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Blood, Iron, and Gold: How the Railways Transformed the World by Christian Wolmar
banking crisis, Beeching cuts, British Empire, Cape to Cairo, invention of the wheel, James Watt: steam engine, joint-stock company, Khartoum Gordon, Mahatma Gandhi, railway mania, refrigerator car, side project, South China Sea, transcontinental railway, tulip mania, urban sprawl
Britain’s more advanced industrialized position allowed it to keep ahead of its European counterparts and as a result it was the first nation to exploit fully the boundless potential of this new technology. It would retain that lead for some time, experiencing a series of railway manias, most notably in the early 1840s, the opening years of Queen Victoria’s reign, that would result in the construction of over 7,000 miles of railway within two decades of the opening of the Liverpool & Manchester. While other countries would also undergo such periods of railway mania, the British version was the first and one of the most fruitful. 11 Britain was, too, the first country to experience a railway scandal. George Hudson, who melded together a vast railway empire controlled by the Midland Railway, for a time Britain’s largest railway company, was exposed as a fraudster who cheated investors out of their money.
Most losses occurred when promoters, either fraudulent, stupid or simply over-optimistic, obtained huge sums of money for lines that were never completed so that investors lost all their cash. Investors were most vulnerable during the railway manias which raged through different countries at various times and were swept up in the rush simply because everyone else seemed to think it was a good idea. Railway bubbles simply fit into the history of similar scandals from the Dutch tulip mania of 1637 to the recent banking crisis. There’s no shortage of elegantly embellished but completely valueless railway company share certificates still adorning living-room walls, dating from the various railway manias of the nineteenth century. However, it was when governments became involved that unbelievably huge sums could be purloined by corrupt promoters and the world centre for such activity was the United States, where several later scams dwarfed even the dodgy dealings outlined in Chapter 6 during the construction of the first transcontinental.
Over the next three years, work on the railway, which involved a 500-metre tunnel and two bridges over the River Elbe, was completed in stages. At the grand opening on 7 April 1839, the first train consisted of fifteen coaches, in three different classes, hauled by two locomotives, one of which was named Robert Stephenson, and driven by another Englishman, a Lieutenant Peters. By the time of the full opening of the line, railways across Germany were expanding as a railway mania was taking hold. The German plains were filling up with lines as speculators began to realize that there was enormous potential for making money out of the railways, and the state governments were becoming aware of the powerful economic impact of the iron road. Prussia even passed a railway law regulating the industry before any lines were built in anticipation of this bonanza. In Bavaria, the king had granted a concession in 1836 to the München-Augsburger Eisenbahn Gesellschaft to build a forty-mile line between Munich and Augsburg, but the start of construction, as with so many early railway schemes, was delayed for two years because of difficulties in raising finance.
The Great Railroad Revolution by Christian Wolmar
1919 Motor Transport Corps convoy, accounting loophole / creative accounting, banking crisis, Bay Area Rapid Transit, big-box store, collective bargaining, cross-subsidies, intermodal, James Watt: steam engine, Ponzi scheme, quantitative easing, railway mania, Ralph Waldo Emerson, refrigerator car, Silicon Valley, strikebreaker, too big to fail, trade route, transcontinental railway, traveling salesman, union organizing, urban sprawl
See also Carriages Pullman News, 185–186 Pullman strike, 186, 235–238, 262 Rail network, US (2010), xvi–xvii (map) Rail World, 354 Railroad Bureau, 100, 103 Railroad Safety Appliance Act, 199–200 Railroad Temperance Society, 206 “Railroad wars,” xxii, 94, 107, 173–174 Railroads 1850, xv (map) 1880, x–xi (map) 1916, xii–xiii (map) Rails iron-covered, 3, 45–46 L-shaped, 3–4 steel, 196 toothed, 15 T-shaped, 45–46 Railway barons, 238–252, 255–256, 290, 298, 355 Railway charters, 11, 12, 17, 19–20, 23, 26, 29, 48 Railway companies and antitrust legislation, 274, 290–291 consolidation, 68, 123–124, 165, 167, 200–201, 238, 248, 256, 259–262, 293–299, 347, 358 labor relations, 231–238 (see also Labor unions) management structures, 229–232 monopoly powers, 30, 65, 205, 216, 238, 255, 259, 271, 273, 294, 316 public hostility, 119, 204–206, 216, 238–239, 243, 245, 250–257, 271, 290, 295, 355–356 and regulation, 256–257, 272–274 Railway company agents, 169, 172 Railway construction, 25–50 costs, 46–48 labor, 38–40 promotion, 33–36, 37, 38 See also Transcontinental railroads Railway manias, 23, 85, 124, 163 Railway travel collective travel, 222–223 connections, 84 experiences, 73–85, 161–162, 167–168, 208–213 luxury and prestige services, 181–190, 263–268, 300–303, 308, 309–315, 324, 325, 327–328, 329 (see also Passenger services) nighttime, 81, 83 and segregation, 208, 212–213 Sunday travel, 83 Railways achievements and impact, 216–230 British investment, 124 deregulation, 347–350 early opposition, 27, 63, 86–87, 92 government support, 28–34, 51, 52, 85, 129, 153, 166, 173, 233, 341–345, 356 and immigration, 169–173 interwar boom, 307–308 nationalization, 291–292 postwar expansion, 121–124, 159–165 regulation, 192–193, 256–257, 295–296, 297–298, 311, 347 route mileages, 68, 72, 85, 90, 123–124, 159, 174–175, 215, 259, 261, 288–289, 306, 307, 308, 318–319, 349–350 vertical integration, 48 Western expansion, 168–180 Rainhill Trials, 16, 17 Ramsey, Joseph, 247 Raquette Lake Railroad, 224 Raton Pass, 173 Rea, Samuel, 290 Redfield, William, 53, 125 Refrigerated wagons, 179, 255, 333 Reno brothers’ gang, 202, 203 Rensselaer & Saratoga Railroad, 23 Reutter, Mark, 62 Richmond, Fredericksburg & Potomac Railroad, 106 Richmond & Petersburg Railroad, 103 Rifkind, Simon, 325 Ripley, William Z., 296 River transportation, 6 Roads, 10–14 “corduroy roads,” 10 and government funding, 12, 332, 343, 356 interstate highways, 304–306, 308, 321, 332 plank roads, 69, 70 safety, 318 “shunpikes,” 12 turnpikes, 8, 11–13, 26–28, 29, 31, 48, 217, 303–304 Robber gangs, 202–206 Robinson, John and Lester, 132 Rockefeller, John D., 225 Rocket, 16 Roosevelt, Franklin D., 308, 322 Roosevelt, Theodore, 272 Rosecrans, William, 113 Roulette, 4 Royal Blue, 264–265 Royal Gorge, 173–174 “Runners,” 84 Russia, 171–172, 294, 357 Russian Revolution, 294 Ruth, Babe, 227 Sacramento Valley Railroad, 128, 129, 132 Safety, 48, 80, 190–200, 251, 256, 318, 323, 351, 354 Saint, Eva Marie, 266 Salamanca, 15 San Francisco Examiner, 237 Sand Creek massacre, 148 Sandboxes, 45 Santa Fe Railroad.
Ultimately, the Baltimore & Ohio became more important because the railroads in the North developed in a far more sophisticated way than their southern counterparts. In particular, they were prepared to go over state boundaries to provide long-distance services, unlike in the South, where the railroads largely stayed within individual state borders. These two railroads were part of a wider spurt of railroad activity, a mini version of the “railroad manias” that characterized future developments not just in the United States but across the world. In addition to the two longer coal railroads in Pennsylvania, New York State’s first railroad, the Mohawk & Hudson, which provided a shortcut to a circuitous section of the Erie Canal, had been chartered in 1826. However, financial and political difficulties meant that work did not start until the summer of 1830, and a 16-mile route between Albany and Schenectady opened a year later.
It was speed that stimulated the boom that saw the mileage of railroads, which in 1840 was around the same as that of the canals, increase almost exponentially, whereas canal building all but stopped. In the 1840s only 375 miles of new canal were added to the network, and closures of the economically weak waterways had already begun. Railroads like the Hudson River Railroad, and indeed the Erie, were being laid parallel to existing canals or river routes, and consequently even the steamboats were beginning to feel the pinch. The decade of the 1850s was a period of railroad mania. Whereas New England had benefited from most of the growth in the 1840s, the focus now shifted to the plains of what is now known as the Midwest but was then called the Northwest. The huge size of the territory meant that in the 1850s, Illinois and Ohio vied for the prize of building the most miles of railroad, a contest that the Land of Lincoln shaded with more than 2,600 miles of track—just 300 more than Ohio.
The Four Pillars of Investing: Lessons for Building a Winning Portfolio by William J. Bernstein
asset allocation, Bretton Woods, British Empire, buy low sell high, carried interest, corporate governance, cuban missile crisis, Daniel Kahneman / Amos Tversky, Dava Sobel, diversification, diversified portfolio, Edmond Halley, equity premium, estate planning, Eugene Fama: efficient market hypothesis, financial independence, financial innovation, fixed income, German hyperinflation, high net worth, hindsight bias, Hyman Minsky, index fund, invention of the telegraph, Isaac Newton, John Harrison: Longitude, Long Term Capital Management, loss aversion, market bubble, mental accounting, mortgage debt, new economy, pattern recognition, quantitative easing, railway mania, random walk, Richard Thaler, risk tolerance, risk/return, Robert Shiller, Robert Shiller, South Sea Bubble, transaction costs, Vanguard fund, yield curve
No less than Prime Minister Robert Peel warned, “Direct interference on our part with the mania of railway speculation seems impracticable. The only question is whether public attention might not be called to the impending danger, through the public press.” In short, Britain’s most brilliant prime minister did everything but shout “irrational exuberance!” at the top of his lungs in Parliament. The United States underwent its own railway mania in the post-Civil War period. But even taking into account the clocklike regularity of railroad bankruptcy and the Credit Mobilier scandal (in which this construction arm of Union Pacific plundered the parent company, not unlike the recent Enron scandal), things were a bit tamer here than in England. This was because U.S. companies were mainly financed with bonds, which are not as prone to bubbles as equity.
On the other hand, the Federal Reserve’s mishandling of the liquidity crunch brought on by the 1929 crash magnified its effects, resulting in the Great Depression, which scarred the national psyche for decades. The collapse of railroad shares in 1845 was equally catastrophic; a worldwide depression nearly swept away the Bank of England. Only hard money retained its value. The most long-lasting effect of the railway mania is that Britain, to this day, is cursed with a disorganized bramble of a rail network. Even casual visitors cannot help but notice the contrast with France’s more efficient layout, which was first surveyed by military engineers and then let out for private construction bids. Minsky’s criteria for bubbles work just as well in reverse with busts. A generalized loss in the faith of the new technologies to cure the system’s ills is usually the triggering factor.
The Bubble Act, which had actually precipitated the collapse, required a parliamentary charter for all new companies. Aside from wasting Parliament’s time and energy, the Bubble Act mainly served to hinder the formation of new enterprises. Parliament almost outlawed stockbrokering and made illegal short sales, futures, and options. These devices serve to make the capital markets more liquid and efficient, and their absence undoubtedly served to make subsequent crises more difficult to manage. The railway mania itself is a case in point; had investors been able to sell short railway shares, the bubble and subsequent collapse would likely have been much less violent. A similar reaction occurred in the United States in the wake of the 1929 crash that should give pause to many involved in the most recent speculative excess. At the center of this titanic story was a brilliant attorney of Sicilian origin, Ferdinand Pecora.
banking crisis, barriers to entry, Beeching cuts, British Empire, combinatorial explosion, Corn Laws, corporate social responsibility, David Ricardo: comparative advantage, intermodal, iterative process, joint-stock company, joint-stock limited liability company, knowledge economy, linear programming, Network effects, New Urbanism, performance metric, railway mania, rent-seeking, strikebreaker, the market place, transaction costs
The Committee saw the selection problem as a technical issue, to be decided by applying rational principles to documentary evidence, while MPs believed the issue should be resolved by persuasion, involving public debate conducted through hired legal advocates. After the collapse of the Railway Mania in 1846, commentators highlighted the capital losses sustained by shareholders, and the enormous expenditure on legal fees. They denounced Mania schemes as dishonest, whereas, in fact, most of the schemes were honest attempts to meet the commonly agreed requirements of the regions they planned to serve. The term Mania created a misleading impression, suggesting that the schemes were foolish and that investors were stupid. This study suggests that the failings of the Railway Mania were political and cultural rather than purely psychological. It was bad decision-making, rather than Wnancial speculation, that was the most serious problem. The Railway Mania represented a turning point in the history of the UK railway system.
