The Tulip Bubble of 1630, also known as Tulip Mania, was a speculative frenzy that gripped the Dutch Republic during the Golden Age. Tulip bulbs, particularly rare and exotic varieties, became wildly popular and their prices soared to absurd levels. People from all walks of life, from merchants to laborers, invested their fortunes and even futures in these blooms. At its peak, a single tulip bulb could cost as much as a grand house. However, the bubble inevitably burst in early 1637, causing financial ruin for many and serving as a cautionary tale in the history of financial markets about the dangers of irrational exuberance and speculative bubbles

Tulip Bubble/ "Tulipmania" of the 1630s

In 1687, William Phips achieved remarkable success on his expedition by discovering a sunken ship carrying an astonishing 32 tons of treasure. This extraordinary find yielded a spectacular 10,000% return on investment for the backers of the venture, igniting a speculative frenzy in London's investment circles. This craze gave rise to numerous "sea diving engine" companies, promising extended underwater exploration for treasure hunters, although many of them turned out to be fraudulent schemes. Simultaneously, the stock market saw a surge in Initial Public Offerings (IPOs). However, the market crash of 1696 had a devastating impact, leading to collapse of 70% of the 140 English and Scottish listed companies that had emerged since 1693.

IPO bubble, 1690s

The Mississippi Bubble was a financial scheme in France, orchestrated by Scottish economist John Law. It involved the issuance of vast amounts of paper money and the speculative trading of shares in the Mississippi Company, which held a monopoly on trade in the French colonies. The bubble burst when the value of the company's assets was questioned, resulting in a financial crisis and economic turmoil in France.

The Mississippi Bubble, 1720

The Panic of 1819 is often referred to as America's inaugural depression. It stemmed from a real estate boom driven by the U.S. government's need to settle debts accrued during the War of 1812. Land grants were sold, often on credit, thanks to prior legislation and the proliferation of state banks offering affordable loans. However, a European crop downturn had cascading consequences that led to a significant economic downturn, marking America's first authentic "depression."

America's first depression, 1819

The 19th century witnessed a significant coal boom in India. British colonial rulers recognized the nation's vast coal reserves and began extensive mining operations. Coal became a crucial resource, fuelling industrialization, transportation, and energy production. The growth of the railway system and the emergence of coal-dependent industries transformed India's economy, contributing to the country's integration into the global market and laying the foundation for its modern industrial sector.

Coal boom, 1850s

With the onset of the American Civil War, America stopped exporting cotton to Europe. This resulted in a cotton famine and Europe looked towards India to fill the vacuum. In the five years of war, the European demand for cotton doubled. By 1865, India was exporting 11,87,000 bales of cotton to Europe and only 14,000 bales of cotton elsewhere. As a result, 84.82 crores worth of bullion made its way to the vaults of Bombay.

Investors flocked to cotton stocks, causing prices to skyrocket. This speculative frenzy ultimately led to a market crash in 1865.

Cotton Share Mania, 1860s.


Before the establishment of the Native Share and Stock Brokers Association (now the BSE Brokers' Forum) in Bombay (now Mumbai), stock broking activity was characterized by an informal and unregulated landscape. Stockbrokers operated independently, often without a centralized exchange. Transactions were conducted primarily through personal networks and open outcry trading in informal locations like under banyan trees. The absence of a formal association led to limited transparency and regulation.  
During 1860, the brokerage business flourished and number of brokers increased to sixty. 

Boom of Brokerage Business in Bombay, 1860

“… 50 million sterling, if not more, of real wealth had been allowed to disappear like the baseless fabric of a vision, and how on the debris of such fabric the Bombay (now known as Mumbai) of today was re-built…”- DE Wacha, A Financial Chapter in the history of Bombay City.
The American Civil War, which took place during 1861 to 1865, had a profound impact on global cotton supplies. Amidst the crisis, India emerged as a crucial alternative source of cotton for the textile mills of Europe. The Bombay Presidency, in particular, played a pivotal role in supplying cotton to meet this growing demand.
However, after the end of the American Civil War, the cotton bubble that had propelled Bombay into a frenzy of economic activity burst. This resulted in an unprecedented crash in both prices of cotton and those of shares of cotton companies. This article delves into the rise and fall of the Indian cotton industry, particularly in Bombay, during this tumultuous period. It explores the economic boom that saw cotton exports soar and the subsequent crash that left Bombay in financial ruins.

Cotton Boom and Bust: The Legacy of India's First Stock Market Crash (Share Mania of 1861-1865)

With the onset of the American Civil War, America stopped exporting cotton to Europe. That resulted in a cotton famine and Europe looked towards India to fill the vacuum. In the five years of war, the European demand for cotton doubled. By 1865, India was exporting 11,87,000 bales of cotton to Europe and only 14,000 bales of cotton elsewhere. As a result, 84.82 crores worth of bullion made its way to the vaults of Bombay.

Share Mania, 1865

Following the 1860s crisis, a growing number of tea plantations transitioned to ownership by forward-thinking companies willing to make substantial long-term investments. Factors such as robust global demand for Indian tea, limited competition from both foreign and Indian planters, affordable land prices for establishing gardens, and access to inexpensive labour collectively fostered the expansion and success of India's tea industry. The tea boom of the 1880s-90s had a profound impact on India's economy, society, and the tea industry itself. 

