The British Gas Industry before

BY M . E . FALKUS

T
HIS paper attempts to describe and quantify certain aspects of the spread
ofthe gas industry in the United Kingdom during the first half of the nine-
teenth century. It deals in particular with three problems: (i) the extent
to which the gas industry had developed by mid-century, (ii) the pace of con-
struction of new gasworks in the period, and (iii) the amount of fixed capital
investment in the gas industry. Finally, a few general remarks are made on the
method of financing gas undertakings.
The principal conclusions reached are that by about the middle ofthe nine-
teenth century the gas industry was widespread and the vast majority of towns
with a population greater than 2,500 possessed gas companies; that the construc-
tion of new gasworks took place in phases corresponding to the trade cycle; and
that throughout the period there was a marked tendency for gas manufacture to
spread to progressively smaller towns. It is estimated that fixed capital invest-
ment in gasworks (at historic cost) was approaching ,(^12 million by the late
1840's.

It is assumed that the spread ofthe gas industry can be gauged from the develop-
ment ofgas companies. Throughout the period certain factories, institutions, and,
later, railway companies manufactured their own gas, and textile mills in the
north of England acting in this way were the earliest commercial users of gas.^
Gas companies, however, were by far tlie most important suppliers of gas, and
once one was established in a particular locality private gas manufacture gener-
ally declined as former producers found it cheaper and more convenient to take
gas from the company.
The year 1812 saw the foundation ofthe first gas company, the London Gas-
light and Coke Company, established by royal charter. Four years later came the
earliest provincial companies, in Preston and Liverpool, and there followed a
rapid extension ofthe industiy to most ofthe major towns by the mid-1820's.^
The companies' business usually involved an initial contract with the local
^ An earlier version of this paper was read to Prof. A. H. John's seminar in Economic History at the
Institute of Historical Research, and I am grateful for the useful comments and criticism received there.
The paper has developed out of a wider study on the development of the gas industry before the First
World War on which Prof. John and I are at present engaged.
^ In 1805 William Murdoch, the generally acknowledged originator of practical coal-gas lighting, lit
the cotton mill of Messrs Phillips and Lee in Salford, and the same year Samuel Clegg lit the cotton mill
of Henry Lodge at Sowerby Bridge, near Halifax (S. Clegg, Jun., A Practical Treatise on the Manufacture
and Distribution ofCoal-Gas (1841), pp. 8, 13). Throughout the period, private gas maniifacture continued.
Indeed, in 1847 the surveying officers examining the Bingley Gas Company Bill found that in the area
it was a "common practice on the part of the largest mill-owners, to make their own gas" {Local Acts,
Prelimiruay Inquiries, Report of the Commissioners on ihe BirtgUy Gas Company Bill, Parl. Papers 1847, xxn, 269).
^ Few gas companies controlled works in more than one town. The two principal ones were the British
Provincial Gas Light Company, which owned works in Ayr, Clonmel, Gloucester, HolyweU, Hull,
Norwicli, Stoke, Shelton, and Trowbridge; and the United General Gas Light Company, whose works
were in Dublin, Limerick, Waterford, and Cork.

494
 GAS INDUSTRY 495

authorities to light public lamps (often a cheap supply of gas to public lamps
was made a condition upon a company for the privilege of disturbing paving in
(5rder to lay their mains) and, with this demand secured, the company would
supply to private consumers. The "lighting of a town" by gas was thus largely
synonymous with the spread of the gas industry.
The first half of the nineteenth century forms in some ways a convenient phase
in the history of the gas industry. It was an era of virtually complete private
enterprise, for the municipalization of gas establishments had made only a small
beginning before 1850. Demand for gas in this period was almost entirely for
lighting; the development of markets for heating and cooking came only in the
latter part of the century.^ Again, the widespread adoption of gaslight in private
households belonged to the post-1850 period; although household consumption
increased rapidly during the 1840's, the bulk demand continued to come from
street-lighting requirements, factories, shops, inns, railway stations, and institu-
tions of various kinds.
Most of the data used in this paper cover the period up to 2846. In 1847 the
first systematic returns by incorporated gas companies were made to Parliament,^
and it is possible therefore to get a reasonably accurate picture of the extent of
their operations up to this date. The main source of information I have used for
non-corporate companies extends also to the year 1846. This is a not inappro-
priate year with which to end a survey of the early gas industry, since its develop-
ment followed closely the pattern of the trade cycle and 1845-6 marked the peak
of an upswing in economic activity.
Most gas companies operating in the larger towns required sufficient capital
to warrant limited liability secured by Act of Parliament. The dates of these Acts
therefore give a good indication of when the various companies were formed.
The chief difficulty in quantifying the overall growth of the gas industry arises
from trying to locate the more numerous but widely scattered small undertakings
operating under deeds of trust or owned by private individuals. Any conclusions
about the growth of these unincorporated concerns have therefore to be drawn
from a sample.
Fig. I shows two series of the development of new gas companies in the United
Kingdom. One is taken from the parliamentary return of 1847 ^^^ therefore in-
cludes most of the authorized companies. The other is based on a sample of
private undertakings, and has been drawn from the records of Newton Chambers
and Go.,^ a Sheffield firm which specialized in the manufacture of gas castings.
They supplied mains, retorts, purifiers, lamp posts, gasholder balance weights,
and numerous other essential items to gasworks throughout the country. From
the surviving correspondence and day books of the firm it is possible to know the
^ The active expansion of the heating and cooking markets came largely in response to competition
from electric lighting in the i88o's. A useful historical survey is contained in P.E.P.j Report on the Gas
Industry in Great Britain (1939), pp. 41—55.
^ ReturnsfromGas Companies establislied by Act of Parliament in the United Kingdom, P.P. 1847, XLiv, 360-
407. See also Return, or Statement,from every Gas Company established by Act of Parliament in the United Kingdom,
P.P. 1850, XLix, 28-45.
•' I am indebted to Mr Brian Awty, of the British Library of Political and Economic Science, for sug-
gesting the Nev/ton Chambers records as a source of information on the gas industry. He has also generous-
ly allowed me to share his own extensive knowledge of the subject. I am also gratdul to Mr Chambers, of
Newton Ciiambers and Co., for his help and kindness in permitting me to study the firm's archives.
496 M. E. FALKUS

