What Can We Learn for Today from 300-Year-Old Writings about Stock Markets

Bibliographic Data

ID4297659
AuthorsPaul Harrison (0000-0001-8769-5615, corresponding author)
Year2004
Volume36
Issue4
Pages667-688
Publication date2004-11-01
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueHistory of Political Economy (JOURNAL)
Journal identifiersISSN: 0018-2702 • E-ISSN: 1527-1919
PublisherDuke University Press (PUBLISHER • US)
DOI10.1215/00182702-36-4-667
OpenAlexW2062346857
LanguageEN
Citations received5
References cited18

In this article I catalog how historical analysis using a variety of writings on stock markets from around the early eighteenth century can help inform our understanding of financial market institutions and behavior. In so doing, I hope to suggest how the history of economic thinking can have direct value for today’s financial economist. Old writings, of course, are a trove of interesting vignettes. For example, the term bear to describe a stock-market pessimist derives from the seventeenth-century slang for short-sellers, a reference to risk-addled speculators who dared to sell the bear’s skin before catching the bear; John Burr Williams, who is frequently credited with inventing the dividend discount model in his Theory of Investment Value (1938), was nonetheless writing well over 200 years after the widespread use of such valuation techniques; and the explosion in the use of put and call options in the 1970s occurred nearly 300 years after their use swept the Amsterdam and then London stock exchanges in the late 1600s. But more importantly, the historical record is also a source of institutional detail and substance. For instance, that record reveals how investors relied on a trader’s reputation to honor Correspondence may be e-mailed to [email protected] or addressed to the author at the Federal Reserve Board, 20th and C Street NW, Washington, D.C. 20551. I thank Dan Covitz and Neil De Marchi for detailed comments and suggestions, and Craufurd Goodwin, Roy Weintraub, and seminar participants at Duke University for helpful discussion. Some of the background text for this article is drawn directly from Harrison 2001. Naturally, the views expressed here are mine and not those of the Federal Reserve or the Board of Governors. This article is, to a large extent, a summary of an ongoing research project of mine and so draws directly on previous published and unpublished research where some of the points are made in more detail

Archaeology · Economics · Financial economics · Neoclassical economics · Stock (firearms · Corporate Finance and Governance · Financial Markets and Investment Strategies · History · Monetary Policy and Economic Impact

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