Railway Mania

Railway Mania was a stock market bubble in the railway industry of the United Kingdom of Great Britain and Ireland during the 1840s, fueled by falling interest rates, the 1825 repeal of the Bubble Act, and a laissez-faire regulatory climate that let promoters float new railway companies with as little as a 10 percent share deposit. Speculation peaked in 1846, when Parliament passed 263 Acts authorizing new railway companies in a single year. The Bank of England's interest rate increase in late 1845 triggered a collapse in share prices and a sudden halt to new investment; roughly a third of the authorized lines were never built, and many middle-class investors lost their entire savings as failed companies were absorbed by larger rivals at reduced prices. Despite the bust, the mania left Britain with a substantial rail network, some 6,220 miles of track ultimately constructed, illustrating how a speculative bubble can still leave lasting productive infrastructure behind.