date ofthe initial tenders and ofthe commencement of lighting in various towns
between 1818 and 1846. A list of 163 non-corporate companies has been ex-
tracted, and is shown in Fig. i. The extent of Newton Chambers's activity makes
it possible to use this as a representative sample for the country. Although much
of their business was concentrated in northern and eastern England, they sup-
plied castings to companies in over 25 English counties and also to companies
operating in Wales, Scotland, Ireland, the Channel Islands, and the Isle of Man.
The growth of new gas companies was clearly concentrated into three periods,
1818-25 (with a dip in 1819), 1831-7, and 1842-6, corresponding closely with
booms in the British economy. ^ The pattern is not, of course, surprising, but it is
worth noticing two particular features which linked the growth ofthe gas industry
to the general level of economic activity. Gas company profits were heavily de-
pendent on the consumption by business concerns since street-lighting contracts
were generally considered to give littie remuneration.^ The willingness of firms
to adopt gaslighting, often involving them in expensive outlays on pipes and fit-
tings, was obviously related to their financial circumstances. Moreover, as will
be discussed later, the financing of new gas companies was frequently undertaken
on industrial and bank credit, and the availability of such credit determined to a
large extent the course of gasworks construction. An interesting feature of this
development is the lack of any substantial rise in the numbers of incorporated
companies after the boom ofthe early 1820's. The principal reason for this ap-
pears to be that the great majority of large towns were already lit by the mid-
1820's. Thereafter the capital requirements of companies being established in
small towns were generally low enough for these concerns to operate without
incorporation. Since the data for Fig. i refer to the formation of new gas com-
panies, they take no account ofthe extensions to existing concerns. Such expan-
sion was of course taking place continually due to the need to replace worn-out
equipment and to satisfy growing demand; there is no doubt, however, that the
major extensions and reconstructions of existing companies also followed the
same cyclical pattern. The Newton Chambers order books show that the largest
replacement orders generally coincided with boom periods, and it was in these
years that most new Acts to increase the capital of incorporated companies were
granted.
II
Gas companies were first established in the largest towns, and subsequently
operations were commenced in progressively smaller places. Within broad limits
it is possible to assign to each of the three phases of rapid growth a particular
class of town. In 1821 no town in the United Kingdom with a population greater
than 50,000 was without a gas company, and by 1826 the industry had made
such rapid strides that very few towns of more than 10,000 were not served. Ofthe
1 The establishment of gas companies which did not deal with Newton Chambers followed the same
pattern, as is shown by local directories, etc. Even in London, ofthe I2 companies operating in 1848,
6 were formed in the period 1817-35 and 4 between 1830 and 1836.
^ For a discussion ofthe unprofitability of street-lighting contracts, which appears to have been a wide-
spread phenomenon, see J. O. N. Rutter, Gas Lighting: its Progress and Prospects (1B49), pp. 4-5; see also
Reportfrom the Select Committee on Gas-Light Establishments, P.P. 1833, v, 233, and the General Report on the
existing System Toums with Gas, by Messrs Johnes andClegg, P.P. 1847, xxii, g6, where the surveying o£ficers
found "very commonly the gas for the public lights is sold for less than the cost of production".
 GAS INDUSTRY 497

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498 M. E. FALKUS
towns of this size listed in the 1821 Census only tv^ro, Lincoln (population 10,367,
lit in 1828) and Whitehaven (population 12,438, lit in 1831) were still without
gas in 1826. During this period many smaller towns were also lit, mainly in
manufacturing districts where there was a lively demand from factories and inills.
Thus Chorley was lit in 1819, Stockton-on-Tees in 1822, North Shields in 1823,
Durham in 1824, Whitby and Ashton-under-Lyne in 1825, Chesterfield, Burnley,
and Heywood in 1826, and so on, but the lighting of towns with populations of
under 10,000 was not general at this time.^ For Scotland and Ireland the evidence
is not so complete, although Ireland certainly lagged behind Britain in the pro-
vision of gasiighting. By the mid-1820's, however, all the largest towns, Edin-
burgh, Glasgow, Dundee, Paisley, Inverness, Dumfries, Dublin, 'Waterford,
Londonderry, Belfast, and a few others, had gas companies.

Table i. Towns lit by Gas, 1818-46

Size of town 1818-33 1831 1843-6
50,000-1- 13 —
20,000-49,999 22 —
10,000-19,999 40 6 3
4,000-9,999 19 48 II
2,500-3,999 2 17 25
under 2,500 — II
7
Totals 82 46
Notes and sources: This table is a combination of the Newton
Chambers and parliamentaiy series shown in Fig. i. It does not
therefore indicate the relative size of the construction booms (in
fact iar more towns were lit during the 1830's than in either of the
other periods). The population data are from the Censuses of 1821,
1841, and 1851 respectively.

