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Hot answers tagged

139

To expand on Schwern's answer somewhat, using leverage as a trader works more or less like this: Scenario 1: you have $1k of play money and use it to buy stocks. The market goes up 10%. You sell. You now have $1.1k. Net gain: $100, minus some transaction fees. Scenario 2: you use $1k as collateral for a loan to bring your play money to $10k. The stocks go ...


83

If they did, it would be because of the practice of buying on margin, a form of loan from your broker where you use the stocks themselves as collateral. This allows you to buy more stock than you have cash on hand. If the price goes up, you get even richer and sell some of the stock to pay off the loan. If the price of the stock falls, you'll find yourself ...


35

I think this is a color error (in reproduction, printing, fading, etc.) It is a 19th Century Venezuelan flag with the cluster of stars visible on the blue bar.


27

Seems like the questioner was asking for a bit more than just an idea of conversion rates, so here is some background on how the pre-decimal currency worked. 4 farthings = one penny 2 halfpennies = one penny tuppence = colloquial two pence thruppence = colloquial three pence 240 pence = one pound 6 pence = sixpence (aka a Tanner), or half a shilling. ...


24

Brokers went bust due to an aspect of investing that isn't often covered by mainstream media: the margin call. When you buy stocks on margin, meaning you're borrowing the money to buy a lot of the stocks, who puts up the rest of the money? The broker. Buy $10k worth of stock at the 15% margin allowable in the 1920's, and you only paid $1500. So if it goes ...


14

THE SHORT ANSWER Charles I did borrow money from abroad but it was never enough to meet his needs. The financial drain of the Thirty Years War on much of Europe, a muddled foreign policy, and a lack of both collateral and trust were the main reasons Charles I could not borrow enough abroad. Potential lenders were also reluctant to help the king due to the ...


10

According to the autobiography of Lord Denis Healey, who was Chancellor of the Exchequer from 1974 to 1979, Britain only drew half of the IMF loan. Furthermore, he states that drawn amount were repaid in full by 4 May 1979, when the Labour government including himself left office. Moreover, I drew only half of the loan offered in return by the IMF, and ...


10

The article cited by Pieter Geerkens asserts that all the bonds issues were oversubscribed, and this is backed up by this other source. Wikipedia here and here, Investopedia and the Museum of American Finance all broadly agree with this, but with qualifications on the first issue especially. This answer therefore deals primarily with the first issue of ...


9

There are several reasons: One was historical - this was where Buttonwood Agreement was signed in 1792, starting what would later become the New York Stock & Exchange Board and eventually morphed into NYSE. One was geographical. New York was one of the main Atlantic sea ports in USA, thus ensuring connections to European and especially London banking. ...


9

The short answer is that there was little in the way of pre-defined tools, but the government could rely on its governing and legislative powers to intervene on an ad-hoc basis. There was no coherent banking system in 1933 China. The concept of "reserve requirements" as we know it today did not exist - banks maintained a specie reserve to back their private ...


8

According to this source by the Treaty of Bärwald: Richelieu, however, turned against the Habsburgs young Gustavus Adolphus of Sweden, paying him a subsidy of a million livres a year by the treaty of Bärwald of the 23rd of January 1631. Wikipedia states: The treaty obliged Sweden to maintain an army of 36,000 troops, and France to fund the Swedish ...


8

The number of Jews who lent money in the Middle Ages is unfortunately commonly over-estimated. The majority of Jews had jobs that did not involve money-lending. This is a fairly new historical discovery, though more and more research is coming out every year. For a good, scholarly, and responsible introduction see: Margolis, Ethan Levi, "Evidence that the ...


8

New York was a natural trade center for a few key reasons. Access to Upstate NY Upstate NY was very important place in commercial history. The settlement of New York was driven by access to beaver and other furs, and the Hudson River was the 16th century equivalent to an interstate highway, leading right to the port of New York City. Later, as fertile ...


8

Bond yields dropped as it became more and more apparent that the United States would win the war. Then the war expenditures were seen an "investment" in a lasting and durable peace. At the end of World War II, the U.S. had 50% of the world's industrial capacity, up from 40% before the war (according to Paul Kennedy in "The Rise and Fall of the Great Powers). ...


