From Money to Capital, 1801-1851
The formation of the Stock Subscription Room in 1801 represented a major advance in the London securities market, though contemporaries appeared totally unaware of the significance of the change that had taken place. With the power to exclude there now existed an ability to enforce the rules and regulations that increasingly governed the conduct of business in the securities market. Rules and regulations were essential if those buying and selling securities were to cope with the volume, variety, and speed of transactions demanded of the market by that time. Nevertheless, it was to be a number of years before the authority of this new institution to control the market was accepted by all concerned. There were always to be those, not permitted to participate, who objected to the closed nature of the Stock Exchange compared to the absence of barriers in the past. Internally the institution had to resolve conflicts over the balance of power among the members as it was necessary to restrain the freedom of individuals, or even significant groups, in order to further the interests of the whole body. There was also the question of how far the rules and regulations could be extended into the private business affairs of members, including the relationships they maintained with clients.
The continuing development of the securities market was not stopped by the formation of the Stock Exchange, but it did change in nature. There was now a major institutional player in the process that could take collective action, co-ordinating the interests of different sections of the market and influencing the future course of events. Essentially, the emergence of a closed market in securities, and all that involved, represented both an end to one evolutionary process, related to the mechanisms and techniques whereby stocks and shares were bought and sold, and the beginning of another, that now included the control, distribution, and exercise of power and authority. Henceforth, the securities market was no longer an open one which participants could enter at will and act in without redress. Instead, it incorporated not only an enforceable code of conduct for business behaviour but also an institutional organization that demarcated member from non-member.