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Speculative Women: A History of Female Investors
Happy Sunday, everyone! In honor of Women’s history month, today’s newsletter delves into the lives of some of the most remarkable female investors and speculators throughout history, and examines their unique contributions to the world of finance.
From the South Sea Bubble to the railways of the 19th century, women have played a vital role in shaping the financial landscape. The first article, “The Lady of The South Sea,” explores how women investors were intimately involved in one of history’s greatest financial disasters, and how their participation challenged traditional gender roles.
The second article, “Lady Brokers on the Street,” introduces us to Victoria Woodhull, who became the first woman to open a brokerage firm on Wall Street in 1870. She also ran for President in 1872 with Frederick Douglas as her Vice Presidential candidate, and developed a close business relationship with Cornelius Vanderbilt. Her pioneering spirit and commitment to equality paved the way for the diverse, thriving financial markets we have today.
“Independent Women – Investing in British Railways”, examines how female investors exercised independence in their financial affairs during the period of 1915-1922. Using a novel dataset of almost 500,000 shareholders in some of the largest British railways, the authors explore how women were much more likely to be solo shareholders than men, and how they prioritized their independence above other considerations like where they invested or how diversified they could be. This article highlights the increasing prominence and independence of female investors during a time of great change and social upheaval.
Finally, in “The No. 1 Ladies’ Defrauding Agency,” we learn about Sarah Howe, a clairvoyant charlatan who became the founder of the Ladies’ Deposit Company, a bank run by women for women. Unfortunately, her innovative “bank” was an elaborate pyramid scheme, and her investors were ultimately ruined and left with nothing.
Now let’s dive in!
The Lady of The South Sea
Why This Is Relevant:
Although their role is less widely covered, women were at the heart of financial markets in cities like London from inception. That said, the history of financial markets is inextricably linked with the rise of female investors and speculators. As early as the 17th century, paper credit and joint-stock companies enabled women to try their luck on the stock exchange. This challenged the traditional gender roles of that era, which caused cultural anxieties.
The South Sea Company, for example, offered generous subscription terms and financial lures to attract investors, including women. This paper is relevant for investors today as it emphasizes the importance of understanding how cultural and economic forces shape financial markets.
South Sea Scheme by William Hogarth
Lady Brokers On The Street
A satirical depiction of Victoria Woodhull, dubbed “Mrs. Satan”, from 1870.
Independent Women: Investing in British Railways
The No. 1 Ladies’ Defrauding Agency
The story of Sarah Howe reveals how fraudsters commandeer seemingly benevolent movements like “ESG” to scam investors.
In 1877, Sarah was a fortune-teller living in Boston. Before long, however, this clairvoyant charlatan became the founder of an innovative bank: The Ladies’ Deposit Company. A bank run by women, for women.
Howe’s bank had strict qualifications for depositors. For example, it did not accept deposits from men, wealthy women, or women with husbands that could financially support them. Eventually, the bank boasted more than 1,000 depositors, and some estimate the bank received $13 million in deposits by modern values. Even more impressive, the bank never advertised its services and relied entirely upon word of mouth.
So, what was the problem? The Ladies Deposit Company offered depositors 8% interest paid monthly, and new clients received the first 3 months’ interest up front. Thus, a $100 deposit would gain $96 in interest by end of year. Essentially, the deposit would double.
As you’ve probably guessed, Howe’s bank was a pyramid scheme that relied upon using new depositors’ funds to pay out interest to existing clients. This scheme worked until 1880, when a run on the bank caused everything to collapse, and exposed Howe’s fraud. She was sentenced to 3 years in prison.
Yet, Howe clearly did not learn her lesson. When she was released in 1884, she founded “The Woman’s Bank”, which offered depositors… wait for it… 7% interest paid monthly, and 3 months interest paid up front to new clients. She kept up the new scam for 2 years before investigations ran her out of town and into hiding.
Unfortunately, all the women that had invested with Howe were left with nothing.
Visualizing History: