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The London and New York Stock Exchanges, 1850–1914

  • Ranald C. Michie (a1)
Abstract

This paper compares two financial institutions that provided the same functions at the same time, but in different countries and with different memberships. Though the London and New York stock exchanges appear to be alike between 1850 and 1914, they were not, as each responded in its own way to the forces acting upon it. The result was a radically different organization of the securities market in Britain and the United States. This had important implications for the money and capital markets and consequences for business and the economy.

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1 Cameron, R., “Banking in the Early Stages of Industrialisation: A Preliminary Survey,” Scandinavian Economic History Review, 2 (1963);Cameron, R., ed., Banking in the Early Stages of Industrialization: A Study in Comparative Economic History (New York, 1967);Cameron, R., ed., Banking and Economic Development (New York, 1972).

2 See also Davis, L. E., “Capital Mobility and American Growth,” in Fogel, R. W. and Engerman, S. L., eds., The Reinterpretation of American Economic History (New York, 1971), pp. 185–86.Born, K. E., International Banking in the 19th and 20th Centuries (Leamington, Spa, 1983), p. 164.

3 U.S. Congress, Report of the Committee Appointed to Investigate the Concentration of Control of Money and Credit, 28 Feb. 1913, p. 33.

4 Lawson, W. R., The Scottish Investors' Manual (Edinburgh, 1884), p. 35; see also Morgan, E. V. and Thomas, W. A., The Stock Exchange: Its History and Functions (London, 1962), p. 68;Wyckoff, P., Wall Street and the Stock Markets: A Chronology, 1644–1971 (Philadelphia, 1972), pp. 5, 8;Krooss, H. E. and Blyn, M. R., A History of Financial Intermediaries (New York, 1971), p. 56;Sobel, R., The Big Board: A History of the New York Stock Market (New York, 1965), p. 21.

5 Parliamentary Papers, 187, IX, Royal Commission on the London Stock Exchange, Report, pp. 5–6, Minutes, pp. 4, 16–17;Keyser, H., The Law relating to Transactions on the Stock Exchange (London, 1850), pp. 2021;Morgan and Thomas, Stock Exchange, pp. 70, 74, 143.

6 Meeker, J. E., The Work of the Stock Exchange (New York, 1930), pp. 6469.

7 Morgan and Thomas, Stock Exchange, chap. 9; Meeker, Work of the Stock Exchange, chap. 16.

8 Archives of the New York Stock Exchange [henceforth, NYSE], Stock and Exchange Board, 15 Nov. 1867; NYSE, Committee of Arrangements, 2 Nov. 1878, 23 Dec. 1881, 9 Nov. 1885, 9 May 1887, 11 July 1895, 12 May 1902; NYSE, N. Green (Gold and Stock Telegraph Co.) to Chairman, NYSE, 26 Dec. 1884; NYSE, Memorandum on Foreign Ticker Services, 3 May 1897.Stedman, E. C., ed., The New York Stock Exchange (New York, 1905), pp. 440–41;Schultz, B. E., Stock Exchange Procedure (New York, 1936), p. 12; NYSE, Special Committee on Odd Lots, Report, 6 June 07.

9 London Stock Exchange [henceforth, LSE], Trustees and Managers, 7 Oct. 1868, 5 Feb. 1873, 5 Nov. 1879, 20 Jan. 1880, 1 July 1888, 7 Nov. 1888, 2 Jan. 1889, 14 Oct. 1891, 3 June 1903; LSE, General Purposes, 1 Oct. 1872, 10 April 1907; LSE General Purposes—Sub-Committee on Exchange Telegraph Co., 16 April 1886–30 Dec. 1908.

10 Royal Commission, Report, p. 6, Minutes, pp. 10–13, 166; LSE, Trustees and Managers, 14 Oct. 1891; LSE, Statement of foreigners admited as members, 1 Jan. 1900–31 Dec. 1909;Chiswell, F., Key to the Rules of the Stock Exchange (London, 1902), p. 28;Day, J. E., Stockbroker's Office Organisation Management and Accounts (London, 1911), p. 3;Morgan and Thomas, Stock Exchange, pp. 140–44, 157–58, 160.

