Rain, Steam and Speed— The Great Western Railway, oil on canvas, by Joseph Mallord William Turner, 1844.
National Gallery of Art, London
The swap of LA for TA continued for about six weeks until January 5, 1830( and resumed on a smaller scale, with a slightly different instrument and lower profits, for a while at the end of January). After the first three swaps of LA for TA on Monday, the next similar moves took place on Wednesday, and this time one of the six investors involved was Turner.
In late 1829, Turner had £ 527.74 per year of LA, worth close to £ 10,000, which can be compared to between $ 1 million and $ 10 million today. On that Wednesday, November 25, he swapped £ 20 per year of LA for £ 20.53 of TA, a gain of about 2.1 %( taking into account that small stub payment on LA). How did he learn of this potential? We don’ t know. And why did he only swap 4 % of his LA holdings? Again, we don’ t know, but the most likely explanation is that he could not believe such an easy way to make money was legal.
Three weeks later, Turner returned and swapped a larger amount, £ 300 per year of LA. This time he received £ 305.75 per year of TA, so a gain of just about 1.4 %( after the LA stub correction), due to changes in market prices. This was comparable to a gain of between $ 10,000 and $ 100,000. Why did it take him three weeks to come back? And why did he not swap his whole stake in LA at that time, £ 507.74 per year? Those mysteries may never be solved.
Some puzzles from that moment in financial history can almost surely be solved with more research. Since there are complete records of transactions in LA and TA, it is possible to learn much about the microstructure of the London financial markets, as the London Stock Exchange members played prominent roles.
Culture and Finance
The most important puzzle of the LA to TA swap is the small number of investors who participated. Of the £ 1.36 million per year of LA, only £ 125,954 per year, or 9.3 %, were swapped for TA by early January 1830. The easily obtainable gains were widely publicized by Thomas Massa Alsager, the most eminent financial journalist of that time in his daily column in The Times, which was the most prominent newspaper in Britain. Further, Alsager’ s writeups on the advantages of TA were cited in many provincial papers. So a lack of information does not seem to be an adequate explanation. General conservatism of British investors was a more likely cause.
An even more important factor seems to have been a cultural inhibition against dabbling in what was somewhat disreputable finance, with the word“ jobber” carrying a heavy pejorative connotation. Thus, the Evening Standard on November 26( a day after Turner’ s first tentative swap), in a diatribe against greed, attacked“ the agonizing anxiety manifested about half a pound per cent, and the scrupulous and indignant
40 FINANCIAL HISTORY | Fall 2025 | www. MoAF. org