Table i illustrates the decline in the average size of town lit during the period
1818-46. During the first boom period the greatest number of such towns was in
the 10,000-20,000 group; in the 1830's the bulk of new lighting occurred in towns
of 4,000-10,000; by 1842-6 the average had declined further to 2,500-4,000.

Ill
A more detailed examination of those counties in which Newton Chambers had
the greatest interest shows that each of the three cycles saw nearly all of a parti-
cular size of town lit.^ We have already seen that by the mid-1820's most towns
greater than 10,000 possessed gas industries; during the 1830's the lighting of
medium towns (4,000-10,000) became general, and by 1846 there were relatively
few over 2,500 which did not have gas.
^ A figure of 200 towns in the United Kingdom lit with gas by 1827 is widdy quoted, the source being
W. Matthews, An Historical Sketch of the Origin, Progress, and Present State of Gas Lighting (1827), footnote
on p. 229. His authority is the evidence of a gentleman "well-informed upon the subject" to a House of
Commons Committee, who considered there were about two hundred "public gas establishments". This
figure would clearly include the gas undertakings In those large towns which had more than one company,
but in any case would seem to be an exaggeration; there were probably no more than 120-30 towns lit in
1827.
2 This section is based largely on material from Newton Chambers and on local directories and histories.
Population figures for the early cycle of gasworks construction are from the 1821 Census, for the 1830's
from the 1841 Census, and for the third period from the 1851 Census.
 GAS INDUSTRY 499

