J. P. Morgan in London and New York before 1914

Abstract

Before 1914, London had a stock exchange that was larger and qualitatively more developed than New York's. Yet the London Stock Exchange has received a bad press from historians, while the New York Exchange has achieved star billing. This forensic reexamination of J. P. Morgan–a player in both markets–suggests that such a historiography is egregiously biased. Morgan's higher profi ts in New York derived partly from insider deals and partly from monopolistic exactions that U.S. protectionism facilitated but that proved more problematic in the U.K.'s open, competitive markets. Morgan's contributions to the impressive catch-up process by the New York Exchange are more plausibly viewed as successful emulation of European securities-market precedents on routine matters than of the allegedly path-breaking “information-signaling” innovations of more Panglossian accounts.

Investment Banks as Corporate Monitors in the Early Twentieth Century United States

“…Moreover, future revelations of mismanagement or fraud by the railroad damaged the underwriter's reputation among investors, and hurt its capacity to distribute future issues. Thus, underwriters had strong incentives to monitor 3 On the historical role of investment banks, see Carosso (1970) ;Carosso and Sylla (1991); Morrison and Wilhelm (2007);Hannah (2011);and Flandreau and Flores (2012). We add to this literature by providing the first comprehensive documentation of the presence of underwriters on the boards of major corporations in the early twentieth century.…”

Taking firms to the stock market: IPOs and the importance of large banks in imperial Germany, 1896–1913

“…He further supports his view by showing that De Long's analysis lacks convincing statistical evidence—of which De Long himself admits in his paper the conceptual inadequacy and insignificance; Hannah, ‘J. P. Morgan’, p. 142.…”

“…Morgan mainly operated at the New York Stock Exchange, but he also employed 75 men at Drexel & Co. in Philadelphia. See Hannah, ‘J. P. Morgan’, p. 117.…”

Review of periodical literature published in 2011

“…Flores's study of the 1890s Baring crisis shows that although the bank had insider information regarding Argentina's government debt default, it did not exploit this information to the detriment of investors, and that its bailout plan was scuppered by political instability. Hannah's forensic examination of J. P. Morgan's investments suggests that his higher profit on the New York Exchange was derived from insider deals and US protectionism, strategies that were problematic in the comparatively more open and competitive London markets. Rutterford's article ( Business History ) on the history of new issue prospectuses on the London Stock Exchange concludes that their signalling role was crucial in the lightly regulated markets of the time and that information disclosure improved well in advance of regulatory requirements.…”