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The micro-foundations of the early London capital market: Bank of England shareholders during and after the South Sea Bubble, 1720-25 -super-1

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  • ANN M. CARLOS
  • LARRY NEAL

Abstract

Using two sources, Bank of England Transfer Books and Stock Ledgers, this article explores the nature of the 'customer base' for Bank shares during and after the South Sea Bubble. This examination uncovers the nature of individual participation in this early capital market. The Transfer Ledgers record roughly 7,000 transfers during 1720, while the Ledger Books from 1720-25 record over 8,000 individuals holding stock. The analysis finds the customer base had breadth and depth, comprising individuals from across the social spectrum, from all over England and Europe. The market was diverse and liquid. Activity during the Bubble came from those living in and around London, with most traders participating in the market only twice at most. While the majority of participants were men, there was a sizeable female presence. Men as a group lost money from their market activity, but women made money. In the five years after the Bubble, the customer base was sustained. The analysis argues that the secondary market in financial assets cannot be dismissed as mere gambling devices, and that the basis for a mutually productive interaction between the financial sector and the real sector of the economy was already in existence and was sustained through the shock of the South Sea Bubble and its collapse. Copyright Economic History Society 2005.

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Bibliographic Info

Article provided by Economic History Society in its journal The Economic History Review.

Volume (Year): 59 (2006)
Issue (Month): 3 (08)
Pages: 498-538

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Handle: RePEc:bla:ehsrev:v:59:y:2006:i:3:p:498-538

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Cited by:
  1. Gary S. Shea, 2011. "(Re)financing the Slave Trade with the Royal African Company in the Boom Markets of 1720," CDMA Working Paper Series 201114, Centre for Dynamic Macroeconomic Analysis.
  2. Gary S. Shea, 2011. "A Social Network for Trade and Inventories of Stock during the South Sea Bubble," CDMA Working Paper Series 201110, Centre for Dynamic Macroeconomic Analysis.
  3. Stephen Quinn, 2008. "Securitization of Sovereign Debt: Corporations as a Sovereign Debt Restructuring Mechanism in Britain, 1694-1750," Working Papers 200701, Texas Christian University, Department of Economics.
  4. Andrew Mays & Gary S. Shea, 2011. "East India Company and Bank of England Shareholders during the South Sea Bubble: Partitions, Components and Connectivity in a Dynamic Trading Network," CDMA Working Paper Series 201109, Centre for Dynamic Macroeconomic Analysis.
  5. Ann M Carlos & Karen Maguire & Larry Neal, 2008. "“A knavish people ...so dextrous in bargaining that it is impossible for Christians to expect any advantage in their dealings with them” - London Jewry and the Stockmarket during the South Sea Bub," Working Papers 200806, School Of Economics, University College Dublin.
  6. Eric Hilt, 2007. "When did Ownership Separate from Control? Corporate Governance in the Early Nineteenth Century," NBER Working Papers 13093, National Bureau of Economic Research, Inc.

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