Canals and Trains
Nothing is ever really wholly new.
No matter what technology gets invented, you can find a historical precedent for the type of change the new technology will bring to pass. You may not find the technology, but you can find an analogous change and learn from it.
Like most people brought up in the British school system, I used to think think that the UK Canal system was quickly put out of commercial use by the invention of the railway locomotive.
I was wrong and I am indebted to The Oxford History of Britain edited by Kenneth Morgan for putting me right and for teaching me a valuable insight into the development of modern society.
Canals were introduced between 1770 and 1800 as the cutting edge of transport/communications technology. Their introduction herralded a speculative bubble which quickly financed the building of all of the sensible navigable routes that could be exploited. The early 1800s saw a period of spectacular returns for the early investors in Canal technology. The Oxford Canal produced an annual return for its investors of 30% pa and as an industry returns averaged 6% - 8% at a time when Government bonds were paying just 1/4%.
Railways were invented in the 1830s and by the 1840s a speculative bubble developed around their introduction. Everyone could see the money being made by the canals and speculated that trains going faster would achieve even better returns. The speculation was fueled by George Hudson the "Railway King" who by 1845 owned 1/3rd of railway lines in Britain and was delivering fantastic returns to his early investors.
Unfortunately, for Mr Hudson's subsequent investors, it was a scam. Mr Hudson was using the money raised in later schemes to pay dividends to his early investors and the rumours of these fabulous returns were being used to attract fresh victims for his schemes.
- Posted by roger on 11/01/2006.
- roger's site
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