Railway Mania
By the middle of the 1840s the first main lines had been built and many had paid good dividends. Investors, large and small, wanted a share. Companies were formed to build lines to almost anywhere, and a share could be bought for a small deposit, with the rest to be paid later. Prices rose, and rising prices drew in more buyers.
Parliament was flooded with proposals. In 1846, the peak of the boom, it authorised several thousand miles of new line in a single year. Many of the schemes were sound, but others were speculative, or copies of each other, or little more than a prospectus. Newspapers, including the Railway Times, urged readers to buy, and men like George Hudson, called the Railway King, controlled large networks and were celebrated as heroes.
The crash
In 1847 the Bank of England raised its interest rate, calls on shares fell due, and prices collapsed. Many people were ruined. Hudson was later shown to have paid dividends from capital and to have taken advantage of his position, and he fell from power in 1849.
Yet the railways that were built from the boom did not disappear. Many of the lines authorised in these years were completed, and they gave Britain much of the network that it had until the twentieth century, paid for by those who lost their money.