Investing in early public works: financial risks and returns in English and Welsh turnpikes, 1820–82

Abstract Private and local investors provided much of the capital to improve England’s infrastructure during its industrialization. This study investigates the financial returns to investors in turnpike road trusts. It draws on parliamentary reports which provide comprehensive data on finances, including payments to bondholders. One key finding is that turnpike trusts paid their bondholders a return above the yield on government bonds before 1850. Afterwards turnpike interest payments declined, yet they still yielded competitive returns. Another key finding is that the risks were modest. Returns to holding individual turnpike bonds varied, with most paying 4 to 5 per cent and some paying zero. The latter were not the majority and in many cases interest payments resumed within a few years. Diversified portfolios of turnpike bonds enjoyed lower risks, and outperformed portfolios with railway and canal securities traded on the London exchange before 1850. Overall, the results contribute to a better understanding of the risks and returns associated with investing in early public works.