Women investors in early capital markets, 1720-1725

Financial History Review

Volumn 11, Issue 2, 2004, Pages

  Carlos, Ann M ^a,c   Neal, Larry ^b  

^a TRINITY COLLEGE DUBLIN   (Ireland)

^b UNIVERSITY OF ILLINOIS AT URBANA CHAMPAIGN   (United States)

^c UNIVERSITY OF COLORADO   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 10444246599     PISSN: 09685650     EISSN: None     Source Type: Journal    
DOI: 10.1017/S0968565004000137     Document Type: Review

References (68)

1. An early version of this paper was presented at the Economic History Society Conference, Durham, 2003. The authors are especially grateful for the technical support and cooperation of Henry Gillett and Sarah Millard, archivists of the Bank of England and the support of the National Science Foundation. We are indebted to Sylvia Allegretto and Kirsten Wandschneider for research assistance and gratefully acknowledge the comments of the editor and anonymous referee. Ann Carlos thanks the Sutherland Centre, IIIS, Trinity College, Dublin for its research facilities.
2. P. Rousseau, 'Financial systems, economic growth and globalization', Historical Perspectives on Financial Development and Economic Growth, Federal Reserve Bank of St Louis, 84 (2003); P. Rousseau and R. Sylla, 'Emerging financial markets and early US growth', in M. Bordo, A. Taylor and J. Williamson (eds.), Globalization in Historical Perspective (Chicago, 2003); L. Neal, The Rise of Financial Capitalism (Cambridge, 1990).
3. P. Rousseau, 'Financial systems, economic growth and globalization', Historical Perspectives on Financial Development and Economic Growth, Federal Reserve Bank of St Louis, 84 (2003); P. Rousseau and R. Sylla, 'Emerging financial markets and early US growth', in M. Bordo, A. Taylor and J. Williamson (eds.), Globalization in Historical Perspective (Chicago, 2003); L. Neal, The Rise of Financial Capitalism (Cambridge, 1990).
4. P. Rousseau, 'Financial systems, economic growth and globalization', Historical Perspectives on Financial Development and Economic Growth, Federal Reserve Bank of St Louis, 84 (2003); P. Rousseau and R. Sylla, 'Emerging financial markets and early US growth', in M. Bordo, A. Taylor and J. Williamson (eds.), Globalization in Historical Perspective (Chicago, 2003); L. Neal, The Rise of Financial Capitalism (Cambridge, 1990).
5. R. Levine, 'More on finance and growth: more finance, more growth', Historical Perspectives on Financial Development and Economic Growth, Federal Reserve Bank of St Louis, 84 (2003); R. Rajan and L. Zingales, 'Financial dependence and growth', American Economic Review, 88 (1998).
6. R. Levine, 'More on finance and growth: more finance, more growth', Historical Perspectives on Financial Development and Economic Growth, Federal Reserve Bank of St Louis, 84 (2003); R. Rajan and L. Zingales, 'Financial dependence and growth', American Economic Review, 88 (1998).
7. See, in particular, O. Gelderman and J. Jonker, 'The finance of the Dutch East India trade, and the rise of the Amsterdam market, 1595-1612', unpublished working paper, University of Utrecht, 2002.
8. P. Earle, A City Full of People: Men and Women of London, 1650-1750 (London, 1994), p. 120.
9. P. Sharpe, Adapting to Capitalism: Working Women in the English Economy, 1700-1850 (London, 1996), pp. 8-9.
10. In her discussion of reform of married women's property law, Holcombe points out that common law 'recognized four different categories of property and applied different rules to each'. There was real property and personal property (or chattels personal) and chattels real and chattels incorporeal. L. Holcombe, Wives and Property: Reform of the Married Women's Property Law in Nineteenth Century England (Oxford, 1983), p. 19.
11. Quoted in Holcombe, Wives and Properly, p. 25.
12. The inability to sue or to be sued restricted the ability of married women to work or trade on their own account. Although married women did work, they are just not very visible in the historical record. Local custom in London during the seventeenth century did allow married women who pursued a different trade from their husband to trade as a feme sole. S. Mendelson and P. Crawford, Women in Early Modern England, 1550-1720 (Oxford, 1998), p. 330.
13. S. Staves, Married Women's Separate Property in England, 1660-1833 (Cambridge, Mass., 1993), p. 27.
14. Rights of jointure were covered under equity and so brought to the Chancery court and not the court of Common Pleas. See Staves, Married Women's Separate Property for this discussion of jointure; the quotation is from p. 102.
15. B. Hill, Women Alone: Spinsters in England, 1660-1850 (Yale, 2001).
16. Earle, City of People, p. 150.
17. C. Ingrassia, Authorship, Commerce and Gender in Early Eighteenth Century England: A Culture of Paper Credit (Cambridge, 1998), p. 34.
18. Quoted in Staves, Married Women's Separate Property, p. 36.
19. Sec Ingrassia, Authorship, for a discussion of these forces.
20. See Neal, Rise of Financial Capitalism, ch. 4, for a more complete discussion of the nature of the debt for equity swaps.
21. P. G. M. Dickson, The Financial Revolution in England: a Study in the Development of Public Credit, 1688-1756 (London, 1967), ch. 5.
22. Those companies competing for investors' favor against the booming South Sea Company began at this time to take defensive measures. Their standard response was to mortgage a portion of their capital stock, reducing the number of their stock available for trade on the stock market, while at the same time providing relatively cheap credit to their stockholders. This credit could be used to purchase stock in any company or for financial settlement purposes. Starting May 10, 1720, the Bank of England, most threatened by the probable success of the South Sea Company, mortgaged 29 percent of its capital stock. The East India Company and the Royal African Company followed suit.
