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The Rise of New Corruption: British MPs during the Railway Mania of 1845

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  • Esteves, Rui
  • Geisler Mesevage, Gabriel

Abstract

In the 1840s, speculation in railway shares in the UK prompted the creation of hundreds of new railway companies. Each company needed to petition Parliament for the approval of new railway routes. In this paper, we investigate whether parliamentary regulation of the new railway network was distorted by politicians' vested interests. Drawing on methods from peer-effects analysis, we identify situations where MPs could have traded votes with specific colleagues in order to get their preferred projects approved (logrolling). We confirm that logrolling was both prevalent and significant. Our estimates suggest that at least a quarter of approved lines received their bills because of logrolling. Companies approved through logrolling also underperformed in the stock market during the railway bubble and after its final crash in 1847.

Suggested Citation

  • Esteves, Rui & Geisler Mesevage, Gabriel, 2017. "The Rise of New Corruption: British MPs during the Railway Mania of 1845," CEPR Discussion Papers 12182, Centre for Economic Policy Research.
    • Handle: RePEc:cpr:ceprdp:12182
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    References listed on IDEAS

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    1. Jerry Hausman, 2001. "Mismeasured Variables in Econometric Analysis: Problems from the Right and Problems from the Left," Journal of Economic Perspectives, American Economic Association, vol. 15(4), pages 57-67, Fall.
    2. Campbell, Gareth, 2013. "Deriving the railway mania," Financial History Review, Cambridge University Press, vol. 20(1), pages 1-27, April.
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    Cited by:

    1. Bogart, Dan & You, Xuesheng & Alvarez-Palau, Eduard J. & Satchell, Max & Shaw-Taylor, Leigh, 2022. "Railways, divergence, and structural change in 19th century England and Wales," Journal of Urban Economics, Elsevier, vol. 128(C).
    2. Timini, Jacopo, 2020. "Staying dry on Spanish wine: The rejection of the 1905 Spanish-Italian trade agreement," European Journal of Political Economy, Elsevier, vol. 63(C).
    3. Guerrero, Omar & Matter, Ulrich, 2021. "Quantifying Vote Trading Through Network Reciprocity," Economics Working Paper Series 2106, University of St. Gallen, School of Economics and Political Science.

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    Keywords

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    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-
    • N73 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services - - - Europe: Pre-1913

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