Visualizing History 

Industry Breakdowns (1900 vs. 2019)

Size of Global Stock Markets (1899 vs. 2019)


From the Archives

Essays in The Earlier History of American Corporations (1917)

Sunday Reads

Uncle Sam: “Well! Will this nuisance ever learn that the country governs Wall Street; not Wall Street, the country?”

As yesterday marked the annual celebration of America’s declaration of independence in 1776, it is only right that today’s content be centered around the history of American markets and commerce.

Among other things, these articles cover:

  • The first 50 years of American stock markets (1793 – 1843)
  • One Robber Baron’s “Big Short”
  • America’s First Financial Panic
  • Economic Warfare in the Revolutionary War
  • How President’s Invest
  • American Business / Markets History Since 1620

(One piece of housekeeping:If you subscribe to the Sunday Reads through Gmail, I’d really appreciate it if you moved this email from the ‘Promotions’ tab to the ‘Primary’ inbox. Some people have had issues with delivery. Thanks!)

Now let’s dive in!

Jubilee Jim Fisk and The Great Civil War Score

The history of America is a history of speculative ventures and risk.

No period better encapsulates this assertion than the Gilded Age of the 19th century. This moment in American history was filled with audacious speculators and business tycoons that we now commonly refer to as ‘Robber Barons’. One of these barons was a Mr. James Fisk.

This article details what the Boston Globe calls “one of the boldest financial schemes in American history: the original big short”. The excerpt below is only the intro to this captivating story, which you can also listen to in podcast form at the top of the linked page.

“Midnight, April 2, 1865

IT HAD BEEN A LONG SATURDAY NIGHT for James Fisk Jr. His unkempt blond hair marked the hours he had been running his hands through it, while his waffle-weave suit struggled to hold in his girth. Bones of Fisk’s food of choice — turkey—— were strewn about. As the clock rounded midnight, and Fisk rattled his many rings against the desk, he started to wonder whether tonight was the night. Maybe he should have just had a good sleep and come to the telegraph office in the morning.

But for Fisk, stockbroker and financial schemer, every minute, every second, counted. Had he stayed at home, he would have paced the night away. He might as well camp out at this Boston office of the American Telegraph Company. At any moment, in those predawn Sunday hours, he anticipated an end for General Robert E. Lee’s Confederate Army of Northern Virginia. Each puff of Fisk’s cigar brought him closer to it, so he hoped.

Nearly 500 miles to the south in Washington, D.C., President Abraham Lincoln anxiously waited at the War Department for the same news. Slumped in a chair, his linen jacket hanging off his wiry frame, Lincoln loomed large in the small room at the Winder Building on 17th Street. Next to Lincoln sat a stick he carried at the urging of his wife, Mary Todd, protection against a possible assault. Lincoln’s presence in the room originally came from necessity — he could get work done there. The White House next door had become overrun by party dignitaries, office seekers, and lingerers.

Lincoln had come to know the telegraph operators and cipher breakers stationed at desks around the room, and had made it a habit to flip through new messages. When he finished reading through a pile, he seemed to always have a sarcastic comment ready to elicit a chuckle from the room.

Lincoln’s and Fisk’s interest in the events in and around Petersburg, Virginia, early that morning could not be farther apart. Where Lincoln saw the last gasp of an insurrection that had cost some 750,000 lives and paved the way to a more perfect union free of the national sin of slavery, Fisk saw dollar signs. Lots of them.

As the sun crept into the Sunday sky outside the telegraph office, Fisk wondered if his excitement was premature. Then it happened. The office roared to life. The wires sputtered with fragments of news. The Confederate forces could not hold off the Union juggernaut of General Ulysses S. Grant. Casualties and desertion had taken their toll on the Army of Northern Virginia and now a Union force in the predawn hours of Sunday, April 2, had punched a hole in the wafer-thin line.

Wartime protocols meant military messages took priority on the wires. But rules had never stopped Fisk before. He bribed the telegraph officer to send out a message in between the clacking of military wires. The destination: Halifax, Nova Scotia. The message: “Go!”

With one word, James Fisk unleashed one of the greatest financial schemes in American history….”