Railway projects ‘took off ’ in the 1830s, with a peak in the 1860s. The first Railway Mania year occurred in the period 1844–46. The railways promoted during this period were authorized with a one-year lag in the period 1845–47. There were 119 railway Acts in 1845, 263 in 1846, and 187 in 1847. Many small investors lost their life savings in the speculation that surrounded the Mania. It was a long time before the public regained its confidence in railway investment, but when it did, a second—less virulent—Mania developed. It began in 1861, when 160 railway schemes were authorized. The number rose to 251 in 1865, falling slightly to 199 in 1866. The Mania ended with the collapse of Overend Gurney bankers in 1866—an apparently respectable firm that had been heavily involved in railway finance. During the Second Railway Mania, many of the schemes that had failed in the first Mania were re-launched under new names and new management.
To allow for the counterfactual network to include a Severn Tunnel would, however, be incompatible with the premises on which the counterfactual has been constructed. The counterfactual represents an integrated system which could, in principle, have been designed at the time of the Railway Mania. Furthermore, because it is smaller than the actual network, it could have been completed more quickly and would therefore have enjoyed a longer economic life. The cost of this approach, however, is that the whole network has to use technology that was available at the time of the Railway Mania, or shortly afterwards, and this does not include tunnelling under a major river. The penalty to network performance incurred by the omission of the Severn Tunnel is much lower than might be expected, however, for a number of reasons. To begin with, the operational beneWts turned out to be rather modest.
Fire and Steam: A New History of the Railways in Britain by Christian Wolmar
accounting loophole / creative accounting, Beeching cuts, carbon footprint, collective bargaining, computer age, Corn Laws, cross-subsidies, financial independence, hiring and firing, James Watt: steam engine, joint-stock company, railway mania, rising living standards, Silicon Valley, South Sea Bubble, strikebreaker, union organizing, upwardly mobile, working poor, yield management
The expression ‘calm before the storm’ does not do justice to the events of the middle of the decade when Parliament was inundated with bills and the whole economy of the country was, it seemed, geared towards constructing more and more railways. While there were previous and subsequent periods of booms in railway promotion, the years 1845–7 are rightly known as the period of the ‘railway mania’ because of their widespread impact and lasting effect. FIVE RAILWAYS EVERYWHERE Like all booms, the railway mania started imperceptibly. By the mid-1840s, investing in the railways had become an attractive proposition once again and schemes for new lines began to be drawn up in every region of the country. The financial climate had changed and there was optimism in the air with an upturn in the economic cycle. Interest rates had plummeted, encouraging people to look for a better rate of return on their savings than from government securities, and by the spring of 1844 there was more money available for railway investment than ever before.1 Moreover, the value of existing railway shares had begun to grow and naturally this encouraged promoters to bring forward new schemes which would appeal to the large pool of potential investors eager to make capital gains.
Manchester and its Lancashire hinterland was the centre of the cotton trade while Liverpool had been built up on a rather more sinister industry – slavery – and despite the decline of that trade remained Britain’s second most important port, thanks to the burgeoning imports of cotton from the USA. The Liverpool & Manchester represented the start of the railway age – just as it marked a significant advance in the technology – and was far grander in scale and conception than any of its predecessors. While work had progressed on the Stockton & Darlington, there had been something of a mini railway mania, the first of several over the next few decades, as various enterprising promoters put forward ideas for schemes to criss-cross Britain. Lines worth a total of £22m (about £1.32bn today),1 an unprecedented amount of capital at the time, including an ambitious scheme for a London–Edinburgh railway, were put forward in 1824–5, though most never got further than a prospectus and a vague scrawl on a map.
The railways had begun their long spread across Britain, but it was to be a stuttering process, with times of rapid expansion alternating with periods of little or no construction. FOUR CHANGING BRITAIN By 1843, just thirteen years after the opening of the Liverpool & Manchester, Britain had the makings of a railway network. The year was a notable one because it marked the end of the first phase of construction and the start of a brief hiatus before the railway mania of the second half of the decade began. There was, too, a lull in activity by the promoters. Once again, times were bad, both economically and politically, following a severe depression in trade caused by a series of failed harvests and the terrible Irish potato famine. There were also genuine doubts about whether Britain needed any more railways. A long article in the literary magazine the Athenaeum in May 1843 argued that several million pounds had been wasted in building parallel railways, such as the Midland Counties and the Birmingham & Derby, which both ran north out of Birmingham.
St Pancras Station by Simon Bradley
All looked rosy for the Midland at this point, for its system included part of the only railway route to York and the north, by means of a junction at Rugby with the London and Birmingham’s line to Euston. However, the end of this monopoly was soon in sight: in 1846 the Great Northern Railway was enacted, on a more direct course between York and its new terminus at King’s Cross. The newcomer was one of the more successful promotions of the ‘Railway Mania’ of 1844–7, a classic bubble in which railway shares took on the false lustre of licences to print money and hosts of extravagant and contradictory schemes contended for the capital of the propertied classes. Hudson managed one strategic master-stroke during this heady time by absorbing the new railway from Birmingham to Bristol into the Midland’s system. When the bubble burst, however, the company still had no line of its own to London, and a bad odour was emanating from its account books.
Williams’s company history of 1876 was pretty belligerent about all this: the London and North Western’s policy is summarised as being ‘by open attack and by secret treaties, to sap the resources of the Midland and to draw around it a cincture which should cripple it in every limb’. The mixed metaphors from war, statecraft and biology are telling; the Midland is at once a living organism seeking natural growth and an innocent nation-state subjected to the sinister machinations of a rival power. Conflicts of this kind followed inevitably from the state’s refusal to do much more than impose a modest framework of regulation on the industry. The Railway Mania saw the consequences at their lunatic height: at one point 815 railway ventures were before Parliament, costed at a total of six times the national annual expenditure. It was quite different abroad, where the entire network was sometimes centrally [ 137 ] St Pancras.indb 137 13/9/07 12:12:15 planned from the beginning, as in Belgium. Likewise, the railway approaches to Paris were determined by the state on strategic grounds.
G. 17, 20, 50 jam, manufacture of 152–3 Jerrold, Blanchard 126–7 Jersey City station 79 Jones, Owen 106 K Keats, John 28 Kempthorne, Sampson 30–31 Kew Palace 26 King, Revd Samuel 30 King’s Cross Station 1, 14, 63–6, 68–9, 72, 78, 82–3, 85–6, 88–9, 92, 95, 98, 100, 136, 138, 157–8, 162, 164, 168, 171 Great Northern Hotel 63–6, 95–6, 131 Kipps 143–4 L Ladykillers, The 14 Lansley, Alastair 164 Las Vegas 109 Leeds 98, 125, 137 Leicester 14, 96, 135, 138, 153, 162 Lewis, Joseph 46 Limerick, Earl of 112 Liverpool 149 Cathedral 22 Lime Street Station 63, 74 Liverpool and Manchester Railway 132–4 London: 1860s improvements 8 Agar Town 8–9, 158 Albert Memorial 17, 41, 107 British Library 138, 163 [ 188 ] St Pancras.indb 188 13/9/07 12:12:20 Buckingham Palace Hotel 128 Camberwell 22, 37 Camden Town 83 Crystal Palace 61, 67, 70, 80, 83 Euston Road 1–2, 8, 12, 59, 63 Fleet river 7, 68 Foreign Office 45–7, 54, 86, 159 Grand Hotel, Trafalgar Square 128 Grosvenor Hotel 96, 108 Homerton 30 Hotel Cecil 128 Houses of Parliament 28 Kentish Town 68 Langham Hotel 108, 128 Olympic zone 173 Regent’s Canal 68 Ritz Hotel 128 Royal Courts of Justice 50 Savoy Hotel 108–9, 128 Somers Town 9 Victoria and Albert Museum 111 Westminster Abbey 20–21 Westminster Hall 89 Westminster Palace Hotel 108, 128 Whitechapel 126–7 see also St Pancras Station, St Pancras (churches and churchyards), other railway stations by name London and Birmingham Railway 60, 135 London and Continental Railways 96, 163 London and Greenwich Railway 68 London and North Western Railway 74, 135–7 London Bridge Station 68 London, Brighton and South Coast Railway 96 London, Chatham and Dover Railway 69, 97 London, Midland and Scottish Railway 61, 129, 146 M Manchester 56, 97, 120, 137, 161 Manchester Central Station/G-MEX 79 [ 189 ] St Pancras.indb 189 13/9/07 12:12:20 Manchester and Leeds Railway 143 Manhattan Loft Corporation 163, 168 Maré, Eric de 158 Margarot, Maurice 9 Marriott Hotels 163, 170 Marylebone Station 96, 139, 145 Melton Mowbray 150–51 Metropolitan Railway 2, 8, 69 Midland Grand Hotel see St Pancras Station Midland Railway 6, 22, 46, 54–5, 58, 61, 67, 69, 73, 81, 92, 96, 98, 100, 104, 112, 119–20, 128, 133–40, 151, 154, 161 London extension 6, 54, 69, 96–7, 134–8 milk, supply of 149–50 Modernism 34, 46, 84–5 Moffatt, William Bonythorn 31 Morris, William 53–4, 56–8 N Nairn, Ian 76, 102 Nash, Paul 129–30 New York, Grand Central Station 79, 81, 83, 145 Newcastle upon Tyne, Central Station 91–3 Newington church (Kent) 173 Newman, John Henry 172 O Ordish, Rowland Mason 67 Otis, Elisha 108 Oxford 23, 37, 41 P Paddington Station 1, 65–6, 88, 91, 96 Great Western Hotel 66, 128, 131 Palmerston, Lord 45 Paris 14, 26, 79, 138, 151, 162 Eiffel Tower 80 Galérie des Machines 79–80 Gare du Nord 83 Paxton, Joseph 61 Peabody, George 126 Pendleton, John 154 Pennsylvania Railroad 79 Pevsner, (Sir) Nikolaus 46, 86, 158 Poor Law rooms 30–31 [ 190 ] St Pancras.indb 190 13/9/07 12:12:20 Roberts, Henry 30 Rohe, Mies van der 84 Roman de la Rose 113 Royal Academy (London) 20 Royal Institute of British Architects 20, 129 Rugby 135–6 Ruskin, John 40, 46, 53, 54–6, 58, 84, 173 Seven Lamps of Architecture 40, 53, 56 pork pies, manufacture of 150–51 Portland, 5th Duke of 143 printing industry 148–9 Private Eye 11 Pugin, Augustus Welby Northmore 28, 32–6, 44, 53, 56, 83–4, 91 Contrasts 30–31 True Principles of Pointed or Christian Architecture, The 34 Pullman carriages 144 Punch 127 S Q Quarterly Review 57, 83, 87 Queen Anne style 51–2 R Rail Link Engineering 164 Railway Magazine 125 Railway Mania (1840s) 135, 137 Reading Gaol 31, 112 Red House 53–4 RHWL (architects) 168 Richard III (film) 14 Richard Griffiths Architects 170 Richards, J. M. 85 St Pancras (saint) 1, 4–5 St Pancras (churches and churchyard) 1, 5–6, 9, 14–15, 26–7, 69, 166, 173 St Pancras Station 1–4, 8–10, 14–16, 28, 38–9, 41–50, 58, 65, 82, 86–8, 92, 96–8, 132, 134, 138–40, 144, 155–72, 174 booking hall 42, 104, 160, 170 conversion, 2004–7 4, 10, 162–8 conversion proposals, 1960s–90s 160–63 goods depots and yards 136, 138, 150, 161–3, 171 [ 191 ] St Pancras.indb 191 13/9/07 12:12:21 Midland Grand Hotel 2–4, 10–14, 17, 22, 38–9, 42–50, 54, 59, 61, 77–8, 82–3, 95–6, 98–131, 142, 144, 157–64, 168–71; bathrooms, 118–9; Billiard Room, 114; closure (1935), 10, 127– 31; conversion, 2006 onwards, 4, 168–70; Coffee Room, 113–14; dining room, 114; entrance hall 106–7, 170; guests’ rooms 116–18; Hairdressing Room, 114; Ladies’ Coffee/Smoking Room, 114–15, 129; lavatories, 115; lifts, 108–9; Smoking Room, 114; service rooms, 122–3; staff dormitories, 124–5; staircase 42, 102, 109–14 restoration, 1990s 163 threatened redundancy, 1960s 157–60 train shed 59, 66–82, 98–9, 104, 106, 116, 127, 139, 157, 161, 164–8 Underground station 121, 162, 166–8 Sang, Frederick 116 Schopenhauer, Friedrich 40 Scott, (Sir) George Gilbert 4, 15–22, 27–31, 36–42, 44–50, 52, 54, 56–7, 67, 76–7, 80, 83, 86, 94, 98– 100, 104, 110–11, 120–21, 159–60, 170, 172 Personal and Professional Recollections 22, 29, 36–7, 41, 46, 77 Remarks on Secular and Domestic Architecture 38–9, 44, 83, 111 Scott, George Gilbert, junior 9, 22, 50 Scott, Sir Giles Gilbert 22 Scott, Sir Walter 28 Society for the Protection of Ancient Buildings 56 Shaw, Norman 50 sickle-truss roofs 73–6 Simmons, Jack 8 Skidmore, Messrs 111 Smith, P.
