Skip to main content
Article thumbnail
Location of Repository

How good was the profitability of British Railways, 1870-1912?

By B. R. (Brian R.) Mitchell, D. (David) Chambers and Nicholas Crafts

Abstract

This paper provides new estimates of the return on capital employed (ROCE) for major British railway companies. It shows that ROCE was generally below the cost of capital after the mid-1870s and fell till the turn of the century. Addressing issues of cost inefficiency could have restored ROCE to an adequate level in the late 1890s but not in 1910. Declines in ROCE hit share prices and returns to shareholders were negative after 1897. Optimal portfolio analysis shows that, whilst railway securities would have had a substantial weight prior to this date, investors would have been justified in rushing to the exits thereafter

Topics: TF, HE
Publisher: University of Warwick, Department of Economics
Year: 2009
OAI identifier: oai:wrap.warwick.ac.uk:1357

Suggested articles

Citations

  1. (2002). An awkward fence to cross": railway capitalization in Britain in the inter-war years', doi
  2. (1998). Assurance and the Development of doi
  3. (2006). British investment overseas, 1870−1913: a modern portfolio theory approach', doi
  4. (1968). British Railways in Transition doi
  5. (1971). From damnation to redemption: judgments on the late Victorian entrepreneur', doi
  6. (1907). Investment an Exact Science, doi
  7. (1972). National Income, Expenditure and Output of the United Kingdom 1855-1965 doi
  8. (1988). National statistics, 1760-1920',
  9. (2002). New indices of British equity prices 1870-1913’,
  10. (1982). Overseas Investment in the Age of High Imperialism: the United Kingdom1850-1914 doi
  11. (1952). Portfolio selection’, doi
  12. (1972). Railway combination and government, 1870-1914', Economic History Review 2nd ser., doi
  13. (1991). Railways and late Victorian economic growth', doi
  14. (1988). Railways, 1870-1914: the maturity of the private system',
  15. (2005). Rates of return, concentration levels and strategic change in the British railway industry, 1830-1912', doi
  16. (2006). Regulation and the cost of capital', doi
  17. (1972). Social rates of return on American railroads in the nineteenth century', Economic History Review, doi
  18. (1984). The capitalisation of Britain's railways, 1830-1914',
  19. (1964). The coming of the railway and United Kingdom economic growth’
  20. (2003). The Green Book: Appraisal and Evaluation in Central Government
  21. (2001). The London Stock Exchange: A History doi
  22. (1976). The North Eastern Railway Company (Leicester, doi
  23. (1978). The profitability and performance of Britain's railways, 1870-1914', Economic History Review 2nd ser., XXXI doi
  24. (2007). The Stern Review of the economics of climate change', doi
  25. (2007). The worldwide equity premium: a smaller puzzle', doi
  26. (2006). Time is money: a re-assessment of the passenger social savings from Victorian British railways', doi
  27. (2007). Total factor productivity growth on Britain's railways, 1852-1912: a reappraisal of the evidence', doi

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.