The World's First Railway System

Abstract

The British railway network was a monument to Victorian private enterprise. Its masterpieces of civil engineering were emulated around the world. But its performance was controversial: praised for promoting a high density of lines, it was also criticized for wasteful duplication of routes. This book provides a history of the railway system written from a modern economic perspective. Using counterfactual analysis, it reveals enormous inefficiency in the Victorian system. This inefficiency was due to weaknesses in regulation and defects in government policy. British railway companies developed into powerful regional monopolies, which then each invaded each other's territories. When denied access to existing lines in rival territories, they built duplicate lines instead. Plans for an integrated national system, sponsored by William Gladstone, were blocked by Members of Parliament because of a perceived conflict with the local interests they represented. Each town wanted more railways than its neighbours, and so too many lines were built. The costs of these surplus lines led ultimately to higher fares and freight charges, which impaired the performance of the economy. The outcome would have been far better if Gladstone's proposals had been implemented.

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