Tea boom, 1880s-90s

A remarkable "Bicycle Mania" in Britain saw an incredible 671 bicycle companies become publicly traded in just 2.5 years. This surge in demand and interest was driven by technological advancements that modernized bicycles, transitioning from the older penny-farthing design to the more familiar, contemporary models we recognize today.

"Bicycle Mania", 1890s

In June 1929, the cotton textile industry in Bombay witnessed calamitous strikes. But the tide completely turned within a few months with the Wall Street crash in September and the following world economic crisis and depression. Exports and imports in India fell drastically, badly affecting seaborne trade in the region and leaving a deep impact on the Indian railway and agricultural sectors in particular. 

Wall Street crash of 1929 and impact on the Indian economy

By 1932, economic conditions were on the recovery path from the Great Depression. The price of steel products soared, and that was reflected in a steep rise in the price of steel company's shares. In particular, the Calcutta Stock Exchange saw frantic trade in steel company's shares. Iron shares forged ahead from below Rs. 9 in June 1936 to Rs. 30 in January 1937 and Rs. 80 along with a sharp rise in the price index from about 110 in 1935-36 to 129 in September 1937.

Steel Boom, 1937

The share values experienced a landslide on the stock exchanges in Calcutta and Delhi. Equities slumped heavily with hardly any worthwhile break. The causes for the downtrend were manifold.  The immediate concern was in regard to the Indo-Pakistan relations following the Security Council debate over Kashmir.  Fears of fresh taxation in the budget added uncertainties.

Equities easy in calcutta & Delhi stocks slump

On March 18, 1982, Reliance Industries share price crashed from Rs 131 to Rs 121 within half an hour as over 3.5 lakh shares were sold, triggering panic. It later emerged that a Kolkata bear syndicate had engineered this crash to buy back cheap shares. However, a group of brokers called 'Friends of Reliance' started aggressively buying the dumped shares, acquiring over 8.57 lakh of the 11 lakh shares sold. They forced the price back to Rs 125 before market close.When the settlement day reached , as the buyers demanded delivery and as seller’s failed in their obligations, BSE had to be closed for three trading days to resolve the dispute.

Market crash, 1982

On October 19, 1987 markets crashed across the globe. The Dow Jones Industrial Average dropped 22.6% in a single session, a loss that remains the biggest one-day stock market decline in history. Known as 'Black Monday' the crash was attributed to factors like computerized trading and economic concerns, highlighted the vulnerability of financial markets to sudden, widespread panic selling.

Black Monday, 1987

The Bombay Stock Exchange (BSE) re-opned for trading after a lapse of five days to a barrage of selling which pushed down the BSE index down by a whopping 570 points.

BSE Index drops 570 points

The Bombay Stock Exchange (BSE) sensitive index dipped 86.99 points following reports in Times of India newspaper that the Securities and Exchange Board of India was considering the abolition of forward trading on all markets. 

Mixed reaction to badla ban proposal. BSE Index dipped, 1993

The Asian Financial Crisis was a devastating economic event that began in Thailand and rapidly spread throughout Southeast Asia. A sharp currency devaluation, excessive debt, and speculative investments triggered the crisis. It exposed vulnerabilities in Asian economies and led to sharp stock market declines, currency collapses, and the need for international bailouts. This crisis spurred financial reforms and greater global financial cooperation.

Asian Financial Crisis, 1997

The mild tension in the minds of key market participating, especially senior exchange official, disappeared as soon as news of the Union cabinet clearing derivatives trading reached the city.

Cabinet decision on derivatives trading cheers market

The technology bubble burst was a pivotal event in the history of stock markets. Fuelled by speculative investments in internet-related companies, stock prices soared to unsustainable levels. When many of these companies failed to meet expectations, the bubble burst, leading to a sharp decline in technology stocks. This event underscored the importance of rational investing and risk assessment in the digital age.

Dotcom bubble burst, 2000

In May, NDA lost the elections and UPA returned to power with the support of left parties. That result triggered the first circuit breaker on May 17 at 10:15 AM when BSE SENSEX fell by 356 points. The circuit breaker was triggered at 10% threshold level. When the markets opened at 11:15 AM, SENSEX fell again by 487 points. Finally, the markets opened at noon after the government’s assurances and buyers support. The SENSEX recovered from its lowest point of 4227 to 4505 by the end of the day.

Political event triggers first circuit breaker, 2004

On May 22, the circuit breakers were triggered when the CNX NIFTY fell by 340 points. It happened when brokers dumped client stocks to meet margin requirements. The markets halted for one hour and then resumed. By the end of the day, the NIFTY recovered from the low of 2896 to 3081.

Market crash triggers circuit breaker, 2006

The idea of a stock market was born in Venice, a meeting place of merchants from across the world. The city served as a hub for trading government securities and shares in maritime ventures. Venice's stock market set a precedent for organized securities trading and laid the groundwork for future stock exchanges, contributing to the development of modern financial markets. Later, the English, French, and Dutch trading companies established companies with limited liabilities to raise funds from investors in exchange for a slice of the profits.

