Annual EBHS Conference, 39th Annual Economic and Business History Society Conference

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Working-Class share dealing in 1850s Lancashire. A new source of industrial finance?
Peter Wright Hampson

Last modified: 2014-03-10


Until the 1844 Joint Stock Companies Act, transferable shares were  only legal for incorporated companies, but even after this workingmen were restricted to operating under the Friendly Societies Acts, which did not allow transferable shares and this ban was continued by the 1852 Industrial and Provident Societies Act. The Bacup Commercial Company, who formed their own joint stock company, exploited the window of opportunity between 1844 and 1852. Others followed them and by 1862 there were over 50 companies and 20,000 working-class shareholders in SE Lancashire. These companies sold shares to local people. There were no markets for shares of this kind, so the they were initially sold by word of mouth, later they were advertised in local newspapers. The point of sale was often in local shops or pubs run by officers of the company.

The shares were sold on ‘easy terms’, a deposit was made and the balance was paid up over a period, which varied with the company. All shares were normally of low value, usually £10, and fully paid up. They had to be in this format as working people could afford a few shillings per month to buy them, but could not have survived a sudden call for more. In this respect it can be argued that this set a precedent for what happened on the major exchanges after the financial crash of 1866.

As momentum grew and shares began to be re-sold, various small operators began to appear. Initially the early share dealers were part-time, looking to act as middlemen and buy and sell on commission. Some pubs set aside a share dealing room one evening per week. More unusually were the shares, which were sold by auction. Up until as late as 1900 share auctions were a regular way of disposing of shares. Obviously all share transfers had to be registered with the company.

More traditionally, share lists appeared in local newspapers, giving dividends, price, etc. The share brokers, who had started to become more established, often sponsored these. Then in 1876 a new share exchange was built in Rawtenstall. The announcement made it clear that this was a club where workingmen could come to buy and sell their shares. It was also clear that old-established family firms were taking advantage of the share market in their midst and floating their companies to realise their assets. This allowed working-class speculators access to even more companies.

These types of shares would not be quoted on major exchanges until the twentieth century, so the ‘grey’ share markets, which spread to other areas, were a major source of funding for the smaller, industrial manufacturing companies. The question of industrial finance in this period is still debated, but this source has not, until now, been identified as significant. In fact the capitalisation of these companies amounted to millions of pounds, equivalent to billions in today’s values, and thus very significant.