In Lincolnsloire, all towns which had a population in 1841 greater than 4,000
were lit with gas by 1837, and at this date several smaller places—Holbeach,
Market Rasen, and Brigg—^were also lit. By 1846 every town greater than 2,500
according to the 1851 Census had a gas company, as did the even smaller town
of Alford. But it was only after 1850 that the lighting of these very small places
became general, and during the 1850's Gaister, Crowle, Crowland, and Barrow
were all lit.
The picture shown by Lincolnshire was very much the same as that in other
counties examined. In Suffolk, every medium-sized town was lit by 1838, as were
Stowmarket and Halesworth with populations below 4,000. By 1846 no town
smaller than 2,500 remained without gas. In Cumberland, with the exception of
Workington, where a company was established in 1840, the medium towns were
lit as early as 1833 and by 1846 the lighting of small towns was completed. In
Norfolk, the 1830's saw the extension of gaslighting to towns of about 3,000 such
as Dereham, Diss, and North Walsham. Of towns greater than 2,500 only one,
Downham Market (lit in 1849), was unlit by 1846, and by this time several
smaller towns—Fakenham, Holt, and Harleston—were already lit. In Cam-
bridgeshire also, most of the medium towns had been Kt during the 1830's, al-
though March and Whittlesey (both just over 4,000) did not have gas companies
until the early 1840's. By 1846 there was no town in the county greater than 2,000,
except Soham (where a company was established in 1848) which was not lit.
The development of gas companies in Yorkshire followed a very similar pat-
tern. In the West Riding only Bingley (lit in 1849) of the medium-sized towns
was without gas in 1837, by which time the smaller towns of Bawtry, Throne,
and Tadcaster were already lit. In 1846 a few towns smaller than 2,500 such as
Wath-on-Dearne and Holmfirth had gaslighting, and only Bingley remained
without. In the East Riding the lighting of towns over 2,500 was completed
as early as 1834, and at that date all towns larger than 3,000 in the North
Riding were lit. By 1846 no North Riding town larger than 2,500 was without
gas.
The broad picture presented by these counties of the spread of gaslighting to
nearly all medium and small towns during the 1830's and 1840's can be taken
as a guide to what was happening in the country as a whole. The activities of
I*Jewton Chambers themselves show this to have been true even in such peripheral
parts as the Isle of Man and the Channel Islands, while count>' directories con-
firm that gaslighting had become generally established in all but the smallest
towns by 1850.
The generality of gaslighting by the mid-nineteenth century is apparent from
many contemporary comments. The contractor erecting a gasworks at the
minute Buckinghamshire town of Winslowe (which had less than 1,500 inhabi-
tants) wrote in 1842: "I am anxious to get gas Apparatus on a small scale as
cheap as pcssible, so that I can erect small works at a cheap rate, and induce
people in the small Towns to form gas companies, etc. There is no doubt that in
a little time all the small towns will be lit with Gas."'- A few years later a gas
engineer wrote tliat Uttle remained to be done as far as the construction of new
gas companies was concerned; the main need now was for the extension and
•• Newton Chambers, Malam Correspondence,^zmes Malam, ig Nov. 1842.
500 M. E. FALKUS
improvement of existing companies.^ In 1841 Samuel Clegg wrote: "At the pre-
sent time there is scarcely a town in Great Britain of any importance that is not
lighted with gas,"* while, with some exaggeration, a gas periodical spoke of "the
thousand prosperous little establishments with which the provinces are now
endowed".*
It would help the argument if the total number of various-sized towns could
be compared with the total number of gas companies. The first comprehensive
list of gas companies in the United Kingdom was published by the Joumai of
Gas Lighting in March 1849.* It showed 760 different towns* as having companies,
but even this list was incomplete. The 1851 Census recorded 815 "towns" in
Great Britain;^ this number included all places having a weekly market, many
of which had populations well below 2,000. The number of small market towns
appears to have been particularly prevalent in Scotland; excluding towns of over
50,000 inhabitants, the average-size town there was only 5,134,^ whereas for
England it was 7,551 .* At the same time the census list excluded some quite large
places which did not have a market. The market towns over 2,500 in England
and Wales numbered only 460* in 1851 and only 91 in Scotland.^" Even allowing
for Irish towns^^ and for those places excluded because they lacked markets, it is
doubtful if the number of towns greater than 2,500 in the United Kingdom ex-
ceeded 700 in 1851, and this, together with the number of towns known to be
lit in 1849, appears to confirm the conclusion that the great majority of towns
above 2,500, and not a few smaller ones, had gaslighting by the late 1840's.
This uniform spread of the gas industry is not surprising. The demand for gas
depended very largely on the size of town lit since, at any given price of gas, it
was this which chiefly determined the extent of the market. Certain costs varied
regionally, of course, above all the cost of coal. But this did not appear to have
a great influence on prices or to delay the establishment of gas in high-cost areas,
one reason for this being that in these regions prices for coke, the chief by-product,
were often proportionally higher. As Table 2 shows, prices charged by companies
operating in small towns were higher than those in large towns, but there is little
evidence of any significant regional variation in the rates.
The growth in the production of gas in the United Kingdom resulted
from both the development of new gas companies and the increased output of
already established concerns. Both supply and demand factors contributed to
this expansion. Demand might be expected to rise with population and urban
growth and with higher real incomes. At first, as mentioned earlier, demand for
gas came primarily from public lighting authorities and business establishments,
but by the 1840's its use was growing in middle- and upper-class homes. Con-
sumption was fostered also by considerable improvements in the quality of gas
^ Rutter, Gas Lighting . . . p. 24.
^ Clegg, op. cit. p. 19. (In the second edition 12 years later Clegg was able to omit the words "of any
importance".)
8 Gas Gazette, no. 2, 10 June 1847, p. 19.
* Journal of Gas Lighting, no. 2, 10 March 1849, pp. 25-6.
5 595 in England, 136 in Scotland, and 29 in Ireland.
* 580 in England, 225 in Scotland, and 10 in the Islands in the British Seas {TTie Census of Great Britain
in 1851, reprinted in a condensed form C1854), p . 13).
' Calculated from ibid. pp. 13, 105. 8 jbid. pp. 98-100. * Ibid. l" Ibid. p. 105.
11 The 1851 Census of Ireland recorded about 90 towns with more than 2,500 inhabitants.
 GAS INDUSTRY 5OI
and by better lamps, burners, and methods of ventilation. More important, how-
ever, was the adoption of gas meters^ which by the mid-1830's had come into
general use (although even in 1846 a few companies still charged by the period
of time for which gas was supplied). Efficient meters made their appearance
during the early 1820's and spread quickly, particularly in the provinces. Early
meters were "wet", and registered by passing the gas through water, but from
the 1840's dry meters became increasingly popular. In 1849 ^ pamphleteer wrote
ofthe meter; "It has done more to extend their [i.e. the companies'] business
and make gas popular in private houses than anything else."^
There are indications that the price elasticity of demand for gas was high, since
price reductions were frequently followed by an immediate rise in a company's
revenue (in most cases it was evidently the attraction of new consumers which
accounted for the major part of such an increase).^ The secular fall in gas prices
contributed to the growth of demand, therefore, yet the companies showed a
great reluctance to reduce prices. They did so more often from the threat of com-
petition from rival concerns than from expectations of greater profits. The threat,
cr actual establishment, of a competing company usually coincided with the
periods of general gasworks construction, i.e. the upswings of the trade cycle;
price reductions tended consequently to take place discontinuously. In London,
for example, companies charged 15s. per 1,000 cubic feet for most ofthe 1820's;
a series of quick reductions brought the price down to ios. by the mid-1830's,
and in 1844-5 ^^e price was further lowered to 7s. In Hull the price remained
at 15s. between 1830 and 1842, but was then rapidly reduced to 8s. 4(1. by 1843.
In Oxford reductions took place in 1833, 1834, 1837, and 1B45, bringing the
price down from 21s. to ios.*
Competition, or fear of it, was naturally greatest in large towns with extensive
markets, and this perhaps provides one explanation for the marked price differ-
entials between large and small towns (see Table 2). But of greater significance
were economies of scale which allowed large companies to supply gas at cheaper
rates than those charged by small establishments.
The supply schedtiles of gas fell owing to technological improvements and to
cost reductions in equipment. The price of iron retorts fell from about ,(^20 a ton
In 1817 to ^12 during the early 1820's and to •£'-1 ios. by the mid-1830's.* There
were also considerable price reductions for lamp posts, mains, and service pipes.

' These were credit meters; coin-in-the-slot meters did not make their appearance until about 1890.
^ Rutter, Gas Lighting . . . p. 12. The directors of the Rugby Gas Light Company apparently realized
this when they wrote "the Directors earnestly request the Proprietors present to use their utmost exertions
in facilitating the sale of meters to consumers, as upon this in a great measure depends the prospect of a
speedy dividend" (Warwick Record Office, Rugby Gas Company, Annual Report of Directors. 4 June
39)
^ This was widely recognized. The Hungerford gas directors spoke o f t h e popuiar axiom that reduc-
tion in price tends to an increased consumption" when recommending a lower price (Berkshire Record
Office, Hungerford Gas Company, Report of Directors for the year 1847). Rutter wrote: "there is an
elasticity about gas-lighting understood only by those who have experienced its effects" (Rutter, Gas
Lighting . . . p. 30). At Willenhall the gas company obtained greater revenue and wider consumption
following price reductions (Staffs. Record Office, Willenhall Gas Company, Directors' Minute Books,
3 .'^ug. 1846 and 5 Aug. 1848).
* Clegg, op. cit. p. 22, and Returns from Gas Companies ... P.P. 3847, XLIV, 360-407.
s Clegg, op. cit. (1853 edn), p. 20, and 1841 edn, p. 70. T. S. Peckston, A Practical Treatise on Gas-
Lighting, (2nd edn, 1825), p. 142.
502 M. E. FALKUS

