Introduction

The flotation of a ‘second wave’ of guaranteed rail companies in the 1880s and 90s shows ‘gentlemanly capitalists’ of the City and commerce exerting great influence on the India Office, in a manner which challenges Macpherson's benign view of their activities. They performed incompatible functions of principal investor and government advisor. This conflict was justified by India Office officials on the basis of the enormous financial burden of railways for commerce, famine relief and military transportation. Nowhere were those conflicts more apparent than in the informal advisory appointment of Lord Nathaniel Rothschild to a succession of Indian Secretaries of State, on the floating of Indian rail companies as joint stock companies on the London Stock Exchange. In analysing four specific Rothschild-led share floatations of the period, the mutual dependence of the City and government officials becomes clear. The government guaranteed securities were bought by City underwriters and MPs alike.

Macpherson observed that ‘the profits of promotion’ were ‘not the motive’ for pre-1875 railway promoters and financiers. However, the evidence from private papers of Kimberley, Cross, Hamilton and Fowler is that enormous pressure was exerted on the India Office after 1875 by the City and Calcutta/ Bombay managing agents. The railway concessions granted facilitated profits for underwriters, traders, investors and suppliers.