7

Money's meaning changes over time; it is not a static category. For simplicities sake, lets assume that you learn how to use Lsd (£/s/d) figures, and work out a few of the more curious word name (tuppence). Even then, you won't know how much money was worth in that era unless you read a lot of social history. There are time values for money converters (...


7

After zooming in, it does look like the white part is a faded yellow and there is a circle of stars in the middle of the flag (as pointed out in Aaron's answer):


7

Question: All things being equal (population, years of opportunity, sold bond value adjusted for inflation to 2018 dollars), and with similar marketing strategies in both wars to sell the bonds, what contributed to the higher participation rates and higher dollar contributions per capita in WWII over that of WWI? Has there been an historical analysis of ...


6

This is a very good question with a very weird and convoluted answer. This is my first post, so I've only got two links - I've bolded terms you should google, and referred to interesting wiki articles by their title. First, banks and corporations did not fill the same functions as they do today - and the giant powerhouse financial institutions were ...


6

As the wikipedia article on consols mentions, Britain actually started issuing these perpetual bonds in 1751. So their use during the Napoleonic Wars some fifty or so years later was far from unprecedented. As noted in the comments, the attractiveness of this style of loan (to the borrower) was a combination of the low interest rate and putting the ...


6

As Semaphore points out, the UK is paying interest on consolidated annuities. His links are better, but here is a story from the New York Times. (Note: Semaphore corrected my quibble about UK vs GB; he was right, I've removed my text). France continues to pay on a debt from 1738. But the oldest active debt is Dutch: The very oldest active bonds, ...


5

Specie Circular: The most direct and immediate effect of the Panic of 1837 was the repeal of the Specie Circular of 1836. The Specie Circular was a highly deflationary policy because it required that Western lands be purchased with specie that just wasn't available. Deflation exacerbates recessions: never good. In May 1838, the Senate repealed the Specie ...


5

The Panic of 1837 proved that the "cure was worse than the disease." Thus, it set the U.S. on the road to the passage of the 16th Amendment, and the establishment of the Federal Reserve some 76 years later, in 1913. The "disease" that Jackson fought was a centralized national bank along the lines of the Bank of England, advocated by banker Nicholas Biddle. ...


5

Here is a relevant example concerning the Jewish minority in late 19th-century Vienna, as recorded by Peter Gay in Freud: A Life for Our Time: Many of the immigrants from the miserable villages to the east dressed and spoke and gestured in ways alien and disagreeable to the Viennese; they were too exotic to be familiar and not exotic enough to be ...


5

Is there any evidence for this statement? No. It is clearly falsifiable and falsified—see the experience of indigenous people in settler societies. (Think Canada, US, Australia, New Zealand, Argentina, Chile).


5

From Wikipedia – In all the French spent 1.3 billion livres to support the Americans directly, in addition to the money it spent fighting Britain on land and sea outside the U.S. France's status as a great modern power was affirmed by the war, but it was detrimental to the country’s finances. Even though France's European territories were not ...


5

One unique characteristic of Hamilton's Bank of the U.S. (BUS) was that the government only had a 20 percent ownership of the bank, but the government had the right at all times for reports and status on the operation of the bank. Hamilton was concerned that government officials would be tempted to use the bank to give/gain favors politically...so he found ...


5

I think the best way to answer this question is to ask: Why did Philadelphia lose its position as the hub of American finance? Philadelphia had first mover's advantage over New York in terms of finance. Unfortunately for Philadelphia, national politics would erase Philly's advantage in the 1830s and 1840s, setting the stage for New York to begin to establish ...


5

tl;dr Yes, it appears that debts were taken into account by the censors, and that details were provided as part of the statement given by every Roman citizen to the censors. This is an interesting question, and is complicated somewhat by the nature of Roman Law. Every Roman citizen was required to provide a statement of his familia (including his wife, ...


4

I would add that Holland was the financial centre of the Earth in 17-18th centuries. NY, having the best specialists in finances simply couldn't fail.


4

The huge debt inherited from his father, Charles V (Charles I of Spain), had to be renegotiated with bankers several times. Thus, a system of bonds was created in which bankers accepted to receive the interests only. The principal, however, was never returned and the interests kept on growing. This system of bonds was the first in history, by the way. The ...


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