Origin of the stock market, Venice, 14th century

The earliest recognized joint-stock company in England was the Company of Merchant Adventurers to New Lands, established with 240 shareholders. It later transformed into the Muscovy Company after receiving a Royal Charter in 1555, granting it a monopoly over trade between Russia and England.

Earliest joint stock company in England, 1551

While the Dutch and Portuguese East India companies led the way, English traders in the East Indies gained traction with a pivotal advantage: the Royal Charter of 1600, granting them a trade monopoly east of the Cape of Good Hope. Recognizing the need for capital and strategic partnerships, these English traders embarked on a pioneering path. The English East India Company emerged as the world's first joint-stock company, a trailblazing institution that not only supported their infrastructure but also financed daring voyages, notably to India, shaping the future of global trade and commerce.

Birth of the world's first joint stock company to trade with the East, 1600

On March 20, 1602, the Dutch East India Company officially declared its IPO in its founding charter. In August 1602, the company opened up shares for investment to all Dutch citizens, a ground-breaking departure from the tradition of exclusive investments by affluent groups. When the IPO subscription concluded , approximately 1,100 individuals had acquired shares, marking a significant shift in the accessibility of public investments.

World's first IPO, 1602

The Dutch East India Company (VOC) issued its inaugural dividend to investors. Although the company was established in 1602 with a lucrative trade monopoly, it was shareholder pressure, notably from Isaac Le Maire, that prompted the VOC to distribute dividends, albeit in the form of spices initially. Shareholders received mace equivalent to 75% of the nominal capital. The first cash dividend from the VOC didn't materialize until 1612.

The first dividend, 1610

Joseph de la Vega's book Confusion of Confusions (written in Spanish as Confusión de Confusiones) was the first written work to give an analysis of the stock market, especially the Amsterdam stock exchange. The book takes the form of a dialogue among an Investor, Philosopher, and Merchant, with the Investor elucidating the intricacies of the stock market. He explained the role of market participants and intricacies of speculation and trading. He put forward four rules of speculation that are still relevant today.   

First book to analyse the stock market, 1688

America's first telegraph line linked Washington, D.C., to Baltimore, Maryland, marking a transformative moment in American communication. The first transmitted message, "What hath God wrought," drawn from the Bible, symbolized its profound significance. Samuel Morse, the inventor, reshaped long-distance communication, and its financial industry impact was so significant that one observer declared the end of "distance and time."

Invention of the telegraph, 1844

The Bombay Spinning and Weaving Co. was incorporated as a joint stock company. It was the first cotton mill in India. It marked the beginning of India's industrialization, powered by steam engines.

The Bombay Spinning and Weaving Company, founded by Parsi entrepreneur Cowasji Nanabhai Davar in 1854, held a prominent place in India's textile industry during the British colonial era. This pioneering company contributed significantly to the growth of Bombay (now Mumbai) as an industrial center. It played a pivotal role in the development of the region's textile manufacturing capabilities, marking a crucial milestone in India's industrialization. The Bombay Spinning and Weaving Company remains a historical symbol of early Indian entrepreneurship and textile production.

First cotton mill of India, 1851

The Acland Mill was set up in Rishra by British entrepreneur George Acland and Bengali financier Babu Bysumber Sen. It was under the supervision of a Dundonian, who helped install the first jute spinning machinery in the undivided Presidency of Bengal (currently Hooghly district). 

First Indian jute mill, 1855

Electronic Communication Networks (ECNs) emerged as a pivotal development in electronic trading. ECNs provided alternative platforms for traders to execute orders, allowing for greater transparency and competition. Institutions and retail investors could access real-time market data and interact directly with one another, bypassing traditional exchanges. This innovation contributed to increased market efficiency and paved the way for electronic trading's widespread adoption in the financial industry.

Electronic Communication Networks (ECNs), 1980s

Leading financial institutions are promoting a new company called Over Counter Exchange of India (OTCEI). The promoters, Industrial Credit and Investment Corporation of India Ltd. Industrial Bank of India , Industrial Finance Corporation of India, Life Insurance of India, General Insurance of India, SBI Capital Markets and Canbank Financial Service Ltd to contribute Rs. five crore as aid-up capital. 

Establishment of OTCEI

The first private sector mutual fund (Kothari Pioneer, now Franklin Templeton) introduced its initial two schemes (Kothari Pioneer Bluechip Fund and Kothari Pioneer Prima Fund). This event paved the way for entry of private sector in India's mutual fund (MF) industry, which had previously been dominated by the government-owned Unit Trust of India (UTI). Private sector participation triggered a remarkable expansion in the variety and quantity of MF schemes. 

First private sector mutual fund, 1993

Last minute touches given to the custodial and depository services bill which is certain to be introduce during the monsoon session of parliament, official source said.

Central Depository be a reality soon

The launch of the National Securities Depository Limited has set in motion the most significant piece of reform in the country capital market. The depository will bring in paperless trading in shares and other securities, a features now central to any mature securities market.

