Source: adapted from G. Campbell, “The Dividend Mania: Stock prices and dividends during the Railway Mania”, Social Sciences Research Network, Working Paper Series.
The initial developments of railways in Great Britain were characterized by phases of booms and busts. Like all new technologies, the commercial potential of railways remained uncertain, which led to high expectations and temporary over-investment (bubble behavior). One revealing example was the railway mania of the 1840s, which culminated in 1846. By the 1860s, growth rates stabilized at around 5%.