The Stock Market Game in Post-war Britain

Abstract

After World War II, the financial sector took a back seat in Britain’s political economy and Labour’s nationalization programme initially wiped out significant areas of investment. In the post-war decades it was common for politicians of all parties to attack stock market operators as harmful gamblers. This anti-finance rhetoric has obscured our view of retail investment in those years in the way that it became almost invisible from public debate—and a historiography—that was dominated by nationalized industries, Keynesian demand management, and the welfare state. If anything, contemporaries were and scholars have been preoccupied with the ‘Cult of Equity’, the rapid growth of institutional investment at that time. While more private individuals ventured into the stock market—there were approximately 3 million direct shareholders by the early 1960s—their share of listed equity was declining. Hence, the small investor’s comeback went unnoticed in comparison with the shift of pension funds and life insurance companies from bonds into equities once markets had recovered by the mid-1950s. Investors small and large made and lost fortunes in two unprecedented boom markets while the burgeoning climate of affluence and permissiveness loosened traditional reservation against financial securities. More and more middle-class Britons not only invested in equities as a means of retirement planning, but also discovered the stock market as a hobby that offered thrills of risk and reward similar to gambling.