Before World War I, the London Stock Exchange was at the center of the global economy. The London Stock Exchange listed thousands of domestic companies that can be used to trace the rise of the British economy through the industrial revolution. From the Canal revolution of the early 1800s to the South American bubble of the 1820s to the railroad bubble of the 1840s and on to the rise of the industrial economy in the last half of the 1800s, the UK Stocks Database allows its users to document these changes. The London Stock Exchange was truly a global stock market. The UK Stocks database also includes data on over 2500 companies from 80 countries. Companies in British colonies, or former colonies, and in countries without developed local financial markets listed their securities on the London Stock Exchange because they could raise capital in London more effectively than they could anywhere else. Foreign securities traded in London because many countries had no local stock exchange. The first Canadian shares listed in London in 1825, but the Montreal Stock Exchange didn’t open until 1874. Australian shares first listed in London in 1834, but the Melbourne stock exchange didn’t open until 1861. Using data from the London Stock Exchange, GFD will provide global historical indices on emerging markets that otherwise would be unavailable. The US Stocks Database enables its users to study similar trends in the American economy during the 1800s. After World War II, the United States stock market represented almost half the capitalization of all the stock markets in the world. The US Stocks Database includes not only data from the New York Stock Exchange, New York Curb/American Stock Exchange, NASDAQ, and regional exchanges such as Boston, Philadelphia and Chicago, but also data on thousands of companies that listed over-the-counter. Global Financial Data is using this extensive database to put together its own set of proprietary indices that document the changes in the global economy over the past 300 years. The indices will include not only general, sector and industry indices for the United States and the United Kingdom, but also for the countries that had shares listed on the London and New York Stock Exchanges. As Global Financial Data collects data from other exchanges throughout the world, it will add indices for those countries as well. GFD Indices for Russia and for Denmark have already been added. The GFD Indices will include both bond and equity indices. The GFD Indices will be available both on a daily and a monthly frequency. Data on UK stocks is available daily back to 1693. Data on US Stocks is available daily through 1903 and from 1957 to date. Monthly data is available for more companies than daily data, so monthly indices will be used to supplement the daily indices and provide broader coverage than the daily indices. Global Financial Data has share outstanding information for most companies that are included in the US and UK Databases. This will enable GFD to calculate both cap-weighted and price-weighted indices. The databases also include extensive dividend information and by calculating the effect of reinvested dividends, GFD can calculate both price and total return indices. Since the GFD Indices rely upon data on individual securities that are included in the U.S. and U.K. Stock Databases, we will provide constituent membership information so users will know which shares are used in the indices at any point in time. Users can drill down to the individual securities to see how their behavior has impacted the indices we have calculated. A special tab in the search engine is set aside for the GFD Indices. Go to the GFD Indices tab and you can discover which indices are available to subscribers. Tabs for the U.S. Stocks Database, U.K. Stocks Database and Fixed Income Securities allow you to search almost 100,000 current and historical securities that GFD provides through these databases. The GFD Indices provide a unique set of data not available from any other source. The indices provide a motherlode of information on the history of stock markets over a 300-year period from throughout the world. GFD Indices that use the U.S. Stocks Database are available to all U.S. Stock Database subscribers. GFD Indices that use the U.K. Stocks Database are available to all U.K. Stock Database subscribers. GFD Bond Indices are available to all Fixed Income Database subscribers. If you would like more information on the indices and the US Stocks Database, the UK Stocks Database, or the Fixed Income Database, please feel free to contact one of our sales representatives at 877-DATA-999 or 949-542-4200.