11 NYSE, Committee on Membership Rights, 17 Oct. 1868;Armstrong, W., Stocks and Stock-Jobbing in Wall Street (New York, 1848);Hamon, H., New York Stock Exchange Manual (New York, 1965), p. 112;Anon, , History of the New York Stock Exchange (New York, 1887), pp. 1, 5;Sobel, Big Board, pp. 86–88; Schultz, Procedure, p. 13; Wyckoff, Wall Street, pp. 150–51.

12 Royal Commission, Minutes, p. 27; LSE, General Purposes—Sub-Committee on Exchange Telegraph Co., 13 Aug. 1894, 13 Sept. 1894; LSE, General Purposes—Sub-Committee on Mincing Lane, 23 Sept. 1909;Anon., A New Survey of London (London, 1853), vol. 1, p. 378; Universal Stock Exchange, Stock Exchange Investments (London, 1897), introduction and pp. 168, 173;Burt, R., “The London Mining Exchange, 1850–1900,” Business History, 14 (1972), pp. 126–42;Morgan and Thomas, Stock Exchange, pp. 141, 227.

13 Duguid, C., The Stock Exchange (London, 1913), p. 120; Financial Times, Investors Guide (London, 1913), p. 67; Chiswell, Key, p. 71.

14 Medbery, J. K., Old Times in Wall Street: A Study for To-day (New York, 1886), pp. 110, 131;Anon., The New York Stock Exchange (New York, 1886), pp. 21, 28;Nelson, S. A., The Consolidated Stock Exchange of New York (New York, 1909), pp. 45, 23, 25; Consolidated Stock Exchange, Annual Report (1886), pp. 68, 73–74, and Annual Report (1913), p. 19; and U. S. Congress, Regulation of the Stock Exchange: Hearings before the Committe on Banking and Currency (Washington, 1914), p. 78;Samson, W. E., The Mysteries of Wall Street (New York, 1884), p. 66;Nelson, S. A., ed., The ABC of Wall Street (New York, 1900), pp. 69, 73;Jones, and Baker, , The History of the New York Curb (New York, 1916), p. 8;Sobel, R., The Curbstone Brokers: The Origins of the American Stock Exchange (New York, 1970), p. 105;NYSE, Committee on Arrangements, 31 March 1886;Huebner, S. S., ed., Stocks and the Stock Market (Philadelphia, 1910), p. 2.

15 U. S. Congress, Money Trust Investigation: Investigation of Financial and Monetary Conditions in the United States (Washington, D.C., 1912), pp. 1297, 2194. NYSE, Special Investigation of the Curb Market, 29 03 1908;NYSE, Special Committee on Mining Dept., 20 Nov 1879; NYSE, Special Committee on the NY Mining Exchange, 16 Jan 1885;National Monetary Commission, Statistics for the United States, 1867–1909 (Washington, D.C., 1910), p. 9; Consolidated Stock Exchange, Annual Report, 31 May 1903, 31 May 1908, 31 May 1909;Van Riper, L. C., Ins and Outs of Wall Street (New York, 1898), pp. 2526;Nourse, E. G., Brokerage (New York, 1910), p. 88;Wyckoff, Wall Street, p. 155; Nelson, ABC of Wall Street, p. 18;Martin, H. S., The New York Stock Exchange (New York, 1919), pp. 104–5;Van Antwerp, W. C., The Stock Exchange from within (New York, 1913), pp. 428431.

16 Royal Commission, Minutes, 1878, p. 29.

17 LSE, General Purposes, 27 June 1900, 11 July 1904, 15 Oct 1905.Duguid, Stock Exchange, p. 34; Day, Stockbroker's Office, p. 80.

