Quiz Question...

Generali

The answer is Britain in the 1840s. There was a huge public debt resulting from the wars against France and the hangover from 2 railway investment booms.

The source was John Maudlin's excellent bi-weekly email which is very interesting if rather bearish.

Britain got herself out of massive debt (maybe 250% of GDP) with an amazing technological revolution. My opinion is that we are on the edge of another technological spike, this time in the medical arena.

JimmyTheWig

1840s? Fair enough.
Wouldn't have thought that the US was rapidly growing that early. Guess I was wrong.

Incedentally, the "sadly" in your response to my guess. Was that simply "sadly" for me that I was wrong? Or were you saying that it would have been better if it was the 1920s than the 1840s?

Thrugelmir

Generali wrote: »

The answer is Britain in the 1840s. There was a huge public debt resulting from the wars against France and the hangover from 2 railway investment booms.

Railways were in their infancy in the 1840's. Most of the investment came from public share offerings too. So doesn't ring true.

Generali

JimmyTheWig wrote: »

1840s? Fair enough.
Wouldn't have thought that the US was rapidly growing that early. Guess I was wrong.

Incedentally, the "sadly" in your response to my guess. Was that simply "sadly" for me that I was wrong? Or were you saying that it would have been better if it was the 1920s than the 1840s?

The 'US System' had come in by then through early innovators like Colt I believe and growth was much faster than the UK saw in the Industrial Revolution.

By 'sadly' I meant 'sadly you're wrong'. Maybe unfortunately would have been a better adjective to use.

Generali

Thrugelmir wrote: »

Railways were in their infancy in the 1840's. Most of the investment came from public share offerings too. So doesn't ring true.

AIUI the first was in the mid 1830s, and the second reached its peak in the mid 1840s.

Happy to be corrected though if you know otherwise Thrugelmir.

Thrugelmir

Generali wrote: »

AIUI the first was in the mid 1830s, and the second reached its peak in the mid 1840s.

Happy to be corrected though if you know otherwise Thrugelmir.

Stephenson only finished the Rocket in 1829. London to Birmingham railway was completed in 1838. London to Bristol in 1841.

Generali

Thrugelmir wrote: »

Stephenson only finished the Rocket in 1829. London to Birmingham railway was completed in 1838. London to Bristol in 1841.

From Wikipedia:

http://en.wikipedia.org/wiki/History_of_rail_transport_in_Great_Britain_1830%E2%80%931922

Railway Mania

The boom years were 1836 and 1845-47, when Parliament authorized 8,000 miles of lines at a projected cost of £200 million, which was about the same value as the country’s annual Gross Domestic Product (GDP) at that time.

AIUI, the most common way of financing the railways were to get investors to pay 10% of the cost of their share up front with the 90% payable on demand. Many railways were schemes to fleece investors with a railway attached.

Acts allowing railways were forced through by the 'railway interest':

http://en.wikipedia.org/wiki/Railway_interest

Thrugelmir

When were they completed though?

"1845-47 when Parliament authorized 8,000 miles of lines at a projected cost of £200 million, which was about the same value as the country’s annual Gross Domestic Product (GDP) at that time."

Some years later I suspect. Many major bridges took 4-7 years in construction alone.

wotsthat

Generali wrote: »

AIUI, the most common way of financing the railways were to get investors to pay 10% of the cost of their share up front with the 90% payable on demand. Many railways were schemes to fleece investors with a railway attached.

I can't find the quote but wasn't Warren Buffett that said if he had a time machine he'd go back and uninvent railways and airlines as neither as an industry has yet managed to deliver a positive return?

Generali

Thrugelmir wrote: »

When were they completed though?

"1845-47 when Parliament authorized 8,000 miles of lines at a projected cost of £200 million, which was about the same value as the country’s annual Gross Domestic Product (GDP) at that time."

Some years later I suspect. Many major bridges took 4-7 years in construction alone.

Good point and I can't answer your question as I simply don't know the answer.

My original point was about the debt/bubble however. The debt was incurred at the point of buying not building.