Gas apparatus generally became more efficient, and the average output of gas
produced from coal probably increased by about 20 per cent between 1820 and
1850.1
Table 2. Average Gas Prices per 1,000 cu.ft, by Regions
c. 1833 c. zS^o c. 1840
{Townsover is,ooo) (Towns over 12,000") (Towns under is,ooo)
s. d. s. d. s. d.
North II a 7 5 10 2
South 12 0 8 II 12 I
West II II 7 4 II 0
East 12 I 9 5 " 5
Midlands 11 3 7 7 II 4
Scotland II 8 7 4 12 0
Notes and sources: Population data from the Censuses of 1831 and 1841. Price
data from Returns from Gas Companies ... P.P. 1847, XLIV, 360-407, and from
local directories and gas company records covering 112 towns. The regional
divisions are: J^orth, Yorkshire, Lancashire, Cumberland, Northumberland,
Durham; South, London, Middlesex, Buckinghamshire, Kent, Berkshire; East,
Lincolnshire, Essex, Norfolk, Suffolk, Cambridgeshire; West, Devon, Cornwall,
Gloucestershire, Somerset; Midlands, Warwickshire, Worcestershire, Stafford-
shire, Northamptonshire.

The precise conditions which determined when a particular-sized town would

be lit are difficult to formulate, since both supply and demand were changing
simultaneously. However, the uniform spread of gasiighting as between parti-
cular-sized towns leads one to suspect that changing costs were probably the most
important determinant. There is no reason to suppose that demand was increas-
ing uniformly, even if increasing generally, if only because population and in-
come changes were not distributed evenly throughout the country.* On the other
hand it seems reasonable to assume that technological change and benefits from
the manufacture of gas apparatus appropriate to the needs of smeJl towns would
affect the construction and operating costs of new gasworks of a given size to a
similar extent.' Equalization of the costs of transporting coal as a result of rail-
way expansion would also operate in the same direction.

IV
If the outline of the development of the gas industry presented in the previous
section is substantially correct, it is possible to estimate the approximate capital
employed in the industry at the end of each period of rapid construction. The
cost of a gasworks depended on its size, which in turn depended primarily on the
size of town to be served.* Since the three construction cycles corresponded with
1 Clegg, op. cit. (1853 edn), p. 22.
^ That is, expected population increases, on whicli forecasts of demand were made, varied regionally.
' Rutter wrote in 1833: "Excepting in thickly popiilated districts the immense expenditure which was
required for erecting gas-works, amounted formei"]y to a prohibition. Now, we can scarcely conceive that
there is a town in the kingdom whose inhabitants amount to 2,500 or 3,000, which might not participate
in all the benefits of gas-light; a privilege hitherto almost exclusively monopolized by its more wealthy
and more populous neighbours" (J. O. N. Rutter, Practical Observations on Gas-Lighling (1833), p. 18).
* There is much evidence that this was the case, although it ^vas obviously less true of very large towns
with more than one gas company. Thus the surveying officers appointed by Parliament presented esti-
mates for the cost of erecting a gasworks in "a town with about 40,000 inhabitants" and "for a small
town" based on expected consumption of gas {General Report ...by Messrs Johnes and Clegg, P.P. 1847,
 GAS INDUSTRY 503
the lighting of particular classes of towns one can, in principle, obtain a figure
for capital investment quite simply, by multiplying the numbers of towns in each
class by the cost of the "average" gasworks for that category. The initial invest-
ment in gas companies was remarkably uniform as between companies operating
in similar-sized towns. This was partly because of the "lumpiness" of the cost of
some of the most expensive equipment; a gasholder and tank, for example, might
cost j(,'i ,000. It followed also from the fact that gas consumption varied according
;o the size of the town.

Table 3. Capital Investment in Gasworks in the United Kingdom.

Estimate according to Size of Town
{J\funibers of towns in each category in brackets)
i8s6 1S33 X846
£ £ £
Total invesFment in towns: 50,000-)- 1,744,500 (13) 3,576,700 (27) 4,643,400 (30)
Average investment in towns: 10,000—50,000 15,000 (74) 20,000 (108) 23,000(159)
4,000-10,000 6,000 (50) 5,500 (254) 6,000 (342)
2,500-4,000 — 3,000(274)
Total capital investment in all classes of towns
(gross historical cost) 3,154,500 7,583,700 11,770,400
Xet fixed capital investment at current prices 3,002,250 6,698,200 9,725,700
JS'otes and sources: Population data from the Censuses for 1821, 1841, and 1851. Investment in towns
greater than 50,000 from Returnsfrom Gas Companies . . . P.P. 1847, XLiv, 360-407, for authorized con-
cerns; for non-incorporated companies, from local directories and company records. Estimates of invest-
ment in smaller towns are approximations derived from the same sources and from Local Acts, Preliminary
Inquiries . .. P.P. 1847, xxn. It is assumed that 50 towns below 10,000 had gas companies by 1826, and
that the cost of establishing them was higher then than in the subsequent period. Depreciation of capital
is taken as 2-^ per cent per annum, which was the usual aUoweince by gas companies (see Journal of Gas
Lighting, 10 Feb, 1849, p. 11, and 10 Nov. 1849, p. 134). It is further assumed that construction took
place evenly throughout the three construction cycles. Value of capital in current prices has been calcu-
lated from historical cost using a combined price index composed of the Rousseaux series for principal
industrial products (B. R. Mitchell, Abstract of British Historical Statistics (Cambridge, 1962), p. 471) and
the price of iron mains pipes paid by gas companies. This gives the following index: 1817-26, 100;
'831-7, 79-a; 1842-7,75-7,

