The History of Finance and Capital Markets: A Documentary Approach

Proposal for a Yale College/SOM Seminar


The History of Finance and Capital Markets: A Documentary Approach  EPE 407B


Instructor: William N. Goetzmann, Yale School of Management


The course will explore the history of finance and capital markets from antiquity to the modern times.  It will focus on innovations in the technology of finance:  from the Mesopotamian origins of financial instruments, to the mathematical development of compound interest calculations, the beginnings of paper money and related instruments, the appearance of bond markets in the Late Middle Ages, the origins of mutual funds in Northern Europe, the development of government bond markets, financial innovations associated with the American Revolution,  the globalization of capital before World War 1 and the political consequences of unfettered capitalism. 


Through the course the students will be introduced to mathematical methods and algorithms used historically to solve financial problems, from Mesopotamian mathematical tablets to Chinese problems to medieval calculations to the mathematical advances of the enlightenment. The course uses two methodologies:  the analysis of documents, and the analysis of quantitative financial data. 


The course will take advantage of Yale collections in financial history at the Yale Babylonian Collection and the Beinecke Rare Book Library.  Students will have a chance to study documents in the newly formed SOM/Beinecke History of Finance Collection. 


The structure of the course will closely follow the volume edited by Goetzmann and Rouwenhorst:  The Origins of Value.    Additional references by volume contributors will be added to the reading list, including journal articles. 


Each meeting will focus on collection materials, reading and a discussion of student research.  Requirements: Students  will write two papers.  The first is a study of a document or financial contract in their area of interest.  The second is a brief statistical analysis of historical financial data on a question of their own design.  Finally, a term paper analyzing some feature of capital market history in depth, using primary documentary or quantitative material.   Students are encouraged to use primary data when available, including market databases.  Two students will be asked to prepare a document or dataset for discussion in each of the classes.


Pre-requisites: Preference is given to students with reading knowledge in another language, as many of the primary sources are not in English.  These languages include Latin, Ancient Greek, Literary Chinese, Dutch, French and Italian. Some facility with mathematics is desirable.  Previous course experience in economics and/or finance is desirable. EPE majors are given priority.


Class meetings:  The course will meet Monday, 1:30 PM in the Beinecke, or in another Yale collection.


Books for the Course:


[G&R] Goetzmann, William and K. Geert Rouwenhorst, 2005, The Origins of Value: The Financial Innovations that Created Modern Capital Markets, Oxford University Press


 Sylla, Richard and Sidney Homer, A History of Interest Rates. Rutgers University Press; 3rd Rev. edition.


Larry Neal, The Rise of Financial Capitalism: International Capital Markets in the Age of Reason.


MacDonald, James, A Free Nation Deep in Debt, Farrar, Strauss, Giroux.


John Micklethwait, Adrian Wooldridge,  The Company: A Short History of a Revolutionary Idea  


Lenin, Vladimir Il'ich 1917,  Imperialism: The Highest Stage of Capitalism.


Niall Ferguson, The Cash Nexus, Money and Power in the Modern World, 1700-2000.


Bernstein, Peter, 1998, Against the Gods, The Remarkable Story of Risk, Wiley. 


Bernstein, Peter, Capital Ideas: The Improbable Origins of Modern Wall Street, Free Press.


Hudson, Michael and Marc Van de Mieroop, eds.  2002,  Debt and Economic Renewal in the Ancient Near East, CDL Press.


Millet, Paul, 2002, Lending and Borrowing in Ancient Athens, Cambridge University Press.


Joseph de la Vega, Confusiones de Confusiones.

This book is sold together with Macay’s Extraordinary Popular Delusions and the Madness of Crowds which has a chapter on John Law.



Optional Books:


Optional: William G. Roy,  1999, Socializing Capital, Princeton Press.


Optional: Robert Shiller, The New Financial Order. Princeton University Press.


Optional: Sigler, Laurence, 2003,  Fibonacci’s Liber Abaci, Springer. Paperback.



