When the edge of town seems to most people like the edge of the earth, how do you to rally the resources needed to outfit a fleet of ships capable of sailing beyond the horizon? When the universal speed limit is assumed to be the plodding stride of a horse, where do you obtain the means of building a steam-powered railroad fast enough to redefine time? If you wanted to build energy conduits over continents to light up the world, if you wanted to manufacture automobiles cheap enough to be purchased by the workers who assembled them, if you wanted to put artificial intelligence in everyone’s pocket, if you wanted to change the world, to whom, exactly, would you turn for funding?
In the history of civilization, the question of how to raise enough money to revolutionize the human condition long lacked an adequate answer. For centuries, visionaries and entrepreneurs who were not privately wealthy enough to finance their own ventures might exhaust their financial options after merely knocking on the door of their local landowner or perhaps seeking an audience with a prince. And, in any case, even the biggest personal fortunes were often insufficient to really move the dial of history. Generation after generation, dreams of progress were too often left to wilt in the imaginations of men and women as the paucity of investment made their execution impossible. This repressive rule of history is one of the main reasons why progress was so slow for so long. But, around 400 years ago, something emerged in Europe to rewrite the rules of enterprise forever; an entirely new system of value exchange that finally made it possible for even average citizens to raise vast amounts of capital, ultimately relocating the limits of achievement from what rulers might impose to what any individual might imagine. Amid the ancient markets for buying and selling goods and services there arose a very different kind of market for buying and selling ownership in companies, or what we have since come to know as the stock market.
The stock market has been labeled many things; a den of iniquity, a playground for con artists, a forum of fraud. But however true those descriptions may have rung throughout its history, the stock market has also enabled us to allocate unprecedented quantities of wealth on efforts judged valuable by populations instead of princes. Of course any system capable of aggregating the resources of millions of people will suffer abuse and over-speculation, but episodes of financial shock are less damaging than those of shell shock, and beyond its ability to concentrate capital for innovation, the stock market has also helped to replace the mortal pulse of spilled blood between nation’s armies with the commercial pulse of modern markets between nation’s economies. The stock market has not only democratized fundraising, it has democratized investment, creating a new engine of economic prosperity powerful enough to supplant the tradition of working to death with the tradition of retiring into the golden years of seniority. Much more than just a forum of fraud, then, the stock market has been a forum of hope; a platform on which average people have been able to express their exceptional ambitions to build a better future. But, how did the idea of selling ownership evolve out of the tradition of selling things? How did we liberate the power inherent in millions of people’s desire to have a stake in the possibilities of progress?
I give you the stock market, and how it began.
Select Bibliography for The Stock Market
B. Mark Smith, The Equity Culture: The Story of the Global Stock Market, Farrar, Straus and Giroux, 2003.