The London Stock Exchange: A History

By Ranald C. Michie | Go to book overview

6
The Changing Market Place
Between the Wars

COMPETITION

The competitive environment within which the London Stock Exchange existed between the wars was itself changing. Communications were allowing the London Stock Exchange to serve, directly, a much wider constituency in terms of the investing public. With the introduction of omnibus telephone circuits and the teleprinter within Britain, and the continuing development of wireless telegraphy and submarine telephone cables internationally it was becoming as easy and cheap to communicate between London and other centres as within London itself. As it was, the use of the telephone by London brokers, both for local and national purposes, grew enormously in this period. Cazenoves went so far as to have private lines installed between its office and those of its largest clients, such as Barings and Schroders. Though regular face-to-face contact was still important, with partners in Capels, Cazenoves, and Sebags continuing to do a daily round of regular clients, that was being supplemented, and then steadily replaced, by telephone calls. With a telephone call a client could be immediately updated as market circumstances changed and new orders received and carried out. It was an easy matter to extend that service to clients outside London.1

However, though technology was continuing to eliminate distance as a barrier to direct participation in the market, institutional impediments still remained or were introduced. The imposition of exchange controls made it difficult to obtain the foreign currency necessary to pay for the purchase of securities owned outside a country. Domestically each stock exchange jealously guarded its own independence while manœuvring for position within an evolving market-place. Communication was a two-edged weapon as the direction of any flow of business was dependent upon the competitive power of the markets at either end, and the numerous stock exchanges still

____________________
1
LSE: Trustees and Managers, 16 Apr. 1926; C. H. Holden and W G. Holford, The City of London: A Record of Destruction and Survival ( London 1951), 182; D. Kynaston, Cazenove & Co.: A History ( London 1991), 111, 136; M. C. Reed, A History of James Capel and Company ( London 1975), 79; D. Sebag-Montefiore, The Story of Joseph Sebag & Co. (n.p. 1996), 39.

-235-

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The London Stock Exchange: A History
Table of contents

Table of contents

  • Title Page iii
  • Acknowledgements vi
  • Foreword vii
  • Contents xi
  • List of Figures and Tables xii
  • Introduction 1
  • 1 - From Market to Exchange, 1693-1801 15
  • 2 - From Money to Capital, 1801-1851 37
  • 3 - From Domestic to International, 1850-1914 70
  • 4 - Shattered Dominance: The First World War, 1914-1918 143
  • 5 - Challenges and Opportunities, 1919-1939 170
  • 6 - The Changing Market Place Between the Wars 235
  • 7 - New Beginnings: The Second World War, 1939-1945 287
  • 8 - Recovery and Crisis: 1945-1949 326
  • 9 - Drifting Towards Oblivion, 1950-1959 363
  • 10 - Failing to Adjust, 1960-1969 423
  • 11 - Prelude to Change, 1970-1979 479
  • 12 - Big Bang 543
  • 13 - Black Hole 596
  • Conclusion 636
  • Select Bibliography 643
  • Index 655
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