Running Money by Andy Kessler
Andy Kessler, Apple II, bioinformatics, British Empire, business intelligence, buy low sell high, call centre, Corn Laws, family office, full employment, George Gilder, happiness index / gross national happiness, interest rate swap, invisible hand, James Hargreaves, James Watt: steam engine, joint-stock company, joint-stock limited liability company, knowledge worker, Long Term Capital Management, mail merge, margin call, market bubble, Maui Hawaii, Menlo Park, Network effects, packet switching, pattern recognition, pets.com, railway mania, risk tolerance, Sand Hill Road, Silicon Valley, South China Sea, spinning jenny, Steve Jobs, Steve Wozniak, Toyota Production System
Joint-stock companies became the rage, and the stock market was all too happy to step in and provide capital. Then more capital. And then too much capital. By the 1840s, a railroad mania was raging, stocks selling on multiples of passenger miles, a precursor for multiples of page views that Yahoo stock would trade on 150 years later. An inven- B&W IPO 93 tor named Charles Babbage complained that “the railroad mania withdrew from other pursuits the most intellectual and skilful draftsmen” and sought to invent a machine that might replace them, and make Yahoo possible. Charles Dickens marveled at railroad wealth. Investors made money, investors lost money, but in the best and worst of times, the railroads got built, and people and goods were shufﬂed about more and more cheaply. The Industrial Revolution hit its stride. Railroad mania hit the U.S. after the Civil War. It gave the New York Stock Exchange something to trade besides government debt.
It gave the New York Stock Exchange something to trade besides government debt. Railroads helped create the pools of capital that funded innovation in the U.S. for the next century. Man, I’d like to short horse stocks right here. Railroads look interesting, especially since they need some government mandate for the right of way between two destinations. Put up $650 grand to make that much in fees each year—no wonder there was a railroad mania. Gotta make sure to jump off this one when ticket and hauling prices start to crack. Ocean steamships and propellers: The next barrier was a steampowered Atlantic crossing. There was only one problem—how to carry enough coal to keep the steam engine cranking for that long trip. A self-proclaimed expert on the subject, Reverend Dionysius Lardner, announced in 1837 that the longest theoretical distance a steamship that carried its own coal could travel was 2,500 miles.
Albert Einstein, Andy Kessler, automated trading system, bank run, Big bang: deregulation of the City of London, Bretton Woods, British Empire, buttonwood tree, Claude Shannon: information theory, Corn Laws, Edward Lloyd's coffeehouse, fiat currency, floating exchange rates, Fractional reserve banking, full employment, Grace Hopper, invention of the steam engine, invention of the telephone, invisible hand, Isaac Newton, Jacquard loom, Jacquard loom, James Hargreaves, James Watt: steam engine, John von Neumann, joint-stock company, joint-stock limited liability company, Joseph-Marie Jacquard, Maui Hawaii, Menlo Park, Metcalfe's law, packet switching, price mechanism, probability theory / Blaise Pascal / Pierre de Fermat, profit motive, railway mania, RAND corporation, Silicon Valley, Small Order Execution System, South Sea Bubble, spice trade, spinning jenny, Steve Jobs, supply-chain management, supply-chain management software, trade route, transatlantic slave trade, transatlantic slave trade, tulip mania, Turing machine, Turing test, William Shockley: the traitorous eight
You could put in a 20-mile railroad for the equivalent of $650,000 and collect that much in fees every year. Joint stock companies were the rage, and the stock market was all too happy to step in and provide capital. And more capital. And then too much capital. TRANSPORTATION ELASTICITY 49 By the 1840’s, a “Railroad Mania” was raging, with stocks selling on multiples of passenger miles, a precursor for multiples of page views that Yahoo stock would trade on 150 years later. An inventor named Charles Babbage complained that “the railroad mania withdrew from other pursuits the most intellectual and skilful draftsmen.” He sought to invent a machine that might replace them, and although he couldn’t have foreseen it, make Yahoo possible. This is when Charles Dickens marveled at railroad wealth. Investors made money, investors lost money, but in the best and worst of times, the railroads got built, and people and goods were shuffled about.
The size of a house, it would need a steam engine to operate but it would solve differential equations. Great idea, poor execution. A few small-scale models were demonstrated, but the engine was ahead of its time, by probably 100 years. After 10 years of trying, he gave up. He brooded around for a while and then in 1837 announced a somewhat less ambitious plan, the Analytic Engine, which would do math faster and to a larger scale than a Pascaline. Babbage complained that a Railroad Mania, then raging, hired away all the skilled workers and his Computing Engines were, at least partially, an attempt to do without them. The daughter of poet Lord Byron, the lovely Augusta Ada King, Countess of Lovelace, was his assistant. This was key in getting government funding. Again, a few models were demonstrated, but like his Difference Engine, the Babbage Analytic Engine never actually worked.
Company: A Short History of a Revolutionary Idea by John Micklethwait, Adrian Wooldridge
affirmative action, barriers to entry, Bonfire of the Vanities, borderless world, business process, Corn Laws, corporate governance, corporate social responsibility, credit crunch, crony capitalism, double entry bookkeeping, Etonian, hiring and firing, invisible hand, James Watt: steam engine, joint-stock company, joint-stock limited liability company, Joseph Schumpeter, knowledge economy, knowledge worker, laissez-faire capitalism, manufacturing employment, market bubble, mittelstand, new economy, North Sea oil, race to the bottom, railway mania, Ronald Coase, Silicon Valley, six sigma, South Sea Bubble, Steve Jobs, Steve Wozniak, strikebreaker, The Nature of the Firm, The Wealth of Nations by Adam Smith, Thorstein Veblen, trade route, transaction costs, tulip mania, wage slave, William Shockley: the traitorous eight
In 1830, George Stephenson’s Rocket began steaming down the Liverpool-Manchester line, the world’s first regular passenger railway. By 1840, two thousand miles of track, the bare bones of a national network, had been built—all by chartered joint-stock companies. Acts of Parliament were required for every line: there were five a year from 1827 to 1836, when the number jumped to twenty-nine. In the same year, parliament, trying to stop the growing “railway mania,” limited loans to one-third of the chartered railways’ capital, and it also banned any borrowing until half their share capital had been paid up. In the 1844 Railway Act, the state reserved the right to buy back any line that had operated for twenty-one years—a right that came in surprisingly useful during the nationalization mania a century later. It still did not stop the rush: there were 120 Railway Acts in 1845, 272 in 1846, and 170 in 1847 (involving some £40 million worth of capital).18 Although these companies were publicly traded, most of the real money for railways came from government and local businessmen (who had the most to gain from connecting their town to the network).
“We will venture to assert,” decided an 1835 circular to London bankers, “that taking into account all the railways north of Manchester not one twentieth part of the capital was provided by members of the stock exchange.”19 But the importance of tradable equities increased, particularly once the railways started issuing preference shares, which provided a guaranteed dividend rate (making their value easier to work out for investors), yet counted as equity under the government’s debt-to-equity rules: by 1849, they accounted for two-thirds of the railways’ share capital.20 Most of these shares were traded on local exchanges, such as Lancaster—out of reach of Lombard Street, which was still more interested in public debt than private equity. Railway mania was fanned by a growing number of railway papers, such as the Railway Express, Railway Globe, and Railway Standard. In its first issue in 1843, the Economist devoted less than a tenth of its “commercial markets” column to money-market and stock prices. It bitterly condemned the railway speculation, forecasting a “universal domestic affliction.” But in 1845 it launched its own highly profitable nine-page section, the Railway Monitor, professing that no financial paper could be without one.21 The railway was not the only force for change.
The Future of Technology by Tom Standage
air freight, barriers to entry, business process, business process outsourcing, call centre, Clayton Christensen, computer vision, connected car, corporate governance, disintermediation, distributed generation, double helix, experimental economics, full employment, hydrogen economy, industrial robot, informal economy, interchangeable parts, job satisfaction, labour market flexibility, market design, Menlo Park, millennium bug, moral hazard, natural language processing, Network effects, new economy, Nicholas Carr, optical character recognition, railway mania, rent-seeking, RFID, Silicon Valley, Silicon Valley ideology, Silicon Valley startup, six sigma, Skype, smart grid, software as a service, spectrum auction, speech recognition, stem cell, Steve Ballmer, technology bubble, telemarketer, transcontinental railway, Y2K
vi Foreword o understand the future of technology, start by looking at its past. From the industrial revolution to the railway age, through the era of electrification, the advent of mass production and finally to the information age, the same pattern keeps repeating itself. An exciting, vibrant phase of innovation and financial speculation is followed by a crash; then begins a longer, more stately period during which the technology is widely deployed. Consider the railway mania of the 19th century, the dotcom technology of its day. Despite the boom and bust, railways subsequently proved to be a genuinely important technology and are still in use today – though they are not any longer regarded as technology by most people, but as merely a normal part of daily life. Having just emerged from its own boom and bust, the informationtechnology industry is at the beginning of its long deployment phase.
Equally important, buyers are starting to spend their it budgets more wisely. Meanwhile, the industry’s relationship with government is becoming closer. All this suggests that the technology industry has already gone greyish at the temples since the bubble popped, and is likely to turn greyer still. Sooner or later the sector will enter its “golden age”, just as the railways did. When Britain’s railway mania collapsed in 1847, railroad shares plunged by 85%, and hundreds of businesses went belly-up. But train traffic in Britain levelled off only briefly, and in the following two decades grew by 400%. So are the it industry’s best days yet to come? There are still plenty of opportunities, but if the example of the railways is anything to go by, most it firms will have to make do with a smaller piece of the pie.
Optimists hope that surfers will soon be able to roam around freely and remain continuously connected to the internet. And small radio chips called rfid tags will make it possible to track everything and anything, promising to make supply chains much more efficient. But even a new killer application is unlikely to bring back the good old times. “After a crash, much of the glamour of the new technology is gone,” writes Brian Arthur, an economist at the Santa Fe Institute. The years after the British railway mania, for instance, were “years of build-out rather than novelty, years of confidence and steady growth, years of orderliness.” This kind of “new normal”, in the words of Accenture, another it consultancy, may be hard to swallow for a sector that has always prided itself on being different. But for its customers, a more mature it industry is a very good thing: just as the best technology is invisible, the best it industry is one that has completely melted into the mainstream.
Indeed, the boilers of the first two locomotives they produced both exploded, again a common feature of early locomotive development, but the third, completed in 1835, proved relatively efficient, ‘able to move faster than a horse, even if it could pull only a smaller load’.14 It is a measure of the state of Russia in the early nineteenth century that both Cherepanovs were actually serfs, effectively owned by the factory for which they worked. Sadly, their efforts were in vain as the first Russian railways used foreign locomotives. Hence the elements of building a railway were available in Russia relatively early, just as railway mania was sweeping the European continent and, indeed, the United States. The political will, however, was lacking, despite the entreaties of the small, forward-looking minority of the aristocratic ruling elite, who realized that the railways were the only viable transport option for a vast nation like Russia with the extremes of climate that made roads impassable and rivers unnavigable for large parts of the year.
Most crucially, the industrial area in the Urals was still not connected with the nation’s two main cities, which greatly hampered its economic development. In the four decades between the completion of the Nikolayev Railway and work starting on the Trans-Siberian, Russia did embrace the idea of a national rail network, but generally with little sense of urgency and at a far gentler pace than its European counterparts. There was no early period of railway mania as occurred in so many other countries which plunged into the railway age with such enthusiasm. Given the limited resources, it was felt that the country could afford to build only one major railway at a time, especially as the lines were being funded from the state coffers. The completion of the Nikolayev Railway encouraged the tsar to order the construction of the St Petersburg–Warsaw Railway, also as a state enterprise.