NSDL introduction finally ushers in paperless trading 

The National Stock Exchange to launch the "Junior Nifty" mid cap index comprising 50 stocks with a base period November 4, 1996.  The Index having representation of companies with medium sized capital in the Indian capital market is expected to have high hedging effectiveness for portfolios having midcap companies and appropriate for index based derivatives. 

NSE launches new mid-cap index

The electronic settlement of scrips in the National Securities Depository Ltd which went live recently to commence this week (December 26, 1996)

Commencement of settlement at NSDL 

On February 5, 1998 Trading volume on the two stock exchanges at Bombay touched historic high at Rs 1848.21 crores as stock process continued their upward spiral.

NSE creates history in trading volumes 

The secondary market advisory committee of the Securities and Exchange Board of India in its meeting here on Monday, April 20, 1998 discussed the Dr. L. C. Gupta committee recommendations on derivatives trading and agreed that derivatives should be introduced in a phase manner beginning with index future.

Flag off derivatives with index futures: SEBI panel

The securities and Exchange Board of India (SEBI) sets January 10, 2000 for commencement of rolling settlement in a phase manner. Initially, rolling settlement will be kicked off with 10 scrips.

Rolling settlement set to commence from January 10, 2000

In 2000-01, Internet trading was started to augment convenience, transparency, and real-time trading. Internet-based trading was allowed through order routing system for execution of trades on stock exchanges. 

Beginning of Internet trading, 2001

Newspaper article on the occasion of introduction of Options and Futures in Indian Securities Market,

Entering the world of options and futures

The Securities and Exchange Board of India (SEBI) has won the last legal battle over its decision to levy registration fee on stockbrokers on the basis of their turnover in the five period before the grant of registration.  The Supreme Court dismissed the petition filed by the BSE Brokers' Forum challenging the fee and upheld SEBI's decision.

SEBI clears first ever exchange traded fund

The Securities and Exchange Board of India has standardised all forms of electronic transaction by introducing 'straight through processing' (STP) in the Indian Securities market . This is based on the recommendations made by a SEBI committee under the Chairmanship of Shri R M Joshi, Executive Director, SEBI.

SEBI to Implement STP from December 2, 2002

Pursuant to  Foreign Exchange Regulation Act , 1973 (FERA) holding of foreign firms in Indian companies was restricted to 40%. Any company with more than 40% foreign equity had to dilute it to comply with FERA. This was done to reduce foreign control and increase indigenous ownership of Indian industries. 

Foreign firms forced to cut Indian stakes, 1973

The Governing Board of the Stock Exchange, Bombay, decided to suspend admission to dealing of the securities of the 90 companies for three days from November 20 to November 22, 1990, for their failure to publish unaudited financial result for the half-year ended on March 31, 1990. This is required by Clause 41 of the Listing Agreement, and to offer any explanation therefore.

BSE suspends activities in 93 companies

India embarked on a transformative journey of economic liberalization. Faced with a severe balance of payments crisis, the government under Prime Minister, Shri Narasimha Rao and Finance Minister, Shri Manmohan Singh introduced a series of reforms, which included reducing trade barriers, opening up to foreign investment, and deregulating industries. 

Economic liberalization, 1991

The balance-of-payment crisis of 1991 brought to the fore the need for global foreign direct investment and portfolio flows. A high-level committee on balance of payments, under the chairmanship of C. Rangarajan, recommended a shift towards non-debt-creating inflow of external finance. In a major step towards globalization, the government allowed foreign institutional investors (FIIs) to invest in listed companies of Indian stock exchanges  under the guidelines issued on September 14, 1992. The Guidelines prescribed eligibility conditions for FII registration, such as track record, professional competence, financial soundness, and registration with a regulatory organization in their home country.

Permission for Foreign institutional investors (FIIs) to invest in the market, 1992

The Securities and Exchange Board of India superseded the governing board of the Pune Stock Exchange for six months and appointed an administrator in its place. This is the first time the regulator has taken such stringent action any stock exchange in the country.

Pune bourse board superseded

To give flexibility to the companies to issue shares at any amount , to extend free pricing to its logical conclusion, the current requirement for issuing shares with a fixed par value of Rs.10 or Rs.100 abolished for companies, whose shares were dematerialised.

Par Value abolished,  1998

In a significant decision, the Securities and Exchange Board of India (SEBI) decided that all debt instruments would have to be rated by a cred rating agency.

SEBI, SEC sign MoU

The Securities Exchange Board of India has ordered compulsory settlement of traders in ten specified scrips in dematerialised form for institutional as well as other investor from January 4, 1999.

SEBI orders compulsory demat trading in 10 scrips

Disposing of the petition filed by three brokers accused in the market aberration case, the Bombay high court has rejected their plea for striking down the Securities and Exchange Board of India ban on their operations.

HC upholds SEBI ban on scam-accused brokers - 

The Securities and Exchange Board of India (SEBI) has issued show-case notices to the top brass of the Bombay Stock Exchange (BSE) and the National Stock Exchange(NSE) for their failure to detect and check price manipulation in three scripts ,in its notice dated February 10, SEBI asked to explain lapses in detecting the abnormalities in price and volume in the scrips -Sterile Industries, BPL Ltd and Videocon Industries.

