In the mid-1840s, the Bank of England lowered interest rates and legislation made it easier for individuals to invest in companies, fueling the English Railway Mania. Railroad companies were hyped as a "fool proof investment" and many new schemes emerged. Due to politicians investing, there was little regulation of the increasingly speculative frenzy. Between 1844-1846, over 6,000 miles of track were built. However, when interest rates rose in 1845 and some schemes were revealed as scams, share prices collapsed, and many investors lost substantial sums.

1. BUBBLE SPOTTING SERIES - 2014
QUICK SUMMARY FORMAT

2. This short presentation on the English Railway Mania forms
part of a larger presentation on Market Bubbles
Front page graphic - WIKICOMMONS. -Petar Milošević

3. BACKGROUND
In the late 1830s and early 1840s the British
economy slowed down, and interest rates
went up. Government bonds became a
preferred investment.
www.nrm.org.uk

4. However in the mid 1840s the bank of
England dropped the interest rates again.
England was in the middle of the industrial
revolution, creating an affluent middle
class in the process.
Government then changed legislation,
making it much easier for individuals to
invest in companies.
www.nrm.org.uk

5. Railroad companies were punted by media
hype as a FOOL PROOF INVESTMENT and a
number of Railroad “Investment
Opportunities” sprung up left, right and
centre.
www.nrm.org.uk

6. Due to many Members of Parliament
investing in these schemes, the regulatory
control was pretty much laissez-faire OR
LACKING.

7. During those early days, the technology was
far from perfected, and it resulted in
numerous accidents (as can be seen from this
1931 sketch) www.Nrm.Org.Uk

8. Between 1844-1846 a total of 6,220 miles
(10,010 km) of railway line was constructed
(comparatively by the 2000’s the modern UK
rail network was only approx. 11,000 miles
(18,000 km) long.

9. In 1845 the Bank of England increased
lending rates, which was the end of easy
capital.

10. Some scams were uncovered, which had
lured innocent investors to invest
their hard earned money in bogus
investments.

11. This, combined with weak operating
performance (at least partially as a result
of extreme competition between all the
various railroad companies), started the
snowball effect and funds were withdrawn
from railroad companies.

12. RAILWAY SHARE
PRICES

13. Many investors lost substantial
investments.

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15. English Railway Mania (Bubble) –Sources and further reading
http://www.thebubblebubble.com/1929-crash/
http://www.investopedia.com/terms/s/stock-market-crash-1929.asp
http://www.reuters.com/article/2008/01/21/us-market-crashesidUSL2126592320080121
http://www3.nd.edu/~jstiver/FIN462/US%20Market%20Crashes.pdf
http://en.wikipedia.org/wiki/Wall_Street_Crash_of_1929

16. This presentation is provided in the sake of public interest, and has been compiled based on
publically available information sources on the web.
While great care has been taken in the preparation and compilation of information indicated here,
the author does not accept any legal or other liability for any inaccuracy, mistake, misstatement or
any other error of whatsoever nature contained herein.
This presentation is not investment advice, not a solicitation for any type of investment, financial
or otherwise, nor is this presentation an opinion expressed on, nor endorsement of markets,
commodities or investments.
Any names, trademarks and images are copyright their respective owners and rights in the
graphic artwork and photos used in this presentation belongs to, and are courtesy of the
respective owners thereof. Unless where otherwise indicated, I don’t claim to have any rights
therein.