The Media during the Railway Mania

 

There were several newspapers dedicated to commenting on the railway industry. The Railway Times had the largest circulation, with The Times and the Economist also being very influential.

 

The Railway Times had a favourable view of the railway industry but was primarily dependent on advertising from rail companies, so had incentive to inflate stock prices. To meet the increasing demand for advertising, they started publishing up to three weekly supplements in 1845. The railway share index reached its tipping point while the promotional activities increased.

 

The Economist criticized the speculation in railway shares and warned that the new railway construction would drain the nation of available capital and that the degree of railway promotion was unsustainable.

 

Speculation received harsh criticism from The Times as well and critics at the time accused The Times of bearing the market for financial gain and ultimately causing the market for railway stocks to crash due to so much attention being placed on the promotion boom.

 

There is very little evidence in the role of the media on the Railway Mania, but it has been suggested that changes in the stock market and the economy affected media coverage. Changes in returns affected how positive the content would be in the news in the following weeks.

 

It was also found that positive reporting resulted in higher stock returns in subsequent weeks, indicating the media may have slightly affected stock returns, as investors responded to new information.

 

Overall, the media had little impact on the Railway Mania, other than altering investors beliefs slightly, and its main role was providing investors with information. The main issue was how late they called the bubble, meaning they will little help to investors.