ABSTRACT
The number of industrial. commercial and financial companies quoted on the London Stock Exchange in 1853 was just over two hundred with a nominal capital of £125 million.1 By the outbreak of the first world war the number had increased to many thousands with a huge nominal capital of £1.500 million. Unfortunately it is not possible to quantify the development of the home industrial share market of the provincial stock exchanges in the same way but some indication of the changes for the period can be given. At the height of the 1845 railway boom most of the larger exchanges carried quotations in a miscellaneous range of purely local companies numbering well over a hundred. but relative to London companies their capital would have been much smaller. Following the passing of the joint stock acts of 1844. 1855. 1856 and the 1862 codifying act incorporated companies increased greatly in number. a development reflected in the share lists of the provincial markets. Acceptance by investors of shares in these companies depended upon. among other things. a market and a stock exchange quotation. The value of a limited liability share was largely based on its marketability. while a local quotation provided shareholders with the security and comfort they desired. The growth of company promotions in the eighteen seventies and eighties brought increased pressures for market facilities and in the case of 'home' industrials this was largely met by the provinces. Phillips' Investors Manual of 1885. one of the many of its kind. was of the opinion "that the provincial exchanges were of almost greater importance in relation to home securities than London. "2 This claim could not be equally asserted after the turn of the century. but as each major industry was converted onto a joint stock footing the local stock exchanges developed their own particular speciality so that by 1914. while they did not possess the vast range of the London markets. the main provincial centres dealt in a special range of shares with quotations dependant mainly on local information as to industrial conditions. "they do not vary. as gilt-edged securities and debentures do. with monetary and political conditions. nor do they take their tone from London".a
incorporation by royal charter or act of parliament, joint stock companies in industrial and commercial activities were relatively insignificant prior to the eighteen fifties and were confined to gas, water, housing, public baths, and banking, where capital needs were beyond the resources of the partnership form of organization. This restricted use of the joint stock form was due to economic and legal factors. For most forms of enterprise a small sum of fixed capital sufficed and it was frequently well within the resources of an individual, his associates, or obtainable by mortgage. Also there was the "geographic accident" that most capital needs occurred at a distance from the largest but not the only financial centre in the country.4 The legal impediments arose from the state of company law. Following the passing of the Bubble Act in 1720 it was illegal to act as a corporation and to issue transferable stock without obtaining an act of parliament or a royal charter. Both these procedures for securing the privileges of incorporation were exceedingly cumbrous and expensive, and were only granted reluctantly where parliament saw an overwhelming need which could not be met by private means. Many companies however proceeded without incorporation and by 1825 they had become so numerous, with an estimated capital of between £160-£200 million, that the Bubble Act was repealed since it threw grave doubt as to their legality and unincorporated companies were left to the common law.5 Most of the companies listed in the provinces in the eighteen thirties and early eighteen forties were of this kind.
