The Cotton Trade

In the latter part of the eighteenth century, the area surrounding the port of Liverpool and the growing town of Manchester was rapidly expanding. The American colonies had played a large part in promoting Liverpool as the port of import, and Manchester as the finishing centre for their cotton. Liverpool also dealt with the importation of rum, tobacco and slaves as well as establishing itself as the chief trading port with Ireland ? importing yarn which was then sent to Manchester. As an example of the enormous rise in trade, the cotton figures for Liverpool in 1792 show that 503 bags were imported, whereas in 1823 this had grown to the fantastic figure of 412,020 bags !

At this time the two cities, 30 miles apart, were joined by various canals and inland navigations and of course by turnpike roads, but the time taken, always dependent on prevalent weather conditions, was beginning to slow down the trade.

Whilst the economy was in the doldrums, as it had been up until 1819 because of the Napoleontic Wars, the merchants, if occasionally complaining about rate fixing and the deteriorating service, had put up with the waterways position. But with the increase in trade, the corn merchants in 1821 were the first group to complain about the high tariffs and lack of barges. As is often the case in such circumstances it was the meeting of two totally different men which sparked of the L&M project.

William James, already associated with railway promotion, was in 1821 in Lancashire on other business when he met Joseph Sandars, an angry corn merchant and underwriter. The two discussed the difficulties in moving goods between the cities and James offered at his own expense to prepare a railway survey, whilst Sandars drummed up financial support from leading merchants in both towns. A Provisional Committee was set up in 1822.

Shortly afterwards James was engaged upon a second survey. This proved to be extremely difficult as much of the land belonged to large canal shareholders and powerful landowners who had no desire for a railway. Sandars was finding that support for the scheme was strong, especially in Liverpool, where perhaps the merchants had most to gain.

Henry Booth

In 1824 Henry Booth, son of a leading corn merchant, and Lister Ellis, a powerful banker, joined the committee. Henry Booth was to be a prime mover, and eventually operator, of the railway, as Secretary, Treasurer and, in due course, General Manager. The committee looked at railways and steam power in the country, and the results were discussed on 20th May 1824, when it was decided to employ steam power. This was before the opening of the Stockton & Darlington Railway (September 1825) had demonstrated the potential for steam locomotives on public railways.

Other recommendations were agreed, including that to form a joint-stock company, entitled the Liverpool and Manchester Rail-Road Company. Booth estimated that ?300,000 would be needed to build a double track route, and suggested that this be provided by issuing 3000 ?100 shares, with the proviso that no holder could own more than ten and must pay ?3 on application (the remainder in calls where necessary). This was enthusiastically received and the limit of ten shares supported, as it would become a democratic line run by the merchants for the merchants. This point is interesting as the railway was never intended and never envisaged as a passenger line ? that was to become an added bonus.

George Stephenson

George Stephenson was engaged as engineer, a subscription book was opened, and preparations made for approaching Parliament for an Enabling Act. The prospectus issued on 29th October, 1824, called for ?400,000 capital in ?100 shares. The main attack in the prospectus was aimed at the canals for price fixing and lack of proper facilities. In 1825 a call was made of ?3 per share. At the same time an enormous row blew up concerning the railway, between the canal, the turnpike, the large landowners (principally Lords Sefton and Derby, and R.H. Bradshaw, the Duke of Bridgewater?s trustee) and the railway promoters. Now that the document was before Parliament a full list of subscribers was produced.

By far the largest number of subscribers was in Liverpool, with Manchester way behind even though the two cities stood to benefit equally from the railway. Scrip certificates must have been issued at this time, but none are known to be in collections.

The Bill was presented to Parliament in the midst of a huge investment bubble. A list published in February 1825 shows 276 stock companies, including 49 rail roads, seeking authority from Parliament to raise capital totalling a massive ?174 million. After much written and verbal evidence, the L&M Bill was defeated. A second survey was immediately proposed which would avoid some of the lands of the most difficult landowners, thus quietening them a little and easing the next Bill?s passage. A new subscribers list was commenced, the old script being exchanged for the new, plus a further call of ?3. The subscribers list presented to Parliament with the new Bill in 1826 was as follows :

Names Number of shares London 96 844 Liverpool 172 1979 Manchester 15 124 Others 24 286 1/3 Marquis of Stafford 1 1000 Total 308 4233 1/3

The Bill passed through Parliament on 5th May, 1826, but with certain interesting stipulations. One such was a limit in the dividends to 10%, or if more was paid then the tariff rates must be reduced correspondingly, as was in fact later done.

