The Rise of the Small Investor in the United States and United Kingdom, 1895 to 1970

JANETTE RUTTERFORD; DIMITRIS P. SOTIROPOULOS

doi:10.1017/eso.2016.25

The Rise of the Small Investor in the United States and United Kingdom, 1895 to 1970

Published online by Cambridge University Press: 17 April 2017

JANETTE RUTTERFORD and

DIMITRIS P. SOTIROPOULOS

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JANETTE RUTTERFORD: Affiliation:
Janette Rutterford is Professor of Financial Management at The Open University Business School. Prior to joining the OUBS, Janette worked at Credit Lyonnais as a bond analyst, taught finance at the London School of Economics, and worked in corporate finance at N. M. Rothschild & Sons Limited. Janette’s research has centered on corporate finance, investment management, and the history of finance. She has written a number of texts, notably Corporate Finance & Capital Markets, Financial Strategy, and three editions of An Introduction to Stock Exchange Investment. Janette’s current research is on the history of investment, women and money, behavioral finance, and portfolio diversification. E-mail: janette.rutterford@open.ac.uk
DIMITRIS P. SOTIROPOULOS: Affiliation:
Dimitris P. Sotiropoulos is Senior Lecturer in Finance at the Open University Business School. His current research interests are focused on the political economy of derivatives markets, the social aspects of risk management, and the history of financial innovation. He has published three books, the most recent being The Political Economy of Contemporary Capitalism and Its Crisis: Demystifying Finance (Routledge). E-mail: dimitris.sotiropoulos@open.ac.uk

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Abstract

The role of the small shareholder has been largely ignored in the literature, which has tended to concentrate on controlling shareholders and family ownership. Yet, focus on the importance of small shareholders can capture significant aspects of financial development. Pre-1970 debates and policy conflicts linked to stock exchange development concentrated on shareholder democracy and diffusion as key indicators. This article explores the so-called democratization of investment and the factors behind it through the lens of trends in estimates of the UK and U.S. shareholding populations between 1895 and 1970. It covers three key periods: before World War I, before and after the stock market crash of 1929, and post-World War II. It identifies three periods in the United States when shareholder numbers were paramount: in the boom years of the 1920s, as part of the inquest into the 1929 crash, and post-World War II in an attempt to boost stock market activity. In the United Kingdom, although some concern was expressed during the 1920s and 1930s at the passive nature of small investors, who held diversified portfolios with small amounts in each holding, it was the fear of nationalization after World War II that led to more in-depth shareholder estimates.

Type: Articles
Information: Enterprise & Society , Volume 18 , Issue 3 , September 2017 , pp. 485 - 535

DOI: https://doi.org/10.1017/eso.2016.25 [Opens in a new window]
Copyright: Copyright © The Author 2017. Published by Cambridge University Press on behalf of the Business History Conference. All rights reserved.

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