18 LSE, General Purposes—Sub-Committee on Commissions, 8 May 1912, 16 May 1912, 4 July 1912, 30 Sept. 1912, 24 Jan. 1913; LSE, General Purposes, 13 Jan. 1912, 15 Jan. 1912, 25 April 1912, 30 April 1912, 1 June 1912, 21 Sept. 1912, 30 Sept. 1912, 20 Jan. 1913, 24 Jan. 1913.

19 NYSE, Governing Committee, 13 April 1894; see also Constitution of the New York Stock and Exchange Board, 21 Feb. 1820, Article 10.

20 NYSE, Committee on Commissions, 14 May 1889, 29 March 1910; NYSE, Governing Committee, 23 Oct. 1878, 22 May 1889, 12 Nov. 1902, 30 March 1910; NYSE, Special Investigation of the Curb Market, 4 April 1906; NYSE, Special Committee on Bucket Shops: Digest, 25 June 1913, p. 83.

21 Railroad Review, 24 Dec. 1887; NYSE, Antwerp, Van to Neeley, G. A., 30 June 1913, Van Antwerp Papers; NYSE, Committee on Commissions, 8 Jan. 1883;Pratt, S. S., The Work of Wall Street (New York, 1903), p. 93;LSE, General Purposes, 13 Feb. 1907;Gibson, G. R., The Stock Exchange of London, Paris and New York: A Comparison (New York, 1889), p. 34.

22 NYSE, Committee on Commissions, 16 May 1881, 20 June 1881, 14 July 1911. 12 Nov. 1913; NYSE, Committee on Admissions, 29 Jan. 1902; NYSE, Special Committee on Wire Privileges, 11 Jan. 1900; NYSE, Antwerp, Van to Neeley, G. A., 30 June 1913; Boston Stock Exchange, Constitution (1905), Article 29;Armstrong, W. A., Stocks and Stock-Jobbing in Wall Street (New York, 1848), p. 36;Anon., New York Stock Exchange (New York, 1886), pp. 63, 115;NYSE, Committee on the Constitution, 4 Dec 1911.

23 Money Trust Investigation, Minutes, p. 827; Barron, C. W. et al. , The Boston Stock Exchange, 1834–1893 (Boston, 1893) (no pagination);Antwerp, Van, The Stock Exchange, p. 428.

24 Eames, F. L., The New York Stock Exchange (New York, 1894), p. 90;Stedman, E. C., ed., The New York Stock Exchange (New York, 1905), p. 11;NYSE, Committee on Arrangements, 10 May 1886; NYSE, Committee on Commissions, 21 Feb. 1894; Nelson, Consolidated Stock Exchange, p. 75.

25 NYSE, Governing Committee, 13 April 1894; Huebner, Stocks, p. 7.

26 Reply by the New York Stock Exchange to the Governor's Committee on Speculation in Securities and Commodities, 1909, Horace White Papers, New York Historical Society, p. 27; NYSE, Governing Committee, 12 Jan. 1881, 27 June 1883, 13 April 1894, 23 April 1894, 31 May 1894, 23 Dec. 1897, 26 Jan. 1898; NYSE, Committee on Arrangements, 1 July 1895, 11 Jan. 1897, 29 Oct. 1900, 18 Dec. 1903, 9 May 1904, 14 June 1904; NYSE, Committee on Commissions, 5 Jan 1904; NYSE, Matter of Domestic Arbitrage and Quotations, 14 June 1904; Pratt, Work, p. 115; Stedman, New York Stock Exchange, p. 505.

27 NYSE, Committee on Commissions, 29 Feb. 1912; NYSE, Special Committee on Wire Connections, transcripts, 11 Jan 1900; NYSE, Special Investigation Committee on Continuous Quotation, transcripts, 21 Jan 19031905 Feb. 1903: NYSE. Special Committee on Copper Stocks, 18 May 1903. See also Boston Stock Exchange, Governing Committee, 10 April 1894, 3 Feb. 1898, 11 April 1898, 20 March 1914, and Committee on ways and means of increasing Business, 18 July 1904;Cornwell, W. C., “Bonds as Additional Banking Reserve,” in Hull, W. H., ed., Bonds as Investment Securities (Philadelphia, 1907), p. 118.