Under its Act, the Liverpool and Manchester Railway Company was authorised to issue 5100 shares of ?100 each. Each certificate was for one share, so probably upwards of 5000 examples of the magnificent vellum certificate were printed. These first-issue shares were numbered serially in ink, from 1 upwards, with the date of issue also written in. It appears from the dates seen that the subscription process may have taken two years to complete.

Construction now went ahead, with the help of a ?100,000 government loan secured on the railway. The first problem, the crossing of the boggy land known as Chat Moss, was successfully negotiated. Throughout the construction period many calls were made, but the shareholders paid up with little pressure. In 1828 there were four calls, for ?53 per share in total ; none of these call receipts has been seen. Full of enthusiasm, and with the slump receding, the directors put before Parliament a Bill, passed in 1829, which called for a rights issue of ?127,500 in 5100 ?25 shares, to be used for the provision of wagons, warehouses, depots and carriages. As with the first-issue shares, each certificate was for one share, hand-numbered in a sequence following on from the first issue, and so probably starting from 5101. In this case, the date of issue is printed, 1st June, 1829, and is probably notional. These second-issue shares are on vellum but are disappointingly plain.


Following the success in 1829 of the Rainhill locomotive trials, won by George & Robert Stephenson?s Rocket, the L&M opened for business on September 15, 1830. Figures for the first three months of the line?s operation were amazing : 71.951 passengers carried ; 1432 tons of goods ; 2630 tons of coal, at a net profit of ?14,432. This enabled the directors to immediately declare a dividend of ?2 per ?100 share, and these rose to a ?90 premium. Results for 1 Jan ? 1 June 1831 were even better with the profit up to ?30,314 ? a dividend of ?4 10s was paid per ?100 share. Another issue of ?25 shares was made on 18th Many, 1831, similar in style to the second-issue shares, which appear to be numbered serially in sequence from earlier issues.

The effects of the railway on Liverpool, Manchester and the surrounding area were explosive. New businesses sprang up around the line, and the carriage of goods began to cost less, became more frequent and less dependent on the weather. For the first time it was possible for companies to plan financially the future. The canals and especially the turnpikes were hit hard. By 1832, for example, only one road carriage, carrying mainly parcels, travelled daily between the two cities.

The L&M was successful, commercially and technically. Additional shares were issued for expansion after 1831, one such seen in collections being an issue of ?40 shares on 25th July, 1844, the year before the company merged into the Grand Junction Railway (the Birmingham to Liverpool line). More than 30.000 share certificates had been issued by this time, but very few have been seen on the scripophily market. They should all have been cancelled as part of the merger process, and some of the pieces now in collections are indeed cancelled (by corner-cuts, punch holes or inked stamps). But there are also uncancelled examples, and these are keenly sought.

The Grand Junction became part of the new London & North Western Railway, which merged into the London, Midland & Scottish Railway in 1922. Today, the L&M line still provides A Liverpool/Manchester route, and remains of some of the stations and other artifacts can still be seen.

The L&M was the first ?modern? railway ? steam locomotives, passengers and freight, double-track, inter-city. In 1830, it immediately achieved widespread international renown through journal articles, books and decorative engravings in Germany, France, Italy, Spain, the United States, and no doubt other countries too, as well as commemorative chinaware, medallions, aquatints and prints in Britain.

Engineers from the Delaware & Hudson, the Baltimore & Ohio and the Camden & Amboy, amongst others, visited the railway. By publishing its financial results every six months, the company supplied evidence to support many new railway proposals. For example, the Great Western Railway prospectus of 1834 prints the L&M?s accounts for the three years 1831-1833 ? 1,188,484 passengers, 624,517 tons of freight, ?205,825 net profit after taxes ? a net margin of 44% on sales. Though the return on capital was modest, the profit stream was a considerable achievement for a pioneering and essentially experimental venture. The Liverpool & Manchester was not just Britain?s, but Europe?s, most historically important railway. Indeed, the world?s.

References :
Carlson R, The Liverpool & Manchester Railway Project 1821-1831, 1969
Donaghy T J, Liverpool & Manchester Railway Operations 1831-1845, 1972
Hielscher U, The Emergence of the Railway in Britain, pub. IBSS 2001

Text and Images are used In the Newton le Willows Website with Permissions.
Published in print (with additional illustrations) in the Journal of the International Bond & Share Society, May 1997
Copyright ? International Bond & Share Society 2001