George Stephenson (33 page)

In gobbling up company after company, Hudson always seemed to find it surprisingly easy to raise new money and yet keep on paying high dividends on his old companies. His method was simple: he used each intake of capital to pay his old shareholders. Today this would be highly illegal but Mr Hudson, being a new sort of speculator, was making his own rules. He audited his own books, which helped, disguising the fact that many of his companies could not possibly afford the high dividends he was paying. Naturally, if you were receiving a high dividend, you were keen to invest in any new scheme Mr Hudson might announce. Shareholders meetings consisted of loud and continuous cheers for Mr Hudson.

At the same time he was genuinely cutting costs to the minimum, usually at the expense of safety, and keeping wages low. He was so adept at railway company manoeuvrings that he helped out Robert Stephenson on several occasions. By 1843 he'd become the single most powerful man in railways, controlling lines from York down to Rugby and Birmingham, It was in that year he was first known as the ‘Railway King', at last throwing off his image as a cheap, provincial asset stripper. Now he was respectable – and feared – if still a bit of a joke behind his back. On 7 October 1843 the
Railway Times
printed a satirical song about him, saying they were lines to be sung at the grand amalgamation meeting scene of a new opera to be called
Midas
:

George, in his chair,

Of Railways Lord Mayor

With his nods

Men and gods

Keep in awe;

When he winks

Heaven shrinks

When he speaks,

Hell squeaks,

Earth's globe is but his taw.

In 1844 he came face to face with Gladstone, then president of the Board of Trade, who was against the unrestricted speculation in railways which was convulsing the country and taking up so much parliamentary time. Gladstone got a committee of inquiry set up to which Hudson was called as the most important witness. Gladstone cross-examined Hudson on the possibility of a single powerful capitalist (i.e. Hudson) creating a railway monopoly. Hudson said that amalgamations were good for the country, saving expenses and benefiting each company. The bill which Gladstone was trying to push through, to check railway monopoly, was finally emasculated. Hudson was acclaimed by the railways interests as the victor – beating Gladstone in the House of Commons without even being an MP.

Both Gladstone and Hudson, in their different ways, were to be proved right. Gladstone wanted some sort of state control, which had happened in several European countries, such as Belgium. Britain, by being first in the field, had proceeded in a chaotic, private-enterprise, free-for-all scramble. But it was private enterprise, in Darlington and Liverpool, which had backed railways in the first place. As for Hudson, the eventual monopoly he envisaged (with him in charge of course) was a sensible course for such vast financial operations, though it was a hundred years before a nationalised monopoly in the form of British Rail came to pass.

In 1844, when he opened one of his new properties, the Newcastle and Darlington Junction Railway, he chose the anniversary of Waterloo for the opening celebrations, just to add to the pageantry. He brought up train loads of directors and influential shareholders from London for the celebrations, preceded by a ‘Flying Train' which had the country agog and filled acres of newspaper space because for the first time it brought to Newcastle that morning's London newspapers. His train had covered the 303 miles in a record time of nine hours, including stops. People lined the route almost all the way to gape in awe and wonder. As usual, Hudson proposed the toast of ‘Old George' at the final banquet, calling him a genius, the true begetter of railways. George Stephenson was there in person and trotted out what was becoming his familiar speech, going over his boyhood memories, of his twenty years in the pits, of his struggles to educate his son and develop his first locomotive.

Hudson had by now acquired a large personal circus, investors, contractors, engineers, lawyers, politicians, nobility, who either depended on him for work or, most of all, for the wink and a nod when a new lucrative scheme was in the offing. He was still using the old dodge of calling up new capital to pay old dividends. It wasn't until 1849, when for the first time a government authorised auditor had to look at all company accounts, that there was any real check on railway directors.

His circus followed him round the country, travelling free on his trains to pack public or shareholders' meetings, cheering his every word. In the north the supporters from his home town of York, where a new street had been named after him, became known as the ‘Flying Squad'. One of this group wrote in 1848 that he had sat down to dinner £20,000 richer than when he breakfasted, solely through being in the know about one of Hudson's plans.

