The Global Securities Market: A History

By Ranald C. Michie | Go to book overview

7
Suppression, Regulation, and
Evasion: 1939–70

SECURITIES AND THE SECOND WORLD WAR

The era of economic liberalism that had existed before 1914, and within which the global securities market had flourished, finally ended with the outbreak of the Second World War. That event, following the crisis and depression of the 1930s, ushered in an era of government management and control over national economies that was also extended to the international arena. During the war the operation of the market was suppressed in the interests of national survival, involving both the direction of labour and capital and control over the production and use of goods and services at home and abroad. Such control was found in all combatant nations and even in many that remained neutral. By 1945 the conditions required to support a functioning global securities market had ceased to exist whilst many national markets were no longer operational. As many in government associated securities markets with speculation and fraud, their suppression was welcomed rather than regretted.

Unlike the First World War the coming of the Second was widely predicted long before it occurred. With the financial crisis that accompanied the First World War a recent memory for many, those operating in the securities market, limited their exposure to risk, afraid of being caught by a sudden change in the international political climate. Contracts to buy or sell at fixed prices in the future were avoided where possible, the amount of business financed by borrowed funds remained low, and international commitments were reined in. These negative steps were also accompanied in many cases, though not all, by discussions on appropriate action if war did break out. This often involved liaising with both governments and central banks to formulate a coordinated action plan. The contingency arrangements made by the London Stock Exchange in 1937 included how to cope with the new dangers associated with aerial bombing. In contrast, the Brussels Bourse had no such plan despite their greater proximity to any possible conflict. When

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The Global Securities Market: A History
Table of contents

Table of contents

  • Title Page iii
  • Contents v
  • Preface vi
  • List of Tables xi
  • Introduction 1
  • 1: Origins, Trends, and Reversals: 1100–1720 17
  • 2: Advances and Setbacks: 1720–1815 38
  • 3: New Beginnings and New Developments: 1815–50 60
  • 4: Exchanges and Networks: 1850–1900 83
  • 5: The Triumph of the Market: 1900–14 119
  • 6: Crisis, Crash, and Control: 1914–39 155
  • 7: Suppression, Regulation, and Evasion: 1939–70 205
  • 8: A Transatlantic Revolution: 1970–90 253
  • 9: A Worldwide Revolution: Securities Markets from 1990 297
  • Conclusion 333
  • Notes 341
  • Bibliography 376
  • Index 389
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