In addition to this, GDP files based upon region and income have been added as well. This includes real GDP data for high-income, middle-income and developing countries. GDP files for high-income countries are further broken down into GDP files for OECD and non-OECD countries. GDP files for developing countries are broken down by geographic region, providing indices for Latin America, East Asia, Sub-Saharan Africa, the Middle East and Eastern Europe. GFD has expanded its quarterly GDP data to include Qatar, Guatemala, Honduras, Nicaragua, Azerbaijan, Qatar, Vietnam and Ghana. The Purchasing Managers’ Index provides a useful tool for analyzing macroeconomic trends. Purchasing managers form a near ideal survey sample base, having access to information often denied to many other managers. Due to the nature of their job function, it is important that purchasing managers are among the first to know when trading conditions, and therefore company performance, change for the better or worse. Markit, which calculates the indices, uses such executives to produce data on business conditions. In each country, a panel of purchasing managers is carefully selected by Markit, designed to accurately represent the true structure of the chosen sector of the economy as determined by official data. Generally, value added data are used at two-digit SIC level, with a further breakdown by company size analysis where possible. The survey panels therefore replicate the actual economy in miniature. A weighting system is also incorporated into the survey database that weights each response by company size and the relative importance of the sector in which that company operates. Particular effort is made to achieve monthly survey response rates of around 80%, ensuring that an accurate picture of business conditions is recorded over time. Data are collected in the second half of each month via mail, email, web, fax and phone. To get more information on these indices, or if you would like a list of these indices, call today to speak to one of our sales representatives at 877-DATA-999 or 949-542-4200.

Before the organization of the NASDAQ in 1971, unlisted stocks were traded over-the-counter, using the pink sheets to find brokers who dealt in these unlisted securities. With the advent of computers and the organization of the NASDAQ, this arcane method of buying and selling stocks was made superfluous. Before 1972, however, OTC stocks provided an important resource for securities unavailable on organized exchanges. NASDAQ began keeping track of stock prices electronically on December 14, 1972, and data on OTC stocks after that date is readily available. Before 1972, however, very little data was on unlisted companies was accessible until now. Global Financial Data has digitized over 100 years of information on OTC stocks for its customers to analyze and explore. Although most people may think that it was mainly small stocks of little interest to investors that traded OTC prior to the creation of the NASDAQ, nothing could be further from the truth. Several companies that are current members of the Dow Jones Industrial Average traded OTC before they listed on the NYSE. This includes Chevron, ExxonMobil, Disney, WalMart JPMorgan Chase and Travelers. Without access to Global Financial Data’s complete histories for these companies, you will be missing some of the key elements in these companies’ histories. In addition to this, most financial stocks, banks and insurance, traded OTC prior to the advent of NASDAQ because the companies were too small to list on a major exchange. GFD now makes a hundred years of history that includes data on over 5000 finance companies available to its customers. The database provides information on thousands of banks and insurance companies that are included in the OTC Database from every state of the union. How were bank stocks affected by the Great Depression? Without access to Global Financial Data’s OTC Stocks Database, you will never know. The source of this data is the Commercial and Financial Chronicle and its sister publication, the Bank and Quotation Record. Each month from 1865 until 1972, these periodicals collected data from their sources throughout the United States and published the bid and ask for each OTC company. The result is an incomparable history of business in the United States. The OTC database covers over 100 years of stock histories between 1865 and 1972, including data on over 20,000 companies with over 1 million data entries. Using this resource, we have added data on over 900 insurance companies, over 4000 banks and over 7000 Industrial companies which were not previously part of the U.S. Stocks Database. The inclusion of this data has also allowed us to provide additional data on over 9000 companies that were already in the database, including many members, past and present, of the S&P 500. Xerox listed on the NYSE in 1961, but OTC data for Xerox begins in 1936. As a result of this addition, the number of companies listed in the U.S. Stocks Database has increased to over 50,000 beginning with the Bank of North America in 1782 and ending with the IPOs of 2016. Global Financial Data has carefully collected and entered this data to verify its accuracy. One of the most difficult parts of this project has been to organize the data into separate files for each company. GFD did extensive research to classify each company by equity type, sector and industry, SIC Code, incorporation, and other relevant factors. In addition to this, we provide a description of the company’s business and its corporate history. Even ignoring the extensive stock market data, the result is an incomparable history of corporations in the United States. No other resource provides so much information in a single location about corporations in the United States over the past 200 years than Global Financial Data. Many of our customers are already using these additions to the database to fine tune their algorithms for trading stocks. Are you? To access the United States Stocks Database, to get a list of the OTC stocks that were added to the database, to obtain a complete list of the 75,000 securities in the U.S. Stocks Database, to get a demonstration of the U.S. Stocks database, or if you have any questions about these additions, call today to speak to one of our sales representatives at 877-DATA-999 or 949-542-4200.

