ABSTRACT
The London Stock Exchange was not formally constituted until 1802, with some 550 subscribers and 100 clerks, but the beginnings of share dealing in London go back to more than a century earlier. By the mid 1690s share dealing was taking place in a highly developed form, with brokers and jobbers engaging in time and option bargains as well as staightforward buying and selling. 1 The shares and bonds dealt in were those issued by the early trading companies established by royal charters, such as the East India Company formed in 1600, the Hudson’s Bay Company of 1668 and several other colonial companies. It was estimated by W. R. Scott that there were some 140 joint stock companies in 1695 with a total capital of £4.5 million. 2 The supply of shares to the market was given a substantial, but somewhat shortlived, boost from the large number of company formations during the period of the South Sea Bubble; about 190 new companies appeared between September 1719 and August 1720, involving a total nominal capital of £220 million, but the actual capital raised was probably much less than this. 3 From the stockbroking point of view the intense public interest in speculation attracted many new entrants into the trade, but the ending of the mania with the passing of the Bubble Act in 1720 caused some of them to abandon share dealing. The Bubble Act declared that companies formed without a royal charter or act of parliament were illegal and that transactions in their shares were null and void. It was not repealed until 1825, but it is doubtful whether it seriously impeded capital formation prior to this date since the capital requirements of many industrial enterprises was obtained by partnership, loan or mortgage.
