The reason a small capitalist is better in your case is because I think capitalists have more expensive needs than regular folks. Even if they didn't, you have to provide for ALL of capitalists' needs before any savings takes place, which is something you typically don't do for your labourers and farmers unless you are absurdly rich. When you turn a third of your population into capitalists, you decrease the productivity of your economy by roughly a third, since capitalists don't actually produce anything to sell. You are also now committed with providing a third of your pop with luxuries before ANY savings can take place.
As for capitalist's stash disappearing without anything being built, I've seen that often. First of all, check your country before and after the money disappears to see if any new rail construction started - you don't get a message for it, but this could be what they are spending money on. Second, if you don't have any railroad tech, but your capitalist decides to build the railroad, the money seems to be just lost. The manual said something about the capitalist buying government bonds when he decides not to build the rail or factory, but I haven't actually seen any effect on my treasury when this happens, so I suspect it's just a bug.
Which country are you playing? Keep in mind that industries are not necessarily very profitable early on until you can get some techs and most importantly - rails. So if you are an Unciv without hope of civilizing, but with decent RGOs I'm not sure what value there is in switching to factories. Then again, I don't play uncivs aside from Japan.
If you are a small civilized country, but with good RGOs, it often doesn't make sense to industrialize until later either. Rail - yes, factories - no. I found with Brazil that my very early attempts at industrialization brought very limited results. At some point I simply ran out of POPs working in low-price RGOs and my remaining farmers made more money for me growing tobacco and coffee than craftsmen and clerks did at factories. Further industrialization actually LOWERED my income, which had to be weighed against the benefit of more research.
Anyway, if 50K is a third of your population, I'd question whether a capitalist even makes sense for you. The upfront cost is huge - I count on spending roughly 15K to get just the capitalist. For this sort of money you can easily build almost any factory in a state capitalism or planned economy (if you have an option to switch). So maybe a private-sector industrialization is not the best thing for your country.