The industrial Victorian era offered lucrative opportunities to those with money or vision. Some ventures, however, were not as secure as they first appeared, and could have disastrous results. Engineer Joseph Mitchell witnessed the moneyed classes’ rash love affair with railways, which came to a bitter end in 1847.
In 1845 the whole country was in fever heat regarding railways. The frenzy continued in 1846. However absurd the scheme, the public rushed at it, and every stock ran up to a premium; in fact, there was a mania which resembled the insanity of the South Sea Bubble. Many thousands of people, who could pay a deposit of £2 10s. expecting to get a premium and then sell out, were involved in obligations for thousands of pounds, and he was a fortunate speculator whose project Parliament rejected and the Provisional Committee were required to wind up.
Apart from speculators, for whom there may be less sympathy, thousands of respectable people, believing railways an advantageous investment for their savings, were ruined by the fluctuation in the value of their property, mainly from the opposition lines and the uncertain actions of the Legislature.
In 1847 came the railway crash, consequent on the wild schemes and speculation of former years, and which spread ruin and dismay throughout the country.
Directors who had their Bills passed entered on their works, and had to struggle through excessive difficulties. Some became involved in heavy responsibilities to the extent of their whole fortunes. Notable cases of this occurred in the Caledonian and Scottish Central, and other Northern lines.
Shareholders were prosecuted for calls to their absolute ruin. Stocks were unsaleable. Some railway companies suspended operations.
The Caledonian and Scottish Central contractors, Messrs. Brassey, Mackenzie, and Stephenson, who had upwards of 20,000 men engaged, could not get funds to pay their workmen for a time; and Mr Stephenson, who had the management of the works, in his distress and excitement, lost his reason and died.
The South Aberdeen Railway had to suspend operations, and our opponents, the Great North of Scotland Railway Company, who had got their Bill passed, were unable to proceed with their works.
When this company was formed, instead of issuing their stock to the public, the promoters distributed the greater part of it among themselves, calculating, as many did, that when they obtained their Bill the stock would run up to a premium, as was then common. Hence the law agents of the company had allotted to them 2,130 shares, upon which they deposited £75,850. The secretary was liable for £25,000; the Edinburgh agents, £20,000; two other agents, £15,000; while eight directors subscribed for £170,000 of the stock.
The deposits had been apparently advanced by the banks, chiefly the North of Scotland Bank; but unfortunately the crash came before the calculations of the promoters were realized.
Then came a long period of monetary depression, so that not only had they no capital, as I have said, to carry on their works, but the banks got uneasy regarding the deposits they had advanced, and insisted on payment and security.
The unfortunate promoters of the Great North of Scotland Railway were thus involved in much pecuniary difficulty; some of the directors, it was said, were ruined. At last it was resolved before their power expired to go on with the works, but limit their efforts to the forty miles of line between Aberdeen and Huntly.
The works were contracted for; and with the aid of contractors who took stock in part payment, they with great difficulty succeeded in completing that portion of the railway, thus giving little hope to the northern counties of obtaining railway communication even by Aberdeen.