28 NYSE, Special Committee of Inquiry into the Stock Commission Business Report, 21 Aug. 1887; Committee on Commissions, 14 Aug. 1907, 14 Dec. 1910, 29 Feb. 1912, 9 April 1912, 30 Oct. 1912; NYSE, Governing Committee, 23 Feb. 1911, 20 April 1911, 25 Feb. 1914; NYSE, Special Committee on Foreign Business, Digest, 1934–1935. New York Commercial, 26 Feb. 1914; Brooklyn Daily Eagle, 1 March 1914; Pratt, Work, p. 114;Rosenbaum, W. E., The London Stock Exchange; Its Features and Usages (New York, 1910), pp. 37; Boston Stock Exchange, Ways and Means Committee, 18 July 1904, and Governing Committee, 20 March 1914.

29 Cope, S. R., “The Stock Exchange Revisited: A New Look at the Market in Securities in London in the Eighteenth Century,” Economica, 45 (1978), pp. 8, 15;Wheeler, J. F., The Stock Exchange (London, 1913), p. 41;Duguid, The Stock Exchange, p. 56; Day, Stockbroker's Office, p. 41; Royal Commission, Report, p. 20, and Minutes, pp. 21, 45;Molshelme, R. E. and Gardner, G. S., The Law and Customs of the Stock Exchange (London, 1905), p. 15.

30 For the benefits of an active market, and how it was created, see Cragg, A., Understanding the Stock Market (New York, 1929), p. 196;Howland, H. J., “Gambling Joint or Market Place? An Inquiry into the Workings of the New York Stock Exchange,” The Outlook, 28 June 1913, pp. 436–37.

31 Memorial and Remonstrance of the Board of Stock and Exchange Brokers of the City of New York to the State of New York, 23 March 1836, pp. 2, 4–6, 11; Money Trust Investigation, Report, p. 116;Hedges, J. E., Commercial Banking and the Stock Market before 1863 (Baltimore, 1938), pp. 9798;Myers, M. G., The New York Money Market (New York, 1931), vol. I, pp. 132–33, 305, 424;Schultz, Procedure, p. 8.

32 Goodhart, C. A. E., The Business of Banking, 1891–1914 (London, 1972), pp. 18, 122–27:Withers, E., The English Banking System (Washington, D.C., 1910), pp. 3738;Spicer, E. E., An Outline of the Money Market (London, 1908), p. 19; the following three articles are all in Journal of the Institute of Bankers: Cole, A. C., “Notes on the London Money Market,” 25 (1904), pp. 134–35;Steele, F. E., “On Changes in the Bank Rate of Discount,” 12 (1891), pp. 496–97;Cole, W. A., “The Relations between Banks and the Stock Exchanges,” 20 (1899), p. 409;Crump, A., The Theory of Stock Speculation (London, 1874), p. 19;Lavington, F., The English Capital Market (London, 1921), p. 142;Maddison, E. C., On the Stock Exchange (London, 1877), pp. 9394; Royal Commission, Minutes, pp. 37–40:LSE, General Purposes Sub-Committee of a non-permanent character, 10 Sept. 1914.

33 Goodhart, Business, p. 218;Blaisdell, W. M., Financing Security Trading (Philadelphia, 1935), pp. 33, 48, 84, 151–52;Hollander, J. H., Bank Loans and Stock Exchange Speculation (Washington, D.C., 1911), pp. 4, 24.

34 Myers, New York, pp. 131–33; Hedges, Commercial Banking, pp. 75, 97–98; Banker's Circular (London), 15 Feb. 1828, 19 Oct. 1832;Davis, L., “The Capital Markets and Industrial Concentration: The U.S. and U.K.—A Comparative Study,” Economic History Review, 19 (1966), p. 260.

