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The rollicking U.S. financial markets may seem like modern games of chance, but they actually have lured investors for a couple hundred years now.
In a summer research project at Lafayette College, a student and professor are peering back to the past to analyze financial markets from the era of the War of 1812.
“We’re looking at the onset of globalization,” says Joshua Sullivan ’03, a double major in history and economics and business.
As a participant in Lafayette’s distinctive EXCEL Scholar program, Sullivan is working with Howard Bodenhorn, associate professor of economics and an economic historian. In EXCEL, students assist faculty members with research while earning a stipend.
Sullivan and Bodenhorn are tracking and analyzing various instruments for three U.S. financial markets based on prices from newspapers at the time.
According to Bodenhorn, the newspapers reported prices on a handful of traded equity securities, government bonds, U.S.-English exchange rates and interest rates on short-term borrowings.
“We’re historically evaluating what those stock exchanges did before, during and after the War of 1812,” says Sullivan. “We looked at each week’s market readings and at what kind of stock fluctuations occurred. I’m also doing extensive reading into the state of the economy at those times.”
“We’re also looking at London and Amsterdam, comparing the pound and Netherlands’ guilder to the U.S. dollar,” he adds. “The hypothesis is that when ties were most hostile, exchange rates were great and money flow minimal.”
Sullivan and Bodenhorn will also be creating their own market index like the Dow Jones Industrial Average or Standard and Poors, the student says.
So far, Sullivan has collected the statistics, and entered and sorted the data in spreadsheets; the second half of the project is analyzing them.
“I’m very excited about the second half. It’s a lot of investigation,” he says. In fact, he is thrilled with the entire EXCEL project, which he says is “progressing fantastically.”
“Anytime you get to work one-on-one with someone who’s working on something significant, it’s great,” says Sullivan, who is considering graduate school and a career as a professor in economics or English.
A graduate of Bishop Eustace Prep in Pennsauken, N.J., Sullivan is a campus tour guide, a WJRH DJ and business manager, and a member of the junior varsity basketball team.