Working Paper No. 03-04

Market Participants in the Aftermath of the South Sea Bubble: An Examination of the Stockholders in the Bank of England, 1720 and 1725
Ann Carlos and Larry Neal
February 2003

ABSTRACT

We examine in detail the characteristics of stock market participants in the aftermath of the first great financial crisis of modern capitalism - the South Sea Bubble of 1720. We determine the breadth and depth of the "customer base" for the London stock market at this early date. We exploit data on the holdings of the nearly 8,000 individuals who held Bank of England stock after the crisis of 1720. We classify the customer base by occupation, location, and gender. We also examine changes in holding of this asset over the five years of the study. We ultimately hope to be able to infer from the changes in the composition of the stockholders how the market was able endogenously to develop structures that allowed it to grow and to cope with unanticipated shocks in the future.

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