The estimates of capital investment are shown in Table 3. Figures for towns
"vvith over 50,000 inhabitants have been calculated separately; otherwise an
"average cost" of gasworks for each group of towns has been estimated. The two
main statistical difficulties are the problem of distinguishing between nominal
and paid-up capital in the case of incorporated companies, and the allowance
to be made for extensions to existing gasworks during the period. In the former
case, where paid-up capital was not available, 75 per cent of authorized capital
has been taken. ^ The allowance for extensions and improvemients has been made
XII, 104—5), Equally, the promoters of the Bingley Gas Company estimated demand, and therefore the
size of the works, on the basis of the population {Local Acts, Preliminary Inquiries ... P.P. 1847, xxii, 267).
' This is tliefigureindicated by Henry English in his calculations for 27 gas companies formied before
1824 (Henry English, A Complete View ojfJoint Stock Companies Formed in 1824 and 1835 ri827), quoted in
3, C, Hunt, The Development of the Business Corporation in England, 1800-1867 (Cambridge, Mass., 1936),
p. 48). There is no doubt that by the 1840's this would underestimate capital investment, however,
.since the ploughing back of profits was widespread, and many companies had invested considerably in
excess of their authorized capital. See, for example, S. A. Harris, The Development of Gas Supply on North
Merseyside, 1815-1849 (Liverpool, 1956), p. 24. T'he Gas Gazette gave Ashton-under-Lyne as an example
where fixed capital exceeded authorized capital, and added "in fact this practice seems to be general"
(Gas Gazette, no. !, 10 May 1847, p. 6).
504 M. E. FALKUS
on the basis of increases in paid-up capital by incorporated companies and of
new orders from private firms dealing with Newton Chambers.
The results of these rough estimates give a total capital investment of ^^3 • 15
million in 1826, .£1 • 6 million in 1838, and ;{^i i • 8 million in 1846. This last figure
is somewhat larger than two contemporary estimates: Porter^ gave a total capital
investment in the gas industry in Great Britain of ^^io -o million in 1847, and for
1848 Rutter^ produced a figure of ;^io-5 million for the United Kingdom, but
neither gave their method of calculation.
The scant data available on early nineteenth-century capital formation make
it difficult to place gas investment in a more general perspective. Certainly such
investment was dwarfed in comparison with that in railways. It is estimated that
the annual new capital formation in transport amounted to about £11 million
in the 1830's and to over ^15 million in the 1840's.^ Investment in water com-
panies was probably of a similar order of magnitude to that in gasworks, but gas
investment was never a large part of total domestic capital formation. Its greatest
contribution to the latter was presumably during the boom of 1818-25, that is,
before the rapid mechanization of textile-weaving and the development of steam
locomotion.
In view of poor statistical information on the extent and role of early nine-
teenth-century investment, a more useful way of considering the impact of the
gas industry is perhaps to look at linkages with the rest of the economy. These
were considerable, and must have been of particular importance in the pre-rail-
way age. A contemporary wrote of the gas industry in 1827: "it has given a most
important impulse to several branches of our manufactures . . . it has benefited
the iron trade to an incalculable extent; and it has also occasioned a great con-
sumption of metals of other kinds. Its operations have given rise to a large and
flourishing branch of manufacture, by demand for tubing, burners and various
other articles."* The writer presumably thought the demand for coal too obvious
to be mentioned. It is beyond the scope of this paper to discuss these linkages in
any detail, but it is worth noting that in London alone an estimated 250-300
miles of mains were in use in 1823,'' ^^^ by the mid-century this had risen to
2,000 miles.* By the late 1840's the annual coal consumption in gasworks through-
out the country was probably in the region of one million tons' (out of a total
national production of between 45 and 50 million tons) ;* and a contemporary
considered that in 1848 the gas industry gave rise directly and indirectly to the
employment of some 20,000 workers.' The economic repercussions of gas invest-
ment should not be exaggerated; in absolute terms the industry remained a small
1 G. R. Porter, Progress of the Nation (1847), p. 631. ^ Rutter, Gas Lighting . . . p. 24.
3 P. Deane and W. A. Cole, British Economic Growth, 1688-1959 (Cambridge, 1962), p. 263. Fixed
capital investment in gas undertakings appears to have been about half that in cotton-spinning and
weaving establishments which Blaug estimates as ;{;i4-8 million in 1834 and about £2^ million in 1845
(M. Blaug, 'The Productivity of Capital in the Lancashire Cotton Industry during the Nineteenth
Century', Economic History Review, 2nd ser. xm (1961), 372.
* Matthews, op. cit. pp. 233-4. " Clegg, op. cit. (1853 edn), p. 22. « Ibid.
' Clapham quotes Porter'sfigureof 600,000 tons ini 850 (J. H. Clapham, An Economic History of Modern
Britain (Cambridge, 1932), 11, 105). Clegg (op. cit. (1853 edn), p. 22) gave 500,000 tons in 1851 as the
consumption of one London gasworks alone, however. Rutter (op. cit. p. 25) gave 1,250,000 tons as the
United Kingdom consumption in 1848.
^ Deane and Cole, op. cit. p. 216.
' Rutter, Gas Lighting . . . p. 24. The 1851 Census recorded 5,630 employed in gasworks service.
 GAS INDUSTRY 5O5

employer and consumer, even if its demand fell heaviest on those industrial sec-
tors which formed the backbone of the industrial revolution. Apart from direct
linkages, the gas industry clearly had a wider impact; there were the economic
and social changes brought about by the new form of illumination, and influences
upon the chemical and engineering trades. It is noteworthy also that gas invest-
ment expanded solely on the basis of home demand, and may thus be a relevant
indicator of economic prosperity and of those difficult-to-measure but important
qualitative aspects of living standards.^

