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Stock Jobbers in the Eighteenth Century

The idea of stock jobber is complex for a number of reasons. First, stock-jobbers refer to different ideas depending on whether you are talking about Britain or America. Additionally, stock jobbers in England during the time were notorious for not recording or leaving any sort of paper trail during their transactions. In the early days of the stock market, stock jobbers are described as the the intermediaries between stockbrokers and people as they were not allowed to be market makers. The term stock-jobbers was first used in England in 1688. These individuals were the forerunners of what is now known as the modern brokerage firm. Licensed brokers were required to possess a silver medallion to identify themselves as being properly registered (Markham). The stock jobbers were instrumental in helping create the massive South Sea Bubble. In a piece by Benedict Sheeley titled The Trouble With Stock Jobbers: The South Sea Bubble, the press and the Legislative Regulation of the Markets states “Essentially, the problem was viewed as a matter of corrupt individuals who were company directors assisted to a large degree in their malfeasance by stock jobbers who distributed shares and facilitated the perpetration of a fraud on the investing public” (Sheehy 11). .Given that investing and the stock market was a much newer concept, the idea of diversification of stocks was an idea not yet realized. So when the vast majority of the public was invested heavily in the South Sea Company and it was realized their value was seen as massively inflated, this led to a major collapse of the banks.

 

The result of the financial crises contributed heavily to a collective disdain for the jobbers. Daniel Defoe is perhaps most famous for his outright disdain for their involvement in the markets. Defoe wrote a lengthy work in attempt to dismantle the stock jobbers in work called “The Villiany of Stock-jobbers detected”. His contempt for the jobbers is made very clear through his work . He posits that “stock-jobbing is the practice of buying and selling stocks to make a quick profit (a “jobber” is a trader), and Defoe in this pamphlet protests that such behavior invites instability in the market and has the potential to ruin trade” ( Griggs ). Similarly, Dr. Johnson described jobbers even in less appealing terms stating they were “A low wretch who gets money by buying and selling shares in the funds” (Griggs). Furthering that, there were also entire plays written to ridicule the stock-jobbers and other financial players in the market.

 

In addition stock-jobbers were the subject to a number of legislation to hopefully in part rid of some of the corruption of the financial markets. The stock jobbers were sought to regulation in 1697 through a statute entitled “An act to restrain the Number and ill Practices of Brokers and Stock Jobbers” (April ). Regulation was somewhat regular but curiously absent in the wake of the South Sea Bubble. Not anyone could just go be a stock-jobber however. Jobbers were required to be licensed by the Lord Mayor of London and to be Registered at the Royal Exchange. If an unlicensed stock jobbers were caught, they were “ placed in the pillory for an hour on each of three days” (Markham).

 

Whatever the case is with respect to the stock jobber’s inherent worth or hinderence , their effect on society cannot be refuted. They were inherent to this new culture that encompassed debt and the merchant, commercial society. Society as a result was much more fast paced, growing at an exponential rate, while at the same time even more exposed to lies, deciet, and corruption. ( Less)

 

 

Griggs, Denise. “Daniel Defoe. Exhibition Finance.” Daniel Defoe. Exhibition Finance. The Lilly Library, n.d. Web. 28 Oct. 2012. <http://www.indiana.edu/~liblilly/defoe/finance.html&gt;.

 

Less, David. “A conspiracy of Paper.” Paper Money — Its Beginnings. Random House, n.d. Web. 30 Oct. 2012. <http://www.ralphmag.org/london1720ZM.html&gt;.

 

Markham, Jerry W. “Stock Jobbers.” A Financial History of the United States. Armonk, NY: M.E. Sharpe, 2002. 94-97. Print

 

“April 1697.” House of Lords Journal Volume 16. N.p., n.d. Web. 31 Oct. 2012. <http://www.british-history.ac.uk/report.aspx?compid=13509&gt;.

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