[Colloquium] Seminar Announcement: Where does Financial Innovation Start? Power Networks in the Early Chicago Board of Trade

[Ninfa Mayorga]

Computation Institute- Data Lunch Seminar (DLS)

Speaker: Mark W. Geiger, Kluge Fellow, Library of Congress and  
Honorary Research Fellow at the University of Sydney
Host: Tanu Malik
Date: July 15, 2011
Time: 12:00 PM - 1:00 PM
Location: The University of Chicago, Searle 240A, 5735 S. Ellis Avenue

Where does Financial Innovation Start? Power Networks in the Early  
Chicago Board of Trade

ABSTRACT—Despite the attention that financial issues have received  
during the current world economic crisis, large gaps exist in our  
understanding of key market institutions, notably exchanges. The early  
Chicago Board of Trade (CBOT), an entity with a large yet unexplored  
financial and institutional archive, affords a rich opportunity to  
broaden our knowledge. CBOT was a leading world exchange for over 150  
years, until its 2007 merger with the Chicago Mercantile Exchange.  
During its first decades in the mid nineteenth century CBOT originated  
several important innovations, most notably a revolutionary financial  
product, exchange-traded futures contracts, that spread to all major  
financial centers.

This presentation will describe my research approach to four  
interrelated questions:
1.	Where do financial innovations originate?
2.	How do innovations spread and become standardized?
3.	What factors impede or promote institutional change?
4.	How do individual exchange members and cliques gain and use power?

A major study objective is to explore the irrational (that is,  
noneconomic) features of markets, which significantly complicate  
efforts toward market reform. Research on the early CBOT will reveal  
something that no modern study can, namely, how exchange members  
interacted when there was no external oversight. Now, multiple  
regulatory authorities dictate ever more specific rules limiting the  
behavior of exchange members. A study of a contemporary exchange  
resembles the study of a trained animal. Much of the animal’s behavior  
will reflect the aims of the trainer, rather than of the animal itself.

This study will draw on my skills in finance and accounting as well as  
my training as a historian. My research plan is similar to the  
strategy I originally developed for an earlier book on Civil War  
Missouri. There, cross-analyzing separate but linked data sets, I  
uncovered a mosaic of local cliques that exerted a largely hidden  
influence on the formal economy of wealthy slaveholders. These  
networked personal connections drove seemingly irrational economic  
decisions that had widespread—and in that instance catastrophic—social  
outcomes. For the present project, because of the quantity of data,  
analysis will require computer support for data mining, financial and  
network analysis, and possibly GIS.

RESEARCHER BIOGRAPHY—Mark W. Geiger is a Kluge Fellow at the Library  
of Congress and an Honorary Research Fellow at the University of  
Sydney. Before embarking on his PhD in history, he received an MBA at  
the Wharton School and held positions in financial services on Wall  
Street and elsewhere. His first book, Financial Fraud and Guerrilla  
Violence in Missouri's Civil War, 1861-1865 (Yale University Press,  
2010), was a finalist and received an honorable mention for the 2011  
Lincoln Prize in American Civil War history, awarded by the Gilder  
Lehrman Institute and Gettysburg College. His dissertation, on which  
the book is based, received the 2007 Columbia University Prize in  
American Economic History in Honor of Allan Nevins, awarded by the  
Economic History Association.


Information: Lunch will be provided