23. The price quoted for South Sea Company stock during this period was, therefore, a forward price, adding a forward premium of the current market rate of interest to the expected future spot price at the end of August. The transfer books for the other companies remained open. This means that the actions of these stockholders during this period of intense reassessment of the market can be observed.
24. This occurred when it became evident that the Company's banking affiliate, the Sword Blade Company, was out of cash.
25. Then the capital of the South Sea Company was split in half: £16 million as stock in the trading company and £16 million as fixed interest stock: the so-called 'South Sea Annuities'. These were perpetual annuities with a 5 percent annual return, later reduced to 4 percent in 1727, arguably the saving financial innovation of the age, as they were redeemable at the will of the government, whenever market interest rates fell below the fixed rate. The success of these securities led eventually to the issue of the 3 percent Bank Annuity of 1726, and from 1727 to 1751, successive 3 percent perpetual annuities issued by the government but managed by the Bank. In 1751, these were all consolidated into the Three Per Cent Consol, the classic government debt instrument for the next century and a half. See Neal, Financial Revolution, ch. 4.
26. These transfers are recorded in separate mortgage ledgers.
27. Ingrassia, Authorship, Commerce and Gender, ch. 1
28. T. Mortimer, Every Man His Own Broker:, or a Guide to the Stock-Exchange (11th edn, London, 1791), pp. xix-xx.
29. To provide a benchmark for these figures, consider that , £100 pounds in 1720 was the equivalent of £9766 today. This means that the current value of Johanna Cock's book value of sales of £36,000 lies in the range of £3.5 million. J. McCusker, 'How Much is That' «www.eh.net»
30. National Archives, Kew, Prob 11/682, Walter Cock «www.documentsonline.pro.gov.uk»
31. Of some interest here is the question of how Johanna Cock became a middleman. Her husband's share ownership shows no indication that he was dealing in Bank of England stock.
32. Nehemiah Lambert was an nephew of Walter Cock, the son of his sister Ann.
33. We assume that Johanna was operating on her own account without the aid of the three named gentlemen, who may never have been involved in her stockmarket dealings but apparently did have a letter of attorney for some purpose.
34. East India Company, Transfer Books, India Office Record, L/AG/14/5/5.
35. Alphabet Ledgers, AC27/434, folio 6226. Kops was her father-in-law's family name. It had been changed to Koch in Walter's generation.
36. National Archives, Kew, Prob 11/682 Peter Cock.
37. National Archives, Kew, Prob 11/682 Thomas Cock.
38. All share prices are listed relative to a par value of £100.
39. We are collecting data for these other companies. Obviously, we would really like to have information on shareholding in the South Sea Company, and we are inferring that from the ledgers of the South Sea Annuities created in 1723. These annuities were allotted proportionately to the South Sea shareholders as of June 1723.
40. Eligibility to vote and to stand for the board of directors was based on the number of shares owned. A shareholder had to hold a certain number of shares to vote and more to be eligible for election.
41. The date in the transfer book is the date when the transfer is recorded and not necessarily when the sale took place but the date recorded is in effect the date of official transfer. We also have no reason to believe that much time existed between sale and transfer.
42. See Scott, Constitution and Finance, vol. 3.
43. A. Carlos, N. Moyen and J. Hill, 'Royal African Company stock prices during the South Sea Bubble', Explorations in Economic History, 39 (2002), p. 67.
44. This point has been made by others. See Dickson, Financial Revolution, or Ingrassia, Authorship, Commerce and Gender. However, care needs to be taken when talking about women in the market, whether one is examining the total number of women shareholders, the percentage of the capital held by women or the number of women actively trading shares. The percentages of those actively trading are smaller than the percentage of total women holding Bank shares, as noted later in the text.
45. This point has been made by others. See Dickson, Financial Revolution, or Ingrassia, Authorship, Commerce and Gender. However, care needs to be taken when talking about women in the market, whether one is examining the total number of women shareholders, the percentage of the capital held by women or the number of women actively trading shares. The percentages of those actively trading are smaller than the percentage of total women holding Bank shares, as noted later in the text.
46. Any woman with a title is considered a member of the nobility. Thus our numbers form only a lower bound estimate.
47. Foreign women and men would only get news by the fastest boat. With daily changes in the market, this might place them at a disadvantage. Obviously, a foreign resident could have an agent living in London who would undertake purchases and sales for them. But this would require giving the agent a lot of control over one's portfolio.
48. By way of comparison, among male shareholders Robert Westley had the smallest transaction when he sold £3 book value to Thomas Houghton; while Samuel Strode, who is listed as a broker, sold a £40,000 book value block of shares to Edward Poulter, a London stationer, on 11 August 1720.
