Abstract: Shaping America's Stock Markets: Regulation and Competition, 1933-2000
In this paper, I analyze the development of the U.S. stock market from the passage of federal securities regulation in the 1930s to the end of the twentieth century. In the popular mind, and to some extent in scholarly discourse, there is a tendency to associate the expansion of the U.S. stock market with the logic of free market capitalism. I argue that such an interpretation confuses the ideology that the U.S. stock market represents with the characteristics of its developmental process. Certainly, private initiative was crucial to the development of the U.S. stock market, but competition among the trading markets was often too little or too much. Federal regulation of the U.S. stock market—its structure as well as the actions of the Securities and Exchange Commission (SEC), the federal agency charged with its administration—played a crucial role at several times during the period both in stimulating and controlling competition among trading markets. As a result, it had important effects on the contemporary institutional characteristics of the U.S. stock market. Some of these effects of federal regulation were intended but others were not planned or even foreseen.