A 'spirit of speculation'

A new book shows that the interplay between politics and finance is as old as the JSE itself

To a man fresh from the London Exchange, where the individual is chaffed for a whole day if he wears a very loud necktie, a gaudy pair of trousers, or something very special in waistcoats, and where it would simply be seeing the destruction of the offensive article to walk in with any hat on your head but the time honoured and universally respected chimney-pot, the costumes of the Johannesburg Stock Exchange were a rude shock. In the matter of hats they wore all kind of head-gear except the chimney-pot. The weather was cold in the early morning, so there were many ulsters, some of remarkable design and colour; there were men in riding-breeches and top-boots, who carried a hunting-crop, and looked as unlike stockbrokers as anything we could imagine.

So recounted a young London broker, Edward Kennedy, having arrived in Johannesburg in June 1889, his experience of the early years of the Johannesburg Stock Exchange (JSE). Formally established in November 1887, the JSE marked the beginning of the organisation and regulation of financial activities within Johannesburg’s volatile mining economy.

Despite this uncertainty (or, perhaps, because of it), the JSE experienced rapid growth in membership numbers. At the beginning of January 1888, writes historian Mariusz Lukasiewicz in his new book Gold, Finance and Imperialism in South Africa, 1887–1902: A View from the Stock Exchange, less than two months after the official opening, the Exchange already had more than 100 paid-up members. The most significant and rapid rise in membership came with the arrival of Barney Barnato as director of the Johannesburg Estate Company. Some 700 new members were introduced to the Exchange during the year of 1889. It helped to get the buy-in of prominent investors: Barney Barnato was instrumental in opening the doors of the Exchange to a broad cross-section of Johannesburg’s general public, encouraging miners and prospectors with no previous financial experience to join the JSE.

Barnato not only attracted new members but was pivotal, during the first financial boom of 1888/9, in restructuring the JSE to better serve his business interests, turning it into a strategic entity within his portfolio. The JSE not only specialised in trading mining securities, reflecting a strong preference for gold mining and exploration, but also dealt with internal power struggles, particularly between the General Committee and the Johannesburg Estate Company. These conflicts often revolved around the vision and operational strategy of the JSE, impacting its development strategy and its capacity to grow as a capital market. This period also marked a significant shift in the JSE’s regulations, aligning more closely with those of the London Stock Exchange, and saw the introduction of regulatory sub-committees to address disputes, signifying a mature approach to governance and operations within the exchange.