Out of Print but on Reserve:


Reserve: Geoffrey Poitras, 2000, The Early History of Financial Economics, 1478 – 1776, Edward Elgar. [available only on reserve]


M. Boone, K. Davids, P. Janssens (eds.), 2003,  Urban Public Debts: Urban Government and the Market for Annuities in Western Europe, Brepols. STRONGLY RECOMMENDED


Reserve: Polanyi, Karl,  Conrad Arensberg and Harry Pearson,1957, Trade and Market in the Early Empires, Regency Press. [Available only on reserve]


Reserve: Feis, Herbert, 1930, Europe, the World’s Banker, Reprint, 1975, Augustus KelleyPublishers. [Amazon link] [BN]  On Reserve.


Reserve: Polanyi, Karl,  Conrad Arensberg and Harry Pearson, 1957, Trade and Market in the Early Empires, Regency Press. [on reserve]


Reserve: Murphy, Antoin, John Law: Innovative Theorist and Policy-Maker [on reserve]




Most articles are available through links or through the Yale library system on-line journals.

Week 1, January 22:   Introduction


Introduction to the course and methods and seminar participants. An introduction to the resources at the Beinecke Library. [Tim Young]


An overview of   finance will focus on it’s role in society.  We will develop questions in the seminar that we will take to the research through the term.  We will discuss how to test hypotheses about finance and society.   Discuss cognitive and notational background, beginning of quantitative reasoning, notation and measures of time.  Sign-ups for presentations and discussions.




- G&R Introduction.  Read this chapter   in preparation for class.


Marshack, 1989,  Evolution of the human capacity: The symbolic evidence,  Yearbook of Physical Anthropology, 1989.


Schmandt-Besserat, Denise,  1992, Before Writing, Volume I.  University of Texas Press.


Mattessich, Richard, 2000, The Beginnings of Accounting and Accounting Thought, Garland Publishing.


McBrearty,  S. and A.S. Brooks, 2000, “The Revolution that Wasn’t: A New Interpretation of the Origin of Modern Human Behavior, “ Journal of Human Evolution, Nov;39(5):453-563.


K Peng, I Choi, 2001, “Culture and Systems of Thought: Holistic Versus Analytic Cognition” Psychological Review.


Background and related resources:


Marshack, Alexander, 1972, The Roots of Civilization: The Cognitive Beginnings of Man's First Art, Symbol and Notation Moyer Bell Ltd; Rev&Exp edition, 1991.


Meninger, Karl, 1992,  Number Words and Number Symbols : A Cultural History of Numbers, Dover reprint.


Week 2, January 29:  Mesopotamia


Beginning of accounting and financial instruments in Mesopotamia.  Origins of  notation and writing.  Evidence for financial systems.  Mesopotamian traders. Loan forgiveness. The debate over private and public economies. Visit to the Yale Babylonian Collection. [Benjamin Foster]




G&R chapter 1. (Van De Meiroop)


Homer  and Sylla,  chapters 1 and 2


MacDonald, Chapter 1


Hallo, William, Ulla Kasten, Martin Shubik, 2005, “The Emergence of Economic Institutions in Mesopotamia” The Museum of Money and Financial Insitutions.


Background Resources:


Dercksen, J.G.,  ed. 1999, Trade and Finance in Ancient Mesopotamia,  Nederlands Historisch-Archaeologisch Instituut Te Istanbul.


Goddeeris, Anne, 2002, Economy and Society in Northern Babylonia in the Early Old Babylonian Period (ca. 2000 – 1800 B.C.), Uitgeverij Peeters and Department Oosterse Studies.


Hudson, Michael and Marc Van de Mieroop, eds.  2002,  Debt and Economic Renewal in the Ancient Near East, CDL Press.


Nissen, Hans, Peter Damerow and Robert Englund, 1993,  Archaic Bookkeeping, University of Chicago Press.


Polanyi, Karl,  Conrad Arensberg and Harry Pearson,1957, Trade and Market in the Early Empires, Regency Press.


Slotsky, Alice, 1997, The Bourse of Babylon, CDL Press. Centuries of spot commodity prices, available on-line.


