The First 50 Years of the US Stock Market: New Evidence on Investor Total Return Including Dividends, 1793-1843

Abstract

Little is known about the performance of the US stock market before 1802, and evidence for the years following 1802 through the 1830s remains scanty. This paper describes a new database on total returns in the US stock market for the first fifty years of its existence, constructed in large part from data compiled by Sylla, Wilson and Wright (2006), combined with dividend information newly obtained from contemporaneous newspapers, along with information on capital stock obtained from contemporaneous directories. The new evidence clarifies the role and prominence of the New York market as compared to those of Boston, Philadelphia, and Baltimore. The outcome is a capital-weighted estimate of total returns over five decades. This estimate does not support Siegel’s (2014) thesis that multi-decade returns in the US market have always been on the order of 6.6% real, compounded. The paper concludes by considering explanations for the sub-par performance of the US stock market during this early period. [This paper has been superseded by later work. See revision notes that follow this abstract.]

Keywords: stocks for the long run, stock market history, stock market in the 19th century, stock market returns, bank stocks, turnpikes, canals, railroads

JEL Classification: N11, N21, N31, N81