Ranald Michie's new study draws on several years of research and reflection on the history of securities markets and their functions within financial systems. Appropriately, this has culminated in a volume about the history of the global securities market that can also be read as a global history of securities markets, as well as a history of global securities. Inevitably, the three are closely linked. Michie identifies six phases in these interconnected histories, characterised by alternating periods of expansion, disruption and suppression, that will be immediately recognisable to historians of the world economy. The first is treated in a single chapter, extending from the origins of interest-bearing government bonds in the medieval Italian city-states, through the emergence of early modern markets, to the speculative bubbles of 1719–20, which Michie describes as the ‘first global stock market boom and collapse’ (p. 35). During the second phase between 1720 and 1815, also covered in a single chapter, the activities of European securities markets, especially in Amsterdam, contributed significantly to ‘a high degree of monetary integration first within Europe and then across the Atlantic’ (p. 57), before collapsing after 1789 because of revolution and war. During the third phase, from 1815 to 1914, the growth of the world economy, widespread economic liberalism as far as monetary policies, capital movements and markets were concerned, and the innovations of telegraphy and the telephone, revolutionised markets. These were increasingly formalised through the creation of stock exchanges, and integrated by the inter-market trading of highly mobile investments like French rentes, US railroad securities, South African gold mining stocks, and imperial Russian bonds. The importance of this phase – during which ‘stock exchanges evolved into central institutions of the capitalist world’ (p. 117) and, according to Michie, contributed far more to the stability of the international monetary system than the gold standard – is indicated by the three chapters devoted to it. These have terminal dates at 1850, 1900 and 1914, and account for just under a third of the book. The following two phases are each given separate chapters. Between 1914 and 1939, securities markets contracted as a consequence of war, the regulatory reaction to the Wall Street crash, and the breakdown of the gold standard. After 1945, they were also increasingly subordinated to the state's fiscal and macroeconomic objectives. During the final phase after 1970, progressive liberalisation in the world economy, combined with the convergence of communication and computer technologies, allowed securities markets to regain their central position. These developments are discussed in two chapters, the first focusing on liberalisation in New York, London and Tokyo to 1990; the second following its ramifications in all markets until 2005. Pursuing the parallel with the pre-1914 era, these transformations are also described as revolutionary.

Michie's interpretation of this history through all its phases develops several themes he has already explored in earlier work, giving coherence to a study that is sometimes burdened by detail and breadth of coverage. Four stand out. The first is the uneasy relationship between markets and the state, governments often wishing to regulate stock exchanges for their own purposes, as well as to protect investors. The outcome, as far as formal exchanges were concerned, was essentially two models of the market – one Anglo-Saxon and laissez faire, the other European and regulatory – each profoundly influencing the stock market's roles within national financial systems and the global economy. The second theme concerns the essential, but largely unacknowledged, role of securities markets under liberal economic regimes in creating the liquidity that allowed banks in particular to employ potentially idle balances in short-term investments that were almost risk-free. Liquidity, openness and arbitrage also facilitated international transfers and allowed monetary shocks to be cushioned by compensatory capital flows. The requirements of merchants, banks and other financial institutions therefore, rather than those of governments and companies, were the primary reasons for the emergence of active securities markets. Moreover, far from being dangerous sources of instability and mere playgrounds for speculation, securities trading and its associated financial activities integrated the money and capital markets, thus becoming indispensable also to the maintenance of domestic and international monetary stability. A third theme is the relationship between formal stock exchanges and the informal, unregulated markets outside. Formal markets flourished when they met the needs of all participants, most of all investors. When restrictive practices or state control impaired their efficiency, financial intermediaries and investors soon found alternative ways of dealing with each other. By attracting business away from stock exchanges, informal markets – particularly over-the-counter and computerised trading platforms – also became dynamic forces promoting liberalisation. A final theme concerns hierarchy and specialisation. Before 1914, markets were linked in networks that functioned at subnational, national and international levels, with the central nodes in London and Paris, but each one providing ‘pools of liquidity’ (a phrase applied to the later period but equally useful here) derived from local concentrations of investors in particular securities. Since 1970, hierarchy has re-emerged in a refurbished network as national and regional markets interact with the main financial centres in New York, London and Tokyo that still attract most of the foreign order flow.

Hierarchy and specialisation lead us back to Michie's main subject, the global securities market. Some readers will feel uncomfortable with his catch-all use of the term from as early as the seventeenth century. His usage can also be inconsistent and confusing. Even by 2005, he acknowledges: ‘Essentially … the global stock market remained an amalgam of national markets with a small amount of international and cross-border trading’ (p. 328). Despite this and some repetition, his history is a remarkable feat of research, synthesis and clear exposition. It is also a powerful statement of the importance of securities markets in capitalist economies. Contemporary historians will be indebted to Michie for bringing order to the bewilderingly rapid changes since 1970. But this is a book for all financial historians. It deserves a place in their libraries, as well as on the reading lists of every student of financial history and the international economy.