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Deep Cultist @NathanTankus
, 17 tweets, 4 min read Read on Twitter
I'm reading Margaret Myers "The New York Money Market: Origins and Development"! I may blog it, but for now I'm livetweeting it. cc/ @DanielaGabor @JWMason1 @cacrisalves @ingridharvold @tymoignee @stf18
First up, something we don't talk enough about. The fact that stock exchanges and banks didn't exist in the Americas before the revolutionary war. Institutions matter and markets aren't natural!
"Philadelphia quotations were published throughout the country; sterling exchange rates originated in Philadelphia; and domestic exchange rates were ordinarily given in terms of Philadelphia values" (page 4).
this is an interesting example of institutions producing reference prices that, while bids and asks are involved by design, don't represent "all possible bids and asks".a certain subset of transactions are supposed to represent the whole.I'll have more on reference prices soon :)
"The branch in New York also brought upon itself the bitter opposition of the state banks by its 'unreasonable' practice of sending home their notes for redemption, instead of paying them out over its counter and helping them remain in circulation"
a theme that will show up quite a lot- fights over the average effective maturity of state bank notes
My first disagreement is around the beginning of chapter 2 (page 11). It confuses the lack of a distinct category of "bonds" in the american colonies as "lack of credit" when actually colonial bills of credit were a hybrid of paper money and bonds with maturities.
The next part of the chapter is a good summary of what is now mainstream historiography of the period- corporate charters emerged what might otherwise be surprisingly late in the United States and were a heavily contested "legal privilege".
most of the early corporate charters that were granted were for specific public purposes, primarily building railroads, roads and bridges and the stock issuances were small and decentralized- meant to be funded by local actors who benefited form the public infrastructure.
and here's one for #businessaving twitter- even when manufacturing corporations began to grow, they rarely sought outside funds to fund investment. Instead, retained earnings were the primary basis of the growth of manufacturing business in the antebellum era.
back to the history of the production of reference prices: "The first trading in securities was carried on by merchants and by auctioneers as a part of their regular business in other commodities.
By 1792 the activity in Wall Street was sufficient to produce a group of specialists in stock trading. When five of the auctioneers, seeing a part of their business about to be taken from their hands, proposed to establish a daily regular auction of stocks,
the brokers were forced into a compact for self defense,and drew up the first informal agreement for a Stock Exchange.They mutually promised not to patronize the auctioneers, not to charge a commission of less than 1/4 of 1% and to give each other preference in sales.
This effectually nipped the scheme of the auctioneers, and since the one-way type of market which they were able to offer to investors was less satisfactory than the two-way market provided by brokers, the market was practically left to the brokers." (page 16).
shortage of safe asset twitter needs to cover the late 19th century where apparently the federal national debt stopped trading because of how above par it was.
"Increased business warranted a more formal organization of the [NY] Brokers, and in 1817 William Lamb was sent to Philadelphia, and 7 firms and 13 individuals became members of the new Board of Brokers, paying an initiation fee of $25" (page 17)
"The trading list at that time was long in comparison with the list of 1792, but contained only the stocks of Federal and state governments, banks and insurance companies No industrial or retired shares were included" (page 17-18) note "stock" originally referred to public debt.
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