Volunteer assignment: select some tablets from the Babylonian collection to introduce and discuss.  Ask Ulla Kasten for help. Alternatively, do some quantitative analysis of the Slotsky data.

Week 3:  February 5,   Late Mesopotamia and Ptolemaic Egypt


Mathematical interlude: compound interest.   Students will learn some basics of   Babylonian mathematics and the approach to compound interest rates used in the Ancient Near East. Late Babylonian financial claims: the Murasu archives.  Documents relating to loans, mortgages  and banking from Ptolemaic Egypt. Property rights, legal definitions of land claims. [John Jacobs, a fifth-year graduate student here at Yale in Classics and NELC will assist in the reading]





Hudson, Michael and Marc Van de Mieroop, eds.  2002,  Debt and Economic Renewal in the Ancient Near East, CDL Press.


Background resources:


Selections from Neugebauer, O. The Exact Sciences in Antiquity. 1969. New York: Dover Press.


Stolper, Matthew W. Entrepreneurs and Empire. 1985. Leiden: Nederlands Instituut voor het Nabije Oosen. Stolper, Matthew W. Entrepreneurs and Empire. 1985. Leiden: Nederlands Instituut voor het Nabije Oosen.


Maclennan, Hugh,  1935, Oxyrhynchus: An Economic and Social Study. Adolph  H. Hakkert.


DeSoto, Hernando,  2000, The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere  Else,  Basic Books.


Keenan,  James G.,  1997, Demotic  and Greek Texts from an Egyptian Family Archive in the Fayum (fourth to Third Century B.C.) Oriental Institute Publications volume. 113.


The Oxyrhynchus Papyri  On-line index of the texts.


Financial papyri at Yale:  Search under subject = bank. 




P.CtYBR inv. DPg 10

P.CtYBR inv. 366

P.CtYBR inv. 490 qua

P.CtYBR inv. 512

P.CtYBR inv. 543

P.CtYBR inv. 1562 (A)(first text) qua P.CtYBR inv. 1562(A)(second text) qua

P.CtYBR inv. 1832

P.CtYBR inv. 3715


P.CtYBR inv. 496 qua

P.CtYBR inv. 721 qua


Hans Julius Wolff, 1940,  An Oxyrhynchus Receipt for Repayment of Loans”  Transactions and Proceedings of the American Philological Association, Vol. 71. (1940), pp. 616-622.

Stable URL:


Roger Shaler Bagnall   “SPP XX 74: The Last Preserved Bank-Diagraphe,” Tyche 10 (1995) 1-7 (with K. A. Worp)



Search other ancient papyri via Perseus.



Volunteer Assignment:  Select some financial papyri to introduce and discuss.  These could be from any collection in the world.  Prepare a web link as needed.



Week 4:  February 12,   Greece and Rome


The origins of coinage in Greece, India and China. The origins of banking in Greece.  Visit to the  Yale Numismatics Collection. [William Metcalf, curator].




Homer and Sylla Chapters 3,4 and 5


Millet, Paul, 2002, Lending and Borrowing in Ancient Athens, Cambridge University Press.


David M. Schaps The Invention of coinage in India, Lydia and China


Walter Scheidel, 2006, “The divergent evolution of coinage in eastern and western Eurasia” Working Paper, Stanford University.


Background resources:


Yale Numismatics Collection.


American Numismatic Society Resources and Links


Visual Resources:


Early Greek coinage, Chinese coinage, Indian coinage.


Volunteer Assignment:  Select some  Greek or Indian coins  that are interesting as financial technology.



Week 5, February 18, China


Silk Road Finance, Paper Money, Eat Meets West.   Early coinage in China,  Monetary theory and management in Warring States period.  Development of  contracts  in ancient China, development of secured lending, paper financial technology and development of paper money.  Role of finance in Chinese society.  Preview of  19th century developments.   Chinese  financial mathematics.




G&R Chapters 3,4 and 5 (Hansen, Hansen, Von Glahn)


Background Resources:


Hansen, Valerie, Negotiating Daily Life in Traditional China : How Ordinary People Used Contracts, 600-1400, Yale University Press.