Alexander Hamilton, the first Secretary of the Treasury, laid the foundations of the American financial system. When Hamilton became Secretary of the Treasury on September 11, 1789, the nation’s finances were in a mess. Government 6% bonds were trading at 25 since they were in default. Hamilton planned to follow in the footsteps of John Law and reduce the amount of government debt by allowing it to be converted into equity. The President, Directors and Company, of the Bank of the United States, or the First Bank of the United States, as it is more commonly known, was chartered for a term of twenty years, by the United States Congress on February 25, 1791. The bank was part of Alexander Hamilton’s plan for stabilizing and improving the nation’s credit by establishing a central bank, a mint, and introducing excise taxes. Opposition to the bank was led by Thomas Jefferson and James Madison who thought the bank was unconstitutional and created an unnecessary centralization of power. Hamilton modeled the Bank of the United States on the Bank of England. The bank could be a depository for collected taxes, make short-term loans to the government, and could serve as a holding site for incoming and outgoing money. Nevertheless, Hamilton saw the main goal of the bank as a way of promoting commercial and private interests by making sound loans to the private sector. Most of the bank’s activities were commercial, not public. The Bank of the United States had $10 million in capital, of which $2 million was subscribed by the U.S. government. The $8 million in shares sold to the public (20,000 shares at $400) were sold in July 1791. To understand how large the Bank of the United States was, the revenues of the Federal Government were only $4.4 million in 1791, so the capitalization of the Bank of the United States was twice that of the Federal Government’s revenues.  

The Bank Scrip Bubble

Scrip on the Bank of the United States, which represented rights to buy full shares of stock, initially sold for $25 on July 1, 1791. To complete ownership, payments of $75 were due on December 31, 1791, $100 on July 1, 1791, $100 on December 31, 1792 and $100 on July 1, 1793. One-quarter of the payment had to be in gold, but the remaining three-quarters could be made in U.S. government bonds. By allowing three-fourths of the payment to be made in United States debt securities, the prices of U.S. government bonds immediately rose in price. U.S. government debt had been reorganized in October 1790 into the Sixes and Threes, at which point the Sixes traded at 70, and by July 31, 1791, the Sixes were trading at 100. Since Hamilton had taken over as Secretary of the Treasury, U.S. government bonds had risen in price from 25 back to par at 100. Fully-paid shares in the Bank of the United States were issued in August 1791, and they rose in price from 530 to 740 by the end of August, only to fall back to 524 by early October. Trading also occurred in the scrip of the Bank of the United States, which represented shares that had not been fully paid for (these later became half shares and three-quarter shares as payments became due). The scrip went on an even wilder ride, rising from 25 at the beginning of August to 249 on August 12, 1791, falling to 165, rising again to 207 on August 22, then sliding back to 121 by September 16. The speculation became known as the Bank Scrip Bubble of 1791. Within weeks of the issuance of Bank shares, the nation had gone through its first stock market bubble and crash.  

Duer and the “Six Percent Club”

The Society for Establishing Useful Manufactures (SUM) was established in 1791 to promote industrial development along the Passaic River in New Jersey, founding the city of Patterson in the process. The goal was to use the Great Falls of the Passaic River as a power source for grist mills. The company was the idea of Assistant Secretary of the Treasury Tench Coxe, and was charted in New Jersey under Hamilton’s direction as a type of public-private partnership. Hamilton asked William Duer, who had sided with Hamilton in The Federalist Papers, writing in support of the United States Constitution under the alias of “Philo-Publius,” to become governor and chief salesmen for the SUM. Duer was instrumental in helping to raise $500,000 in capital for the new company. William Duer was not only a master salesman, but a speculator as well. When Hamilton discovered that Duer had been a driving force in the “scripomania” which had driven the Bank Scrip Bubble, he sent Duer a letter admonishing him for speculating in bank scrip. Like any plunger, his failure in the Bank Scipr Bubble only motivated him to invest on a larger scale and to try and have greater control over the market to insure success. Duer organized a pool along with Alexander Macomb, a wealthy land speculator who had purchased the largest piece of property from the state of New York, and with other owners of shares in the Bank of the United States. They were known as “The Six Percent Club” since shares in the Bank of the United States paid a 6% dividend. Their goal was to try and corner the market before the next distribution of shares in July 1792 and sell the shares to European investors at a profit. Duer and the others bought the shares on time, in essence buying options, rather than buying full shares, so they could maximize their profit through leverage. The Bank of the United States finally opened in December 1791, and made use of its capital by making loans and issuing banknotes. This increased the money supply and helped to feed new speculation in bank shares and U.S. 6% bonds. The wild ride in shares of the Bank of the United States continued. Shares rose in price from 524 to 680 on October 26, 1792, fell back to 528 on December 17, 1791 and rose to 712 on January 4, 1792. Since the U.S. Government Sixes could be used to buy shares, their price rose in sympathy with the increase in the price of the Bank of the United States, rising to 129 on March 5, 1792.

