Chapter

Dis-organizing Capitalism

R. W. Kostal

in Law and English Railway Capitalism 1825–1875

Published in print October 1997 | ISBN: 9780198265672
Published online March 2012 | e-ISBN: 9780191682926 | DOI: http://dx.doi.org/10.1093/acprof:oso/9780198265672.003.0002
Dis-organizing Capitalism

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Lawyers provided invaluable legal and commercial services to the scores of ‘legitimate’ railway enterprises promoted in England before 1850. Their expertise in business organization and capitalization was crucially important to the evolution of new associations of railway investors. The facilitative role of lawyers and legal forms in the early development of the industry, then, cannot be discounted. But this undoubtedly positive contribution is only part, and the lesser part, of the legal history of joint-stock railway enterprise in England to 1850. While a great many attorneys and solicitors laboured with great skill and integrity to build operational railway companies, at least as many others took advantage of buoyant markets for tradable railway ‘paper’ to concoct sham companies. While some lawyers were glad to act as the well-paid subordinates of genuine railway associations, others seized the chance to profit even more substantially from the promotion of purely speculative railway ventures. In the end, it was not the loyal legal officer but the bubble buccaneer who had the greatest short-term impact on the industry. Rampant bubble railway promotions by lawyers, first in the mid-1830s and more intensively a decade later, caused irreparable harm to the capital markets on which bona fide railway companies depended. By 1850, the verdict of professional railway analysts was in: lawyers had done less to organize than to dis-organize their industry.

Keywords: railway industry; lawyers; speculative ventures; bubble railway promotions; capital markets; legal services; legal history; joint-stock railway companies

Chapter.  18984 words.  Illustrated.

Subjects: History of Law

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