Samuel Peto, who preferred to use his second Christian name, was a remarkable engineer and railway builder whose influence in Norfolk was at its peak in the seven years he sat as a Norwich MP from 1847 to 1854.
Electioneering was a dirty business in those days. The Times in July 1847 reported, under the banner headline ELECTION RIOT, that on polling day, 200 of the navvies employed by Peto having ‘as is their wont, regaled themselves too plentifully with ale’, so infuriated the ‘Norwich mob’ with their behaviour that the mob, armed with ‘sticks and bludgeons’ attacked the navvies, who had to take refuge until rescued by the police, who escorted them to the station to catch a train to Ely. Other newspapers published stories with the roles of the combatants reversed. As Queen Elizabeth so famously said ‘Recollections may vary’. Newspaper stories tended to be written from the viewpoint which reflected the political sympathies of the proprietor. Plus ça change.
Be that as it may, Jeremiah Colman and Morton Peto were elected in the Liberal interest. Peto was to return to parliament later, for a different constituency, but he resigned his Norwich seat in 1854 for the most honourable of reasons. Britain was at the time bogged down in the Crimea, and Peto offered to build, without profit, a railway line from Sebastopol to the front in order to facilitate the movement of materiel over very difficult terrain. Despite deriving no financial benefit, he had to resign his seat in order to complete a contract with the government, though he was rewarded with a baronetcy.
If, as you walk out of Norwich Thorpe Station, you look up, you will see a bust of Peto, bearing the inscription ‘Baptist Contractor Politician Philanthropist’. He was all those things but he was a much more controversial character than one might infer from that description. Baptist, certainly – his generosity to the church was phenomenal, contractor too – responsible not just for the railways for which he is best remembered but also for the building of Nelson’s Column and, in part, the Houses of Parliament. Politician, perhaps a little less – though his absence was a matter of regret across the board – both Gladstone and Disraeli appreciated him. Philanthropist without a doubt, but usually either for the benefit of the Baptist church or in pursuit of business opportunities.
But there are two strands of Peto’s character on which I shall focus. First his engineering, in particular his financial engineering, and second – much more to his credit – his employment policies which were totally at odds with those of his contemporaries. Peto was a very caring employer.
On the financial front, whenever one looks at the ways in which capital was raised to build railways it is sensible to approach the subject with a clothes peg firmly affixed to one’s nose. As with politics it was a dirty business – George Hudson, often nick-named the Railway King, whose capital-raising methods bore some similarity to a Ponzi scheme, was not only eventually bankrupted, but had to live abroad to avoid imprisonment for debt. Peto was not in the same league, but was bad enough for the Spectator in 1866 to declare ‘we do not hesitate to say that quiet persons all over England are at this moment poorer by millions sterling in consequence of what Sir Morton Peto helped to do’.
This was the age of the railway mania - a bubble, which like all bubbles, eventually burst leaving a nasty mess. Every business, straight or maverick, wanted to get in on the act. Companies were set up to build railways everywhere – regardless of whether there was any real possibility of them generating enough traffic to pay their way. In just one year there were 263 acts of parliament to approve new lines – about a third of them were never built.
As a railway engineer, Peto was, arguably, in a class of his own – he built in Britain, Australia, Canada, Denmark, Russia, France, Algeria, Portugal and the Argentine. As a financial engineer, his success was not so long-lived. Unfortunately, the capital to build railways wasn’t always easy to find and it soon became common practice for the engineers bidding to build the lines to take a part, and as time went by an increasing part, of their remuneration in what were, virtually, IOUs.
This was really a classic house of cards. Contractors were ‘paid’ for their work in shares and securities issued by the start-up railway companies which could be redeemed only when the company was sufficiently solvent, or sold where there was a demand for the shares. The risk was largely with the contractor, and the extent of that risk depended on how keen he was to get the contract in the first place. Peto was certainly not alone in operating this way, but he took things further than most.
He made no secret of the industry issue, telling his constituents, in 1868, that only the ill-informed ‘fancied railways were to be made with real capital fairly provided in good round sums by genuine subscribers’. The Times, reporting Peto’s speech went on to refer to ‘Contractor’s Lines, those built not because the district wanted a railway, but because the contractor wanted a job’.