35 Blaisdell, Financing, pp. 33, 84, 152, 156–58, 165;Ryan, J. P., “Call Money Rates and Stock Prices,” in Gibson, T., Special Marker Letters for 1908 (New York, 1909), p. 96;Osborne, A. A., Speculation on the New York Stock Exchange, September 1904–03 1907 (New York, 1913), p. 108;Nourse, Brokerage, pp. 209–10, 214–15, 223.

36 Woodlock, T. F., The Stock Exchange and the money market (New York, 1908), pp. 2829;New York Tribune, 28 Oct. 1879, 7 May 1884, 15 May 1884, 12 Nov. 1890, 19 Nov. 1890; Ryan, “Call Money Rates,” p. 96;Goodhart, C.A.E., The New York Money Market and the Finance of Trade (Cambridge, Mass., 1969), p. 17.

37 Grosvenor, W. M., American Securities: The Causes influencing investment and speculation and the fluctuations in values, 1872–1885 (New York, 1885), pp. 2324;Noble, H.G.S., The New York Stock Exchange in the Crisis of 1914 (New York, 1915), p. 14;Owens, N. N. and Hardy, C. O., Interest Rates and Stock Speculation (New York, 1925), pp. 56;U.S. Congress, Regulation of the Stock Exchange: Hearings before the Committee on Banking and Currency (Washington, D.C., 1914), Brief of Counsel on behalf of the New York Stock Exchange, pp. 529, 551, 553; NYSE, Streit, S. F., Report on European Stock Exchanges (New York, 1914), pp. 8, 16–17.

38 Royal Commission, Report, p. 9; Playford, F., Practical hints for Investing Money—with an explanation of the mode of transacting business on the Stock Exchange (London, 1856). pp. 1011;Hooper, W. E., ed., The Stock Exchange in the Year 1900 (London, 1900), p. 198.

39 Royal Commission, Minutes, pp. 29, 126, 130, 206;Day, Stockbroker's Office, pp. 44, 218, 219;Duguid, C., The Story of the Stock Exchange (London, 1901), p. 350;Financial News (London), 8 March 1905; Investors Review (London), 15 Feb. 1908; Times (London), 21 Feb. 1908: LSE, General Purposes, 27 June 1900, 17 Dec. 1902, 23 April 1903, 18 Dec. 1903, 11 July 1904, 15 Oct. 1906, 27 Nov. 1906.

40 NYSE, Committee on Arrangements, 5 Nov. 1877, 17 March 1884, 22 June 1891; Answers from the Committee of NYSE to supplemental questions, 1909, Horace White Papers. New York Historical Society, pp. 3, 35–36;Hamon, Manual, p. 107; Howland, Gambling, pp. 427–40; Antwerp, Van, Stock Exchange, pp. 279–80; Schultz, Procedure, pp. 55, 58, 64; Money Trust Investigation, Report, pp. 743–44, 753–55; New York Tribune, 6 July 1914; New York Herald, 4 May 1902;Van Antwerp, W. C. to Editor, Saturday Evening Post (Philadelphia), 13 June 1913;NYSE, Committee on Commissions, 25 Nov. 1900;Martin, H. S., The New York Stock Exchange (New York, 1919), pp. 143–53.

41 Thomas, W. A., The Provincial Stock Exchanges (London, 1973), pp. 9091, 202;LSE, General Purposes, 13 Jan 1908, 10 Feb. 1908, 17 Feb. 1908, 2 July 1908, 23 July 1908, 11 June 1909, 1 March 1910, 13 Jan 1912, 1 June 1912, 2 Sept. 1912, 30 Sept. 1912, 8 July 1914.

