Independent Women: Investing in British Railways, 1870-1922

by Graeme Acheson (University of Strathclyde Business School), Aine Gallagher, Gareth Campbell, and John D.Turner (Queen’s University Centre for Economic History)

The full article from this blog post has been published in The Economic History Review.

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Women have a long tradition of investing in financial instruments, and scholars have recently documented the rise of female shareholders in nineteenth-century Britain, the United States, Australia, and Europe. However, we know very little about how this progressed into the twentieth century, and whether women shareholders over a century ago behaved differently from their male counterparts. To address this, we turn to the shareholder constituencies of railways, which were the largest public companies a century ago.

Railway companies in the UK popularised equity investment among the middle classes; they had been a major investment asset since the first railway boom of the mid-1830s. At the start of the 1900s, British railways made up about half of the market value of all domestic equity listed in the UK, and they constituted 49 of the 100 largest companies on the British stock market in 1911. The railways, therefore, make an interesting case through which to examine women investors. Detailed railway shareholder records, comparable to those for other sectors, have generally not been preserved. However, we have found Railway Shareholder Address Books for six of the largest railway companies between 1915 and 1922. We have supplemented these with several address books for these companies back to 1870, and have analysed the Shareholder Register for the Great Western Railway (GWR) from 1843, to place the latter period in context.

An analysis of these shareholder address books reveals the growing importance of women shareholders from 1843, when they made up about 11 per cent of the GWR shareholder base, to 1920, when they constituted about 40 per cent of primary shareholders. By the early twentieth century, women represent 30 to 40 per cent of shareholders in each railway company in our sample, which is in line with estimates of the number of women investing in other companies at this time (Rutterford, Green, Maltby and Owens, 2011). This implies that women were playing an important role in financial markets in the early twentieth century.

Although women were becoming increasingly prevalent in shareholder constituencies, we know little about how they were responding to changing social perceptions, and the increasing availability of financial information, in order to make informed investment decisions, or if they were influenced by male relatives. To examine this, we focus on joint shareholdings, where people would invest together, rather than buying shares on their own. This practice was extremely common, and from our data we are able to analyse the differences between solo shareholders, lead joint shareholders (i.e., individuals who owned shares with others but held the voting rights), and secondary joint shareholders (i.e., individuals who owned shares with others but did not hold the voting rights).

We find that women were much more likely to be solo shareholders than men, with 70 to 80 per cent of women investing on their own, compared to just 30 to 40 per cent of men. When women participated in joint shareholdings, there was no discernible difference as to whether they were the lead shareholder or the secondary shareholder, whereas the majority of men took up a secondary position. When women participated as a secondary shareholder, the lead was usually not a male relative. These findings are strong evidence that women shareholders were acting independently by choosing to take on the sole risks and rewards of share ownership when making their investments. 

We then analyse how the interaction between gender and joint shareholdings affected investment decisions. We begin by examining differences in terms of local versus arms-length investment, using geospatial analysis to calculate the distance between each shareholder’s address and the nearest station of the railway they had invested in. We find that women were more likely than men, and solo investors more likely than joint shareholders, to invest locally. This suggests that men may have used joint investments as a way of reducing the risks of investing at a distance. In contrast, women preferred to maintain their independence even if this meant focusing more on local investments.

We then examine the extent to which women and men invested across different railways. In the modern era, it is common to adopt a value-weighted portfolio which is most heavily concentrated in larger companies. As three of our sample companies were amongst the six largest companies of their era and a further two were in the top twenty-five, we would, a priori, expect to see some overlap of shareholders investing in different railways if they adopted this approach to diversification. From our analysis, we find that male and joint shareholders were more likely than female and solo shareholders to hold multiple railway stocks. This could imply that men were using joint shareholdings as a means of increasing diversification. In contrast, women may have been prioritising independence, even if it meant being less diversified.

We also consider whether there were differences in terms of how long each type of shareholder held onto their shares because modern studies suggest that women are much less likely than men to trade their shares. We find that only a minority of shareholders maintained a long-run buy and hold strategy, with little suggestion that this differed on the basis of gender or joint versus solo shareholders. This implies that our findings are not being driven by a cohort effect, and that the increasing numbers of women shareholders consciously chose to invest independently. 

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To contact the authors:

Graeme Acheson, graeme.acheson@strath.ac.uk

Aine Gallagher, Aine.Galagher@qub.ac.uk

Gareth Campbell, gareth.campbell@qub.ac.uk

John D.Turner, j.turner@qub.ac.uk