SOURCES OF SCOTTISH RAILWAY SHARE CAPITAL BEFORE 1860*
| DOI | http://doi.org/10.1111/j.1467-9485.1970.tb00717.x |
| Published date | 01 November 1970 |
| Author | Wray Vamplew |
| Date | 01 November 1970 |
SOURCES
OF
SCOTTISH RAILWAY
SHARE CAPITAL
BEFORE
1860*
Year
1840
1844
1849
1854
1859
WRAY
VAMPLEW
Total Paid-Up Share Capital
(f‘000)
Total Route Mileage
1960 137
3839 282
19324 872
22560 1062
28358 1418
As
Table
I
shows over twenty-eight million pounds
of
share capital was
raised by Scottish railway companies between
1825
and
1860,
the beginning
of the decade in which it is reckoned that the railway capital market became
relatively perfect (Hawke and Reed,
1969,
p.
278).
The aim
of
this article,
Table
I
SCOITISH
RAILWAY MILEAGE
AND
Stme
CAPITAL
1840-59
after briefly outlining the progress
of
Scottish railway development in the
period concerned,
is
to suggest where this capital came from.
I
A
letter to the
Railway
Times
(1
5
August
1840)
commented that in Scot-
Iand
‘
they are children as to railways
’.
At this time only
137
route miles were
in operation north of the border whilst the rest
of
Britain could claim nearly
400
miles a decade previously. This lag in development was not due to a lack
of
initiative in transport innovation for Scotsmen pioneered many transport
improvements-one has only
to
recall Telford’s roads and Henry Bell’s
Comet
-nor can it be attributed
to
any lack
of
interest in railways as there is ample
evidence that railways were discussed
in
Scottish business circles quite early
in the nineteenth century and plans formulated for their construction,
although in most cases these proposals proved abortive.
If
the demand
for
railways was
to
become effective, capital had to be provided, and it is the
difficulties of finance which suggest the most plausible answer to the question
of Scotland’s late development relative to her southern neighbour. Normally
I
am grateful for comments from Professors
S.
B.
Saul and
M.
W.
Flinn, and
Dr.
T.
C.
Srnout
of
the Department
of
Economic History, University
of
Edinburgh, and
to
the participants at the Conference
of
Scottish Economic Historians held at the
University of
Glasgow,
December
1967.
426
WRAY VAMPLEW
railways take time to construct and experience a long gestation period before
returns are obtained on the capital invested. Scotland, it can be suggested,
simply could not afford to divert capital from other sectors of her economy
and tie it up
in
the building
of
railways. We return to this
in
Section
111.
The railways that were built lend support to the hypothesis
of
fund-raising
difficulties being the key factor in explaining the slowness of railway develop-
ment in Scotland.
As
in England, there was a long history
of
rails being put
down to aid in the exploitation
of
coal deposits; in fact all but one of the
Scottish railways built before
1836
were to facilitate mineral development.
Their promoters were frequently the proprietors
of
the coal and ironstone
fields to be opened up and the users of the minerals to be exploited, both
of
whom could afford the relatively small capital expenditure of these short
lines from which they perhaps sought indirect rather than direct returns.
Non-mineral lines and expensive projects had to wait.
A
railway to link
Edinburgh and Glasgow was originally envisaged
in
1812,
was first surveyed
in
1825.
and was eventually brought to the public in
1832,
only to be
prevented from fruition by a lack
of
finance
(Scortish
Guardian,
6
March
1832).
Not until
1842
did this important inter-urban line come into operation. The
only railway built before the mid
1830s
which was not primarily concerned
with carriage of minerals was the Dundee and Newtyle, and this underwent
severe financial difficulties. its eleven miles of single track taking over five
years to complete.' Financial problems thus restricted Scottish railway
development before the mid
1830s
to a scattering of short, predominantly
unconnected lines. Even the minor railway mania that hit Britain in the mid
1830s
left Scotland relatively unscathed. Few schemes were put forward and
even less materialised; only three small lines actually being sanctioned.
However, the late
1830s
witnessed the construction
of
three major inter-urban
railways radiating from Glasgow. The railway idea had now become firmly
established in concrete
form.
Unlike its predecessor the great railway mania
of
the
1840s
had strong
positive effects on Scottish railway development. Stimulated first by low
interest rates and later by the prospect
of
capital gains, capitalists, large and
small, promised money to railway enterprises in even the most isolated areas
of
Scotland.
'
We have railways proposed in every direction
'
wrote one
contemporary observer.2 How right he was, for in December
1845
plans for
one hundred and fifteen Scottish railways were deposited with the Board
of
Trade. The heady years of the mania soon gave way to a sobering
aftermath when these speculators found themselves committed
to
under-
taking investment far in excess
of
their financial resources.
A
movement for
postponements and abandonments quickly gained momentum and the
remaining years of the decade witnessed frequent reports of company
liquidations or requests for an extension of time before the commencement
of
construction. However, it must be emphasised that many
of
the abortive
1
Airlie
Papers.
G.
D.
16,
Section
38/77,
bundle
1.
Scottish Record Office (S.R.O.),
Edinburgh.
Ibid. Section
38/82,
bundle 2, items
5
and
6.
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