42 Greenwood, W. J., Foreign Stock Exchange Practice and Company Laws (London, 1911), p. 204;Cairncross, A. K., Home and Foreign Investment, 1870–1913 (Cambridge, 1953), pp. 90, 95;Skinner, T., The Stock Exchange Year Book and Diary (London, 1974), p. iii;Morgan and Thomas, Stock Exchange, p. 97; Antwerp, Van, Stock Exchange, pp. 345–58; Pratt, Work, p. 35.

43 Fenn, C., A Compendium of the English and Foreign Funds (London, 1837, 1840);NYSE, Van Veghten, D. K., Prices of Stocks and Rates of Exchange, 27 Oct. 18201819 April 1821; NYSE, G. A. Rollins, Call Quotation Book, 17 Sept. 18351826 March 1836.

44 Royal Commission, Minutes, pp. 29, 59, 66, 77, 79, 150, 369; Economist, 30 May 1885; LSE, General Purposes, Sub-Committee of a non-permanent character, 25 April 1898, 27 April 1899, 25 April 1900, 22 April 1901; Morgan and Thomas, Stock Exchange, pp. 282–83; General Securities Corp., Investors' Handy Book of Active Stocks and Shares (London, 1912). p. ix;Edeistein, M., “Rigidity and Bias in the British Council Capital Market, 1870–1913,” in McCloskey, D. N., ed., Essays on a Mature Economy: Britain after 1840 (London, 1971), p. 87.

45 Pratt, Work, pp. 51, 82; Schultz, Procedure, p. 14.

46 Van Antwerp, W. C. to Abbott, E. F., Citizens Bank, Kansas, 7 July 1914; Myers, New York, pp. 42–43; New York Evening Post, 3 May 1913; Greenwood, Foreign Stock Exchange, p. 198.

47 Calculation based on the Commercial and Financial Chronicle (New York), 28 Feb. 1914, and the Stock Exchange Official Intelligence (London, 1914). As with London, only a small number of issues were very actively traded.

48 Fisk, and Hatch, , Memoranda concerning Government Bonds (New York, 1882), p. 23;Harris, N. W. and Co., Municipal Bonds (New York, 1897). p. 20;Nelson, S. A., The Bond Buyers' Dictionary (New York, 1907), p. 81;Halsey, N. W. and Co., The most satisfactory bonds (New York, 1912), p. 15.

49 Navin, T. R. and Sears, M. V., “The Rise of a Market for Industrial Securities,” Business History Review, 29 (1955), p. 136;Sears, M. V., “Gold and the Local Stock Exchanges of the 1860s,” Explorations in Entrepreneurial History, 2nd ser., 6 (1968/1969), pp. 200–1.U.S. Congress, Regulation of the Stock Exchange, p. 120; NYSE. Committee on unlisted securities. 17 Nov. 1897, 22 Sept. 1908; NYSE, Committee on mining securities, 28 April 1880; NYSE, Committee on Stock List, 7 March 1872, 9 July 1884; NYSE. Committee on Arrangements. 10 June 1881: NYSE, Governing Committee, 25 Jan 1882, 8 March 1882, 1 Nov. 1882, 11 May 1886, 13 April 1887, 12 Nov. 1902; NYSE, Special Committee on unlisted dept.—minority report, 22 Jan 1896: NYSE, Special Committee on Wire Connections—Transcripts, 18 Jan 1900.

50 Hicking, J. and Co., Men and Idioms of Wall Street (New York, 1875), p. 17:NYSE, Reply by the NYSE to the Governor's Committee on Speculation, pp. 32–33: NYSE, Governing Committee, 16 March 1910.

51 Money Trust Investigation, Report, p. 33.

52 Payne, P. L., “The Emergence of the Large-Scale Company in Great Britain, 1870–1914,” Economic History Review, 20 (1967), pp. 519, 523, 527, 533–34, 537–40:Chandler, A. D., The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977). pp. 332–33, 338, 373–74, 376;Krooss and Blyn, A History of Financial Intermediaries, p. 129.

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