Every so often a technology arrives that changes everything. For over 5,000 years, the fastest a human being or a ton of freight could move overland was the speed of a horse. Then, in the span of a single generation, that constraint was gone.
We are living through one of these revolutions right now, sparked by artificial intelligence. When you look at other revolutions in history, nothing quite compares to AI… except for rail.
This is the first episode of our Rail Revolution series. We start with the technology breakthrough in this episode before turning to the markets it unleashed in our next episode. It’s the story of how steam power and the railway were born, and why that story rhymes so closely with the AI buildout happening right now.
We begin in 1700s England, a country running out of wood and forced underground for coal, where flooding mines created the desperate problem that the steam engine was invented to solve. From there we trace a century of breakthroughs including Newcomen’s atmospheric engine, James Watt’s separate condenser, Richard Trevithick’s high-pressure locomotive, and the incremental improvements in iron technology.
We tell the story of George Stephenson: born dirt-poor in a colliery village, illiterate until 18, with no patrons and no formal training. We follow him from his first locomotive through the Stockton & Darlington, into a brutal Parliamentary cross-examination engineered by the canal lobby to break him, and on to the Rainhill Trials and the opening of the Liverpool & Manchester Railway, which was a national spectacle with a great tragedy that could have derailed the growth of railways.
Why did the railway take decades to arrive when the technology was ready years earlier? What does it actually take to commercialize a working invention? And what allowed a self-taught underdog to pull it all together?
Stay tuned for our next episode: the railway works, the dividends are real, and the fuse is lit. George Hudson and one of the largest investment manias in history.
Chapters
(04:48) Life in 1700s England: the wood crisis and the desperate need for coal
(08:13) How a steam engine works: vacuum, pistons, and Newcomen’s atmospheric engine
(15:13) James Watt’s separate condenser and the partnership with Matthew Boulton
(16:41) Richard Trevithick, high-pressure steam, and the first locomotive on rails
(21:49) The iron problem: why cheap wrought iron unlocked the railway
(22:56) Meet George Stephenson: from illiterate colliery boy to the Stockton & Darlington
(29:51) Liverpool’s canal monopoly and the fight for a Parliamentary bill
(38:02) George crushed in Parliament
(48:49) The Rainhill Trials
(53:00) Opening day 1830: spectacle, the Duke of Wellington, and the Huskisson tragedy
(1:04:48) Takeaways: the total product and the three ingredients of a tech revolution
References
George and Robert Stephenson: The Railway Revolution by LTC Rolt (link)
Richard Trevithick: Giant of Steam by Anthony Burton (link)
The Most Powerful Idea in the World: A Story of Steam, Industry, and Invention by William Rosen (link)
History of Railway Mania by Gareth Campbell (link)
Papers on Technology and Financial Manias by Andrew Odlyzko (link)
Visualizations of the Newcomen and Watt steam engines, and the Puffing Devil locomotive by Michael De Greasley (link)
AI Could Be the Railroad of the 21st Century. Brace Yourself by Derek Thompson (link)
Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages by Carlota Perez (link)
Crossing the Chasm by Geoffrey Moore (link)
Sponsors
Big thanks to EQT Corporation for helping us bring you the stories of market history and how they apply today. To learn more and explore the latest data on energy affordability, go to eqt.com/energy-affordability.
Note: this show is for informational purposes only and isn’t investment advice. Backtest hosts and guests may have investments in the companies discussed.