Fresh capital was rolling in at such a rate that on one occasion he was paying a dividend of ten per cent on one line before it had even opened. In October 1844 he raised the sum of two-and-a-half million pounds to finance three branch lines without disclosing any details about them! No one knew where they were to be, when they were to be built or even had a guarantee from Hudson that he would ever use the money for railways at all. He went round boasting how he'd kept everyone in the dark.

In 1845 he found himself in a long drawn out campaign against one proposed line that had the audacity to compete with him on his home territory, the London and York Company This was to be a more direct line, via Lincoln, and would be thirty miles shorter than Hudson's more complicated route which went via the Midlands and Rugby. When the line came before the House of Commons, Hudson did all he could to obstruct it, hiring twelve counsel at a cost of £3,000 a day to discover flaws in his rivals' proposals.

The procedure for all new railway companies of the time was that a provisional committee got the line surveyed, got estimates made and produced a list of subscribers showing that at least three-quarters of the necessary capital had already been promised. Naturally, this led to wholesale fiddling of the list of proposed shareholders. Hudson knew all about such fiddles, having done it himself so often, so he brought in an agent called Croucher who went through his rivals' subscription list. With the aid of some House of Commons notepaper, to which he wasn't entitled, he wrote to local postmasters asking them to check the existence and means of all the more doubtful looking subscribers.

As Hudson well knew, a great many of the names turned out to be fictitious. But, even better from his point of view, many of the people who did exist were forced to present themselves before the parliamentary committee. A charwoman's son was revealed to be liable for £12,000 worth of shares, according to the list. A man in the workhouse was down for an equally large sum. Altogether, £29,000 worth of shares had been applied for by people who didn't exist and £44,000 was down for people who did exist but had no money or property whatsoever. The Lords was forced to throw out the bill. Another triumph for King Hudson. The monopoly of his Midland Railway was safe, though his obstructionist tactics had cost Hudson well over £ 100,000.

During the height of this particular parliamentary battle, it was decided that it was about time Hudson had a testimonial. It was later alleged that this decision had been made by Hudson himself, but there is no proof of this. Hudson was nevertheless delighted. The Victorians loved testimonials. The usual practice was that a committee was formed to honour the great man in question and a subscription list opened. The leading subscribers' names then appeared in large type in the newspapers. The great man would in due course have a statue built or some inscribed silver plate handed over to him at an appropriate ceremony. George Stephenson had recently been so honoured, with Hudson prominent amongst the subscribers.

The testimonial opened for Hudson was rather unusual. According to well-informed rumours, not only had Hudson himself drafted the appeal, he had also drawn up the list of subscribers. He well knew which engineers, contractors and politicians owed him favours and would naturally love to subscribe. He worked out an appropriately handsome sum for each and instructed his secretary to publish the list in the newspapers
before
telling the people concerned. ‘Advertise it, that will clinch the matter.'

Only one person dared to refuse when they saw their names in the papers – and that was George Stephenson. He threatened to insert his refusal in the same papers, but so many Hudson directors pleaded with him that such an exposure from Stephenson, of all people, would result in a catastrophic fall in the shares of all Hudson's railway companies, that he desisted. However it seems apparent from then on that he had grown wise to Hudson and his methods, long before anyone else realised the truth. Hudson had earlier become one of Stephenson's partners in a new coal mine and occasionally Stephenson agreed to join the board of a Hudson company, if it looked interesting, or was in his native Tyneside, though basically he was against the amalgamation methods of Hudson, preferring small, privately operated companies all competing against each other, rather than one big national company, which was Hudson's ultimate plan. George always refused resolutely to speculate in any of Hudson's schemes, however much Hudson entreated, even at the height of their friendship.

Not long after the testimonial row, George made clear his new opinion in a letter written to his old friend Michael Longridge. It's dated 22 November 1845, and was addressed from Tapton House. (It belongs to the Institute of Mechanical Engineers, bought by them in 1970.)