Faking It: British Counterfeiting During the American Revolution

Colonial bank

There have long been concerns that China could weaponize its position as the largest foreign holder of America’s national debt to weaken our nation’s finances.

While the figure fluctuates, China holds roughly $1 Trillion of the national debt. Last summer, the Financial Times wrote:

“Against the backdrop of the escalating US-China trade war and other protectionist measures, the move has sparked concerns that China is actively weaponizing its position as the largest foreign creditor to the US government. The fear is that such selling — especially at a time when foreign demand for US Treasuries has flatlined — will result in higher US interest rates, pushing up borrowing costs.

This fear of China ‘weaponizing’ its financial stake and positioning for geopolitical gains is reminiscent of Britain’s counterfeiting strategy during the Revolutionary War, which aimed to weaken America’s finances by fueling rapid inflation.

Almost overnight the thirteen separate colonies had to form a central government to unify the people, a military to defend the people and a central economy to pay for it all. It was a daunting task that had to be accomplished while undergoing an invasion by the British army, which would continue to make mincemeat out of whatever forces the Americans could throw at it. The British army, however, had just as many uphill battles to fight. Lack of men and supplies, a chain of command that stretched almost three thousand miles… Something besides the force of arms would be needed to bring the colonies to their senses.

To this end a campaign was devised to undermine the nascent American economy in an attempt to achieve a twofer. If the economy was in shambles the Americans would not be able to purchase the men and material needed to continue the war. At the same, by undermining the economy they would also be undermining the American Congress, which was acting as the central government. Perhaps if people lost faith in the Congress, they would realize that war could not be won, and they would all return to the fold…

The most effective strategy that was tried, and one that very nearly succeeded, was the massive undertaking of counterfeiting Congressional paper currency to the point of making it almost worthless, thus crashing the American economy. No economy, no more war… Looking at the counterfeiting strategy through these questions presents an intriguing, and often overlooked aspect of the American Revolution.”

This article aims to answer three crucial questions related to this campaign of economic warfare waged by the British:

  1. How were the fake notes produced and circulated?
  2. Was it effective in undermining the economy?
  3. Was this a sanctioned strategy by the British, one that they knowingly pursued?

The First 50 Years of the US Stock Market: New Evidence on Investor Total Return Including Dividends (1793-1843)

Speculation in the United States is as old as the nation itself. Leading up to the nation’s first financial panic in 1792 (covered later in today’s post), Thomas Jefferson wrote a letter to James Monroe in which he lamented:

 “It is impossible to say where the appetite for gambling will stop.”

As we are celebrating our nation’s founding this weekend, it seems fitting that I include an article on the first 50 years of American stock markets, and the implications of this early data for investors today. In other words, the American IPO.

‘Little is known about the performance of the US stock market before 1802, and evidence for the years following 1802 through the 1830s remains scanty. This paper describes a new database on total returns in the US stock market for the first fifty years of its existence, constructed in large part from data compiled by Sylla, Wilson and Wright (2006), combined with dividend information newly obtained from contemporaneous newspapers, along with information on capital stock obtained from contemporaneous directories. The new evidence clarifies the role and prominence of the New York market as compared to those of Boston, Philadelphia, and Baltimore. The outcome is a capital-weighted estimate of total returns over five decades. This estimate does not support Siegel’s (2014) thesis that multi-decade returns in the US market have always been on the order of 6.6% real, compounded. The paper concludes by considering explanations for the sub-par performance of the US stock market during this early period.’

The US Bond Market Before 1926: Investor Total Return from 1793, Comparing Federal, Municipal, and Corporate Bonds

Part I: 1793 – 1857

‘US securities markets took root after Alexander Hamilton’s refunding of the Federal debt in the early 1790s. Accordingly, a market in bonds has been in operation in the US for over two centuries. Until recently, however, little was known about bond market returns prior to 1857. This paper focuses on investor holding period returns, using newly compiled data on bond prices, rather than focusing on the movement of yields, as in Homer (1963) and Macaulay (1938). It incorporates the relatively familiar Treasury securities from the years before President Andrew Jackson paid off the debt in 1835, but also includes state and city debt, which ballooned beginning in the 1820s, as well as corporate debt, from its beginnings about 1830 to its explosion after 1850.