Richard Von Glahn, 1996,  Fountain of Fortune: Money and Monetary Policy in China, 1000-1700, University of California Press.


The Suan shu shu 筭數書 'Writings on Reckoning [look for business problems]


Lien-sheng Yang, 1952, Money and Credit in China.


Ping Xinwei A Monetary History of China 2 vols., 1994 reprint.


W. Allyn Rickett,  translator,  Guanzi: Political, Economic, and Philosophical Essays from Early China, selected chapters to be identified.


Shen Kangshen, John N. Crossley, Anthony W. -C. Lun , Nine Chapters on the Mathematical Arts, The Nine Chapters on the Mathematical Art : Companion and Commentary, selected problems for analysis.



Visual Resources:


Chinese coinage, Chinese paper money. Beinecke Library:  Great Ming Universally Circulating Banknote.



Volunteer Assignment: Pick a Chinese document, text or object that relates to Chinese financial history, in Yale collections or elsewhere to describe for class.




Week 6, February 24:  The Middle Ages


Fibonacci and Financial Revolution.  Students learn how Fibonacci calculated. Present value calculations, business entities.


Italian bonds and government debt.  Monti di  Pieta and usury laws.  Foreign exchange  for concealing interest.




G&R Chapters 7,8 (Goetzmann, Pezzolo)


Macdonald, Chapters 2, 3 and 4.


Sigler. Laurence, 2003, Fibonacci’s Liber  Abaci, Springer. Paperback.


Munro, John,  2003, “The Medieval Origins of the Financial Revolution: Usury, Rentes and Negotiability,” The International History Review 25(3) 505-562.


Sylla and Homer, chapters 6 through 10 on medieval interest rates.


Background Resources:


Geoffrey Poitras, 2000, The Early History of Financial Economics, 1478 – 1776, Edward Elgar.  Chapters up to 1600.


M. Boone, K. Davids, P. Janssens (eds.), 2003,  Urban Public Debts: Urban Government and the Market for Annuities in Western Europe, Brepols.


Kohn, Meir, The Origins of Western Economic Success: Commerce, Finance, and Government in Pre-Industrial Europe, Unpublished, available on his website.


Swetz, Frank, 1987, Capitalism and Arithmetic,  The New Math of the Fifteen Century.


Egmond, Warren Practical Mathematics in the Italian Renaissance.


Mueller, Reinhold, The Venetian Money Market.


Yale Beinecke Collection: Spinelli Archive, , see: Robert Babcock, The Spinelli Family. Guide to an Exhibition at the Beinecke Library  (New Haven, 1989)


Source material for research on Tuscan families, taxes and investments from David Herlihy’s Computer files.  Castato Study data.


Volunteer Assignment:  Look in the Spinelli Archive and related documents, or explore the possibilities of analysis of  Castato Study data.

Week 7, March 5:  The Corporation 


Roman shares and markets.   Medieval corporate structures.  Origins in the Middle East.   Evolution of  entities in early modern times.  Some theories  about the firm.  History of  corporate governance outside of European models.  Family-based finance and the development of the corporation in China.  Some theory about corporate financial securities:  priority claims, bankruptcy, the share as discounted future value of cash flows.  Some theory about economic definitions of profits and return on capital.





G&R  Chapter 2, 9 (Malmendier and Neal)


John Micklethwait, Adrian Wooldridge, 2003,  The Company : A Short History of a Revolutionary Idea.


Hansmann, Henry, Kraakman, Reinier H. and Squire, Richard C., "Law and the Rise of the Firm" (January 2006). ECGI - Law Working Paper No. 57/2006


G&R Chapter 21 (Harms)


Background Resources


Larry Neal, The Rise of Financial Capitalism : International Capital Markets in the Age of Reason.


Visual Resources:


Yale Beinecke Collection:  Dutch East India Company bond.  Documents from the  Keyeserliche Company.



Homework Due:


Choose a document or  an object relating to financial history and write a three-page analysis of it.  Include a picture of the document. The paper should describe the object,  explain how it was made, when it was made,  its provenance, language, age and relevant references.  Explain the financial problem it solved.   We will discuss these papers   in class and following classes depending upon time and interest.

