Public Choice

, Volume 150, Issue 3–4, pp 609–631 | Cite as

Property rights and competing for the affections of Demos: the impact of the 1867 Reform Act on stock prices

  • John D. TurnerEmail author
  • Wenwen Zhan


The 1867 Reform Act in Britain extended the electoral franchise to the skilled but propertyless urban working classes. Using stock market data and exploiting the fact that foreign and domestic equities traded simultaneously on the London market, this paper finds that investors in British firms reacted negatively to the passage of this Act. We suggest that this finding is consistent with investors foreseeing future alterations of property rights arising from the pressure that the large newly enfranchised group would bring to bear on government policy. We also suggest that our findings appear to be more consistent with the Tory political competition explanation for the Act rather than the Whig threat-of-revolution explanation.


Democracy Franchise extension Property rights Britain Stock market 

JEL Classification

G10 K00 N23 N43 P14 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Acheson, G. G., Hickson, C. R., Turner, J. D., & Ye, Q. (2009). Rule Britannia!: British stock market returns, 1825–1870. Journal of Economic History, 69, 1106–1136. CrossRefGoogle Scholar
  2. Acemoglu, D., & Robinson, J. A. (2000). Why did the West extend the franchise? democracy, inequality, and growth in historical perspective. Quarterly Journal of Economics, 115, 1167–1199. CrossRefGoogle Scholar
  3. Acemoglu, D., & Robinson, J. A. (2001). A theory of political transitions. American Economic Review, 91, 938–963. CrossRefGoogle Scholar
  4. Acemoglu, D., & Robinson, J. A. (2006). Economic origins of dictatorship and democracy. Cambridge: Cambridge University Press. Google Scholar
  5. Acemoglu, D., Johnson, S., Robinson, J. A., & Yared, P. (2005). From education to democracy? American Economic Review Papers and Proceedings, 95, 44–49. CrossRefGoogle Scholar
  6. Acemoglu, D., Johnson, S., Robinson, J. A., & Yared, P. (2008). Income and democracy. American Economic Review, 98, 938–963. CrossRefGoogle Scholar
  7. Aidt, T. S., Dutta, J., & Loukoinova, E. (2006). Democracy comes to Europe: franchise extension and fiscal outcomes 1830–1938. European Economic Review, 50, 249–283. CrossRefGoogle Scholar
  8. Atiyah, P. S. (1979). The rise and fall of freedom of contract. Oxford: Clarendon Press. Google Scholar
  9. Barro, R. J. (1996). Democracy and growth. Journal of Economic Growth, 1, 1–27. CrossRefGoogle Scholar
  10. Barro, R. J. (1999). Determinants of Democracy. Journal of Political Economy, 107, S158–S183. CrossRefGoogle Scholar
  11. Bennion, F. (1981). Modern royal assent procedure at Westminster. Statute Law Review, 2, 133–147. CrossRefGoogle Scholar
  12. Briggs, A. (1959). The age of improvement 1783–1867. London: Longmans. Google Scholar
  13. Campbell, J. Y., Lo, A. W., & MacKinlay, A. C. (1997). The econometrics of financial markets. Princeton: Princeton University Press. Google Scholar
  14. Cheffins, B. R. (2008). Corporate ownership and control: British business transformed. Oxford: Oxford University Press. CrossRefGoogle Scholar
  15. Cowling, M. (1967). 1867: Disraeli, Gladstone and revolution. Cambridge: Cambridge University Press. CrossRefGoogle Scholar
  16. Dicey, A. V. (1917). Lectures on the relation between law and public opinion in England during the nineteenth century. London: Macmillan. Google Scholar
  17. Dickinson, G. L. (1895). The development of parliament during the nineteenth century. London: Longman, Green and Co. Google Scholar
  18. Durkin, M., & Gay, O. (2005). The royal prerogative. Standard Note of House of Commons Library, SN/PC/03861. Google Scholar
  19. Evans, E. J. (1983a). The great reform act of 1832. London: Routledge. Google Scholar
  20. Evans, E. J. (1983b). The forging of the modern state: early industrial Britain, 1783–1870. London: Longman. Google Scholar
  21. Evans, E. J. (2000). Parliamentary reform, c.1770–1918. London: Longman. Google Scholar
  22. Ferguson, N. (2001). The cash nexus: money and power in the modern world, 1700–2000. London: Penguin. Google Scholar
  23. Gallagher, T. F. (1980). The second reform movement, 1848–1867. Albion, 12, 147–163. CrossRefGoogle Scholar
  24. Gerring, J., Bond, P., Barndt, W. T., & Moreno, C. (2005). Democracy and economic growth: a historical perspective. World Politics, 57, 323–364. CrossRefGoogle Scholar
  25. Glaesar, E. L., La Porta, R., Lopez-de-Silanes, F., & Shleifer, A. (2004). Do institutions cause growth? Journal of Economic Growth, 9, 271–303. CrossRefGoogle Scholar
  26. Guttsman, W. L. (1974). The British political elite and the class structure. In P. Stanworth & A. Giddens (Eds.), Elites and power in British society. Cambridge: Cambridge University Press. Google Scholar
  27. Harrison, R. (1965). Before the socialists: studies in labour and politics 1861–1881. London: Routledge and Kegan Paul. Google Scholar
  28. Herrick, F. H. (1934). The reform bill of 1867 and the British party system. The Pacific Historical Review, 3, 216–233. Google Scholar
  29. Himmelfarb, G. (1966). The politics of democracy: the English reform act of 1867. Journal of British Studies, 6, 97–138. CrossRefGoogle Scholar
  30. Husted, T. A., & Kenny, L. W. (1997). The effect of the expansion of the voting franchise on the size of government. Journal of Political Economy, 105, 54–82. CrossRefGoogle Scholar
  31. Justman, M., & Gradstein, M. (1999). The industrial revolution, political transition, and the subsequent decline in inequality in 19th-century Britain. Explorations in Economic History, 36, 109–127. CrossRefGoogle Scholar
  32. Lee, S. J. (1994). Aspects of British political history, 1815–1914. London: Routledge. Google Scholar
  33. Lindert, P. H. (2003). Voice and growth: was Churchill right? Journal of Economic History, 63, 315–350. CrossRefGoogle Scholar
  34. Lipset, S. M. (1959). Some social requirements of democracy: economic development and political legitimacy. American Political Science Review, 53, 69–105. CrossRefGoogle Scholar
  35. Lizzeri, A., & Persico, N. (2004). Why did the elites extend the suffrage? democracy and the scope of government, with an application to Britain’s ‘age of reform’. Quarterly Journal of Economics, 119, 707–765. CrossRefGoogle Scholar
  36. Lott, J. R., & Kenny, L. W. (1999). Did women’s suffrage change the size and scope of government? Journal of Political Economy, 107, 1163–1198. CrossRefGoogle Scholar
  37. Miller, G. (2008). Women’s suffrage, political responsiveness, and child survival in American history. Quarterly Journal of Economics, 123, 1287–1327. CrossRefGoogle Scholar
  38. Mitchell, B. R. (1988). British historical statistics. Cambridge: Cambridge University Press. Google Scholar
  39. Murdoch, J. (1885). A history of constitutional reform in Great Britain and Ireland. Glasgow: Blackie and Son. Google Scholar
  40. North, D. C., & Weingast, B. R. (1989). Constitutions and commitment: the evolution of institutions governing public choice in seventeenth-century England. Journal of Economic History, 49, 803–832. CrossRefGoogle Scholar
  41. North, D. C., Wallis, J. J., & Weingast, B. R. (2006). A conceptual framework for interpreting recorded human history. NBER Working Paper #12795. Google Scholar
  42. Olson, M. (1963). Rapid growth as a destabilizing force. Journal of Economic History, 23, 529–552. Google Scholar
  43. Olson, M. (1993). Dictatorship, democracy, and development. American Political Science Review, 87, 567–576. CrossRefGoogle Scholar
  44. Phillips, J. A., & Wetherell, C. (1995). The great reform act of 1832 and the political modernization of England. American Historical Review, 100, 411–436. CrossRefGoogle Scholar
  45. Papaioannou, E., & Siourounis, G. (2008). Democratisation and growth. Economic Journal, 118, 1520–1551. CrossRefGoogle Scholar
  46. Rallings, M., & Thrasher, M. (2007). British electoral facts 1832–2006. Aldershot: Ashgate. Google Scholar
  47. Saunders, R. (2007). The politics of reform and the making of the second reform act, 1848–1867. Historical Journal, 50, 571–591. CrossRefGoogle Scholar
  48. Scholes, M., & Williams, J. (1977). Estimating betas from nonsynchronous data. Journal of Financial Economics, 5, 309–327. CrossRefGoogle Scholar
  49. Schwert, G. W. (1981). Using financial data to measure the effects of regulation. Journal of Law and Economics, 24, 121–158. CrossRefGoogle Scholar
  50. Seymour, C. (1915). Electoral reform in England and Wales: the development and operation of the parliamentary franchise. New Haven: Yale University Press. Google Scholar
  51. Smith, F. B. (1966). The making of the second reform bill. Aldershot: Gregg Revivals [1992 reprint]. Google Scholar
  52. Thomas, J. A. (1925). The House of Commons, 1832–1867: a functional analysis. Economica, 13, 49–61. CrossRefGoogle Scholar
  53. Thompson, E. A., & Hickson, C. R. (2001). Ideology and the evolution of vital economic institutions: guilds, the gold standard, and modern international cooperation. Boston: Kluwer. Google Scholar
  54. Trevelyan, G. M. (1937). British history in the nineteenth century and after. London: Longmans. Google Scholar
  55. Turner, J. D. (2009). Wider share ownership?: investors in English bank shares, 1826–1900. Economic History Review, 62, 167–192. CrossRefGoogle Scholar
  56. Weingast, B. R. (1997). The political foundations of democracy and the rule of law. American Political Science Review, 91, 245–263. CrossRefGoogle Scholar
  57. Wright, D. G. (1970). Democracy and reform 1815–1885. Harlow: Longman. Google Scholar
  58. Zhang, I. X. (2007). Economic consequences of the Sarbanes-Oxley Act of 2002. Journal of Accounting and Economics, 44, 74–115. CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Queen’s University Management SchoolQueen’s University BelfastBelfastUK

Personalised recommendations