The Railway Mania

George Hudson and the Railway Mania

EVERY now and then a nation loses its head over financial matters, goes money-mad, and speculates wildly in a fashion that can have but one ending - the ending of a gambler.

We all know something of the famous South Sea Bubble, which in Queen Anne’s reign ruined thousands of thrifty folk, and left behind it many a desolated home and suicide’s grave. Hundred pound shares of the South Sea Company’s stock changed hands for a thousand pounds or more. Then the reaction set in; the shares fell in value with terrible rapidity, and soon were worth little more than the paper of the scrip. It took all Walpole’s financial genius to save the credit of the nation from being lost amid the general catastrophe.

Even more disastrous in its consequences was the mania for buying and selling shares in existing or projected railways which twice seized the British public; the first time in 1836, and again in the years 1843-45.

In the early thirties the railway had few friends. Those people who were not openly hostile to it, were either utterly indifferent to its development or cynical. As a few years ago caricaturists heaped ridicule on the motor car - to-day a great power in the land - so then every comic draughtsman or scribbler must have his fling at the dangerous, noisy, smelly, illness-causing, ugly locomotive, - epithets which by no means exhaust the list of adjectives applied to the steam-horse.

But in spite of the jeering the faithful few persevered, and the despised railways soon began to pay dividends of 10 and even 15 per cent. In 1836 money was “easy”, that is, plentiful, and profitable investments were hard to find. So that before long the railways attracted the attention of the financial world. People suddenly discovered that the earning of a good dividend covered a multitude of sins. The iron track, once everybody’s butt, blossomed into “a great civilizer”, “a priceless boon”, “a triumph of peace”, and so on, according to the command of language enjoyed by the journalist who rushed into print in praise of the new panacea for all evils social and political.

Folk tumbled over one another in their eagerness to buy scrip. The wildest schemes for new lines found immediate support. Nothing seemed too idiotic, when the public had for the time become a race of idiots; among whom only a few men, such as George Stephenson, managed to keep a cool head. Huge fortunes were made and lost in a week or two. Paupers became rich men; millionaires sank into poverty. Trickery and knavery of all sorts was rampant. The industrial balance of the country was upset; and the year ended amid the gloom of acute monetary depression.

Yet the speculation of 1836 was but a mild gamble compared with that of the second period (1843-45). Once again people looked about for something which would yield a better return than Consols, now above par, and so scarcely worth buying. The mania “commenced in 1843, was continued in 1844, and arrived at its height in 1845, during which thousands of persons were ruined by the absurd rush for shares.” Railway schemes grew with a mushroom growth. In January 1845 sixteen new lines were registered, and in the eleven months following, more than 1200 lines were projected, a very small proportion of which ever received Parliamentary powers. No part of the country was too barren, too remote, too poverty-stricken, too thinly populated, to be described by the projector as affording an opening for a most profitable line. In one place a railway was advocated because it would run over the route once taken by a Roman Road! In another district a sufficient cause was found in the fact that a Danish Invasion had once passed that way!

As during the cycle “mania” of some years ago, everything and everybody connected with the cycle trade enjoyed a sudden “boom”, so during the furore of 1843-45 did the railway press, the railway expert, even the individual who had the shallowest acquaintance with railway matters, find themselves inundated with business. A hundred newspapers sprang into existence, reaped a great harvest out of the advertisements, which sometimes in a single journal amounted to £10,000 a week, and expired in a few months. Men who could draw, survey, or in any way make themselves useful to the promoter, received princely salaries ranging upwards to £10 a day. The most magnificent schemes were carried through - on paper. Extraordinary public boons were brought home to the railway - on paper. Writers excelled themselves in flights of imagination which saw the railway levelling all class distinctions, and replacing poverty and discontent by comfort and universal brotherly kindness among men. This, again, was only a matter of paper. Arguments were forthcoming to prove that, however much money was sunk in railways, it must eventually benefit the community by keeping the wealth of the nation “on the move”. Lord Bacon’s saying that “money is like muck, and does no good till it is spread”, was adduced as a testimony to the advantages of pouring the wealth of the public into the pockets of the engineer and navvy, who now became familiar figures all over the country. The navvy, a much more uncouth person in those times than he is at present, caused consternation and often terror among the country folk with whom he came into contact. Cases of robbery and outrage were numerous, and the law, as represented by a few constables, was powerless to maintain order in the large camps of the navigators.

