DP12182 The Rise of New Corruption: British MPs during the Railway Mania of 1845
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.