 SC upholds SEBI fee on stockbrokers

The Securities and Exchange Board of India (SEBI) has cleared first ever exchange-traded fund (ETF), promoted by a new mutual fund firm, Benchmark Asset Management Company (BAMC). BAMC had earlier tie up with National Stock Exchange (NSE) for floating this new fund to be available to retail and institutional investors through the exchange only like any other stock.

Govt gives SEBI an overhaul, more teeth

Starting July 2, 2001, all scripts that were being traded under the carry forward mechanism such as the automatic lending and borrowing mechanism (ALBM) of the National Stock Exchange and borrowings and lending of securities system (BLESS) of the Bombay Stock Exchanges got replaced by Compulsory Rolling Settlement on all the bourses.

SEBI puts an end to badla

High-Frequency Trading (HFT) gained prominence in India's financial markets. HFT involves the use of advanced algorithms and lightning-fast execution to conduct large numbers of trades in milliseconds. It brought increased liquidity and efficiency but also raised concerns about market stability and fairness. HFT has since become a significant aspect of India's trading landscape, influencing market dynamics and regulatory discussions.

High-Frequency Trading (HFT) in India, 2005 onward

On October 16, 2007 FIIs/ Sub-accounts were prohibited from issuing new Offshore Derivative Instruments (ODIs) with derivatives as underlying and existing positions with regard to such ODIs to be wound up over 18 months. The next day, markets breached the lower circuit at 10% when the NIFTY fell by 524 points and trading was halted for one hour. However, by the end of the day the markets closed in green at 3081. 

SEBI's clampdown on participatory  notes, 2007

CTT on non-agricultural commodities futures contracts at the same rate as on equity futures, that is at 0.01% of the price of the trade. 

With effect from July 1, 2013, CTT became applicable on the sale of all non-agricultural commodity futures. For agricultural commodities, a distinction was made between futures on pure agricultural commodities, such as wheat, cotton and soybean, and futures on processed farm commodities, such as soy oil, guar gum and sugar. The former were exempted from CTT while the latter were not.

 While its implementation aimed to curb speculation and increase government revenue, it also drew criticism for potentially affecting liquidity and trading volumes in the commodity derivatives markets.

Introduction of the Commodity Transaction Tax (CTT) on non-agricultural commodity futures, 2013

India introduced a significant legislative update with the enactment of the new Companies Act in 2013. This comprehensive law replaced the Companies Act of 1956 and introduced extensive reforms in corporate governance, accounting, and financial reporting. It aimed to align India's corporate regulations with international standards, enhance transparency, protect shareholder rights, and promote sustainable business practices. The Companies Act of 2013 represents a crucial milestone in India's corporate regulatory framework.

 Companies Act, 2013

The “Make in India”  campaign was kicked off in September 2014 to boost domestic manufacturing and attract foreign investments. The initiative featured investor-friendly policies, easier business regulations, and promotion of entrepreneurship. It signified a significant shift in India's economic policy towards self-reliance and drew attention from global businesses, signalling India's commitment to becoming a global manufacturing hub.

Launch of "Make in India" campaign, 2014

To enhance transparency and promote orderly conduct in the securities market, SEBI has outlined the disclosure requirements for the acquisition, sale, and pledge of securities under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ("SAST Regulations") and SEBI (Prohibition of Insider Trading) Regulations, 2015 ("PIT Regulations"). With the advancement of systems and technologies adopted by Stock Exchanges, Depositories, and Registrar and Share Transfer Agents (RTAs), system-driven disclosures have become feasible and were introduced in phases.
In the first phase, SEBI mandated the disclosure of changes in the shareholding of promoters and promoter groups of listed entities. In the second phase, SEBI introduced system-driven disclosures related to Regulations 29(1) and 29(2) of the SAST Regulations for non-promoters, and disclosures under Regulation 7(2) of the PIT Regulations for company directors and employees. Subsequently, system-driven disclosures for members of the promoter group and designated persons were implemented under Regulation 7(2) of the PIT Regulations.

Introduction of system-driven disclosures by promoters/promoter group

India implemented the Goods and Services Tax (GST), a landmark tax reform. GST replaced a complex web of indirect taxes with a unified taxation system. It streamlined taxation on goods and services, making it more efficient and transparent. This tax reform aimed to promote ease of doing business, reduce tax evasion, and create a single national market. GST is considered one of the most significant economic reforms in India's recent history.

Goods and Services Act, 2017

System driven disclosures pertaining to directors and employees of the company

On September 20, 2019, the government announced massive cuts in corporate tax rates, lowering the base rate to 22% from 30% and 15% from 25% for new manufacturing companies. It led to a surge in stock prices as companies' profitability increased due to reduced tax burdens. It also enhanced investor sentiment, attracted foreign investments, and stimulated economic growth, contributing to a bullish trend in the Indian stock market.

Corporate tax cut, 2019

System driven disclosures for members of promoter group, designated persons 

Originally a member of the Dutch East India Co. (VOC) board, Isaac Le Maire resigned in 1605 amidst controversy. Seeking revenge on the VOC, he initiated a short-selling campaign, aiming to lower the company's share price, which has been quoted  as an early form of shareholder activism. Le Maire believed the VOC's decisions were detrimental to shareholders and employed shorting as a means to gain their attention. Eventually, the VOC persuaded the Dutch government to prohibit naked short selling, thwarting Le Maire's campaign.

