The Past Speaks

AS: I’ve stumbled across an interesting article on the impact of the 1867 Reform Act on the price of shares on the London Stock Exchange. Essentially, passage of this legislation caused share prices to dip, which suggests that investors thought that expanding the franchise might result in socialistic legislation that reduced profits. It seems to me that you could adapt the author’s methodology for looking at the impact on the stock market of other events in this period. For instance, what was the impact of the passage of the British North America Act on the London prices of shares in Canadian companies. That’s something that needs investigation.

Turner, John D., and Wenwen Zhan. “Property rights and competing for the affections of Demos: the impact of the 1867 Reform Act on stock prices.” Public Choice 150, no. 3-4 (2012): 609-631.

Abstract: The 1867 Reform Act in Britain extended the electoral franchise to the skilled but propertyless urban working classes. Using stock market data and exploiting the fact that foreign and domestic equities traded simultaneously on the London market, this paper finds that investors in British firms reacted negatively to the passage of this Act. We suggest that this finding is consistent with investors foreseeing future alterations of property rights arising from the pressure that the large newly enfranchised group would bring to bear on government policy. We also suggest that our findings appear to be more consistent with the Tory political competition explanation for the Act rather than the Whig threat-of-revolution explanation.