The growth and diversity of the Cape private capital market, 1892–1902

ABSTRACT The adoption of limited liability in the nineteenth century is considered to have boosted economic growth and expanded capital markets in Europe and North America. Despite similar legal changes in frontier markets such as South Africa, very few attempts have been made to analyse the economic effects thereof. After the Cape Joint Stock Company Act No. 25 of 1892 there was an upsurge in new joint stock companies in the Cape Colony, but little is known about the people who financed them. This study is an enquiry into who they were. Using a list of 6883 shareholders from 263 companies, we show that the Cape’s sources of private capital were a diverse group of people. Unlike previous studies, we find that most capital came from the middle class at the Cape and very little from foreign investors. The paper contributes to our understanding of early financial developments on the frontier and the evolution of capitalism at the Cape. It also contributes broadly to the economic and business history of the late nineteenth- and twentieth-century Cape.