I find that all three classes of bonds provided investors with similar total returns prior to 1857, excepting a brief period in the 1840s when state securities plunged before recovering. I also find that over the entire 19th century, real bond returns considerably exceeded the long-term average return of 3.6% proposed for bonds in Siegel (2014). In explaining these high bond returns I identify problems with Siegel’s data sources, notably Homer’s mistaken interpretation of Macaulay’s data. I further find that in these early years, bonds sometimes out-performed stocks over periods of several decades, again contrary to Siegel’s thesis. The paper considers the implications of a demonstration that stocks and bonds performed differently in the nineteenth century as compared to the twentieth century.’

Part II: 1857 to 1926

‘From 1857 scholars have relied on Macaulay (1938) to track changes in interest rates during the period before the Ibbotson data begin. Holding period returns, where of interest (e.g., Siegel 1992a, 1992b), have been calculated from summary yield inputs such as those tabulated by Homer (1963), rather than observed prices of individual bonds. Here in Part II of the paper I explain how Homer got Macaulay wrong, misleading downstream compilers such as Siegel, and causing him to under-estimate 19th century bond returns. Values in Homer taken from Macaulay are not yields, but mathematical constructions erected on a (distant) foundation of observations. I correct Siegel’s under-estimate by retrieving bond prices from Macaulay’s sources and calculating holding period returns directly. I also correct a more general failure to treat Federal bonds properly during the greenback era. In the aggregate I find real bond returns in the second half of the 19th century to be about 150 basis points higher than Siegel. With this correction, in conjunction with corrected stock returns before 1871, I find that bond returns matched stock returns over the entire 19th century. The “stocks for the long run” thesis now appears to be a mistaken extrapolation from a few decades in the middle of the 20th century. No support for it can be found in the 19th century.’

Early Joint Stock Companies and Securities Trading in the United States (1620s – 1850s)

The United States has long prided itself for being the global capital of finance and commerce. In fact, America’s reign as the world’s largest economy has lasted since 1871. This is a remarkable feat when you consider how much the world has constantly evolved and transformed since the late 19th century. For example, the author of this article states that in 1790 “agriculture was the way of life for 90% of the population”. The American population was also just some 4 million people in that year, which is roughly the number of people living in Los Angeles today.

This article covers the development of American enterprise and securities markets in the period leading up to 1871 by studying the evolution of commerce in North America from the time that English colonists first reached America in the early 17th century all the way up to the 1850s.

“In 1790, when the first census had been held and the new Republic was about to experience her first financial boom and the following panic, the population was less than four million, with seven-hundred-thousand slaves, in the United States. Settlement was skewed mostly to the East coast belt within an area of one-thousand-three-hundred miles long and one-to-five-hundred miles wide. Agriculture was the way of life for 90 percent of the population. Industry was virtually nonexistent; so were the industrial company shares. Government bonds were the only instruments to be traded in the financial centers, mainly Philadelphia, New York, and Boston, along with Baltimore and Charleston, to some degree. It would take almost a century for industrial shares to capture the essence of the securities markets in the U.S. The securities of the turnpike, canal, and railroad companies can be viewed as the transitory instruments from the deficiency to the abundance of American company shares. Railroad companies seem to be the archetypes of modern management systems and large-scale financing through the equity markets. They had also been the pacemakers for industrial shares and the emergence of a huge capital market in the U.S.

There were the middlemen in all these developments who had mediated between those who had money in their hands and a desire for speculation or contribution to the industrialization of the young country and those who were in pursuit of building railroads, production plants, etc. without sufficient capital in hand. As the opportunities surfaced and the desires emerged and ripened, the middlemen began to be a power that would have significant influences on the political environment, as well as the economy.


This study will cover that story from the very early examples of joint stock companies and sporadic trading of their shares in the financial centers of the U.S. The foreign capital inflows, thus the trading of the American company shares in London, Paris, Amsterdam or elsewhere will not be detailed, though such cases involve significant volumes and implications on the U.S. economy for some periods. The trading on company stocks* will be our main focus as far as the period that we cover avails. For this, the existence of joint stock companies at a fair level emerges as a condition. Historically, the supply of the shares of such organizations eventually created a matching demand wherever excess funds exist, be it in Europe or in a financial center of an American city. As the expectations evolved, so did the speculation. Where the speculation evolved, the booms and busts began to be the realities of American financial markets. Markets learned from them and responded with prudence. Markets learned from this learning-by-living process and evolved. Due to their significant impacts on the evolution of the capital markets in the U.S., such instances will be tried to receive their due attention and for some periods the whole story will be on them.”

