Why did investors decide to bet on the various companies that would form the three 1720 bubbles in France, England and the Netherlands? (p.1). How did these bubbles affect companies which unlike the Compagnie des Indes and the South Sea Company were neither involved in the Atlantic trade nor in public finance?
Carlos, Ann M., Jennifer Key and Jill L. Dupree (1998) “Learning and the Creation of Stock-Market Institutions: Evidence from the Royal African and Hudson’s Bay Companies, 1670-1700”, The Journal of Economic History, 58/2: 318-344.
Disclaimer: this summary is written by the blog and not by the authors of the article. Any mistake is Manuel’s fault.
“England’s emergence as an international trading nation in the seventeenth century can be linked to the growth of trading arrangements that allowed for a longer life of capital either […] as a joint-stock trading company” (p.318).
According to North and Weingast’s famous thesis this emergence was made possible by the reforms brought by the 1688 Glorious Revolution. However the authors underline the fact that markets don’t grow instantaneously and it takes some times for the actors to learn how to use the market (p.319). Read the rest of this entry »