Capitalism: Money, Morals and Markets by John Plender
Andrei Shleifer, asset-backed security, bank run, Berlin Wall, Big bang: deregulation of the City of London, Black Swan, bonus culture, Bretton Woods, business climate, Capital in the Twenty-First Century by Thomas Piketty, central bank independence, collapse of Lehman Brothers, collective bargaining, computer age, Corn Laws, corporate governance, credit crunch, Credit Default Swap, David Ricardo: comparative advantage, deindustrialization, Deng Xiaoping, discovery of the americas, diversification, Eugene Fama: efficient market hypothesis, eurozone crisis, failed state, Fall of the Berlin Wall, fiat currency, financial innovation, financial intermediation, Fractional reserve banking, full employment, Gordon Gekko, greed is good, Hyman Minsky, income inequality, inflation targeting, invention of the wheel, invisible hand, Isaac Newton, James Watt: steam engine, Johann Wolfgang von Goethe, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, Joseph Schumpeter, labour market flexibility, London Interbank Offered Rate, London Whale, Long Term Capital Management, manufacturing employment, Mark Zuckerberg, market bubble, market fundamentalism, means of production, Menlo Park, moral hazard, moveable type in China, Nick Leeson, Northern Rock, Occupy movement, offshore financial centre, paradox of thrift, Plutocrats, plutocrats, price stability, principal–agent problem, profit motive, quantitative easing, railway mania, regulatory arbitrage, Richard Thaler, rising living standards, risk-adjusted returns, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, shareholder value, short selling, Silicon Valley, South Sea Bubble, spice trade, Steve Jobs, technology bubble, The Chicago School, The Great Moderation, the map is not the territory, The Wealth of Nations by Adam Smith, Thorstein Veblen, time value of money, too big to fail, tulip mania, Upton Sinclair, We are the 99%, Wolfgang Streeck
He was a visionary who created the first modern rail network, helped by his friend George Stephenson, builder of the early steam locomotive the Rocket. Yet his methods were crooked. In 1848 he was found to have bribed MPs, manipulated share prices and defrauded his creditors, resulting in his imprisonment in York Castle for debt. Among the indignities he felt most acutely was hearing that his wax effigy at Madame Tussauds had been melted down. In the railway mania of the time, Hudson was far from being the only fraudster. The requirement to obtain parliamentary consent for the building of railways meant that there was a constant temptation to bribe MPs, while the increasing ease with which companies could be set up and floated was an encouragement to play fast and loose with other people’s money. Then, as with the Bubble Act in 1720, came re-regulation.
E. 1 morbidity syndrome 1 More, Thomas 1, 2 Morgan, John Pierpont 1 Mozart 1, 2 Mussolini 1 Mutual Assured Production (Richard Katz) 1 Mynors, Humphrey 1 Napoleonic Wars 1 Nash, Ogden 1, 2 Native Americans 1 Nazi Germany 1 Netherlands 1 New Deal 1, 2 New Testament 1 Newton, Isaac 1, 2, 3 Nicholas Nickleby (Dickens) 1, 2, 3 Nigeria 1 Norquist, Grover 1 North, Roger 1 North and South (Mrs Gaskell) 1 North Korea 1 Northern Rock (UK) 1 Novalis 1 Nuffield, Lord 1 Obama, Barack 1, 2 Occupy movement 1, 2 oil states 1 da l’Osta, Andrea 1, 2 outsourcing 1, 2 paper currency 1 Parker, Dorothy 1 Pascal, Blaise 1, 2 Past and Present (Thomas Carlyle) 1 Paulson, John 1 Peasants’ Revolt (England) 1 pension funds 1 Pepys, Samuel 1 Peruzzi family 1 perverse incentives 1, 2 Petronius 1 Picasso 1, 2 Piketty, Thomas 1 Pitt, William the Elder 1 Pitt, William the Younger 1 Plato 1, 2, 3 Political Discourses (Hume) 1 Politics (Aristotle) 1, 2, 3, 4, 5 poll taxes 1 Pope, Alexander 1, 2, 3, 4, 5 Portugal 1 positional goods 1 Poussin, Nicolas 1 Prell, Michael 1 Priestley, Joseph 1 printing 1 Proposition 1 (California) 2 Protestant Ethic and the Spirit of Capitalism (Weber) 1 Prussia 1, 2, 3 public sector debt 1 R. A. Chilton 1 railway mania (Britain 1840s) 1 Rajan, Raghuram 1, 2, 3, 4 Rand, Ayn 1, 2 Raphael 1 Reading, Brian 1, 2, 3, 4 Reagan, Ronald 1, 2, 3, 4, 5 Reformation 1, 2 regulators 1 regulatory arbitrage 1 Renaissance 1, 2, 3 Republic (Plato) 1, 2 retail banking 1 Reynolds, Joshua 1, 2 Ricardo, David 1 Richelieu, Cardinal 1 Ring of the Nibelung (Wagner) 1, 2, 3 Ritblat, John 1 Roaring Twenties 1, 2 robber barons 1, 2, 3 Robinson Crusoe (Daniel Defoe) 1 Rockefeller, John D. 1, 2 rogue traders 1 Rolls-Royce 1 Roman republic 1 Roosevelt, Franklin 1 Rosenberg, Harold 1 Roseveare, Henry 1 Roubini, Nouriel 1 Rousseau, Jean-Jacques 1, 2 de Rouvroy, Claude-Henri 1 Royal Exchange (London) 1 Rubens, Peter Paul 1, 2 rural exodus 1 Ruskin, John 1, 2, 3 Saatchi, Maurice 1, 2 Samuelson, Paul 1 Sandel, Michael 1 sarakin banks (Japan) 1 Sarkozy, Nicolas 1 Sassoon, Donald 1 Satyricon (Petronius) 1 Savage, Richard 1, 2 Schama, Simon 1, 2 Schiller, Friedrich 1 Scholes, Myron 1 Schopenhauer 1 Schuman, Robert 1 Schumpeter, Joseph 1, 2, 3, 4, 5, 6, 7 Schwed, Fred 1, 2 second industrial revolution (1920s) 1 Sen, Amartya 1 separation of powers 1 Shakespeare 1, 2, 3, 4, 5, 6 shareholder activists 1 shareholder value 1 shareholders 1 Shaw, George Bernard 1 Sherman Antitrust Act (US 1890) 1 Shiller, Robert 1, 2, 3, 4 Shleifer, Andrei 1 short selling 1, 2 Siemens 1 von Siemens, Werner 1 Sinclair, Upton 1 Skidelsky, Robert 1, 2 Smith, Adam 1, 2, 3, 4, 5, 6, 7, 8 Smith, Sidney 1 Smithers, Andrew 1, 2 Smollett, Tobias 1 social democratic model 1, 2 Société Générale 1 Socrates 1 Solon 1 Sombart, Werner 1, 2 Soros, George 1, 2 Sotheby’s 1 South Sea Bubble 1, 2, 3, 4, 5, 6, 7 sovereign debt 1 sovereign debt crisis (2009) 1 Spain 1, 2, 3, 4, 5, 6 speculation 1 Spenser, Edmund 1 Stabilising an Unstable Economy (Hyman Minsky) 1 Steed, Wickham 1 Stephenson, George 1 Stevens, Wallace 1 Streeck, Wolfgang 1 subprime mortgages 1, 2, 3, 4 Sutter, John 1 Sutton, Willie 1 swarf 1 Sweden 1 Swift, Jonathan 1, 2, 3 Tale of Two Cities (Charles Dickens) 1 Taleb, Nassim Nicholas 1, 2 Talleyrand, Charles Maurice de 1 Taoism 1 tax farming 1 tax havens 1 tax revolts 1 taxation 1 Taylor, John 1 Tea Party movement 1 Tennyson, Alfred 1 Thaler, Richard 1 Thatcher, Margaret 1, 2, 3, 4, 5, 6 Theory of Moral Sentiments (Adam Smith) 1 ‘thingism’ 1 Thomas Aquinas 1, 2 Thompson, E.
Paper Promises by Philip Coggan
accounting loophole / creative accounting, balance sheet recession, bank run, banking crisis, barriers to entry, Berlin Wall, Bernie Madoff, Black Swan, Bretton Woods, British Empire, call centre, capital controls, Carmen Reinhart, carried interest, Celtic Tiger, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, currency manipulation / currency intervention, currency peg, debt deflation, delayed gratification, diversified portfolio, eurozone crisis, Fall of the Berlin Wall, falling living standards, fear of failure, financial innovation, financial repression, fixed income, floating exchange rates, full employment, German hyperinflation, global reserve currency, hiring and firing, Hyman Minsky, income inequality, inflation targeting, Isaac Newton, joint-stock company, Kenneth Rogoff, labour market flexibility, Long Term Capital Management, manufacturing employment, market bubble, market clearing, Martin Wolf, money: store of value / unit of account / medium of exchange, moral hazard, mortgage debt, Nick Leeson, Northern Rock, oil shale / tar sands, paradox of thrift, peak oil, pension reform, Plutocrats, plutocrats, Ponzi scheme, price stability, principal–agent problem, purchasing power parity, quantitative easing, QWERTY keyboard, railway mania, regulatory arbitrage, reserve currency, Robert Gordon, Robert Shiller, Robert Shiller, Ronald Reagan, savings glut, short selling, South Sea Bubble, sovereign wealth fund, special drawing rights, The Chicago School, The Great Moderation, The Wealth of Nations by Adam Smith, time value of money, too big to fail, trade route, tulip mania, value at risk, Washington Consensus, women in the workforce
He showed they followed a template of a ‘displacement’ – some development like a war or technological change – credit expansion, over-trading (the final speculative phase), followed by distress (as some investors try to exit) and revulsion, as all who took part are berated for their stupidity. The sub-prime boom fits the pattern. BUBBLES, PAPER MONEY AND THE END OF BRETTON WOODS As Kindleberger noted, without credit expansion, it is hard to generate asset bubbles.10 The ability to borrow money to buy houses, or to buy shares on margin, creates the temptation for investors to speculate. Bubbles did occur during the gold standard. In the 1840s, for example, Britain enjoyed railway mania in which investors bought shares in the new transport system. Often different companies built parallel routes between the same destinations. The railways were as exotic then as the Internet seemed in the late 1990s, and investors believed the prospects for profits were limitless. The mania only collapsed when it was clear that many lines lacked sufficient passengers to make them profitable. However, the end of Bretton Woods released the remaining brake on the system.
leverage leveraged buyout Lewis, Michael Liberal Democrat party (UK) Liberal Party (UK) life expectancy life-cycle theory Little Dorrit lire Live 8 concert Lloyd George, David Lombard Odier Lombard Street Research London School of Economics Long Term Capital Management longevity Louis XIV, King of France Louis XV, King of France Louvre accord Lucas, Robert Lucullus, Roman general Luxembourg Macaulay, Thomas McCarthy, Cormac Macdonald, James MacDonald, Ramsay McKinsey McNamara, Robert Madoff, Bernie Malthusian trap Mandelson, Peter Marais, Matthieu Marco Polo Mares, Arnaud Marks & Spencer Marshall, George Marshall Aid Marshalsea Prison Mauro, Paolo May, Sir George means/media of exchange Medicaid Medicare Mellon, Andrew mercantilism Merchant of Venice, The Meriwether, John Merkel, Angela Merton, Robert Mexico Mill, John Stuart Milne-Bailey, Walter Minsky, Hyman Mises, Ludwig von Mississippi Project Mitterrand, Francois Mobutu, Joseph Mongols monetarism monetary policy monetary targets money markets money supply Moody’s Moore’s Law moral hazard Morgan Stanley Morgenthau, Henry Morrison, Herbert mortgages mortgage-backed bonds Multilateral Debt Relief Initiative Napier, Russell Napoleon, emperor of France Napoleonic Wars Nasser, president of Egypt National Association of Home Builders National Association of Realtors National Association of Security Dealers Netherlands New Century New Hampshire New Jersey Newton, Sir Isaac New York Times New Zealand Nixon, Richard Norman, Montagu North Carolina Northern Ireland Northern Rock North Korea North Rhine Westphalia, Germany Norway Obama, Barack odious debt Odysseus OECD d’Orléans, duc Ottoman Empire output gap Overstone, Lord overvalued currency owner-equivalent rent Papandreou, George paper money paradox of thrift Paris club Passfield, Lord (Sidney Webb) Paulson, Hank pawnbroking pension age pension funds pensions Pepin the Short Perot, Ross Perry, Rick Persians Peter Pan Philip II, King of Spain Philip IV, King of France PIGS countries PIMCO Plaza accord Poland Ponzi, Charles Ponzi scheme population growth populism portfolio insurance Portugal pound Prasad, Eswar precious metals Price-earnings ratio primary surplus Prince, Chuck principal-agent problem printing money private equity property market protectionism Protestant work ethic public choice theory public-sector workers purchasing power parity pyramid schemes Quaintance, Lee quantitative easing (QE) Quincy, Josiah railway mania Rajan, Raghuram Rand, Ayn Reagan, Ronald real bills theory real interest rates Record, Neil Reformation, the Reichsbank Reichsmark Reid, Jim Reinhart, Carmen renminbi Rentenmark rentiers reparations Republican Party reserve currency retail price index retirement revaluation Revolutionary War Ridley, Matt Roberts, Russell Rogoff, Kenneth Romanovs Roosevelt, Franklin D.