The establishment and finance of gas undertakings were effected in a variety of

ways, but it is at least possible to point to a number of general characteristics of
capital investment. Throughout the period consideied here local initiative and
capital played an important role in the spread of the gas industry. But the sphere
of local enterprise was diminished in two important respects. First, the specialist
skills required in the operation and especially in the construction of gasworks
had almost always to be drawn from outside. This gave rise to the "contractor
system" v/hereby a specialist gas engineer was called in to plan and superintend
the erection of the works. Secondly, there were many instances where the initial
promotion and finance of gasworks were undertaken by speculators whose activi-
ties can be traced in every region of the country. And it may be supposed that
this type of activity, where successful, would stimulate local initiative elsewhere.
A few examples will illustrate these aspects of the finance and construction of
gas concerns. In Preston a group of inhabitants subscribed to form a company
in 1815 and invited John Grafton, who was an engineer with the Chartered
Company in London, to plan and superintend the erection of their works. ^
Grafton found it necessary to bring with him other skilled workers from London.
The same engineer likewise erected the Wolverhampton works in 1820. In Liver-
pool^ another gas engineer with London experience, James Hargreaves, under-
took the construction of a gasworks in 1815 with capital raised by a group of local
subscribers. It is not known whether Hargreaves initiated the enterprise himself
or was invited to do so by the Liverpool inhabitants, but in a number of these
very early projects non-local initiative and even capital were instrumental in the
initial stages. Sometimes a "promoter" would begin the construction of a gas-
works on his ov/n account and then form a company to finance the rest of the
undertaking. The London iron merchants John and George Barlow operated in
t!iis manner and by 1822 had erected works at Brentford, Newport (Isle of
^Vight), Dudley, Southampton, Portsea, Poplar, Coventry, Warwick, and several
other places.' In each case, having commenced the works on their own, they then
formed an incorporated company to continue construction with capital sub-
scribed locally. In like fashion John Gosling, who described himself as a "gas
^ .Apart from she obvious benefits of better light, brighter and safer streets, etc, it was frequently men-
tioned how the marked superiority of gaslight led to dissatisfaction with contemporary standards of
lighting, and consequently to the introduction of more and improved candles and oil lamps into private
houses. See, for example, Porter, op. cit. p. 590, and Bohn's Illustrated Library, Handbook of London
(:i854),p. 231.
^ Lancashire Records Office, Preston Gas Light Company Minutes, 6 July 1815 and 26 Sept. 1815.
" Harris, op. cit. p. 6. * H. of C. Journals (1817-22).
5O6 M. E. FALKUS

contractor", promoted works at Maidstone, Canterbury, Birmingham, and

Greenwich.
By about 1822 it was usual for companies to be formed prior to the erection of
works. By ti-iis time the soundness of gas investment was becoming recognized
and the risk element in their promotion declined. Since the early companies were
erected principally in the larger towns and manufacturing districts, the avail-
ability of local capital and enterprise is not surprising. The need for specialist
gas engineers to build the works continued, however, and it remained usual for
gas companies to invite tenders from such persons to contract to establish the
plant. These contractors were important figures in the expansion of the gas in-
dustry. They were often responsible for the entire establishment, from the selec-
tion of a site to the completion of the works. They decided on the equipment to
be used, and ordered it from the manufacturers of their choice. To contractors
can be traced many of the most important technological innovations in the vari-
ous stages of gas manufacture and advances in the design of apparatus.
In this manner a relatively small number of men became responsible for the
planning and construction of numerous different works. Two such contractors
were John Malam and Samuel Clegg, both of whom made many contributions
to gas technology. They undertook the lighting of a number of towns wliich by
1825 included Chester, Bristol, Birmingham, Worcester, Kidderminster, Wigan,
Warrington, Rochdale, Oldham, Beverley, Louth, and Stamford. The supply of
men with sufficient specialist knowledge of the new industry was, of course, ex-
tremely limited, and such supply as there was must have been particularly
strained during the 1818-26 boom in construction. The contractor system can
be viewed as an economic response to this situation, maximizing the usefulness
of these men, and allowing the spread of a scarce resource over a wide area of
enterprise.
As gaslighting was extended to smaller towns in the 1830's the problem of
finance changed somewhat. Companies serving large towns were usually of suffi-
cient size to warrant incorporation by Act of Parliament with consequent limited
liability, and the majority of bigger concerns availed themselves of this, as pointed
out earlier. For small companies, on the other hand, the capital required was
insufficient for incorporation to be adopted as a rule, particularly since the privi-
lege was an expensive one. At the same time the lack of limited liability added
to the risk of the undertaking. This, coupled with the fact that entrepreneurial
vigour and resources of "development capital" were obviously limited in minor
provincial towns, put a constraint on the promotion and financing of small gas
companies.
The Newton Chambers records give a good deal of information about the
finance of these smaller undertakings. In many cases this was done in the same
way as the large concerns insofar as local subscribers formed a gas company and
then erected their own works. There are numerous examples, however, where tliis
was not the case, and both the promotion and construction of a gasworks were
performed by a "gas contractor". Newton Chambers had considerable business
with these gas contractors, the most remarkable of whom were the three Malam
brothers, John, James, and George. Prior to 1846 they were responsible for the
complete or partial construction of over 50 gas establishments. John concentrated
 GAS INDUSTRY 5O7

