Integration of Trans-Atlantic Capital Markets, 1790-1845

During the 1790s, European investors began to purchase substantial quantities of US government and corporate securities. A number of these securities were traded in markets on both sides of the Atlantic. Based on market price quotations we compiled for the same securities in London and New York markets, we ask if these early trans-Atlantic securities markets were integrated, and, if so, when they became integrated. We find little evidence of market integration before 1816, and substantial evidence of it thereafter. Financial globalization - the convergence of financial asset prices in markets on different continents - began earlier than most have suspected. Copyright Oxford University Press Science+Business Media, LLC 2006