Although the Government was in favour of the development of trunk railways to stimulate economic recovery and to allow the movement of troops in times of potential civil unrest, it was legally necessary that each line be authorised by a separate Act of Parliament.
While there were entrepreneurs with the vision of an intercity network of lines, such as those through the East Midlands, it was much easier to find investors to back shorter stretches that were clearly defined in purpose and where rapid returns on investment could be predicted.
All the railways were promoted by commercial interests. As those opened by the year 1836 were paying good dividends it prompted financiers to invest money in them and by 1845 over 1000 projected schemes had been put forward. This led to a speculative frenzy, following a common pattern – as the price of railway shares increased, more and more money was poured in by speculators, until the inevitable collapse in price. This became known as ‘Railway Mania’.
It reached its peak in 1846, when no fewer than 272 Acts of Parliament setting up new railway companies were passed. Unlike most stock market bubbles, there was a tangible result from all the investment in the form of a vast expansion of the British railway system, though perhaps at an inflated cost. When the government stepped in and announced closure for depositing schemes, the period of Railway Mania was brought to an end.