The surveyors also showed a sad lack of manners, being attracted on the one hand by the rewards accruing from business successfully carried through, and encouraged on the other by the wealthy companies for whom they worked. Collecting bands of ruffians, they set the landowners at defiance, with the natural result that there were some very pretty scuffles, when the owners also organised a force to resist the invaders.

By 1845 the rage of speculation had become so acute that the police had often to be called in to regulate the crowds besieging the Stock Exchanges of London and other large cities. Amid the general rush for money the railway did, indeed, to some extent prove a leveller, for people of all classes jostled one another in their haste to purchase the scrip dangled temptingly before their eyes by this or that promoter. Vainly did sober journals, such as the Times, urge caution and self-control, prophesying the crash that must follow so unhealthy a growth of railway schemes. They might as well have asked a man dying of thirst to content himself with half a pint an hour when at last he falls in with a pool of clear, sweet water.

Meanwhile the Parliamentary horse was being worked to death. Five hundred and sixty-one Bills came before the Commons. Nearly three hundred of these were promptly slaughtered, and the rest received the Royal Assent. Finally the legislators’ patience gave out, and the Board of Trade fixed November 30, 1845, as the day by which all plans of further projected lines must be deposited.

Then ensued such a scene as cannot be paralleled in the history of finance. The boom was already showing signs of a break, and it became absolutely necessary for such schemes as should be saved from ruin to be given Parliamentary powers to commence work at once. November 30 happened to be a Sunday, and this led to some difficulties. Never was the first day of the week less a day of rest. At twelve o’clock the offices of the Board of Trade would be closed.

Promoters hired special trains, special coaches, or special relays of horses to bear their plans to the Metropolis. In some cases a railway refused to carry people interested in a scheme that might prove harmful to it, and all sorts of devices were resorted to to evade the officials. A story is told of a large roll of plans being placed in a coffin, which was taken to the station on a hearse, attended by mourners wearing all the outward signs of deep sorrow. The coffin, on reaching London, was driven straight to the Board of Trade Offices, where its contents found their last resting-place.

Post-boys were bribed to drive their fares astray, or pretend ignorance of the road. Wheels were loosened; horses stolen. Scarcely a mean trick went unused. On the other hand, some very remarkable running occurred on the railways, as may be gathered from the fact that one “plan-special” covered the 118 miles between Bristol and London in an hour and a half at an average speed of nearly eighty miles an hour!

“THE RAILWAY KING” George Hudson Of course, many plans arrived too late, and the bearers, driven to desperation, hurled them in through the windows, from which they were as speedily ejected.

“THE RAILWAY KING” George Hudson, a great financier of the nineteenth century, whose story is linked with that of the LNER. He spent £3,000 a day in legal fees when fighting rival companies.

Then came the crash. Prices fell by leaps and bounds. Everybody wished to sell, nobody to buy. Thousands found them-selves penniless, and trade so bad that many avenues of earning even a pittance were closed against them. Some resorted to suicide, the final act of despair, and an even greater number languished in prison until their debts should be paid. The battle had been much severer even than that of the parties who strove during the South Sea Bubble, and the dead and wounded were proportionately more numerous.

Among the speculators of those wild days no one could vie with the “Railway King”, as George Hudson was named. He may be called the Napoleon of the mania, for although he outgeneralled his opponents, won many brilliant victories, and had the financial world at his feet, he eventually found his Waterloo. It must be placed to his credit that even if, after the manner of conquerors, he caused a great deal of misery, he did some really good work in the cause of railway extension, notably as regards the Midland system, of which he was the first Chairman.

Born in 1800, he began life as a linen-draper's assistant in York. When thirty-two years old he had attracted notice on the Board of Health of his town, and in 1837 was elected Lord Mayor. Two years later he took a prominent part in the opening of the York and North Midland Railway, which owed its existence largely to his perseverance and business capacity. In 1842 he was appointed Chairman of the North Midland Railway, and in 1844, when that line amalgamated with the Midland Counties and Birmingham and Derby Junction, he accepted the chairmanship of the joint concern.

