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Business Activity and the Boston Stock Market, 1835-1869

  • Jeremy Atack
  • Peter L. Rousseau

This paper examines the performance of the Boston stock market, the nation's premier market for industrials, between 1835 and 1869, developing new indexes of price performance, dividend yields and total holding period returns for bank stocks and industrial equities using annual data from Martin (1871). Using these new series and a set of VAR models we conclude that disturbances in the banking sector, as manifested by declines in total stockholder returns, led to increases in short-term lending rates which in turn led to declines in the price performance of traded manufacturing firms. There is no evidence of feedback from manufacturing returns to bank stock prices via lending rates. The findings are consistent with a key role for banks in nineteenth century business fluctuations.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Historical Working Papers with number 0103.

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Date of creation: Aug 1997
Date of revision:
Publication status: published as Exlorations in Economic History, 36 (April 1999): 144-179.
Handle: RePEc:nbr:nberhi:0103
Note: DAE
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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  1. Sims, Christopher A & Stock, James H & Watson, Mark W, 1990. "Inference in Linear Time Series Models with Some Unit Roots," Econometrica, Econometric Society, vol. 58(1), pages 113-44, January.
  2. repec:cup:cbooks:9780521460965 is not listed on IDEAS
  3. Anindya Banerjee & Robin L. Lumsdaine & James H. Stock, 1990. "Recursive and Sequential Tests of the Unit Root and Trend Break Hypothesis: Theory and International Evidence," NBER Working Papers 3510, National Bureau of Economic Research, Inc.
  4. Satterthwaite, Mark A. & Williams, Steven R., 1989. "Bilateral trade with the sealed bid k-double auction: Existence and efficiency," Journal of Economic Theory, Elsevier, vol. 48(1), pages 107-133, June.
  5. Bodenhorn, Howard, 1992. "Capital Mobility and Financial Integration in Antebellum America," The Journal of Economic History, Cambridge University Press, vol. 52(03), pages 585-610, September.
  6. Cason, Timothy N., 1992. "Call market efficiency with simple adaptive learning," Economics Letters, Elsevier, vol. 40(1), pages 27-32, September.
  7. Schwert, G William, 2002. "Tests for Unit Roots: A Monte Carlo Investigation," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 5-17, January.
  8. Rousseau, Peter L & Wachtel, Paul, 1998. "Financial Intermediation and Economic Performance: Historical Evidence from Five Industrialized Countries," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(4), pages 657-78, November.
  9. Arthur F. Burns & Wesley C. Mitchell, 1946. "Measuring Business Cycles," NBER Books, National Bureau of Economic Research, Inc, number burn46-1, July.
  10. Johansen, Soren, 1991. "Estimation and Hypothesis Testing of Cointegration Vectors in Gaussian Vector Autoregressive Models," Econometrica, Econometric Society, vol. 59(6), pages 1551-80, November.
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