Week 8, March 26:  Dutch Finance


The first modern financial market. The Amsterdam Exchange, Futures Instruments, Short-selling and the Le Maire Affair.  The Dutch East India Company,   The glorious revolution and British Finance.  What are puts, calls, short-sales, future instruments?  Continent claims  in finance.




G&R Chapter 11 (Gelderbloom and Jonker)


Homer and Sylla, chapters 11 and 12 on 17th Century to 18th Century interest rates.


Larry Neal, 1990, The Rise of Financial Capitalism : International Capital Markets in the Age of Reason.



Background Resources


Marjolein ‘t Hart, Joost Jonker , Jan Luiten van Zanden (Eds), 1997, A Financial History of the Netherlands,  Cambridge University Press.


J.C. Riley, 1980, International Government Finance and the Amsterdam Capital Market, 1740-1815, Cambridge University Press.


Joseph de la Vega, Confusiones de Confusiones.  This book is sold together with Macay’s Extraordinary Popular Delusions and the Madness of Crowds which has a chapter on John Law.


James Tracey, 1985,  A Financial Revolution in the Hapsburg Netherlands: Renten and Renteniers in the Country of Holland, University of California Press.


James Tracey, 1990, The Rise of Merchant Empires: Long Distance Trade in the Early Modern World: 1350 -1750.


Weidenmeir, W.D., 2000, “The Market for Confederate  Cotton Bonds,” Explorations in Economic History, January.


Yale Beinecke Collection: early stock futures and options certificates.  Web documents from the 17th and 18th centuries.



Volunteer Assignment:  Choose data or a figure from Homer and Sylla and analyse  it for the class.  Explain why it is interesting.   You also may choose other data as well. 

Week 9, April 2.  Chance and Risk


Mathematical  interlude. Perpetuity formula, Bernoulli and compound interest.  De Witt, De Moivre,  Halley and Nicholas Bernoulli and the valuation of annuities and the invention of probability calculus.  The puzzle of negative numbers as debts.


Securitization and the origins of mutual funds.   Lotteries as investment.  The history of mutual funds from Dutch origins to British companies to American trusts and regulated investment companies.  Why is securitization  an important financial innovation.  A preview of the modern market for securitized products: mortgage-backed securities:  how they work and why they are important.





G&R  Chapter 10, 12, 15 (Goetzmann & Rouwenhorst, Poterba, Rouwenhorst)


Bernstein, Peter,   Against the Gods : the Remarkable Story of Risk.


Background Resources


Weir, David, 1989, Tontines,  Public Finance and Revolution in France and England, 1688-1789., Journal of Economic history,  49 , 95-124.


Weir, David and Francois Velde,  1992, “The Financial Market and Government Debt Policy in France, 1746-1793,” Journal of Economic History 52 1-39.


Alter, G and J.C. Riley, 1986, “How to Bet on Lives: A Guide to Life Contingent Contracts,” Research in Economic History.



Yale Beinecke Collection, 1648 Perpetuity, miscellaneous tontines and related materials from the history of insurance.


A Lottery Book:


Volunteer Assignment: Choose a  set of playing cards from the from the Yale collection and explain what they tell us about the idea of chance at the time of their creation.  Choose a book, document or archive from the Beinecke collection relating to the mathematics of probability and present it to the class.

Week 10, April 9:  John Law and French Finance


The bank, the plan,  the crash. John Law as an innovator.  Details of the scheme.  French Revolution: inflation.   How inflation for the first time robbed savers.  Assignats and the idea of securitizing property.  Tontines and how they worked. 




G&R chapter 13 (Murphy)


Macdonald, Chapters 5 and 6


Homer and Sylla  chapters 11-15.


Velde, Francois, John Law’s System.  Unpublished manuscript, downloadable from his website.


Weir, David, 1989, Tontines,  Public Finance and Revolution in France and England, 1688-1789., Journal of Economic history,  49 , 95-124.


Weir, David and Francois Velde,  1992, “The Financial Market and Government Debt Policy in France, 1746-1793,” Journal of Economic History 52 1-39.