Affordable Care Act / Obamacare, asset-backed security, bank run, banking crisis, Basel III, Bernie Madoff, Big bang: deregulation of the City of London, bitcoin, Black Swan, Bonfire of the Vanities, bonus culture, Bretton Woods, call centre, capital asset pricing model, Capital in the Twenty-First Century by Thomas Piketty, cognitive dissonance, corporate governance, Credit Default Swap, cross-subsidies, dematerialisation, diversification, diversified portfolio, Edward Lloyd's coffeehouse, Elon Musk, Eugene Fama: efficient market hypothesis, eurozone crisis, financial innovation, financial intermediation, fixed income, Flash crash, forward guidance, Fractional reserve banking, full employment, George Akerlof, German hyperinflation, Goldman Sachs: Vampire Squid, Growth in a Time of Debt, income inequality, index fund, inflation targeting, interest rate derivative, interest rate swap, invention of the wheel, Irish property bubble, Isaac Newton, London Whale, Long Term Capital Management, loose coupling, low cost carrier, M-Pesa, market design, millennium bug, mittelstand, moral hazard, mortgage debt, new economy, Nick Leeson, Northern Rock, obamacare, Occupy movement, offshore financial centre, oil shock, passive investing, peer-to-peer lending, performance metric, Peter Thiel, Piper Alpha, Ponzi scheme, price mechanism, purchasing power parity, quantitative easing, quantitative trading / quantitative ﬁnance, railway mania, Ralph Waldo Emerson, random walk, regulatory arbitrage, Renaissance Technologies, rent control, Richard Feynman, risk tolerance, road to serfdom, Robert Shiller, Robert Shiller, Ronald Reagan, Schrödinger's Cat, shareholder value, Silicon Valley, Simon Kuznets, South Sea Bubble, sovereign wealth fund, Spread Networks laid a new fibre optics cable between New York and Chicago, Steve Jobs, Steve Wozniak, The Great Moderation, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, The Wealth of Nations by Adam Smith, The Wisdom of Crowds, Tobin tax, too big to fail, transaction costs, tulip mania, Upton Sinclair, Vanguard fund, Washington Consensus, We are the 99%, Yom Kippur War
From crisis to crisis I can predict the motion of heavenly bodies but not the madness of crowds. Isaac Newton18 Speculative booms and busts have recurred throughout financial history. In the 1630s Dutch merchants pushed the price of tulips to levels at which a prize bulb was as valuable as a house. A century later, the cream of English society participated in the South Sea Bubble. In the 1840s railway mania seized the public imagination. The 1920s saw boom and bust in stock and land values and ended in the Wall Street Crash and the Great Depression. The immediate consequences of the Crash and Depression were political as well as economic: the rise of political extremism led to the Second World War. But the post-war settlement established regulated capitalism in most of the developed world, while the Soviet empire maintained financial stability, of a sort, in eastern Europe.
.: Hyperion 220 Loomis, Carol 108 lotteries 65, 66, 68, 72 Lucas, Robert 40 Lynch, Dennios 108 Lynch, Peter 108, 109 M M-Pesa 186 Maastricht Treaty (1993) 243, 250 McCardie, Sir Henry 83, 84, 282, 284 McGowan, Harry 45 Machiavelli, Niccolò 224 McKinley, William 44 McKinsey 115, 126 Macy’s department store 46 Madoff, Bernard 29, 118, 131, 132, 177, 232, 293 Madoff Securities 177 Magnus, King of Sweden 196 Manhattan Island, New York: and Native American sellers 59, 63 Manne, Henry 46 manufacturing companies, rise of 45 Marconi 48 marine insurance 62, 63 mark-to-market accounting 126, 128–9, 320n22 mark-to-model approach 128–9, 320n21 Market Abuse Directive (MAD) 226 market economy 4, 281, 302, 308 ‘market for corporate control, the’ 46 market risk 97, 98, 177, 192 market-makers 25, 28, 30, 31 market-making 49, 109, 118, 136 Markets in Financial Instruments Directive (MIFID) 226 Markkula, Mike 162, 166, 167 Markopolos, Harry 232 Markowitz, Harry 69 Markowitz model of portfolio allocation 68–9 Martin, Felix 323n5 martingale 130, 131, 136, 139, 190 Marx, Groucho 252 Marx, Karl 144, 145 Capital 143 Mary Poppins (film) 11, 12 MasterCard 186 Masters, Brooke 120 maturity transformation 88, 92 Maxwell, Robert 197, 201 Mayan civilisation 277 Meade, James 263 Means, Gardiner 51 Meeker, Mary 40, 167 Melamed, Leo 19 Mercedes 170 merchant banks 25, 30, 33 Meriwether, John 110, 134 Merkel, Angela 231 Merrill Lynch 135, 199, 293, 300 Merton, Robert 110 Metronet 159 Meyer, André 205 MGM 33 Microsoft 29, 167 middleman, role of the 80–87 agency and trading 82–3 analysts 86 bad intermediaries 81–2 from agency to trading 84–5 identifying goods and services required 80, 81 logistics 80, 81 services from financial intermediaries 80–81 supply chain 80, 81 transparency 84 ‘wisdom of crowds’ 86–7 Midland Bank 24 Milken, Michael 46, 292 ‘millennium bug’ 40 Miller, Bill 108, 109 Minuit, Peter 59, 63 Mises, Ludwig von 225 Mittelstand (medium-size business sector) 52, 168, 169, 170, 171, 172 mobile banking apps 181 mobile phone payment transfers 186–7 Modigliani-Miller theorem 318n9 monetarism 241 monetary economics 5 monetary policy 241, 243, 245, 246 money creation 88 money market fund 120–21 Moneyball phenomenon 165 monopolies 45 Monte Carlo casino 123 Monte dei Paschi Bank of Siena 24 Montgomery Securities 167 Moody’s rating agency 21, 248, 249, 313n6 moral hazard 74, 75, 76, 92, 95, 256, 258 Morgan, J.P. 44, 166, 291 Morgan Stanley 25, 40, 130, 135, 167, 268 Morgenthau, District Attorney Robert 232–3 mortality tables 256 mortgage banks 27 mortgage market fluctuation in mortgage costs 148 mechanised assessment 84–5 mortgage-backed securities 20, 21, 40, 85, 90, 100, 128, 130, 150, 151, 152, 168, 176–7, 284 synthetic 152 Mozilo, Angelo 150, 152, 154, 293 MSCI World Bank Index 135 muckraking 44, 54–5, 79 ‘mugus’ 118, 260 multinational companies, and diversification 96–7 Munger, Charlie 127 Munich, Germany 62 Munich Re 62 Musk, Elon 168 mutual funds 27, 108, 202, 206 mutual societies 30 mutualisation 79 mutuality 124, 213 ‘My Way’ (song) 72 N Napoleon Bonaparte 26 Napster 185 NASA 276 NASDAQ 29, 108, 161 National Economic Council (US) 5, 58 National Employment Savings Trust (NEST) 255 National Institutes of Health 167 National Insurance Fund (UK) 254 National Provincial Bank 24 National Science Foundation 167 National Westminster Bank 24, 34 Nationwide 151 Native Americans 59, 63 Nazis 219, 221 neo-liberal economic policies 39, 301 Netjets 107 Netscape 40 Neue Markt 170 New Deal 225 ‘new economy’ bubble (1999) 23, 34, 40, 42, 98, 132, 167, 199, 232, 280 new issue market 112–13 New Orleans, Louisiana: Hurricane Katrina disaster (2005) 79 New Testament 76 New York Stock Exchange 26–7, 28, 29, 31, 49, 292 New York Times 283 News of the World 292, 295 Newton, Isaac 35, 132, 313n18 Niederhoffer, Victor 109 NINJAs (no income, no job, no assets) 222 Nixon, Richard 36 ‘no arbitrage’ condition 69 non-price competition 112, 219 Norman, Montagu 253 Northern Rock 89, 90–91, 92, 150, 152 Norwegian sovereign wealth fund 161, 253 Nostradamus 274 O Obama, Barack 5, 58, 77, 194, 271, 301 ‘Obamacare’ 77 Occidental Petroleum 63 Occupy movement 52, 54, 312n2 ‘Occupy Wall Street’ slogan 305 off-balance-sheet financing 153, 158, 160, 210, 250 Office of Thrift Supervision 152–3 oil shock (1973–4) 14, 36–7, 89 Old Testament 75–6 oligarchy 269, 302–3, 305 oligopoly 118, 188 Olney, Richard 233, 237, 270 open market operations 244 options 19, 22 Organisation for Economic Co-operation and Development (OECD) 263 Osborne, George 328n19 ‘out of the money option’ 102, 103 Overend, Gurney & Co. 31 overseas assets and liabilities 179–80, 179 owner-managed businesses 30 ox parable xi-xii Oxford University 12 P Pacific Gas and Electric 246 Pan Am 238 Paris financial centre 26 Parliamentary Commission on Banking Standards 295 partnerships 30, 49, 50, 234 limited liability 313n14 Partnoy, Frank 268 passive funds 99, 212 passive management 207, 209, 212 Patek Philippe 195, 196 Paulson, Hank 300 Paulson, John 64, 109, 115, 152, 191, 284 ‘payment in kind’ securities 131 payment protection policies 198 payments system 6, 7, 25, 180, 181–8, 247, 259–60, 281, 297, 306 PayPal 167, 168, 187 Pecora, Ferdinand 25 Pecora hearings (1932–34) 218 peer-to-peer lending 81 pension funds 29, 98, 175, 177, 197, 199, 200, 201, 208, 213, 254, 282, 284 pension provision 78, 253–6 pension rights 53, 178 Perkins, Charles 233 perpetual inventory method 321n4 Perrow, Charles 278, 279 personal financial management 6, 7 personal liability 296 ‘petrodollars’ 14, 37 Pfizer 96 Pierpoint Morgan, J. 165 Piper Alpha oil rig disaster (1987) 63 Ponzi, Charles 131, 132 Ponzi schemes 131, 132, 136, 201 pooled investment funds 197 portfolio insurance 38 Potts, Robin, QC 61, 63, 72, 119, 193 PPI, mis-selling of 296 Prebble, Lucy: ENRON 126 price competition 112, 219 price discovery 226 price mechanism 92 Prince, Chuck 34 private equity 27, 98, 166, 210 managers 210, 289 private insurance 76, 77 private sector 78 privatisation 39, 78, 157, 158, 258, 307 probabilistic thinking 67, 71, 79 Procter & Gamble 69, 108 product innovation 13 property and infrastructure 154–60 protectionism 13 Prudential 200 public companies, conversion to 18, 31–2, 49 public debt 252 public sector 78 Q Quandt, Herbert 170 Quandt Foundation 170 quantitative easing 245, 251 quantitative style 110–11 quants 22, 107, 110 Quattrone, Frank 167, 292–3 queuing 92 Quinn, Sean 156 R railroad regulation 237 railway mania (1840s) 35 Raines, Franklin 152 Rajan, Raghuram 56, 58, 79, 102 Rakoff, Judge Jed 233, 294, 295 Ramsey, Frank 67, 68 Rand, Ayn 79, 240 ‘random walk’ 69 Ranieri, Lew 20, 22, 106–7, 134, 152 rating agencies 21, 41, 84–5, 97, 151, 152, 153, 159, 249–50 rationality 66–7, 68 RBS see Royal Bank of Scotland re-insurance 62–3 Reagan, Ronald 18, 23, 54, 59, 240 real economy 7, 18, 57, 143, 172, 190, 213, 226, 239, 271, 280, 288, 292, 298 redundancy 73, 279 Reed, John 33–4, 48, 49, 50, 51, 242, 293, 314n40 reform 270–96 other people’s money 282–5 personal responsibility 292–6 principles of 270–75 the reform of structure 285–92 robust systems and complex structures 276–81 regulation 215, 217–39 the Basel agreements 220–25 and competition 113 the origins of financial regulation 217–19 ‘principle-based’ 224 the regulation industry 229–33 ‘rule-based’ 224 securities regulation 225–9 what went wrong 233–9 ‘Regulation Q’ (US) 13, 14, 20, 28, 120, 121 regulatory agencies 229, 230, 231, 235, 238, 274, 295, 305 regulatory arbitrage 119–24, 164, 223, 250 regulatory capture 237, 248, 262 Reich, Robert 265, 266 Reinhart, C.M. 251 relationship breakdown 74, 79 Rembrandts, genuine/fake 103, 127 Renaissance Technologies 110, 111, 191 ‘repo 105’ arbitrage 122 repo agreement 121–2 repo market 121 Reserve Bank of India 58 Reserve Primary Fund 121 Resolution Trust Corporation 150 retirement pension 78 return on equity (RoE) 136–7, 191 Revelstoke, first Lord 31 risk 6, 7, 55, 56–79 adverse selection and moral hazard 72–9 analysis by ‘ketchup economists’ 64 chasing the dream 65–72 Geithner on 57–8 investment 256 Jackson Hole symposium 56–7 Kohn on 56 laying bets on the interpretation of incomplete information 61 and Lloyd’s 62–3 the LMX spiral 62–3, 64 longevity 256 market 97, 98 mitigation 297 randomness 76 socialisation of individual risks 61 specific 97–8 risk management 67–8, 72, 79, 137, 191, 229, 233, 234, 256 risk premium 208 risk thermostat 74–5 risk weighting 222, 224 risk-pooling 258 RJR Nabisco 46, 204 ‘robber barons’ 44, 45, 51–2 Robertson, Julian 98, 109, 132 Robertson Stephens 167 Rockefeller, John D. 44, 52, 196 Rocket Internet 170 Rogers, Richard 62 Rogoff, K.S. 251 rogue traders 130, 300 Rohatyn, Felix 205 Rolls-Royce 90 Roman empire 277, 278 Rome, Treaty of (1964) 170 Rooney, Wayne 268 Roosevelt, Franklin D. v, 25, 235 Roosevelt, Theodore 43–4, 235, 323n1 Rothschild family 217 Royal Bank of Scotland 11, 12, 14, 24, 26, 34, 78, 91, 103, 124, 129, 135, 138, 139, 211, 231, 293 Rubin, Robert 57 In an Uncertain World 67 Ruskin, John 60, 63 Unto this Last 56 Russia defaults on debts 39 oligarchies 303 Russian Revolution (1917) 3 S Saes 168 St Paul’s Churchyard, City of London 305 Salomon Bros. 20, 22, 27, 34, 110, 133–4 ‘Salomon North’ 110 Salz Review: An Independent Review of Barclays’ Business Practices 217 Samuelson, Paul 208 Samwer, Oliver 170 Sarkozy, Nicolas 248, 249 Savage, L.J. 67 Scholes, Myron 19, 69, 110 Schrödinger’s cat 129 Scottish Parliament 158 Scottish Widows 26, 27, 30 Scottish Widows Fund 26, 197, 201, 212, 256 search 195, 209, 213 defined 144 and the investment bank 197 Second World War 36, 221 secondary markets 85, 170, 210 Securities and Exchange Commission (SEC) 20, 64, 126, 152, 197, 225, 226, 228, 230, 232, 247, 292, 293, 294, 313n6 securities regulation 225–9 securitisation 20–21, 54, 100, 151, 153, 164, 169, 171, 222–3 securitisation boom (1980s) 200 securitised loans 98 See’s Candies 107 Segarra, Carmen 232 self-financing companies 45, 179, 195–6 sell-side analysts 199 Sequoia Capital 166 Shad, John S.R. 225, 228–9 shareholder value 4, 45, 46, 50, 211 Sharpe, William 69, 70 Shell 96 Sherman Act (1891) 44 Shiller, Robert 85 Siemens 196 Siemens, Werner von 196 Silicon Valley, California 166, 167, 168, 171, 172 Simon, Hermann 168 Simons, Jim 23, 27, 110, 111–12, 124 Sinatra, Frank 72 Sinclair, Upton 54, 79, 104, 132–3 The Jungle 44 Sing Sing maximum-security gaol, New York 292 Skilling, Jeff 126, 127, 128, 149, 197, 259 Slim, Carlos 52 Sloan, Alfred 45, 49 Sloan Foundation 49 small and medium-size enterprises (SMEs), financing 165–72, 291 Smith, Adam 31, 51, 60 The Wealth of Nations v, 56, 106 Smith, Greg 283 Smith Barney 34 social security 52, 79, 255 Social Security Trust Fund (US) 254, 255 socialism 4, 225, 301 Société Générale 130 ‘soft commission’ 29 ‘soft’ commodities 17 Soros, George 23, 27, 98, 109, 111–12, 124, 132 South Sea Bubble (18th century) 35, 132, 292 sovereign wealth funds 161, 253 Soviet empire 36 Soviet Union 225 collapse of 23 lack of confidence in supplies 89–90 Spain: property bubble 42 Sparks, D.L. 114, 283, 284 specific risk 97–8 speculation 93 Spitzer, Eliot 232, 292 spread 28, 94 Spread Networks 2 Square 187 Stamp Duty 274 Standard & Poor’s rating agency 21, 99, 248, 249, 313n6 Standard Life 26, 27, 30 standard of living 77 Standard Oil 44, 196, 323n1 Standard Oil of New Jersey (later Exxon) 323n1 Stanford University 167 Stanhope 158 State Street 200, 207 sterling devaluation (1967) 18 stewardship 144, 163, 195–203, 203, 208, 209, 210, 211, 213 Stewart, Jimmy 12 Stigler, George 237 stock exchanges 17 see also individual stock exchanges stock markets change in organisation of 28 as a means of taking money out of companies 162 rise of 38 stock-picking 108 stockbrokers 16, 25, 30, 197, 198 Stoll, Clifford 227–8 stone fei (in Micronesia) 323n5 Stone, Richard 263 Stora Enso 196 strict liability 295–6 Strine, Chancellor Leo 117 structured investment vehicles (SIVs) 158, 223 sub-prime lending 34–5, 75 sub-prime mortgages 63, 75, 109, 149, 150, 169, 244 Summers, Larry 22, 55, 73, 119, 154, 299 criticism of Rajan’s views 57 ‘ketchup economics’ 5, 57, 69 support for financialisation 57 on transformation of investment banking 15 Sunday Times 143 ‘Rich List’ 156 supermarkets: financial services 27 supply chain 80, 81, 83, 89, 92 Surowiecki, James: The Wisdom of Crowds xi swap markets 21 SWIFT clearing system 184 Swiss Re 62 syndication 62 Syriza 306 T Taibbi, Matt 55 tailgating 102, 103, 104, 128, 129, 130, 136, 138, 140, 152, 155, 190–91, 200 Tainter, Joseph 277 Taleb, Nassim Nicholas 125, 183 Fooled by Randomness 133 Tarbell, Ida 44, 54 TARGET2 system 184, 244 TARP programme 138 tax havens 123 Taylor, Martin 185 Taylor Bean and Whitaker 293 Tea Party 306 technological innovation 13, 185, 187 Tel Aviv, Israel 171 telecommunications network 181, 182 Tesla Motors 168 Tetra 168 TfL 159 Thai exchange rate, collapse of (1997) 39 Thain, John 300 Thatcher, Margaret 18, 23, 54, 59, 148, 151, 157 Thiel, Peter 167 Third World debt problem 37, 131 thrifts 25, 149, 150, 151, 154, 174, 290, 292 ticket touts 94–5 Tobin, James 273 Tobin tax 273–4 Tolstoy, Count Leo 97 Tonnies, Ferdinand 17 ‘too big to fail’ 75, 140, 276, 277 Tourre, Fabrice ‘Fabulous Fab’ 63–4, 115, 118, 232, 293, 294 trader model 82, 83 trader, rise of the 16–24 elements of the new trading culture 21–2 factors contributing to the change 17–18 foreign exchange 18–19 from personal relationships to anonymous markets 17 hedge fund managers 23 independent traders 22–3 information technology 19–20 regulation 20 securitisation 20–21 shift from agency to trading 16 trading as a principal source of revenue and remuneration 17 trader model 82, 83 ‘trading book’ 320n20 transparency 29, 84, 205, 210, 212, 226, 260 Travelers Group 33, 34, 48 ‘treasure islands’ 122–3 Treasuries 75 Treasury (UK) 135, 158 troubled assets relief program 135 Truman, Harry S. 230, 325n13 trust 83–4, 85, 182, 213, 218, 260–61 Tuckett, David 43, 71, 79 tulip mania (1630s) 35 Turner, Adair 303 TWA 238 Twain, Mark: Pudd’nhead Wilson’s Calendar 95–6 Twitter 185 U UBS 33, 134 UK Independence Party 306 unemployment 73, 74, 79 unit trusts 202 United States global dominance of the finance industry 218 house prices 41, 43, 149, 174 stock bubble (1929) 201 universal banks 26–7, 33 University of Chicago 19, 69 ‘unknown unknowns’ 67 UPS delivery system 279–80 US Defense Department 167 US Steel 44 US Supreme Court 228, 229, 304 US Treasury 36, 38, 135 utility networks 181–2 V value discovery 226–7 value horizon 109 Van Agtmael, Antoine 39 Vanderbilt, Cornelius 44 Vanguard 200, 207, 213 venture capital 166 firms 27, 168 venture capitalists 171, 172 Vickers Commission 194 Viniar, David 204–5, 233, 282, 283, 284 VISA 186 volatility 85, 93, 98, 103, 131, 255 Volcker, Paul 150, 181 Volcker Rule 194 voluntary agencies 258 W wagers and credit default swaps 119 defined 61 at Lloyd’s coffee house 71–2 lottery tickets 65 Wall Street, New York 1, 16, 312n2 careers in 15 rivalry with London 13 staffing of 217 Wall Street Crash (1929) 20, 25, 27, 36, 127, 201 Wall Street Journal 294 Wallenberg family 108 Walmart 81, 83 Warburg 134 Warren, Elizabeth 237 Washington consensus 39 Washington Mutual 135, 149 Wasserstein, Bruce 204, 205 Watergate affair 240 ‘We are the 99 per cent’ slogan 52, 305 ‘We are Wall Street’ 16, 55, 267–8, 271, 300, 301 Weber, Max 17 Weill, Sandy 33–4, 35, 48–51, 55, 91, 149, 293, 314n40 Weinstock, Arnold 48 Welch, Jack 45–6, 48, 50, 52, 126, 314n40 WestLB 169 Westminster Bank 24 Whitney, Richard 292 Wilson, Harold 18 windfall payments 14, 32, 127, 153, 290 winner’s curse 103, 104, 156, 318n11 Winslow Jones, Alfred 23 Winton Capital 111 Wolfe, Humbert 7 The Uncelestial City 1 Wolfe, Tom 268 The Bonfire of the Vanities 16, 22 women traders 22 Woodford, Neil 108 Woodward, Bob: Maestro 240 World Bank 14, 220 World.Com bonds 197 Wozniak, Steve 162 Wriston, Walter 37 Y Yellen, Janet 230–31 Yom Kippur War (1973) 36 YouTube 185 Z Zurich, Switzerland 62
Pearson had wanted the mains and pipes to be owned by co-operatives of consumers, a remarkably far-sighted concept for the 1840s; but, after a pitched battle over the installation of a gas main between workmen employed by the Commercial Gas Company and a rival group enlisted by Pearson for the Commissioner of Sewers, he was forced to withdraw, leaving the monopoly unchallenged. It was as City Solicitor, a position he held from 1839 until his death in 1862, that he was able to smooth the way for the creation of the world’s first underground railway. Pearson had first set out the idea of ‘trains in drains’ when standing unsuccessfully in a by-election in Lambeth, but the idea survived his failure, although it was shelved while the excesses of the railway mania of the mid 1840s ran their course. In many respects, poor Pearson can be seen as a serial but heroic British failure. He stood in several other by-elections for Parliament apart from Lambeth, always being roundly defeated, and many of his schemes and ideas never caught on, but his tenacity, perhaps prompted by these setbacks, brought the scheme for an underground railway to fruition. Given this patchy record it is not surprising that Pearson’s contemporaries were sceptical about his early dreams of a rail line under the streets and that it took two decades for the railway to be built.
From 1846 onwards, there was a series of inquiries, roughly one every decade, by Royal Commissions and select committees of Parliament into the various plans of the railway entrepreneurs. Their decisions largely shaped the rail map of the capital as it exists today and, indeed, the findings of the first one, the Royal Commission on Metropolis Railway Termini of 1846, led directly to the development of the Metropolitan line. The establishment was a response to the fact that at the height of the railway mania of the mid 1840s, no fewer than nineteen urban lines and termini were projected and it was clear that this potential wholesale demolition, and the chaotic traffic conditions it would engender, could not be countenanced, even by the Victorians obsessed with keeping government out of business. The Commission took evidence from a diverse range of people and interests – valuers, parish bodies, the Corporation of London, even Her Majesty’s Woods and Forests, and, of course, railway developers with their retinue of traffic managers, solicitors, engineers and land agents.