Hudson has become too great a man for me now. I am not at all satisfied at the way the Newcastle and Berwick line has been carried on and I do not intend to take any more active part in it. I have made Hudson a rich man but he will very soon care for nobody except he can get money by them. I make these observations in confidence to you.

It shows Stephenson's tact, not exposing or criticising him publicly, or perhaps he was ashamed at having been taken in by him for so long. At any rate, it looks as if Hudson never knew what Stephenson really thought of him. In public he was still boasting of their friendship, endlessly proposing his health at banquets.

At this stage, in 1845, Hudson was still publicly a rising star, still on the crest of a wave with the best yet to come. The money from his well-publicised testimonial was modestly received by Hudson – and went straight into his own bank account, without a murmur from any of the other eminent subscribers who'd been tricked.

In 1845, a good year for George Hudson, he was elected MP for Sunderland, became Deputy Lord Lieutenant of Durham and finally astounded the nobility by paying the Duke of Devonshire half a million pounds for a 12,000-acre estate and stately home at Londesborough. He built his own private railway station, laying down two miles of track, so that his special train could roll right up to his own front door.

The railway fever which George Stephenson had set going in 1830 came to its height in 1846. For three successive years the nation had been continuously astounded by the amount of money flowing into railways, with everyone convinced each year that it couldn't go on. In 1844 800 new miles of railway had been sanctioned by parliament at a cost of 20 million pounds. In 1845 the total was 2,800 miles at a cost of around 50 million. Then in 1846 permission for 4,600 new miles was granted which would require the astronomical sum of £132 million.

In those three years the number of journals devoted solely to railway matters rose from three to twenty. Journalists were falling over themselves to publicise and tip new shares and people from literally every walk of life scrambled to buy them. Thackeray as a young man, lost all his savings on railways. Emily and Anne Brontë contributed £1 each to Hudson's testimonial, two of the tens of thousands of little shareholders throughout the country who'd made money from Hudson in the past and felt grateful enough to send a little something when they read about his testimonial in the papers. In three months, £30,000 rolled into Hudson's account. But the third Brontë sister, Charlotte, was against subscribing to Hudson's testimonial. She tried in vain to get her sisters to sell out their holdings in Hudson's York and North Midland stock, convinced a slump was bound to come. (Branwell, their brother, was caught up in railway fever to the extent of getting a job in railways, as a clerk on the Leeds and Manchester. He was sacked in 1842 for ‘culpable negligence'.)

Having established himself as a country gent, living in the style of a duke of the realm, Hudson decided next to establish himself in London. He bought what was then considered to be the largest private house in London, Albert House, just on the north side of Knightsbridge, where Albert Gate leads into Hyde Park. It cost him £15,000, plus the same again in furnishings and decoration.

Hudson was by now comfortably a millionaire. Along with Crockford, the gambler, he was the first self-made provincial millionaire to move into Victorian London. He'd done it in well under ten years – since that day in 1834 when by chance he'd met Stephenson at Whitby. In 1846 his landed properties were worth £700,000; his industrial interests in such things as Sunderland Docks, Clay Cross collieries and other factories and a bank in York were worth at least a quarter of a million; and then, of course, there were his railway interests which at the end of 1846, judged by the total amount of shares which in that year were held in his name, came to £320,000. ‘Get rich quick' was the phrase the Victorians used for Hudson – and all the Hudsons that were to follow.

Once in London he led his life, public and social, in the full glare of publicity with the newspapers reporting his every move. There was a queue of ducal crested coaches forever outside Albert House when he was in town, waiting for his favours. The aristocracy vied with each other in toadying to him, though their ladies weren't so keen when it came to having him back. Their husbands might fawn on Mr Hudson but they certainly didn't approve of Mrs Hudson. Several years later Lady Dorothy Nevill recollected: ‘There were rumours of Hudson, the Railway King, and his wife, but they were never in Society, which, however, was amused by the reports of their doings which reached it.'