The first short, 1605

The history of bank failures dates back to few centuries but recorded ones are as far back as 17th century.  In the early 20th century, the world's financial landscape underwent significant transformation. As nations braced themselves for the impending chaos of World War I, India's economy had to confront multiple set of challenges. One of the most significant economic events during this period was the series of domestic bank failures between 1913 and 1921, which left an indelible mark on Indian stock exchanges. A notable case during this period was that of a prominent member of the Native Share and Stock Brokers Association (earlier known as Bombay Stock Exchange and now BSE), Mr.  Jahangir Byramji who had a substantial holding in Manekji Petit Mill shares.

Impact of Bank Failures on Indian Stock Exchanges: A Case of ‘The Native Share and Stockbrokers’ Association’ (1913-1918)

In 1896, Sun Mill's shares were subjected to a notable cornering incident, orchestrated with the intervention of Mr. Chunilal Motilal, the then President of the Association. Share prices had soared to Rs 620, but due to this manipulation, they were artificially lowered to Rs 150. Eventually, they were settled at Rs 500.

Cornering in shares of Sun Mill, 1896

On the eve of Wrold War I, India witnessed a significant number of banking failures, primarily concentrated in the Punjab region. In the fiscal year 1913-1914, a staggering 54 banks were forced to shutter their operations, with a striking 28 of these closures occurred in Punjab and 11 in Bombay. This banking crises had direct, buit varying impact on all mojor stock exchanges at Bombay, Calcutta and Ahmedabad.  The impact was deepest in Bombay as many such banks from the city had strong connection with the stock market. 

Bank Failures, 1913-14

One of the first financial irregularity in the post-independence era, it  was alleged that Calcutta based individual named Haridas Mundhra fraudulently inflated stock prices. In June 1957, LIC invested Rs.1.2 crore of its policy holder’s funds  in six troubled companies in  which Mundhra had a large holding. As much of LIC’s investment ended in losses and as the matter caught Parliamentary attention, Government constituted a single member Committee (Justice M C Chagla) to enquire into the matter.  The Report  concluded the object of the impugned deal was to relieve Mundhra of his financial difficulties  rather than satisfy any public interest. Mundhra was found guilty and subsequently imprisoned for 22 years. The committee under Justice Vivian Bose was set up to initiate followup proceedings against finance ministry officials . The then Finance minister Shri TT Krishnamachari resigned on February 18,1958 following the indictment by the Chagla Commission.   . 

Mundhra-LIC Issue, 1958

This was as massive financial scandal  orchestrated by stockbroker of Bombay Stock Exchange, using forged bank receipts to inflate stock prices artificially. The incident exposed several inherent loopholes in India's financial system, leading to reforms in securities and banking regulations.

Financial Scam of 1992

MS Shoes was established in Delhi in 1986 as an export house. The company raised substantial amounts through public issues but manipulated share prices and siphoned off funds. This fraudulent activity led to significant losses for investors. This market abberation highlighted regulatory gaps and loopholes, prompting SEBI to strengthen market surveillance and investor protection measures in the Indian securities market.   Use of company funds to buy shares of own company and rig prices was the allegation. .

MS Shoes related issue, 1995

Golden Forest India Limited (GFIL) offered investors, most of them middle-class citizens, with a promise of hefty returns on their investments in developing land and social forestry. However, after raising Rs. 1000 crore, the company collapsed and investors lost their money. After a long legal battle, the Supreme Court cleared the way for the reimbursement of 14 lakh investors.

Golden Forest Scam, 1997

The Vanishing Companies Scam refers to a series of fraudulent activities in the Indian stock market where several companies suddenly disappeared after raising funds from the public through Initial Public Offerings (IPOs). These companies, often referred to as "vanishing companies," would either shut down their operations or abscond, leaving investors in the dark. 

Vanishing Companies Scam, 1998

According to Joint Parliament Committee Report (Para 2.15), Ketan Parekh who emerged as a key player in 2001 scam received large sums of money from the banks as well as from the Corporate bodies during the period when SENSEX was falling rapidly. This led the Committee to believe that there was a nexus between Ketan Parekh, banks and the corporate houses. 
In Para 2.20, the Committee further noted that "This Scam is basically the manipulation of the capital market to benefit market operators, brokers, corporate entities and their promoters and managements. Certain banks, notably private and co-operative banks, stock exchanges, overseas corporate bodies and financial institutions were willing facilitators in this exercise. The scam lies not in the rise and fall of prices in the stock market, but in large scale manipulations like the diversion of funds, fraudulent use of banks funds, use of public funds by institutions like the Unit Trust of India (UTI), violation of risk norms on the stock exchanges and banks, and use of funds coming through overseas corporate bodies to transfer stock holdings and stock market profits out of the country. These activities went largely unnoticed. While the stock market was rising, there was inadequate attempt to ensure that this was not due to manipulations and malpractices. In contrast, during the precipitous fall in March 2001 the regulators showed greater concern."


