LONDON-RATES PER TON.

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merly, when several days were occupied in driving to London, a sheep was found on the average to have lost seven pounds weight, and bullocks twenty-eight pounds. This difference in weight was waste, entirely lost to everybody. Now nearly the whole amount finds its way into the market, as the stock is put into the trucks in the morning, and reaches London in the afternoon, without fatigue.

In former days it was necessary that the metropolis should be near a river, for facility of communication, as London on the Thames, Rome on the Tiber, Paris on the Seine. But now London is no longer dependent on the river for provisions. Coals arrive by land as well as by sea. Until the opening of the Great Northern Railway coals came almost exclusively by sea, and prices in London varied considerably in summer and winter. Now coals are carried by land. From the colliery siding in the West Riding of Yorkshire to King's Cross, London, a distant of 186 miles, coals are carried at 88. 3d. per ton in owners' wagons, inclusive of 18. 1d. per ton city dues. If carried in the railway company's wagons 9d. per ton extra is charged. The railway brings meat daily from Aberdeen, fish from Yarmouth, and farm produce from all parts of the country, nay, even from the Continent. If free trade has done much for the increase of commerce, the railway has done more, in enabling England to supply all nations with her produce and manufactures. Look at the enormous saving of time the railways produce in the transit of merchandise. Millions were formerly lying idle, locked up in the roads, which are now at once liberated for other uses. In days gone by it took a long time to negotiate a business, whether personally or by correspondence. Now it is done in a few moments. Whole cargoes of merchandise are bought and sold by telegram. The saving of time and expense attained by railway travelling is something extraordinary. And so are facilities the railway affords in the carriage of goods. Where could we find horses sufficient to carry the 212,000,000 tons of coals and goods, and the millions of cattle and sheep? A horse can at most work eight hours a day; an engine may work twenty-four hours. And think of the saving in the cost of transport by steam as compared with horse power. In every way the material interests of the country have been immensely promoted by railways. And what of morals and intelligence? Look at the enormous number of newspapers sold at all railway stations. See how many volumes are sold and read! What railway literature has been put forth! What habits of punctuality have been introduced! Who, indeed, can estimate the benefit to mind and intelligence derived by the millions who traverse the length and breadth of the land? A railway carriage full of people is a great school, and we need not be philosophers or moralists in order to learn many a solid lesson from the flow and

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