Chapter

‘A Hurricane of Litigation’

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/9780198265672.003.0003
‘A Hurricane of Litigation’

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The collapse of the railway securities markets in the last days of October 1845 left a powerful financial vacuum in its wake. Millions of pounds of capital had flowed through a screen of paper companies into the purses of numberless attorneys, stockjobbers, engineers, and tradesmen. Thousands of men (and some women) had ‘staked their all’ in railway promotions solely upon the chance of selling their shares, scrip, or letters of allotment for a quick and tidy profit. The panic erased this chance. Tumbling prices left most investors with sheaves of railway paper they were either ‘unable to sell at all, or only at a ruinous sacrifice’. The crash created a vast and tangled web of indebtedness. A sizeable proportion of the entire country's monied classes became participants in a vicious cross-fire of lawsuits. Before the end of December 1845, hundreds of lawsuits had already been commenced by railway investors and promoters. By the end of 1846 the three courts of common law together had issued 24,000 more writs than in the previous year. In the aftermath of the hurricane of railway litigation, English railway capitalism was in a woeful condition. The companies that had survived the panic only barely survived its legal aftermath. Railway share prices continued to fall. Capital had become scarce just when the expanding industry needed it most. The only clear winners in these events were England's legal professions. Solicitors and barristers alike had enjoyed a huge windfall of profitable employment.

Keywords: railway securities market; litigation; railway capitalism; stock market crash; debt; creditors; legal practice

Chapter.  25784 words.  Illustrated.

Subjects: History of Law

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