Stock Market Irregularities, 2001

SEBI’s investigation during 2005  revealed that certain entities had illegally obtained IPO shares reserved for retail applicants through thousands of benaami demat accounts and transferred the shares to financiers. These financiers then sold on the first day of listing to make windfall gains from the price difference between the IPO price and the listing price. SEBI launched a probe into IPO allotments and, after identifying irregularities, passed an interim order restraining the involved entities from participating in future IPOs and directing depositories to freeze their dematerialized accounts.

Irregularities in the IPO issues, 2005

Satyam Computer Services’s revelations that the company's accounts were inflated during the trading hours on January 7, 2009 send the market on a southward spiral. Satyam’s shares plunged 77.69% in a single trading session.  This shocking revelation of the accounting fraud, estimated at about Rs 7000 crore, sent the BSE 30-share Sensex tumbling 7.25% on that day.   
This episode prompted regulatory reforms and increased scrutiny of corporate governance practices in India's business environment.


Satyam Computer Service's accounting fraud, 2009

UPA's win in the 15th Lok Sabha elections caused the only instance in history when the markets were halted due to a breach in the upper circuit. On May 18, 2009, markets were breached at 15% after which there was a halt of one hour. When markets resumed, the third threshold level was breached and the markets were halted for the rest of the day.

15th Lok Sabha election of 2009 triggers upper circuit breaker

The CNX NIFTY lost 900 points or 16% within two minutes on the morning of 5th October, 2012. The incident happened due to a fat finger trade wherein a broker entered an order by error. The market lost Rs. 3 lakh crore due to the erroneous sell order of Rs. 650 crore by the broker. The incident happened at 9:49 am and the markets reached to a low of 4888.20 after previous day’s close of 5787.60. At the end of the day the market closed at 5746.95 with a fall of 0.7%.

Market crash- fat finger trade, 2012

NSEL was embroiled in a financial scandal involving the alleged violation of regulatory norms and mismanagement. The crisis led to payment defaults, investor losses, and legal investigations. It exposed weaknesses in the regulation and oversight of spot commodity exchanges in the country, highlighting the need for stricter monitoring and reforms in the commodities market.

Payment crisis, National Spot Exchange  Limited, 2013

The Punjab National Bank related financial irregularity involving a jeweller  came to light during 2018.  It is alleged that a jeweller defrauded Punjab National Bank (PNB) by obtaining fraudulent letters of undertaking (LoUs) and credit guarantees. This aberration amounted to  over $2 billion and exposed weaknesses in the Indian banking system. It led to legal proceedings against those involved, increased scrutiny of banking practices, and a push for banking reforms in India.

PNB Issue, 2018

The IL&FS group defaulted on debt obligations, causing a crisis in India's financial markets. The default raised concerns about corporate governance, financial stability, and regulatory oversight. The government took over the company's management and initiated efforts to stabilize the financial system. The IL&FS scandal underscored the need for stronger regulatory supervision in India's financial sector.

IL&FS scandal, 2018

On March 24,2020, the markets crashed due to COVID-19 and imposition of national lockdown. The SENSEX fell by 10% to 2991 points and NIFTY plunged 9.40% or 822 points to 7923 points at 9:58 AM. That caused the markets to halt for 45 minutes. Trading resumed at 10:58 AM after 15 minutes' pre-open session. By the day's end, the stock markets witnessed the worst loss in history as the SENSEX closed at 25,981.24 with a decline of 3,934 points or 13.15% and NIFTY closed at 7,610.25 with a decline of 1,135.20 points or 12.98%.

Lockdown due to COVID 19  and market crash, 2020

"Thales of Miletus used knowledge of weather patterns to invest in olive presses, launching the world of options trade. He controlled the market, making a fortune and teaching the art of informed speculation."

Thales and the Birth of Options Trade 6th Century BC

In ancient Japan, "rice futures" emerged as one of the earliest forms of derivatives trading. The rice futures allowed farmers and traders to hedge against price fluctuations in rice, a vital commodity. These contracts laid the foundation for modern derivatives markets by enabling participants to manage agricultural risks, serving as a precursor to the sophisticated financial instruments traded today.

Rice futures in Japan, 6th century BCE

"Sumerians introduced standardized futures using clay tokens representing future delivery promises. This innovative concept laid the foundation for modern trading, allowing assets to be valued and traded efficiently."

Sumerians and Standardised Futures, 4500-4000 BC

"Indus Valley Civilization to Maurya Dynasty
In the ancient landscapes of India, the Indus Valley Civilization emerged in 3300 BCE, boasting advanced urban planning and architecture. They standardized weights and measures, fostering trade links that extended to Mesopotamia. Around 1500 BCE, the Vedic Period began with the Rigveda's hymns, laying the groundwork for urbanization and emphasizing the significance of cattle as a symbol of wealth.
By 322 BCE, Chandragupta Maurya rose to power, with his grandson Ashoka expanding trade networks within their vast empire. The Arthashastra, authored by Chanakya, contained economic and political strategies. Fast forward to 320 CE, and the Gupta Dynasty emerged, establishing extensive trade networks that reached East and Southeast Asia, exemplified by their gold coins."

