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Published by EH.Net (August 2023).

Amy Edwards. Are We Rich Yet? The Rise of Mass Investment Culture in Contemporary Britain. Berkeley: University of California Press, 2022. 384 pp. $29.95 (hardcover), ISBN 978-0520385467.

Reviewed for EH.Net by Janette Rutterford, Professor Emerita of Finance and Financial History, The Open University.

 

Much has been written on the history of investment in the pre-World War I UK, when investors benefitted from a wide array of foreign and colonial investment opportunities as well as from more or less fixed exchange rates. After WWI, investment in the US became democratised in the 1920s and 1930s, as Julia Ott has chronicled in When Wall Street Meets Main Street. Janice Traflet in A Nation of Small Shareholders has described the resurgence of the New York Stock Exchange in the 1950s and the mass marketing of collective investment schemes thereafter. In the UK, by contrast, financial historians of the post-WWI period have concentrated their efforts on the histories of banks, insurance companies and pension funds and ignored the ultimate beneficiaries of their investments, the man or woman on the Clapham omnibus.

This book thus fills a major hole in British investment history. It offers insights into the 20th century decline in the importance of the small investor. Edwards notes a switch from retail investors holding more than half of UK listed equities in 1963, falling to 20% by 1990, with financial institutions – insurance companies and pension funds – going in the opposite direction, from under 20% in 1963 to around 50% by 1990, higher still if mutual funds – open and closed end – are included. This substantial decline of direct investment hid the mini-boom in privatisation issues offered direct to the public. Before the first large privatisation in the Thatcher era, that of British Telecom, direct holdings by individuals had fallen to 3.5% of the UK equity market.

This fall in importance of direct investment in stock market securities did not mean that individuals were not investing. They were also doing so indirectly through increasingly important financial institutions. Edwards argues that, after the publicity accorded to the privatisations of the 1980s, the growth in importance of stock market investment to individuals was facilitated by the creation of a mass culture of investment, partly through an already important financial press and partly through the efforts of financial institutions such as clearing banks and building societies that were already well-known brands. Edwards terms this ‘the rise of financial consumerism’ and explains in the book how financial institutions succeeded in selling investment products – with high embedded costs – as consumer items. The third and final theme of Edwards’ book is the creation of what she terms ‘financial subjectivities’. Financialisaton of the social as well as political and economic elements of society led to a variety of types of ‘investor subject’: the ‘investor-citizen’, the ‘investment-shopper’ and the ‘investment-oriented subject’.

After an introductory chapter on investment in the period 1840 to 1980, Edwards describes the rise and fall of the OTC (Over the Counter) market operated by ‘licensed dealers’. Offering access to riskier securities, the licensed dealers competed against the London Stock Exchange and its creation the Unlisted Securities Market, which began in 1980, and faced increased competition after deregulation (Big Bang) in 1986. Defenders of the OTC market argued that this allowed speculation as well as investment; detractors argued they were little better than fraudsters. On the other hand, the financial bookmakers, such as IG index, established in the same period, have thrived, despite offering risky bets, because, the author argues, they did not upset the status quo.

Chapter 3 looks at the investor shopper in a world of financial consumerism, illustrating how a variety of market players innovated in product design, service delivery and marketing to tempt large numbers of relatively naïve investors. It starts, though, with companies themselves marketing their shares by offering shareholder perks, a hitherto unresearched topic. The establishing of share shops in locations as disparate as Debenhams and building society branches, though innovative, was a failure: commissions on small savers’ dealings were not high enough for the brokers, banks and building societies to turn a profit. Chapter 4 describes the rise in financial advice in the press, books and through other media, followed by a rise in investment education and in stock-market related games. It points to a growing problem during the period, that of differential access to investment advice – with small investors given share price data and limited investment recommendations after a lag, compared the instant access given to brokers’ more profitable financial institution clients. The book concludes with a chapter on the recent phenomenon of yuppie traders, who first appeared in the Thatcher era, and the final chapter covers the rise of investment clubs – a form of self-help for small investors – and shareholder associations such as UKSA which aim to protect the rights of shareholders who buy direct, frustrated in today’s world by difficulty of access of shareholder details, since many shares are held in nominee names.

This book is an excellent addition to the history of stock market investment in the UK during the past 50 or so years. It gives needed coverage to important but overlooked topics such as shareholder perks and OTC traders.

 

Janette Rutterford is Professor Emerita of Finance and Financial History at The Open University. Her latest publication, with Les Hannah, is “The unsung activists: UK shareholder investigation committees, 1888-1940,” Business History Review 96(4): 741-775 (2022).

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