Mackay, Charles,  1841, Extraordinary Popular Delusions & the Madness of  Crowds,  Chapter on John Law.


Background Resources:


Antoine Murphy, John Law, Innovative Theorist and Policy Maker


Beinecke Library:  The Great Mirror of Folly


Hasrvard Exhibition:  Sunk in Lucre’s Charms: South Sea Bubble Resources in the Kress Collection


Fran├žois Crouzet, 1987,  La Grande Inflation.


John Law, Essay on a Land Bank.


Howard J. Shakespeare, 1986 , France, The Royal Loans 1689 – 1789, From Booneshares.


Volunteer Assignment: pick a plate from The Great Mirror of Folly to analyze, explicate  and present to the class.   Analyze the price data from Neale or Velde to understand and explain  the first financial bubble.

Week 11, April 16: American Financial Innovation


American experiments with land banks and paper money.  Financing the revolution.  Origins of the New York Stock Exchange.  Early history of the dollar.  Public goods origins of American corporations.




GR chapters  6, 14,16 and 17  (Goetzmann & Williams, Shiller, Downing and Sylla)


Macdonald, Chapter 7


Homer and Sylla  chapter 16.


Background Resources


William G. Roy,  1999, Socializing Capital, Princeton Press.


Baldwin, Simeon E.  American Business Corporations before 1786.” American Historical Review 8 (April 1903): 449-65.


Goodwin, Jason, Greenback: The Almighty Dollar and the Invention of America.


Davis, Andrew MacFarland. “A Connecticut Land Bank of the Eighteenth Century.”

Quarterly Journal of Economics 13 (October 1898): 70-84.


Udo Hielscher, 2003, Financing the American Revolution. Museum of American Financial History.


Anderson, William, The Price of Liberty: The Public Debt of the American Revolution.


William Graham Sumner,  1898,  Robert Morris: The Financier and the Finances of the American Revolution, Vol. 1 (Paperback Reprint).


Benjamin Franklin, The Nature and Necessity of a Paper-Currency   A Modest Enquiry into the Nature and Necessity of a Paper-Currency. Philadelphia: Printed and Sold at the New Printing-Office, near the Market. 1729. (Historical Society of Pennsylvania)


Materials on Benjamin Franklin’s Will.


The Franklin Papers at Yale University.  An extraordinary resource on one of America’s  great financial visionaries.  A treasure-trove totally searchable by keyword.


Look up: “loan,” “currency,” “finance.”


Beinecke Library The New York Shipping and Commercial List.  Robert Morris Materials.  The Donaldson, Lufkin, Jenrette  collection in the Beinecke.


Yale ICF collection of historical  NYSE prices.


Volunteer Assignment:   Take a document from the Beinecke financial history collection related to early American finance and present it to the class.   Find materials in the Franklin Papers relating to currency or finance.  Analyze the material on Franklin’s will to see what the rate of return was over 200 years. 

Week 12, April 23:  Globalization: 1870 – 1930


Lessons from market integration.  Revolutionary response.  Yale projects on Russian and Chinese capital markets. King Leopold’s bonds.    The use of time-series data and graphs to understand diversification and investment.   Exploring financial imperialism, its technologies and its consequences.





Niall Ferguson, The Cash Nexus, Money and Power in the Modern World, 1700-2000.


Macdonald, Chapters 8 & 9.


Homer and Sylla chapters 17 – 28.


Lowenfeld, Henry , 1909, Investment and Exact Science


Vladimir Il'ich Lenin, 1917,  Imperialism: The Highest Stage of Capitalism


Background Resources


Goetzmann and Ukhov, 2005, “British Investment Overseas 1870-1913: A Modern Portfolio Theory Approach” forthcoming, Review of Finance.


Hobson, J.H., Imperialism.


Herbert Feis, 1930, Europe, the World’s Banker, Reprint, 1975, Augustus Kelley Publishers.

Ferguson, Niall,  2002, The Cash Nexus: Money and Power in the Modern World, 1700-2000, Basic Books.


Kuhlmann, 1983, China’s Foreign Debt, 1865-1982. Booneshares.