his activities in Lancashire and the West Riding of Yorkshire, James in Cumber-
land and the North and East Ridings, and George in East Anglia. Their business
extended to the Isle of Man, Isle of Wight, Channel Islands, and even to the
Jiiuropean continent.
The Malams operated in three principal ways. They contracted with a com-
pany to erect their works (as mentioned earlier, John Malam was active in this
respect in the 1820's); they improved or extended already existing works; they
contracted directly with the public authorities to light towns themselves and thus
became proprietors of the works. Sometimes they operated the works for a long
jjeriod under a manager, but more usually they sold the undertaking once it was
running successfully and could be sold at a profit. It was this third type of activity
that characterized the lighting of many small and medium towns during the
second quarter of the nineteenth century.^ John Malam erected works at Gains-
borough, Knaresborough, King's Lynn, Wisbech, Peterborough, Malton, Grant-
ham, Huntingdon, and many other places, wliich he subsequently sold to local
shareholders. James Malam similarly undertook the construction of gasworks in
Beccles, North Walsham, Maryport, Northallerton, Pocklington, Driffield, Pen-
rith, and Cockermouth, and among George's concerns were works in Dereham,
St Ives (Hunts.), Spalding, Ely, March, Chatteris, Holbeach, Swaffham, Bal-
dock, and Horncastle.
There were other promoter-contractors besides the Malams to have dealings
with Newton Chambers. Thomas Peckston, a noted authority on gas engineering
and a brother-in-law of John Malam, was active in the south-east of England,
erecting gasworks at Bury St Edmunds, Woodbridge, Stowxaarket, Saffron
Walden, and several other places, including towns in the Channel Islands. Ac-
cording to a Suffolk directory, the Stowmarket works "were constructed in
1835-6 by a speculator, who afterwards sold them to a company of share-
holders",^ and this is typical of what appears to have been a fairly common way
in wliich gasworks were established in this period. William Stears (described as
"gas engineer and contractor") operated from Leeds and Stroud (Gloucs.) and
was another active promoter. In 1836 alone he had the lighting of 12 towns in
hand.* Thomas Edge and William Pearce, both important designers and manu-
facturers of gas equipment, also undertook the speculative lighting of several
towns during the 1830's.
Tlie gas contractors were not men of wealth but highly skilled engineers whose
technical knowledge played a large part in their success. When they became gas-
works proprietors they financed their operations by bank loans and, more im-
portant, by credit from the manufacturing firms supplying their equipment. For
most of the 1820's John Malam's account with Newton Chambers stood at well
over ;^5,ooo, sometimes over ^10,000. When Stears was in financial difficulties
in 1837 he owed his creditors, of whom Newton Chambers was the principal one,
•• For example, Johji Malam erected a gasworks in Gainsborough in 1835 and the following year sold
it :o a group of local subscribers for £6,000. He kept his interest in the Knaresborough works longer,
constructing them in 1823 and selling to a local company in 1834 for £2,000 down and £300 for 12 years
(Newton Chambers, op. cit. 2 Feb. 1826, 13 Aug. 1834). Similarly, at Malton "the gzis works were con-
structed in 1832, by Messrs John and James Malam, who sold them in 1836, to a company of proprietors
for £4000, raised in £10 shares" (W. White, Directory of the East and North Ridings ofTorkshire (1840)).
a W. White. Directory of Suffolk (1844). ' Newton Chambers, Stears Correspondence, 13 Aug. 1836.
5O8 M. E. FALKUS

^^22,925.^ The firm was similarly an important creditor to the other contractors.
In boom periods there seemed little difficulty in raising further credit, and it was
in years of depression and financial stringency that the gas contractors were
forced to curtail their operations. Indeed, this method of financing new enter-
prises was clearly an important reason for the very close association of such con-
struction with the trade cycle.
In a recent article* Prof. Pollard has emphasized the different problems of
finance faced by those concerns with a large proportion offixedto working capital
and those which required primarily working capital during the industrial revo-
lution period. The former could tap a "rentier" class while the latter obtained
their capital from "banks, merchants, wage earners, and others".' The experi-
ence of the gas industry suggests that the important factor was the absolute size
of capital requirements rather than the proportion of fixed to working capital.
Large gas undertakings normally obtained capital from shareholders, as did most
small concerns once they were established. It is quite clear, however, that the
initial finance of a smaU gas company was frequently not forthcoming from a
"rentier" class. In these cases the gas contractor performed an important func-
tion, and his role perhaps sheds some light on a more general aspect of capital
accumulation. He regarded the fixed capital (the gasworks) as a redeemable
asset to be sold at a profit, and on this basis was able to obtain short-term credit
to finance long-term investment. The existing forms of industrial and bank credit,
in common use throughout manufacturing industry, provided the contractor
with "development" capital. This was used to finance and operate the under-
taking which only at a later stage was able to attract the "rentier" class.
London School of Economics

^ Newton Chambers, Stears Correspondence, 20 May 1837.

2 S. Pollard, 'Fixed Capital in the Industrial Revolution in Britain', Joiffnai of Economic History, xxiv,
no. 3 (1964), 299-314-
* Ibid. p. 314.