Commuter City: How the Railways Shaped London by David Wragg
Beeching cuts, British Empire, financial independence, joint-stock company, joint-stock limited liability company, Louis Blériot, North Sea oil, railway mania, South Sea Bubble, urban sprawl, V2 rocket, Winter of Discontent, yield management
Typeset in Ehrhardt by S L Menzies-Earl Printed and bound in England by MPG Books Group Pen & Sword Books Ltd incorporates the imprints of Pen & Sword Aviation, Pen & Sword Maritime, Pen & Sword Military, Wharncliffe Local History, Pen & Sword Select, Pen & Sword Military Classics, Leo Cooper, Remember When, Seaforth Publishing and Frontline Publishing For a complete list of Pen & Sword titles please contact PEN & SWORD BOOKS LIMITED 47 Church Street, Barnsley, South Yorkshire, S70 2AS, England E-mail: email@example.com Website: www.pen-and-sword.co.uk Contents List of Illustrations Introduction Chapter 1 The Great Wen Chapter 2 The Railway Age Arrives in London Chapter 3 Railway Mania and the Great Exhibition Chapter 4 Regulation Catches up with the Railways Chapter 5 The Mainline System is Completed Chapter 6 Making Roads Down to Hell – The Underground Chapter 7 Victorian Dynamism Chapter 8 The Threat of the Tram Chapter 9 La Belle Epoche Chapter 10 The Great War Chapter 11 Grouping and Recession Chapter 12 London’s Transport Chapter 13 Electrification and the Long Distance Commuter Chapter 14 The Second World War Chapter 15 Austerity and Nationalisation Chapter 16 Rationalising the Railway Chapter 17 Expansion and Contraction Chapter 18 Sectorisation and Privatisation Chapter 19 The Future Appendix I Appendix II Chronology Bibliography List of Illustrations 1.
The Great Eastern extension to Liverpool Street built during 1861-64 was passed by Parliament on condition that it ran workmen’s trains from Edmonton and Walthamstow, at a return fare of 2d per day for the journey of 6-8 miles; and was one of the few allowed to pierce what almost amounted to a surface railway exclusion zone because the final leg of the extension was in tunnel. Chapter 3 Railway Mania and the Great Exhibition The shares are a penny, and ever so many are taken by Rothschild and Baring, And just a few are allotted to you, you wake with a shudder despairing. W S Gilbert As the 1840s passed, interest in railways grew frantically. Every town wanted to be on the railway system for fear of being left isolated, and every investor wanted to be involved in the railways for fear of missing what was seen as a guaranteed means to fortune.
The Nature of Technology by W. Brian Arthur
Andrew Wiles, business process, cognitive dissonance, computer age, double helix, Geoffrey West, Santa Fe Institute, haute cuisine, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kevin Kelly, knowledge economy, locking in a profit, Mars Rover, means of production, railway mania, Silicon Valley, Simon Singh, sorting algorithm, speech recognition, technological singularity, The Wealth of Nations by Adam Smith, Thomas Kuhn: the structure of scientific revolutions
The economist Carlota Perez, who has investigated the stages technology revolutions go through, points out that such conditions can bring on an investment mania—and a crash. No crash happened with early gene technology. But crashes have been by no means rare in the past. In Britain in the mid-1840s the wild enthusiasm for railways—“the country is an asylum of railway lunatics,” declared Lord Cockburn, a Scottish judge—brought an inevitable collapse. By 1845 a railway mania was in full swing, with scrip (shares that have been sliced into small pieces) sold by alley men, and new schemes for direct lines from little-known towns to other little-known towns launched almost by the day. Then the bubble burst. An economic Week of Terror began on October 16, 1847, in which railway shares lost 85 percent of their peak value, many banks were forced to close, and Britain was brought to the brink of economic collapse.
Affordable Care Act / Obamacare, algorithmic trading, Andrei Shleifer, asset-backed security, availability heuristic, bank run, banking crisis, Black-Scholes formula, bonus culture, Bretton Woods, call centre, Carmen Reinhart, cloud computing, collapse of Lehman Brothers, collateralized debt obligation, corporate governance, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, Daniel Kahneman / Amos Tversky, David Graeber, diversification, diversified portfolio, Edmond Halley, Edward Glaeser, Eugene Fama: efficient market hypothesis, eurozone crisis, family office, financial deregulation, financial innovation, fixed income, Flash crash, Google Glasses, Gordon Gekko, high net worth, housing crisis, Hyman Minsky, implied volatility, income inequality, index fund, Innovator's Dilemma, interest rate swap, Kenneth Rogoff, Kickstarter, late fees, London Interbank Offered Rate, Long Term Capital Management, loss aversion, margin call, Mark Zuckerberg, McMansion, mortgage debt, mortgage tax deduction, Network effects, Northern Rock, obamacare, payday loans, peer-to-peer lending, Peter Thiel, principal–agent problem, profit maximization, quantitative trading / quantitative ﬁnance, railway mania, randomized controlled trial, Richard Feynman, Richard Feynman, Richard Thaler, risk tolerance, risk-adjusted returns, Robert Shiller, Robert Shiller, short selling, Silicon Valley, Silicon Valley startup, Skype, South Sea Bubble, sovereign wealth fund, statistical model, transaction costs, Tunguska event, unbanked and underbanked, underbanked, Vanguard fund, web application
For more on the role of technology in propelling financial innovation, see Stelios Michalopoulos, Luc Laeven, and Ross Levine, “Financial Innovation and Endogenous Growth” (NBER Working Paper 51356, September 2009). 16. Richard Sylla, “A Historical Primer on the Business of Credit Ratings” (paper prepared for a conference of the World Bank, Washington, DC, March 2001). 17. Andrew Odlyzko, “Collective Hallucinations and Inefficient Markets: The British Railway Mania of the 1840s,” SSRN Electronic Journal (2010). 18. Peter Tufano, “Business Failure, Judicial Intervention and Financial Innovation: Restructuring US Railroads in the Nineteenth Century,” Business History Review (1997). 19. Robert Shiller, “The Invention of Inflation-Indexed Bonds in America” (NBER Working Paper 10183, December 2003). For a more comprehensive history, see Franklin Allen and Douglas Gale, Financial Innovation and Risk Sharing (Cambridge, MA: MIT Press, 1994). 20.
Fred Dibnah's Age of Steam by David Hall, Fred Dibnah
Crampton’s locomotives could reach speeds of 90 miles per hour (145 kmph), but were not popular in Britain because of the uncomfortable ride and the destructive effect they had on the track, a direct result of the low driving axle. A British engine built to this design by J. E. Connell of the London and North Western Railway had the nickname ‘Mac’s Mangle’ because of the destruction it caused. Throughout the 1830s and 1840s people all over Britain were clamouring for new lines and money was being thrown at these developments to such an extent that the phenomenon was given the name of ‘railway mania’. Within twenty years of the Rainhill Trials around 5,000 miles (8,047 km) of track criss-crossed the country. The nineteenth-century railway pioneers brought the British nation to the forefront of the world stage in the realm of civil engineering. The construction of the lines involved such feats of engineering that it seems incredible that these were accomplished in the days when precision tools and mechanical aids to labour were unknown.
Bitcoin: The Future of Money? by Dominic Frisby
3D printing, altcoin, bank run, banking crisis, banks create money, barriers to entry, bitcoin, blockchain, capital controls, Chelsea Manning, cloud computing, computer age, cryptocurrency, disintermediation, ethereum blockchain, fiat currency, friendly fire, game design, Isaac Newton, Julian Assange, litecoin, M-Pesa, mobile money, money: store of value / unit of account / medium of exchange, Occupy movement, Peter Thiel, Ponzi scheme, prediction markets, price stability, quantitative easing, railway mania, Ronald Reagan, Satoshi Nakamoto, Silicon Valley, Skype, slashdot, smart contracts, Snapchat, Stephen Hawking, Steve Jobs, Ted Nelson, too big to fail, transaction costs, Turing complete, War on Poverty, web application, WikiLeaks
By the late 1830s all the conditions were in place for a frenzy. The Liverpool and Manchester railway had proved a success, the Bank of England had cut interest rates, the Industrial Revolution had created a new, wealthy middle-class and the new medium of newspapers meant that companies could advertise themselves and news could travel quickly. There was an overriding belief in this revolutionary technology and there was money to invest. Railway mania was born. Hundreds of railway companies sprung up and investment poured in. Land was bought, tracks were laid and trains were built. But it soon became clear that railways were not as easy to build as was once thought, nor was it so easy to turn a profit. Many of the companies were unviable. Some of them were get-rich-quick schemes and scams. Then, in 1845, the Bank of England put up interest rates.
3D printing, additive manufacturing, agricultural Revolution, AI winter, Airbnb, artificial general intelligence, augmented reality, autonomous vehicles, banking crisis, Baxter: Rethink Robotics, Berlin Wall, Bernie Sanders, bitcoin, blockchain, call centre, Chris Urmson, congestion charging, credit crunch, David Ricardo: comparative advantage, Elon Musk, en.wikipedia.org, Erik Brynjolfsson, Flynn Effect, full employment, future of work, gender pay gap, gig economy, Google Glasses, Google X / Alphabet X, income inequality, industrial robot, Internet of things, invention of the telephone, invisible hand, James Watt: steam engine, Jaron Lanier, Jeff Bezos, job automation, John Maynard Keynes: technological unemployment, John von Neumann, Kevin Kelly, knowledge worker, lump of labour, Lyft, Mark Zuckerberg, Martin Wolf, McJob, means of production, Milgram experiment, Narrative Science, natural language processing, new economy, Occupy movement, Oculus Rift, PageRank, pattern recognition, post scarcity, post-industrial society, precariat, prediction markets, QWERTY keyboard, railway mania, RAND corporation, Ray Kurzweil, RFID, Rodney Brooks, Satoshi Nakamoto, Second Machine Age, self-driving car, sharing economy, Silicon Valley, Skype, software is eating the world, speech recognition, Stephen Hawking, Steve Jobs, TaskRabbit, technological singularity, Thomas Malthus, transaction costs, Tyler Cowen: Great Stagnation, Uber for X, universal basic income, Vernor Vinge, working-age population, Y Combinator, young professional
In the second half of the 18th century, the Scottish inventor James Watt teamed up with the English entrepreneur Matthew Boulton to improve Newcomen’s steam engine so that it could power factories, and make manufacturing possible on an industrial scale. At the same time, iron production was being transformed by the replacement of charcoal by coal, and “canal mania” took hold, as heavy loads could be transported more cheaply by canal than by road or sea. Later, in the mid-19th century, steam engines were improved sufficiently to make them mobile, which ushered in the UK's “railway mania” of the 1840s. Projects authorised in the middle years of that decade led to the construction of 6,000 miles of railway – more than half the length of the country's current rail network. Other European countries and the USA emulated the UK's example, usually lagging it by a decade or two. Toward the end of the 19th century, Sir Henry Bessemer's method for converting iron into steel enabled steel to replace iron in a wide range of applications.
accounting loophole / creative accounting, affirmative action, bank run, banking crisis, Berlin Wall, bonus culture, Branko Milanovic, BRICs, call centre, Cass Sunstein, central bank independence, collapse of Lehman Brothers, conceptual framework, corporate governance, correlation does not imply causation, Credit Default Swap, deindustrialization, demographic transition, Diane Coyle, disintermediation, Edward Glaeser, Eugene Fama: efficient market hypothesis, experimental economics, Fall of the Berlin Wall, Financial Instability Hypothesis, Francis Fukuyama: the end of history, George Akerlof, Gini coefficient, global supply chain, Gordon Gekko, greed is good, happiness index / gross national happiness, Hyman Minsky, If something cannot go on forever, it will stop, illegal immigration, income inequality, income per capita, invisible hand, Jane Jacobs, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, low skilled workers, market bubble, market design, market fundamentalism, megacity, Network effects, new economy, night-watchman state, Northern Rock, oil shock, principal–agent problem, profit motive, purchasing power parity, railway mania, rising living standards, Ronald Reagan, Silicon Valley, South Sea Bubble, Steven Pinker, The Design of Experiments, The Fortune at the Bottom of the Pyramid, The Market for Lemons, The Myth of the Rational Market, The Spirit Level, transaction costs, transfer pricing, tulip mania, ultimatum game, University of East Anglia, web application, web of trust, winner-take-all economy, World Values Survey
In his book The Romantic Economist he advocates a new emphasis in economics on imagination: “The Romantics stressed the central role of the imagination in creating and envisioning the future, and in forging our own identities and aims out of the incommensurable and conflicting values and discourses we face.”8 This perspective ties in with the argument that measures such as GDP are an inadequate way to assess economic progress; that we can’t capture it in monetary terms. These are only two examples plucked out a vast literature highlighting the adverse cultural and social consequences of economic growth. Each economic crash, following a period of boom and excess, has brought a new surge of criticism. Karl Marx was inspired, if that’s the right word, by the financial crises of Victorian Britain such as the railway manias and stock price crashes of the 1840s and the mid-nineteenth-century banking collapses. But the reaction was perhaps most dramatic in the 1930s, when the inevitable result of the Great Crash and the Depression was to encourage many different attempts to reimagine the fundamental purposes and aims of the economy. Some of the reactions, as we know with hindsight, had profound and terrible political and historical consequences.
