Some links after the jump.
From The Economic History Society's Long Run blog:
Market anomalies and market crashes: Historical perspectives on modern finance
Early Victorian observers would have found our financial markets familiar,
but would likely expect a crash, writes Andrew Odlyzko*
What would early Victorians make of today’s markets? Such questions are more than just idle curiosities. For example, the recent wide acceptance around the world of negative interest rates was a surprise. Why didn’t the money go into cash? Yet observers should not have been startled by this development. In Britain in the early 1850s, Exchequer Bills effectively offered negative rates. The convenience of those paper instruments gave them higher value than stacks of gold coins, just as today the convenience of electronic ledger balances is worth something compared to having to handle containers full of banknotes.....MUCH MORE
The Exchequer Bills episode is just one minor finding from recent studies that integrate data from the ledgers in the Bank of England Archive with price reports, press coverage, and other sources. Previously unknown statistics about completeness of price reports, turnover rates, and dealer activity have been obtained. It has also been found that the London Stock Exchange was a key part of the “shadow banking system” of the time.
Aside from statistics, we can also obtain some qualitative insights about modern finance from these investigations. Our basic laws and institutions are clear linear descendants of those created at that time. If some of those early Victorians were to come alive today, they would have no difficulty recognizing all the modern financial instruments and services, although they would surely marvel at such concoctions as CDO squareds. Many current concerns would have been familiar to them as well. While they did not talk about climate change, they did worry about natural resource depletion, and effects of globalization. Inequality was even greater than today. Deflation and the analog of our “Great Savings Glut” were visible, and seemed natural. Although the terms secular stagnation and liquidity trap had not yet been invented, they corresponded to widely held attitudes.
Although the financial system was far smaller than today, public opinions about it were not dissimilar. Respect was often mixed with fear and loathing, as in an 1850 magazine article that called the London Stock Exchange “an institution destitute of moral principle, but at the same time omnipotent in its influence upon the moral and social condition of nations.”....
Previously from the good Professor:
"Sir Isaac Newton: Scientific Genius, Investing Fool"
The Wall Street Journal's Jason Zweig leans heavily on Odlyzko's research
The Time Charles ('Popular Delusions...') MacKay Thought 'This Time it's Different'
"Isaac Newton, Daniel Defoe and the Dynamics of Financial Bubbles"
And in network theory he challenged the valuation of networks—he thought the theory gave valuations that were too low, something later important in valuing Facebook, Twitter etc.
Here he is as co-author of a paper on same, this version at IEEE Spectrum:
Communications networks increase in value as they add members
—but by how much? The devil is in the details
