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Published September 1, 2007 | public
Journal Article Open

The Highest Price Ever: The Great NYSE Seat Sale of 1928–1929 and Capacity Constraints


During the 1920s the New York Stock Exchange's position as the dominant American exchange was eroding. Costs to customers, measured as bid-ask spreads, spiked when surging inflows of orders collided with the constraint created by a fixed number of brokers. The NYSE's management proposed and the membership approved a 25 percent increase in the number of seats by issuing a quarter-seat dividend to all members. An event study reveals that the aggregate value of the NYSE rose in anticipation of improved competitiveness. These expectations were justified as bid-ask spreads became less sensitive to peak volume days.

Additional Information

Copyright © 2007 The Economic History Association. Reprinted with permission. Published online 10 September 2007. We thank seminar participants at the Columbia Macro Lunch, the NBER Summer Institute, the New York Stock Exchange, and Universidad Carlos III. We owe particular thanks to Marc Weidenmier, Kim Oosterlinck, and three anonymous referees for their extensive comments. We especially appreciate the time and guidance of Steven Wheeler, Director of Corporate Giving, Archives and Education, NYSE Euronext. We gratefully acknowledge support from the National Science Foundation (34-3262-00-0-79-151) and the Rutgers University Research Council.


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