For Peto, there were probably two cases which cost him most financially, the second ending in his bankruptcy. The first related to a contract in Canada to build the Great Trunk Railway. Not only did Peto underestimate the difficult nature of the terrain, so that he pitched his tender too low, but he also found himself effectually underwriting the cost. When financial difficulties arose he had to agree to take 50% of his fees in the company’s bonds and shares. The company went into liquidation.
The second instance was even worse for him. The London, Chatham and Dover Railway conceived a plan to build a new line to London to connect with the Metropolitan line. Having failed to raise the necessary capital of £9,000,000 they asked Peto for help. He had already accepted bonds issued by the company in lieu of payment for the some of the work and he agreed personally to guarantee the interest on bonds sold to others. The sale of stocks failed. To cap it all, he agreed to buy some land from the company, which he used as security to acquire bills of exchange, of doubtful quality, on which he raised loans from the discount house Overend Gurney. The latter failed, and within 48 hours Peto had to suspend payments. An attempt to shore up the business by presenting a very positive balance sheet giving a false impression of his solvency didn’t help and in 1867 he was declared bankrupt.
But there was another, more positive side to Peto. The railway building boom was characterised by the appalling behaviour of the navvies which led to social unrest in previously genteel areas. In my family papers I have a letter from the Duke of Portland, who was then Lord Lieutenant of Middlesex, to my great-great-grandfather appointing him as an additional JP to read the Riot Act when needed and to support an additional number of constables appointed to keep the peace.
After some rather trenchant comments on the quality of railway company directors, the Duke said that the appointment as a JP was on the basis of favourable reports he had received of my ancestor’s ‘character and ability’. His informant must have failed to tell the Duke that the new appointee was also a director of a railway company!
The Duke would, I suspect, have approved of Peto’s management style. Peto had started at the bottom. Apprenticed, at 14, to his uncle, a builder, he trained in carpentry and brick-laying during the day, and in the evenings attended specialist classes to learn the skills of technical drawing and architectural design. As he completed his training his uncle died, leaving the business jointly to Peto and to his cousin. Peto proved to have the magic touch – his technical skills were matched by his salesmanship, his determination, and his concern for the men who worked for him. He had a strong social conscience.
At the time, it was the norm for navvies to be on a sub-contracted basis, paid in tokens which could only be used to purchase items from the contractors’ own stores, and worked mercilessly into the ground. Peto, with his own experience of working at the bottom of the pile, gave real employment, with money wages to those who worked on his contracts.
Peto won a string of contracts – one of the first was to build the railway between Great Yarmouth and Norwich, but in the early stages railway work was only a small part of the business - the naval hospital at Yarmouth was built by him, as were an extension to the Old Bailey, Nelson’s column, and when the Crystal Palace was moved to Sydenham he was responsible for the task. Highly appropriate – without his donation to Prince Albert’s appeal the Great Exhibition of 1851, for which the Crystal Palace was originally built, might never have taken place.
Peto’s growing interest in railway contracts was not shared by his more cautious partner, and the partnership was dissolved.
Peto, who had bought, though rarely visited, Somerleyton Hall donated generously to public projects in Lowestoft, and built extensive chapels for the Baptists. When his probity was later questioned the Baptist Church gave what Wodehouse fans would see as the Ukridge response – his dubious schemes were regarded as ‘normal business practice’.
Following his bankruptcy he moved first to Budapest and then to Paris, but failing to win contracts in either he returned to England, living in rented accommodation until death at the age of 80.
In a commercial sense he was perhaps a man of his time, and of his industry. But as a caring employer he was on a different tack to his contemporaries. When he sent out 250 navvies to build the Sebastopol railway he also sent to look after them five doctors and four nurses, not to mention a man employed specifically to read the scriptures to the navvies.
In summary, Peto was religious, generous, astute, articulate, hardworking, and a conscientious employer. He was also something of a hypocrite and not free from financial impropriety – something of a paradox.
For a fuller version of Peto’s extraordinary story see Chris Armstrong’s book – Mustard, Boots and Beer (Larks Press, 2014).
