The Emergence of the London Stock Exchange as a Self- Policing Club
In the early stock market in London there were substantial risks of non-payment and fraud. (Mortimer, 1801) According to Hobbesian theory, we would expect stock markets to develop only after government has implemented rules and regulations to eliminate these problems. The historical account, however, provides evidence that solutions to these problems did not come from the state. This article outlines the emergence of the London Stock Exchange, which was created by eighteenth century brokers who transformed coffeehouses into private clubs that created and enforced rules. Rather than relying on public regulation to enforce contracts and reduce fraud, brokers consciously found a way to solve their dilemmas by forming a self-policing club.
|Date of creation:||2002|
|Date of revision:|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cowen, Tyler & Sutter, Daniel, 1999. "The Costs of Cooperation," The Review of Austrian Economics, Springer, vol. 12(2), pages 161-73, November.
- Neal, Larry, 1987. "The Integration and Efficiency of the London and Amsterdam Stock Markets in the Eighteenth Century," The Journal of Economic History, Cambridge University Press, vol. 47(01), pages 97-115, March.
- Benson, B.L., 1993.
"The Impetus for Recognizing Private Poverty and Adopting Ethical Behavior in a Market Economy: Natural Law, Government Law, or Evolving Self- Interest,"
1993_04_02, Department of Economics, Florida State University.
- Benson, Bruce L, 1993. "The Impetus for Recognizing Private Property and Adopting Ethical Behavior in a Market Economy: Natural Law, Government Law, or Evolving Self-Interest," The Review of Austrian Economics, Springer, vol. 6(2), pages 43-80.
- J. A. Kregel, 1994. "The Evolution of Securities Market Organisation," Working Papers 189, Dipartimento Scienze Economiche, Universita' di Bologna.
- Telser, L G, 1980. "A Theory of Self-enforcing Agreements," The Journal of Business, University of Chicago Press, vol. 53(1), pages 27-44, January.
- Dennis W. Carlton, 1984. "Futures markets: Their purpose, their history, their growth, their successes and failures," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 4(3), pages 237-271, 09.
- Boot, Arnoud W A & Greenbaum, Stuart I & Thakor, Anjan V, 1993. "Reputation and Discretion in Financial Contracting," American Economic Review, American Economic Association, vol. 83(5), pages 1165-83, December.
- Scott Chambers & Colin Carter, 1990. "U.S. futures exchanges as nonprofit entities," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 10(1), pages 79-88, 02.
- Kregel, J A, 1995. "Neoclassical Price Theory, Institutions, and the Evolution of Securities Market Organisation," Economic Journal, Royal Economic Society, vol. 105(429), pages 459-70, March.
- Bryan Caplan & Edward Stringham, 2003.
"Networks, Law, and the Paradox of Cooperation,"
The Review of Austrian Economics,
Springer, vol. 16(4), pages 309-326, December.
- Banner, Stuart, 1998. "The Origin of the New York Stock Exchange, 1791-1860," The Journal of Legal Studies, University of Chicago Press, vol. 27(1), pages 113-40, January.
- Macey, Jonathan R & O'Hara, Maureen, 1999. "Regulating Exchanges and Alternative Trading Systems: A Law and Economics Perspective," The Journal of Legal Studies, University of Chicago Press, vol. 28(1), pages 17-54, January.
- Edward Glaeser & Simon Johnson & Andrei Shleifer, 2001. "Coase Versus the Coasians," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 853-899.
- Cowen, Tyler, 1992. "Law as a Public Good: The Economics of Anarchy," Economics and Philosophy, Cambridge University Press, vol. 8(02), pages 249-267, October.
- William L. Silber, 1981. "Innovation, competition, and new contract design in futures markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 1(2), pages 123-155, 06.
- Daniel R. Fischel & Sanford J. Grossman, 1984. "Customer protection in futures and securities markets," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 4(3), pages 273-295, 09.
- Stringham, Edward, 2003. "The extralegal development of securities trading in seventeenth-century Amsterdam," The Quarterly Review of Economics and Finance, Elsevier, vol. 43(2), pages 321-344.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:25415. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joachim Winter)
If references are entirely missing, you can add them using this form.