Macdonald, James, 2003, A Free Nation Deep in Debt: The Financial Roots of Democracy, Farrar Strauss and Giroux.


Bordo, Michael D., Barry Eichengreen and Douglas A.,  Irwin, 1999,  Is Globalization Today Really Different than Globalization a Hundred Years Ago?” NBER Working Paper No. W7195


Bordo, Michael D., Eichengreen, Barry J. and Kim, Jongwoo, "Was There Really an Earlier Period of International Financial Integration Comparable to Today?" (September 1998). NBER Working Paper No. W6738.


Chancellor, Edward;  Devil Take the Hindmost: A History of Financial Speculation.


Goetzmann, William N., Li, Lingfeng and Rouwenhorst, K. Geert, "Long-Term Global Market Correlations" (February 22, 2002). Yale ICF Working Paper No. 00-60; AFA 2003 Washington, DC Meetings.



Goetzmann, Ukhov and Zhu, 2000, “China and the World Financial Markets 1870-1930: Modern Lessons From Historical Globalization,” Forthcoming, Economic History Review.


Edelstein, Michael, 1982, British Foreign Investment in the Age of High Imperialism.


Ukhov,  Andrey, 2003, “Financial Innovation and Russian Government Debt Before 1918” Yale ICF Working Paper No. 03-20.


Charles Trzcinka and Andrey Ukhov, 2005, “Financial Globalization and Risk Sharing: Welfare Effects and the Optimality of Open Markets,  working paper.


Obstfeld, Maurice and Taylor, Alan M., "Globalization and Capital Markets" (March 2002). NBER Working Paper No. W8846.


Preda, Alex, 2004, “Informative Prices, Rational Investors: The Emergence of the Random Walk Hypothesis and the Nineteenth-Century " History of political economy [0018-2702]  vol:36 iss:2 pg:351


Goetzmann, William and Elisabeth Koll,  “The History of Corporate Ownership in China: State Patronage, Company Legislation and the Issue of Control.” In Mork, Randall, ed. A History of Corporate Governance Around the World, National Bureau of Economic Research, 2005.


Quantitative Resources:


Web collection of world securities in the 19th century.


Yale ICF Shanghai Stock Exchange Project.  Historical price data on securities, 1870-1930’s.


Yale ICF St. Petersburg Stock Exchange Project. Historical price data on securities from 1869-1917.


Yale ICF London Stock Exchange Project. Historical price data on securities, 1869 -1930, including world bond markets, world equity issues and domestic securities.


Samples of historical securities from the age of global capital markets:


Beinecke/ICF history of finance collection.  On-line Exhibit, Link to searching the collection.

Volunteer Assignment:   Choose a 19th century or 20th century  financial security to explain to the class. Write a description of one security from the 19th or 20th Century. 

Address the following questions in your analysis. Who printed it, how and why?  What legal rights did the instrument represent?  How was it physically used?  What entity issued it? 

Where was the entity located?  Where was the security traded?  What happened to the issuing entity?  What happened to the claim represented by the security?  What problem did this instrument solve?

Week 13, April 30:   Financial Economics in the 20th Century.

Development of statistical methods of diversification: James Tobin/Harry Markowitz model and the foundation of modern finance.  Rediscovery of international investing.  History of the Equity Risk Premium.


Peter Bernstein, 2000, Capital Ideas: The Improbable Origins of Modern Wall Street, Basic Books.

Goetzmann, William N. and Ibbotson, Roger G., "History and the Equity Risk Premium" (April 6, 2005). Yale ICF Working Paper No. 05-04.

Background resources

Cowles 3rd,  Alfred and Associates, Alfred, 1939, Common Stock Indexes, Second Edition, Principia Press Inc, Bloomington, Indiana Available from the Yale ICF at SOM.

Markowitz, Harry,  Portfolio Selection: Efficient Diversification of Investments.

WRDS database on American Stock Returns from 1926.

Ibbotson Analyzer database of asset classes.

Homework Due:  a three-page paper analyzing some historical financial data.

Final Paper is Due May 11