Railway regulation in 19th Century Britain: the economic rationale and legacy of Gladstone and Chadwick

This paper examines the economic rationale of the ideas of Gladstone & Chadwick on railway regulation and the legacy of their ideas. In 1844 Gladstone proposed and implemented what we would now call price and quantity regulation whereas in 1859 Chadwick proposed competition "for the field", i.e. the establishment of a temporary monopoly or franchise, for a given period. The thinking of Gladstone had been influenced by the classical school of economic thought, most notably J R McCulloch, whilst Chadwick had ideas influenced by his association with Jeremy Bentham and John Stuart Mill. This ideas still impact today; the basic pattern of price and some quantity regulation inaugurated by Gladstone was not abolished until the 1960 Transport Act whilst Chadwicks idea of temporary licenses or franchises came back into vogue when the railways were privatised in 1997.