Railways and Economic Growth: 1830–70

Abstract

WHILE nineteenth-century commentators had little hesitation in assuming a direct relationship between the growth of the railway network and the pace of economic change, present-day historians are more cautious. Rostow’s work has established that the railways cannot be associated with Britain’s industrial ‘take-off’, which came in the late eighteenth century [Rostow, 1960]. This is not to deny them a role in the subsequent stage, the ‘drive to maturity’, where cost-reducing market-widening effects, the stimulus to exports, and the encouragement to expansion in coal, iron and engineering are all relevant. But Mitchell [1964], in the first critical review of the literature, concluded that even here the railways ‘did not have a very great immediate impact’, that is before c. 1850, except in relation to the capital market. Furthermore, claims that railways played a decisive role in raising investment levels have also come under fire recently. The commonly-held view that it was railway investment which lifted Britain’s investment ratio above io per cent for the first time looks more fragile now that Feinstein has challenged Deane’s estimates of capital formation and suggested that the significant leap came in the 1780s, despite the author’s understandable doubts about the quality of his evidence [Feinstein, 1978].