During the mania Mr. Hudson fought a fierce Parliamentary battle on behalf of the Midland against the proposed London and York scheme. As a fighter he was seen at his best, - cool, untiring, cheerful. When once he took a project in hand he devoted his whole energy to it until he emerged victorious, or knew that the cause was hopelessly lost. As a consequence he was much sought after as a director by companies outside his own. His word became law. A few strokes of his pen carried as much weight as an Act of Parliament. He had an interest in practically every railway between Edinburgh and London. He “plunged” magnificently, buying by the hundred thousand pounds where other men were content to invest or risk their thousands. At one time he controlled over 1000 miles of railway. He became a popular hero; was cheered wherever he went; and, in addition to two re-elections to the York Mayoralty, was returned by Sunderland as its Member of Parliament.

Whether intentionally or not, Hudson became involved in transactions that savoured of fraud, and in 1846, at a meeting of the Midland Board called for the purpose of deciding whether they should buy up the Leeds and Bradford line recently opened, he was openly accused of consulting his own interests rather than those of the shareholders whom he represented: because, as Chairman of the Leeds and Bradford, he had advocated the purchase of that line by the Midland. Though he apparently cleared himself from the charges of misappropriation, his reputation had received a blow from which it never recovered.

The “Railway King” now fell on evil times. He whom the Prince Consort had once asked to be introduced to him, became the target at which every caricaturist launched his shaft. It was vain for him to state: “It has been my good or bad fortune to be the purchaser of many railways; and I might frequently have taken advantage of my position and knowledge to go into the market and lay out large sums with great benefit to myself, but I publicly declare that I have not done so, and call upon any person who can prove anything to the contrary to come forward and do it at once.” Satirists delighted to recall his draper days, and represented him sitting in his shop; at the mouth of a tunnel learning “how a great deal of railway business may be kept in the dark”; or seated in spider shape at the centre of a huge railway web to catch the shareholders for whom he had spun the meshes. Last scene of all, George Hudson, alone and deserted on a platform, vainly trying to stop the train which was leaving him in the lurch.

At an extraordinary meeting of the Midland shareholders held at Derby, April 19, 1849, Mr. Hudson, in a letter of considerable length, stated: “After due deliberation I have thought it right and to be more satisfactory to the shareholders of the Midland Railway Company to resign the office of chairman.” The thousand proprietors there assembled also found his action most satisfactory, and his connection with the Midland was thus severed. He had undoubtedly been playing a double game which an honourable man could not have reconciled with his conscience. He had, while professing undivided loyalty to the Midland, taken a share in obtaining Parliamentary sanction for a short line which, by connecting the Great Northern with the Manchester and Leeds Railway, deflected on to the metals of the former company a large amount of traffic hitherto handled by the Midland. When this was discovered - after his resignation - the shareholders naturally maintained that he had betrayed their interests, and demanded a committee of inquiry. In 1853 judgment was given against him in the Rolls Court, requiring him to account for various blocks of shares which he had appropriated, as well as for those with which influential members of Parliament had been bribed to aid the passage of Bills introduced by him. After that every board-room was closed against him; and though Sunderland re-elected him till 1859, his power had departed, and he took himself off to the Continent, there to indulge, on a smaller scale, in schemes such as had won him notoriety in England.

Till the last he retained his self-confidence, and paraded his unjust treatment - as he deemed it - at the hands of those whom he had served. He was lucky to have friends who stuck to him through evil as well as good report, and by generous gifts saved him from the fate which overtakes the majority of fallen men - to die poverty-stricken in a wretched garret.

This brief account of the man to whose piping the railways of England danced for nearly a couple of decades may fitly be closed with the words of Mr. Clement E. Stretton, who says: “The greatness of Hudson’s railway genius only makes it all the more lamentable that so great a man should have so deplorably fallen and have been guilty of acts which resulted in ruin and universal condemnation.” [The History of the Midland Railway, p.268.]

You can read more on “The Atmospheric Railway”, “London’s First Railways” and “When Railways Were New” on this website.