Thursday, 3 July 2008

WRONG: The Government runs the Stock Exchange

The first ever modern share was issued by the Dutch East India Trading Company, a collection of spice merchants who banded together in 1602 to compete against the Spanish and Portuguese. The investors were mainly middle-class tradespeople like bakers, coopers and barber-surgeons (including, wonderfully, one Agneta Cock). Rather than receive their annual share of the company’s profits – the “dividend” – in cash, Mrs Cock and her fellow investors were paid in pepper, mace and nutmeg.

Modern shares are essentially subject to the same rules as those governing La Cock’s pioneering transaction: in return for your investment, you claim a dividend, and you can sell the share whenever you like for however much anyone is willing to pay.

The London Stock exchange is a public limited company (in other words, you can buy shares in it, and its accounts are published). In 1698, a rowdy group of traders (plus ├ža change) was expelled from the Royal Exchange market, crossed the road and started dealing in Jonathan’s Coffee House, Change Alley. It was 75 years before they thought to build their own offices (even though Jonathan’s burned down in 1748), but they did, and prospered as a private company. Amazingly, it was a further 200 years (1973) before female traders were allowed to join the boys’ club. Its private investors voted in 2000 for it to become a public limited company, and if you fancy it, you can look up a stockbroker in the Yellow Pages today and buy some of their shares. Don’t let them pay you off in nutmeg.

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