Capital Markets – a brief history

Paul Pickup

© Catalyst Development Ltd 2002

Capital Markets – a very brief history

• 1844 Joint Stock Companies Act• 1913 and all that• The effect of two world wars + cold war socialism• Milton Friedman and monetarism-ish• Capital Markets golden age• Lessons from History?

© Catalyst Development Ltd 2002

1844 Joint Stock Companies Act

• Oldest SE began in 1602. • UK Laws

1817 An Act for regulating the Proceedings of certain Public Companies and Corporations . . .

1837 Chartered Companies Act

1844 Joint Stock Companies

• London, New York, Paris were capital centres.

© Catalyst Development Ltd 2002

1913 and all that

• Global trade after various wars

• Telegraph• Ticker tape• Single currency in the U.S.• Federal Reserve Act of

1913

© Catalyst Development Ltd 2002

The effect of two world wars + cold war socialism

• Massive rebuilding – Marshall plan

• Broken economies• Communism and

socialism• State run industries• State pensions• Retreat of Capital

Markets to the U.S.

© Catalyst Development Ltd 2002

Milton Friedman and monetarism-ish

• Keynesian economics failed

• Oil crisis 1970s• Re-emergence of

global trading• Western countries

became uncompetitive

• Monetarism introduced by:

© Catalyst Development Ltd 2002

Capital Markets golden age

• 1990s onwards!

• IMF Loans did not work

• Funding agencies encouraged capitalism

• Boom in Stock Exchanges

• Privatisations• Deregulation of

monopolies• Short term gain for

governments

We are back to 1913

BUT – is based on international trading agreements

AND - peace

It does not take long for an uprising to happen

Hitler in jail; writes Mein Kampf First Nazi gains in Reichstag

1924

Nazi popularity declines; party is viewed as a joke by many

1927

Reichstag elections: Nazis lose heavily: keep only 12 seats

1928

WALL STREET CRASH – affects all major European economies

1929

Reichstag elections: Nazi Party now 2nd largest party with 107 seats. The S.A. (Brownshirts) used freely to intimidate voters.

1930

Nazis largest party in Germany with 230 seats ( July) Reichstag still in deadlock (no political party in clear control) (November)

1932

Hitler appointed Chancellor by Hindenburg (January) Reichstag Fire (Communists blamed) (February 27) Enabling Act (Hitler granted unlimited powers for four years) (Mar 23) Reichstag Elections: 92% vote for Nazi candidates (November

1933

Night of the Long Knives (Party housecleaning) (J une 30)

1934

Nuremberg Laws of Citizenship and Race (Sept 15) (Beginning of anti-J ewish acts)

1935

Kristallnacht (anti-J ewish acts committed against businesses, synagogues and homes) (November 9)

1938

Outbreak of second world war 1939

© Catalyst Development Ltd 2002

Paul Pickup – Trading Technology