Journal of Historical Political Economy > Vol 2 > Issue 3

Suffrage Reform and Financial Volatility: Reconsidering the Great Reform Act

Gary Cox, William Bennett Munro Professor of Political Science, Department of Political Science, Stanford University, USA, gcox@stanford.edu , Sebastian Saiegh, Professor of Political Science, Department of Political Science, UC San Diego, USA, ssaiegh@ucsd.edu
 
Suggested Citation
Gary Cox and Sebastian Saiegh (2022), "Suffrage Reform and Financial Volatility: Reconsidering the Great Reform Act", Journal of Historical Political Economy: Vol. 2: No. 3, pp 415-447. http://dx.doi.org/10.1561/115.00000035

Publication Date: 31 Oct 2022
© 2022 G. Cox and S. Saiegh
 
Subjects
Democratization,  Financial markets
 
Keywords
Democratizationfinancial history1832 Reform Act
 

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In this article:
Introduction 
Background 
Financial Volatility in the Reform Era 
Political Risk and Consol Prices 
What Moved Consol Prices? 
Conclusion 
References 

Abstract

We argue that Consol price movements during England's reform era reflected speculative activity spurred by continental revolutions and government instability, rather than market perceptions of a significant risk to the British regime's survival. We first show that, controlling for cross-market linkages, Consol variability during the reform era was no different than it was in normal times. Next, we show that Consol risks could be diversified using a portfolio of securities whose value depended on the unreformed regime's survival — something that should not have been possible if regime survival was in serious doubt. Finally, we use daily data to examine the relationship between major events and Consol prices. We find that investors did not view threats to the reform bill's passage as if they entailed risks of default. Instead, “ordinary” political risk (i.e., a potential change in the partisan control of the government) explains much of the variability in Consol prices.

DOI:10.1561/115.00000035