Charles Dickens wrote only one of the 85 leaders published about railway mania. He viewed free markets as the best way to achieve expansion. When the new Royal Exchange building in London was opened, Charles Mackay wrote extensive coverage of those same railways: ads, meeting reports, and reprints from other publications. While the overwhelming majority was swept away by investment mania, Mackay recalled the South Sea mania and Mississippi madness from the last century.
While Mackay and his allies tried blocking legislation, open access to the rails was there in the law, and he saw in this a free market solution and difficulty. He claimed that though private companies were expected to build and operate railways, after any crisis, they would probably turn over everything to the government. In most cases, it appears the British public at the time of the railway mania in the 1840s was at an almost complete loss at any criticism of investment.
The mania is covered by Mackay along with other great investment delusions. The public cannot recover its senses due to a blindness, what Mackay identified as a fatal defect of the crowd. He noticed how free traders had been getting more and more enthusiastic and active: most people involved in ventures seemed to be blinded by them. The pressure of capital causes disruption of financial markets. Then share prices start to decline. No cause for decline was ever assumed. Nor did it have to be investigated. There were no calls for Parliamentary committees or other bodies to look into the issue, not even to debate it. The low railway share prices continued throughout the 1850s, corresponding to poor financial performance. When the crisis finally arrived, it was a crisis that was relatively minor compared to the four previous and famous great investment manias charted by Mackay!
The earlier manias involved real capital investment that was cherished by the ruling elite, and yet did not provide enough control over the operations of the new infrastructure so that it became neglected in a way that was ultimately unaccountable. Some financial affairs, such as the Tulip Mania or the South Sea Bubble, and involved astronomical valuations, demanding much more money from shareholders than the real values. The fundamental problem of industries is that their new projects need to be profitable. Yet despite repeated recommendations, there was not even a hint of concern that new projects were in danger of being almost uniformly ruinous, or that new burdens would be imposed by their financial operations. On the one hand, investors were willing to support, in a limited way, governments setting conditions. On the other hand, there was substantial growth in coverage of investments in the news – the ultimate pressure to form a crowd.
Mackay was one of the most ardent cheerleaders for the future. Yet he also provided space and occasionally even positive words for anyone opposing the manias of their day. Anyone feeling a reason for keeping quiet could rightly feel from his words that a departure from unrestrained enthusiasm for private enterprise could be a genuine desire. Financial issues that are not easy to understand could be cause for more than just a technical concern. Mackay was one of the first to connect these issues to public interest in the name of the public good. He was, after all, one of the best informed people in Britain. The history and status of Extraordinary Popular Delusions is in its continued global relevance.