The Marketing Of Railway Shares In The First Half Of The Nineteenth Century
manufacturing industry has seldom made use of the capital market machinery for the raising of its capital. In the early period of industrialization small manufacturers were able to make use of their own resources, or loans from friends or from banks; later they ploughed back their profits.2 The figures provided by Lavington, relating to the immediate pre-i9I4 period, showed that 'the London capital market was not the main channel for the finance of industry '.3 Other inquiries, of later date, showed that this continued to be true.4 The small scale of manufacturing industry, and the large profits made, which allowed entrepreneurs to use their profits for extensions, were two of the major reasons for their avoidance of the capital market.5 But public utility companies were obviously different. Apart from their different legal background-they usually required an Act of Parliament to become incorporated-their capital requirements were greater, and could not have been met by the methods used by industry. Ploughing back profits was out of the question since their turnover was small in relation to their capital. Yet although railway companies (the companies to be considered in this article) made large capital issues, they did not, as is well known, make use of underwriters, investment bankers and the like. Part of the reason for this, doubtless, was the abundance of capital in Britain available