Last Trains: Dr Beeching and the Death of Rural England by Charles Loft
The bitter competition between the South Eastern and London, Chatham and Dover companies ruined both shareholders and services alike. When the Manchester, Sheffield and Lincolnshire company, whose initials were jokingly said to stand for ‘Money Sunk and Lost’, built an extension to London and renamed itself the Great Central, the wags justifiably re-dubbed it ‘Gone Completely’. The ‘railway king’, George Hudson, central figure in the ‘railway mania’ investment boom of the 1840s, built a railway empire that exceeded a thousand miles and shaped the network permanently on imaginary profits and false promises that ruined many an investor as well as himself. Railways had never been guaranteed financial successes, but in the inter-war years no one was making much money from them. The assumption that earnings would return to pre-war levels, on which the Southern, LNER, LMS and GWR had been created from a host of smaller companies in 1921, proved to be wrong and, although the industry was by no means bankrupt, earnings on ordinary stocks ranged from little to nothing.
Rethinking Capitalism: Economics and Policy for Sustainable and Inclusive Growth by Michael Jacobs, Mariana Mazzucato
3D printing, balance sheet recession, banking crisis, Bernie Sanders, Bretton Woods, business climate, Carmen Reinhart, central bank independence, collaborative economy, complexity theory, conceptual framework, corporate governance, corporate social responsibility, credit crunch, Credit Default Swap, crony capitalism, David Ricardo: comparative advantage, decarbonisation, deindustrialization, dematerialisation, Detroit bankruptcy, double entry bookkeeping, Elon Musk, energy security, eurozone crisis, factory automation, facts on the ground, fiat currency, Financial Instability Hypothesis, financial intermediation, forward guidance, full employment, Gini coefficient, Growth in a Time of Debt, Hyman Minsky, income inequality, Internet of things, investor state dispute settlement, invisible hand, Isaac Newton, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, labour market flexibility, low skilled workers, Martin Wolf, Mont Pelerin Society, neoliberal agenda, Network effects, new economy, non-tariff barriers, paradox of thrift, price stability, private sector deleveraging, quantitative easing, QWERTY keyboard, railway mania, rent-seeking, road to serfdom, savings glut, Second Machine Age, secular stagnation, shareholder value, sharing economy, Silicon Valley, Steve Jobs, the built environment, The Great Moderation, The Spirit Level, Thorstein Veblen, too big to fail, total factor productivity, transaction costs, trickle-down economics, universal basic income, very high income
Thus, we see a flourishing of casino-like financial instruments, such as those that fuelled the sub-prime mortgage and toxic instruments boom in the US in the 2000s, in order to mobilise the increasing amounts of investment funds looking for easy gains. Indeed, in the past, as now, every installation period has culminated in a major bubble followed by a major crash. In the 1790s and 1840s the canal and railway manias ended in panics; the bubbles of the first globalisation collapsed in the 1890s in Argentina, Australia, the US and several other countries; and the ‘Roaring Twenties’ ended in the crash of 1929. In each case, the basic infrastructure and technologies of the new paradigm had been installed so that the full growth potential of the revolution could be realised across the entire economy. Yet, reverting to ‘business as usual’ after such crashes does not work.
The Power Makers by Maury Klein
Albert Einstein, Albert Michelson, Augustin-Louis Cauchy, British Empire, business climate, invention of radio, invention of the telegraph, Isaac Newton, James Watt: steam engine, Louis Pasteur, luminiferous ether, margin call, Menlo Park, price stability, railway mania, the scientific method, trade route, transcontinental railway, working poor
It lasted only until June 1831, when a fireman, annoyed by the steam hissing from the pop valve, tied the valve down. The explosion killed him, sent the engineer flying, and demolished the engine.16 Boston merchants took an even more ambitious tack, underwriting rail lines to Lowell, Providence, and Worcester. Before the latter road was even completed, a new company organized to extend it another 150 miles through Springfield to Albany. As the 1830s wore on, railroad mania began to upstage the canal craze. The two sons of John Stevens organized the Camden & Amboy Railroad and completed it in 1833. The following year a group of three roads connected Philadelphia and Pittsburgh; later they would be combined into the Pennsylvania Railroad. By 1840 only four of the nation’s twenty-six states still lacked any railroad track. As rails spread across the land, opposition came from canal owners, some states that had invested heavily in canals, turnpike and bridge companies, stagecoach lines, tavernkeepers, and anyone who saw his business threatened by the railroad.
The most traditional source of investment for people with money had always been land or its upscale urban relative, real estate. Government securities constituted another outlet for surplus funds, along with public improvement projects like canals, docks, or roadways. The advent of the railroad, the nation’s first and most capital-intensive big business, transformed the capital market no less than the business and physical landscape. The railroad mania literally created the modern American capital market and with it the stock exchanges that came to be dominated by rail securities along with a smattering of government issues. The term “industrial securities” did not even come into existence until 1889. In that year no fewer than ten railroads had a net worth exceeding $100 million, led by the mighty Pennsylvania Railroad at more than $200 million.
When the Money Runs Out: The End of Western Affluence by Stephen D. King
Albert Einstein, Asian financial crisis, asset-backed security, banking crisis, Basel III, Berlin Wall, Bernie Madoff, British Empire, capital controls, central bank independence, collapse of Lehman Brothers, collateralized debt obligation, congestion charging, credit crunch, Credit Default Swap, credit default swaps / collateralized debt obligations, crony capitalism, cross-subsidies, debt deflation, Deng Xiaoping, Diane Coyle, endowment effect, eurozone crisis, Fall of the Berlin Wall, financial innovation, financial repression, floating exchange rates, full employment, George Akerlof, German hyperinflation, Hyman Minsky, income inequality, income per capita, inflation targeting, invisible hand, John Maynard Keynes: Economic Possibilities for our Grandchildren, joint-stock company, liquidationism / Banker’s doctrine / the Treasury view, liquidity trap, London Interbank Offered Rate, loss aversion, market clearing, moral hazard, mortgage debt, new economy, New Urbanism, Nick Leeson, Northern Rock, Occupy movement, oil shale / tar sands, oil shock, price mechanism, price stability, quantitative easing, railway mania, rent-seeking, reserve currency, rising living standards, South Sea Bubble, sovereign wealth fund, technology bubble, The Market for Lemons, The Spirit Level, The Wealth of Nations by Adam Smith, Thomas Malthus, Tobin tax, too big to fail, trade route, trickle-down economics, Washington Consensus, women in the workforce, working-age population
The implicit mortgage subsidies on offer from Fannie Mae, Freddie Mac and other government-sponsored enterprises in the years running up to our modern-day subprime crisis were surely the equivalent of the government subsidies and land grants provided to railroad speculators in the 1860s. The inevitable over-investment in housing at the beginning of the twenty-first century was foreshadowed by railroad mania in the mid-nineteenth century, while the bank failures that followed the onset of the subprime crisis are no more than a twenty-first century version of the banking collapse triggered by the bankruptcy of Jay Cooke and Co. Subsidizing interest rates is, it seems, a recipe for financial upheaval. The twenty-first century equivalents of a near-universal gold standard are the global dollar standard – with massive increases in foreign exchange reserves, most abundantly within the emerging world, greenbacks are no longer the preserve of the US – and, within Europe, the euro.
Engines of War: How Wars Were Won & Lost on the Railways by Christian Wolmar
After his suggestion to build the line was accepted by the Duke of Newcastle, the material for the railway was gathered together at remarkable speed. So was the workforce of around 250 experienced navvies – eventually nearly four times as many worked on the line at the peak of construction – who were not only motivated by the nationalistic fervour which they strongly espoused but also by the shortage of work since the collapse of the railway mania in Britain in the late 1840s. The flotilla of steamers carrying the men and material managed to leave in December 1854 for the two-month journey within a few weeks of the acceptance of the idea by the government. The project certainly caught the imagination of the public, who liked the idea of these rowdy navvies being sent to the other end of Europe to save the British army. Peto was appointed chief engineer and was rewarded for his efforts with a baronetcy, although he did not actually travel to the Crimea.
Andrei Shleifer, asset-backed security, bank run, banking crisis, Benoit Mandelbrot, Berlin Wall, Bernie Madoff, Big bang: deregulation of the City of London, Bretton Woods, capital controls, carbon footprint, Carmen Reinhart, Cass Sunstein, centre right, choice architecture, cloud computing, collective bargaining, conceptual framework, Corn Laws, corporate governance, credit crunch, Credit Default Swap, debt deflation, decarbonisation, Deng Xiaoping, discovery of DNA, discovery of the americas, discrete time, diversification, double helix, Edward Glaeser, financial deregulation, financial innovation, financial intermediation, first-past-the-post, floating exchange rates, Francis Fukuyama: the end of history, Frank Levy and Richard Murnane: The New Division of Labor, full employment, George Akerlof, Gini coefficient, global supply chain, Growth in a Time of Debt, Hyman Minsky, I think there is a world market for maybe five computers, income inequality, inflation targeting, interest rate swap, invisible hand, Isaac Newton, James Dyson, James Watt: steam engine, joint-stock company, Joseph Schumpeter, Kenneth Rogoff, knowledge economy, knowledge worker, labour market flexibility, Long Term Capital Management, Louis Pasteur, low-wage service sector, mandelbrot fractal, margin call, market fundamentalism, Martin Wolf, means of production, Mikhail Gorbachev, millennium bug, moral hazard, mortgage debt, new economy, Northern Rock, offshore financial centre, open economy, Plutocrats, plutocrats, price discrimination, private sector deleveraging, purchasing power parity, quantitative easing, race to the bottom, railway mania, random walk, rent-seeking, reserve currency, Richard Thaler, rising living standards, Robert Shiller, Robert Shiller, Ronald Reagan, Rory Sutherland, shareholder value, short selling, Silicon Valley, Skype, South Sea Bubble, Steve Jobs, The Market for Lemons, the market place, The Myth of the Rational Market, the payments system, the scientific method, The Wealth of Nations by Adam Smith, too big to fail, unpaid internship, value at risk, Washington Consensus, working poor, éminence grise
But overall, there can be little confidence in the workings of such a system, despite the relief that total disaster may have been avoided. There is keen awareness of the fragility of the recovery and the profundity of the flaws that have been exposed. Moreover, there is not even the usual consolation that can be gleaned once a bubble has burst – that something useful will remain, perhaps the seeds of the next wave of innovative growth.6 Once railway mania had collapsed, the United States was left with a decent railway network; the dot.com bubble popped but left behind a wealth of young and vibrant ICT companies. This boom has left little but a vast overhang of public debt and overstretched banks, along with a range of sectors and companies that now need to reconstitute themselves because the assumptions on which they built their business models have been exposed as bunk.
fir'd thy brain, Nor lordly luxury, nor city gain: No, 'twas thy righteous end, asham'd to see Senates degen'rate, patriots disagree, And nobly wishing party-rage to cease, To buy both sides, and give thy country peace." Pope's Epistle to Allen Lord Bathurst. 17. The South-Sea project remained until 1845 the greatest example in British history of the infatuation of the people for commercial gambling. The first edition of these volumes was published some time before the outbreak of the Great Railway Mania of that and the following year. . Chapter 4. End of Notes Return to top 13/10/2008 17:33 Printable format for Mackay, Charles, Memoirs of Extraordinary Popular ... 21 of 21 http://www.econlib.org/cgi-bin/printarticle.pl Copyright ©1999 Liberty Fund, Inc. All Rights Reserved 13/10/2008 17:33 Printable format for Mackay, Charles, Memoirs of Extraordinary Popular ... 1 of 5 http://www.econlib.org/cgi-bin/printarticle.pl Printable format for http://www.econlib.org/library/Mackay/macEx3.html FAQ: Print Hints Memoirs of Extraordinary Popular Delusions and the Madness of Crowds Mackay, Charles (1814-1889) BIO Chapter 3 The Tulipomania 3.0 3.1 3.2 Quis furor ô cives!