The Stockton & Darlington line opened in 1825 successfully reduced the cost of transporting coal from 18s. to 8s. 6d. a ton. It soon became clear that large profits could be made by building railways. A group of businessmen led by James Sandars recruited George Stephenson to build them a railway. The main objective was to reduce the costs of transporting raw materials and finished goods between Manchester, the centre of the textile industry and Liverpool, the most important port in the north of England.
The proposed Liverpool & Manchester Railway was a serious economic threat to the Bridgewater Canal. that was making a fortune by shipping goods between Liverpool and Manchester. In 1825 shares in the company, originally purchased at £70, were selling at £1,250 and paying an annual dividend of £35. The Marquis of Stafford, who became the principal owner of the canal after the death of the Duke of Bridgewater, was making an annual profit of £100,000 from the venture, and unstandably led the fight against the planned railway. Turnpike Trusts, coach companies and farmers also voiced their opposition.
After the House of Commons rejected Stephenson's proposed route, James Sandars recruited a company run by George Rennie to carry out a new survey and were invited by the company to build it. However, they refused to work with George Stephenson, who they did not consider was a real engineer, and they lost the contract.
After several years of debate, Parliament gave permission for the Manchester & Liverpool Railway to be built in 1826. George Stephenson was faced with a large number of serious engineering problems. This included crossing the unstable peat bog of Chat Moss, a nine-arched viaduct across the Sankey Valley and a two-mile long rock cutting at Olive Mount.
The Liverpool & Manchester railway was 31 miles long and consisted of a double line of rails of the fish-bellied type and laid on stone or timber sleepers. Passenger trains started at the Crown Street Station in Liverpool and after passing Moorish Arch at Edge Hill terminated at Water Street in Manchester.
The directors of the Liverpool & Manchester company were unsure whether to use locomotives or stationary engines on their line. To help them reach a decision, it was decided to hold a competition where the winning locomotive would be awarded £500. The idea being that if the locomotive was good enough, it would be the one used on the new railway.
The competition was held at Rainhill during October 1829. Each competing locomotive had to haul a load of three times its own weight at a speed of at least 10 mph. The locomotives had to run twenty times up and down the track at Rainhill which made the distance roughly equivalent to a return trip between Liverpool and Manchester. Afraid that heavy locomotives would break the rails, only machines that weighed less than six tons could compete in the competition. Ten locomotives were originally entered for the Rainhill Trials but only five turned up and two of these were withdrawn because of mechanical problems. Sans Pareil and Novelty did well but it was the Rocket, produced by George and his son, Robert Stephenson, that won the competition.
The Liverpool & Manchester railway was opened on 15th September, 1830. The prime minister, the Duke of Wellington, and a large number of important people attended the opening ceremony that included a procession of eight locomotives, including the Northumbrian, the Rocket, the North Star and the Phoenix.
After the group of special visitors were given a ride on the Northumbrian, William Huskisson, one of Liverpool's MPs crossed from his own carriage to speak to the Duke of Wellington. Warnings were shouted when people realised that the Rocket, driven by Joseph Locke, was about to pass the Northumbrian. Huskisson was unable to escape and was knocked down by the Rocket. The locomotive badly mangled one of his legs. A doctor attempted to stem the bleeding and George Stephenson used the Northumbrian to take him for further treatment. Despite these attempts to save him, Huskisson died later that day.
With large crowds assembled along the line between Liverpool and Manchester it was decided to continue with the procession. However, when the Northumbrian entered Manchester the passenger carriages were pelted with stones by weavers, who remembered the Duke of Wellington's involvement in the Peterloo Massacre and his strong opposition to the the proposed 1832 Reform Act.
The Liverpool & Manchester railway was a great success. In 1831 the company transported 445,047 passengers. Receipts were £155,702 with profits of £71,098. By 1844 receipts had reached £258,892 with profits of £136,688. During this period shareholders were regularly paid out an annual dividend of £10 for every £100 invested.