Visualizing History

Sourced from this interesting article.

From the Archives

Speculative Notes, and Notes on Speculation, Ideal and Real

Okay, this one is a two-parter, but unbelievably worth it. So please, please, please just trust me on this one. I can honestly say it was one of the most page turning bits of finanical history I’ve read in months. Okay, so first read this article about the Poyais Bubble for background, and then come back…

Now, read from the top of page 102 through 107 of this book on speculation, written in 1864. Talk about distressed assets…!

Sunday Reads: The One Year Anniversary

Since it’s the one year anniversary of ‘Financial History: Sunday Reads’, this week’s edition is going to be a little different. However, don’t worry! There will still be all the links you’ve come for later on in the email, but I wanted to focus this post on saying some thank yous to the people helping me along the way, and describing one year of Sunday Reads.

The Beginning

Might as well start at the beginning of what now marks 52 straight weeks of Sunday mornings filled with bubbles, manias, panics, and crashes.

365 days ago, I had an idea:

While I absolutely love researching and writing my own articles, I figured that people might enjoy reading some of the resources I come across in my writing process. To my surprise, people were interested! The first post took off better than I ever could have hoped for, and this began a 52 week journey of scrambling every week to find 5 articles (and the occasional podcast) on the world of financial and economic history.

Special Thank Yous

Before I go any further, there are some people that I owe a particularly sincere thank you to, so please indulge me.

I am heavily indebted to Jim O’Shaughnessy for his kindness and generosity in re-posting every single one of my Sunday Reads each week. It is really hard to put into words how much that has meant to me during this whole process, and I’m certain there wouldn’t be half as many people tuning in each Sunday morning for these posts if it wasn’t for Jim.

There is also no question that this beautiful website (which I take no responsibility for) never would have happened if it wasn’t for Mr. Adam Collins . Seriously. Adam reached out to me after seeing one of my tweets reference that I have no idea how to build a website, and offered to do it for me. This will always be one of the kindest things that anyone has ever done for me. The website construction process was months of building (Adam), emails, and early Saturday morning screen shares to walk through updates. If you haven’t checked out his writing, fix that now.

I also owe a great deal to Jason Zweig, who I frequently refer to as my ‘Financial History Dealer’ because of all the phenomenal content and archival resources he sends my way. I’ve been the lucky recipient of Jason’s insightful feedback, suggestions, and archival resources. So thank you, Jason!

One Year of Sunday Reads

I am sincerely grateful for all of you that take the time to read these posts each Sunday, and to those that are generous enough to share them with others to help spread the word. It is not something that I take for granted, so from the bottom of my heart, thank you. I am constantly blown away by the generosity and support of the online community. To say that the last year has been a wild ride would be an understatement. After the Sunday Reads solidified my status as a Category 5 History Nerd, I have been fortunate to speak with and get to know some truly fascinating people that share a passion for financial history. In particular, I want to thank those that have given me a platform upon which to nerd out.

In February 2019, Tracy Alloway and Joe Weisenthal allowed me to come chat about the 17th century tech bubble on an episode of Odd Lots, which was an experience that I will never forget. I had absolutely no right to be on there, but I’m glad that they didn’t care and let be do a guest appearance anyway!

And let me tell you, if I had no business being on Odd Lots, I’m sure someone was fired for letting me come talk about 14th century shipping contracts on Bloomberg TV with Scarlet Fu. I am eternally grateful for Eric Balchunas taking a chance on a 23 year old history kid from Twitter. That was also a day that I’ll never forget, but for three reasons.

  1. I’d never been on TV before.
  2. I never knew that my heart could beat as fast, or as hard, as it did when the ‘Live’ light went on in the studio. The only thing going through my mind in the image below was “Don’t have a heart attack on national television.”
  3. It was the first time in my life that I had uttered the words “One second, I have to take my makeup off.”

Finally, I want to thank Mr. Jim Chanos for letting me come speak about the 1690s tech bubble to his class at Yale. I knew that the students would be concerned about my noticeably lacking qualifications (as was I), so made sure to address their concerns in the first slide:

For anyone interested in the rest of the presentation, they can find it here.

A Final Thank You, and a Favor

Finally, I just want to reiterate one more time how grateful I am to all of you for your constant support and encouragement. It means a great deal to me that you look out for my posts each Sunday, and take the time out of your busy lives to see what 18th century panic might be covered in my post. We’re a small group of history nerds, but it’s a tight group! I make absolutely no money off of doing these posts, so the kind words and support from readers like yourselves are what makes the hours of research each week worth it.

If you can believe it, I have one favor to ask of you. If you’ve enjoyed the Financial History: Sunday Reads over the last 52 weeks, it would mean the world to me if you could post a link on social media to the site, and give an example of your favorite link in the last year, or how an article has potentially benefited your research. Thank you all, and here’s to the next year!!

Sunday Reads

The Factor Archives: Shareholder Yield

In the second installment of my Factor Archives series, I covered the centuries old practice of distributing capital to shareholders in the form of buybacks and dividends. Many might think that buybacks are a recent phenomenon, but their history stretches back centuries.

Reach for Yield and Real Estate

“Do investors ‘reach for yield’ when interest rates are low, and how does this influence house prices? This paper exploits the setting of 17th-18th century Amsterdam to study the causal effect of investor demand on house prices, using newly-collected archival data on 164,067 property transactions and 25,962 investment portfolios. In this period, Holland was often drawn into expensive warfare abroad. Wars were uncorrelated to the Amsterdam economy, but exogenously increased the supply of Holland bonds, which investors bought for a stable income. These shocks caused large booms and busts in house prices, while bond yields only changed by small amounts. Housing cycles were amplified because wealthy investors reached for yield, actively purchasing higher-yielding assets in periods of peace, when interest rates declined. For the top 1% of society, a 1% reduction in bond yields increased the share of wealth in real estate by 12%. This reach for yield reduced risk premia and resulted in a persistent increase in housing wealth inequality.”

The World’s First Stock Exchange

An incredibly in-depth look at the Amsterdam Stock Exchange, beginning in the 17th century.

The Development of Corporate Governance in Toulouse 1372-1946

“We exploit unique archives extending over six centuries to trace the development of corporate governance mechanisms that emerged in response to problems inherent in organizing, capitalizing and sustaining large-scale business enterprises. Two Toulouse milling concerns with antecedents in the 11th century organized themselves via mergers into widely-held joint-stock companies in the years 1372 and 1373. We document the institutional innovations they developed over the ensuing centuries, and place these in the context of institutional economic theory. The firms adapted or invented institutional features that are widely recognizable today, including fully tradable shares, limited liability, shareholder meetings, governing boards, cash payout policies, accounting audits and mechanisms for re-capitalization.”

Democratic Dividends: Stockholding, Wealth and Politics in New York, 1791-1826

“This paper analyzes the early history of corporate shareholding, and its relationship with political change. In the late eighteenth century, corporations were extremely rare and were dominated by elites, but in the early nineteenth century, after American politics became significantly more democratic, corporations proliferated rapidly. Using newly collected data, this paper compares the wealth and status of New York City households who owned corporate stock to the general population there both in 1791, when there were only two corporations in the state, and in 1826, when there were hundreds. The results indicate that although corporate stock was held principally by the city’s elite merchants in both periods, share ownership became more widespread over time among less affluent households. In particular, the corporations created in the 1820s were owned and managed by investors who were less wealthy than the stockholders of corporations created in earlier, less democratic periods in the state’s history.”