Regarding securities markets, the author writes:

Philadelphia, Boston, and New York had been the three main financial centers in the U.S. during the eighteenth and nineteenth centuries. Philadelphia became the main financial center of the country during the 1830s by, to a great extent, the efforts of Nicholas Biddle, “America’s pioneer investment banker.” The economic depressions after the crises of 1837 and 1839 destroyed the British (who were the main financiers of the American transportation investments) confidence to the American markets; the railroad construction almost stopped in America. Biddle’s bank collapsed in 1840. All these factors destroyed Philadelphia’s reputation as a financial center, as well as the bond’s as a financing instrument. Boston had the wealth to replace Philadelphia. New England’s less reliance on the bond financing in the previous decades provided her a prosperity over other states that almost all the railroads in New England had been built by stock financing and the state had very few debts to repay by the end of 1830s. New England’s railroads were short and had connected prosperous commercial and manufacturing centers, thus had a regular earning capacity.

The certainty of railroad earnings and the profits from the international trade, shipping and whaling, and manufacturing (especially the textile mills) provided a good stream of earnings to New England community that they had not needed to be bound with the bonds’ 6-percent yield. After the business crisis of 1847, Boston lost its reputation to New York as a primary financial center which would last to this time. The downturn in the British railroad boom hit the Boston financial market which had tied up most of its capital in textiles, railroads, lands in the West, and mines in Michigan when the cash was a dire need. The fall in the stock prices meant the fall in the Boston’s wealth which ushered collapse of many businesses and a direction to the bond financing. By the beginning of the 1850s New England was financing her “oldest and soundest” railroads by bonds and New York had taken over many of the financial duties of Boston.”

The U.S. Panic of 1792: Financial Crisis Management and the Lender of Last Resort

“During the US financial panic of 1792, Wall Street’s first crash, securities prices lost nearly a quarter of their value in two weeks. Nonetheless, the crisis, which came when the modern U.S. markets were less than two years old, is off the screens of most scholars, including even financial historians. In part that is because the crisis was managed incredibly well, mostly by Treasury Secretary Alexander Hamilton. Hence, there was almost no economic fallout for the US economy from the financial crisis. This makes the event worth studying. It is also worth studying because of the crisis management techniques Hamilton invented at the time, many of which later became theoretical and practical standards of central bank behavior in crises. Among other things, Hamilton invented and implemented “Bagehot’s rules” for central-bank crisis management nine decades before Walter Bagehot wrote about them in Lombard Street.”

President Abraham Lincoln: Investor

‘Scene outside the New York Stock Exchange following news of the assassination of President Lincoln.’

Have you ever wondered how those in America’s most powerful office invest their money? Look no further! This piece breaks down the portfolio of President Abraham Lincoln himself.

“All told, he was worth $15,000 in savings, real estate and investments  hen elected to the presidency. While in office, Lincoln remained an investor. He invested his money in U.S. government securities, accumulating an extra $60,000 by the time of his death. However, this investment strategy was guided more by patriotism than profits. Almost all of this money came from investing his presidential salary. Lincoln was paid $25,000 per year, or a little over $2,000 per month. His pay checks were in the form of Treasury warrants, an early form of government check.”

As it turns out, President Lincoln was more focused on patriotism than profit when it came to investing:

“All told, Lincoln invested half of his Presidential income in U.S. government securities. He could have made more profit investing in the stock market or speculating in the price of  gold, but maximizing profit was not his goal. Instead, he wanted to put his money to work to insure the future of his family and his nation.”

Also, how is this for a fun fact?

On April 7, 1866, Congress made it illegal for any living person to appear on government money or bonds of any kind. The law stands to this day, preventing the image of current and recent Presidents from appearing on the nation’s currency and coins.”