Exchanges and Networks: 1850–1900
1850 marks a crucial stage in the development of a truly global securities market. Securities moved out of the realm of government debt and entered the mainstream of economic activity, becoming increasingly central to the processes whereby business obtained finance, banks balanced risk and return, and investors employed their savings. Not confined to national boundaries, this transformation became a worldwide phenomenon. By 1900 no continent was immune from the reach of securities and the markets that served them. National securities markets became integrated into an international network that was far deeper and broader than anything previously achieved. The revolution in communications conquered the problem of distance that had always existed when the only mode of contact was physical transport. With the development of the telegraph distant financial centres could be linked through messages that flowed back and forth in minutes rather than days and weeks, or even months. This period also experienced an enormous expansion in the number and spread of stock exchanges around the world. Advanced economies in western Europe and North America came to possess not one but several stock exchanges serving particular regions or specific types of stocks. In addition, stock exchanges were formed in every continent of the world, spreading across Australia and New Zealand, Latin America, Asia, and Africa as well as invading Eastern Europe and the Mediterranean area. Though part of this expansion was simply a by-product of the European diaspora of the nineteenth century, part was also the implantation of an alien organizational form into different cultures, as in the case of Japan. By 1900 the world possessed an integrated and functioning global securities market benefiting from an international communication network, a mass of easily transferable stocks and bonds, the existence of organized markets, and a minimum of government-imposed barriers at home or abroad.
There was a massive expansion in the amount and importance of securities in existence between 1850 and 1900. One estimate for 1880 put the aggregate value of quoted securities in Europe at £6.8 billion and this had trebled to