Going off the rails

While discussing the impact of Covid-19, investor Warren Buffett described the 2008–2009 recession in these terms: “Our economic train went off the tracks.” There is no better metaphor for explaining the extraordinary economic events of 19th-century Britain.

For a time in the late 1830s and 1840s, it seemed as if there was no stopping the country’s huge economic and social advances. The growth in Gross Domestic Product more than doubled from 1 per cent in the latter half of the 18th century to 2.5 per cent between 1831 and 1860 at the height of the mania.

For ordinary people, this meant growing cities, new business opportunities and – for the first time – a disposable income. But something was wrong.

Much of this growth centred on the rapid expansion of Britain’s steam railways, funded by private investment. And in a world where the stock market was a