The Panic of 1792

By March, the banks started to face a credit crunch. Clinton and his clique began to withdraw large amounts of money from the city’s banks to create a credit shortage. Moreover, it was springtime when farmers began withdrawing money from the banks to pay for the crops they were planting. Oliver Wolcott, the comptroller of the currency, had discovered the deficiency of $292,000 at the SUM, which Duer acknowledged, and demanded repayment. Wolcott called upon the U.S. attorney in New York to sue Duer for the long overdue debt. Duer appealed to Alexander Hamilton to intercede on his behalf, but Hamilton refused, and on March 9, 1792, Duer failed to meet payments on some of his loans and Duer’s paper pyramid collapsed. With Duer and his pool no longer able to buy shares in the Bank of the United States, the price of the stock began a precipitous decline. On March 23, Duer took refuge in the New York city jail. Duer was soon joined in jail by two other members of the “Six Percent Club,” Walter Livingston (who is buried at Trinity Churchyard near Wall Street), who had cosigned over $200,000 of notes signed by Duer, and Alexander Macomb, who defaulted on $500,000 in stock he had purchased from the bears. By mid-April, with the Six Percent Club defaulting and the price of Bank of the United States stock collapsing, the country suffered its first financial panic. This delighted Secretary of State Jefferson, Governor Clinton and his allies, who were opposed to Hamilton’s attempt to centralize the finances of the United States. They would turn the Panic into political capital which they would use to undercut Alexander Hamilton. In response to the crisis, many banks tightened their credit, and in March and April, money began flowing to farmers to provide funding for their crops. From December 29 to March 9, cash reserves for the Bank of the United States decreased by 34%, prompting the bank to not renew nearly 25% of its outstanding 30-day loans. In order to pay off these loans, many borrowers were forced to sell securities they had purchased, which caused the price of stocks to fall sharply. The price of Bank of the United States half shares collapsed from 203 on March 3 to 146 on March 21 while the price of U.S. Sixes fell from 129 to 95. The price of stock in the Society for the Establishment of Useful Manufactures fell from 136.5 on February 8 to 30 on March 13, 1792. Duer had perpetrated the young nation’s first financial Panic and stock market crash, and he paid the price. Duer spent the rest of his life in debtor’s prison where he died on May 7, 1799. Hamilton promised that the government would buy from the bank up to $500,000 of securities should the Bank of New York be stuck with excess collateral. Hamilton also supported lending by the Bank of Maryland and Hamilton authorized an additional $150,000 of open-market purchases by the Bank of New York. In essence, Hamilton followed Bagehot’s dictum, given eighty years later in his book Lombard Street to “lend freely, against good collateral, at a penalty rate,” acting as the lender of last resort for other banks. Nevertheless, in the elections in the congressional elections of 1792, Jefferson and his allies benefitted as voters expressed their disgust with Duer and his financial shenanigans. After the collapse was over, the United States began its first bull market, with stock rising in price until 1802. The outline of every financial panic that has happened over the past two hundred years occurred in the Panic of 1792: the wild speculation, the financial frenzy, the collapse that followed, and the intervention of the government to keep the rot from spreading. Despite everything the Federal Reserve, Congress, President, Stock Exchanges and other agencies may do to insure that financial panics are a thing of the past, this pattern will no doubt be repeated many times over in the century to come. Speculators as a specie will never die.