49. A. Erickson, Women and Property in Early Modern England (London, 1993), ch. 12.
50. As noted earlier, while the date of transfer and the date of sale or purchase might be different, ownership was transferred on the date of registration. Knowing the date of actual transaction is unlikely to change the results in any material way.
51. Two women are not included. Both are unrepresentative. The first is Johanna Cock, whom we discuss in the text. The second is Barbara Calthorpe, a widow in Southampton. She received an £8,000 block of shares on the death of her husband, who died in July 1720. The price on the day of transfer was £236.5 relative to £147 at the end of the year. This gives a paper loss of over £7,000. Yet even if one includes this particular transfer, overall women still have a net gain of over £17,000.
52. These women acquired their shares at very different dates and at different purchase prices. The method used here allows us to make a general comparison of their within-year gains or losses. We are taking a calendar year, January to December, as the basis for comparison.
53. In fact, the influx of new stockholders before the dividend date had been so large that, to accommodate them, a Supplementary Ledger had been opened, and then an Extra Supplementary Ledger.
54. The Alphabet Ledgers also record miscellaneous information with respect to death, bankruptcies, probates, trusts, guardianships and powers of attorney in order to help clerks determine what legal restrictions applied to the disposal of certain stockholdings.
55. The original entries are, of course, handwritten so we transcribed this information into a basic spreadsheet form. The Ledgers include a number of duplicate entries, so we actually started with almost 9,000 holders. Variation in spelling due to entry by different clerks or due to the lack of uniformity of spelling in the period had to be taken into account. Although variation in spelling is not an issue when one is looking at just one company, because the ultimate goal is to be able to compare ownership across many different financial instruments, we had to make adjustments in the basic spelling of names to make them computer compatible. Thus the many variations of Eleanor, Matthew or even Anne were standardized. The original spellings are maintained in the master file.
56. Dickson, Financial Revolution, tables, 36, 38, 40, 43.
57. As Peter Lindert points out, these definitions 'produced the momentary anomaly that nobody made a living as a spinner of the yarn that employed so many male weavers'. 'English occupations, 1670-1811', Journal of Economic History, 40 (1980) p. 691.
58. Because we currently do not have the actual dates on which women initially purchased shares and finally sold shares, we cannot say who held shares for the longest period of time.
59. In breaking out the City of London, we are following Earle's delineation of his data in City Full of People, p. xiii.
60. We used the 1747 A to Z of London to define the City boundaries. Over time, regions in Middlesex especially would become part of the greater London area, but this was not the case in the 1720S.
61. These numbers contrast with those given by Ingrassia, Authorship, Commerce and Gender, p. 30. Ingrassia misquotes Dickson's figures for the percentage of women shareholders as the percentage shareholding by women. Dickson's figures from 25 March 1724 show 20.7 percent of the shareholders were women, but they held 12.6 percent of the capital stock. Dickson, Financial Revolution, p. 282.
62. These numbers contrast with those given by Ingrassia, Authorship, Commerce and Gender, p. 30. Ingrassia misquotes Dickson's figures for the percentage of women shareholders as the percentage shareholding by women. Dickson's figures from 25 March 1724 show 20.7 percent of the shareholders were women, but they held 12.6 percent of the capital stock. Dickson, Financial Revolution, p. 282.
63. The Duchess of Marlborough may have begun her investment strategy when she inherited her mother's estate. Indeed, her mother stipulated that the Duke of Marlborough ('tho I love him from my heart') was to have nothing to do with the inheritance. Once again we see the movement of assets between women. F. Harris, A Passion for Government: the Life of Sarah, Duchess of Marlborough (Oxford, 1991), p. 74. The Duke of Marlborough died in 1722. Ingrassia, Authorship, Commerce and Gender, p. 32, states that Sarah, Duchess of Marlborough held £166,855 of Bank of England stock. We find no evidence of this during the 1720-5 period.
64. The Duchess of Marlborough may have begun her investment strategy when she inherited her mother's estate. Indeed, her mother stipulated that the Duke of Marlborough ('tho I love him from my heart') was to have nothing to do with the inheritance. Once again we see the movement of assets between women. F. Harris, A Passion for Government: the Life of Sarah, Duchess of Marlborough (Oxford, 1991), p. 74. The Duke of Marlborough died in 1722. Ingrassia, Authorship, Commerce and Gender, p. 32, states that Sarah, Duchess of Marlborough held £166,855 of Bank of England stock. We find no evidence of this during the 1720-5 period.
65. Unfortunately, we do not have information on whether these women voted in the elections for the 24 members of the Court of Assistants. Even if done by proxy by attorneys, they had the right to exercise this authority. Although somewhat contrary to the conventional wisdom, we should not reject the position that these women did exercise their rights.
66. Erickson, Women and Property, p. 194. See also Earle, City of People.
67. Erickson, Women and Property, p. 194. See also Earle, City of People.
68. Erickson, Women and Property.