Indus Valley Civilization: Emerged around 3300 BCE. Vedic Period: Began around 1500 BCE. Maurya Dynasty: Chandragupta Maurya rose to prominence around 322 BCE.

"With trading roots dating back to the Indus Valley Civilization, India's journey through the Banyan and Neem trees has led to its global prominence. The nation is poised to become the world's third-largest stock market by 2030."

India's Trading Legacy and Modern Growth

In 1494, Luca Pacioli, renowned as the "Father of Accounting," made a pioneering contribution to the world of finance by publishing "Summa de Arithmetica, Geometria, Proportioni et Proportionalita," the first comprehensive book on double-entry bookkeeping. At the heart of his work was the pivotal principle that "debits must always equal credits." This revolutionary idea mandated that every financial transaction be meticulously recorded in a minimum of two distinct accounts, thereby guaranteeing precision and accountability in financial records.

Pacioli's innovative approach laid the cornerstone for contemporary accounting practices, shaping the very foundation upon which modern financial record-keeping stands. His enduring legacy endorses the enduring significance of this fundamental concept, which continues to guide and underpin the discipline of accounting to this day.

Birth of double-entry bookkeeping, 1494

Hundi, a financial instrument, was used in trade and credit transactions. These informal, yet widely accepted, bills of exchange served as a means of transferring funds over long distances. They were trusted by traders and merchants, promoting economic growth and financial connectivity across the subcontinent. The British government regarded hundis as an indigenous and traditional system that played a significant role in the Indian economy. 

Role of hundi in the Indian economy, 16th century onward

The Dutch East India Company (VOC) holds the distinction of being the pioneer in issuing publicly traded bonds and stocks. On November 7, 1623, it issued a groundbreaking bond worth 2,400 florins. This innovative financial instrument not only funded the company's ambitious voyages but also served as a catalyst for attracting additional investments. The VOC's early foray into publicly traded bonds and stocks marked a watershed moment in the history of finance, laying the groundwork for modern capital markets and investment practices.

Origin of Bonds and Equities, 17th century

"Early Trading Companies
Two pioneering trading companies, the Dutch East India Company and the British East India Company, hold an esteemed place in the annals of financial history. In 1602, the Dutch East India Company, established with exclusive rights to East Indies trade, initiated a momentous event—the world's first Initial Public Offering (IPO). This groundbreaking offering heralded the birth of stock exchange trading, setting in motion a transformation in global commerce and investment.

The British East India Company, founded on December 31, 1600, played a monumental role in the history of trade. Its joint stock shares were actively traded in London, signifying a burgeoning capital market. Notably, this enterprise consistently paid dividends to its investors, exemplifying reliability over centuries until its dissolution in 1874.

In parallel, early debt instruments issued by the English East India Company, a predecessor to its British counterpart, demonstrated ingenuity in raising capital for ambitious ventures. These innovations in finance pushed the boundaries of what was conceivable in the realm of commerce.

Together, these historical facts epitomize the genesis of modern financial systems. From the inaugural Dutch IPO, symbolizing the birth of stock exchange trading, to the British East India Company's unwavering dividends and inventive debt instruments, these companies laid the foundation for the contemporary financial markets we know today."

Dutch East India Company Bond, dated 7th November, 1623 

Dutch broker Abraham van Ketwich introduced what many believe to be the first "mutual fund". It was called "Eendragt Maakt Magt," meaning "Unity Creates Strength." This initiative followed the 1772 financial crisis, where Dutch banks faced near-collapse due to heavy investments in plummeting British East India Company stock. This crisis underscored the importance of diversification. Van Ketwich's fund featured 50 equally weighted bonds spanning 10 diverse sectors, marking a pivotal step in investment strategy innovation.

First mutual fund, 1774

Upon assuming the role of the inaugural Treasury Secretary in 1789, Alexander Hamilton confronted severe financial challenges in the fledgling United States. Hamilton authored the "Report on a National Bank" in 1790, advocating for a national bank to stabilize the economy. After contentious deliberation, Congress greenlit the "Bank of the United States" (BUS) in 1791, with a $10 million capitalization, comprising 80% private ownership and 20% government ownership. Remarkably, the IPO took place on July 4, 1791.

First bank in the US, 1791

Calcutta played a pivotal role in the raw jute trade. The region's fertile land was ideal for jute cultivation, and British merchants recognized its value. The trade expanded rapidly, with jute exports soaring, mainly to the United Kingdom. Calcutta became the primary global supplier of raw jute, laying the foundation for the jute industry's growth and economic significance in India.

Raw Jute trade, 1828 to 1872

The British East India Company introduced the "Rupee" as the official currency of British-controlled territories in India. This marked a significant departure from the diverse regional currencies previously in use. The Rupee became the standard currency unit, and silver coins known as "Company Rupees" were issued. This move played a crucial role in the Company's economic control over India during the colonial period.

The British East India Company introduced the "Rupee" as the official currency, 1825 

The jute industry proliferated in many countries. The first jute mill in France was set up in 1843 in Ailly-s-Somme. Meanwhile, Germany began production in 1861 and established a firm footing by 1879. By 1914, approximately 21% of India’s raw jute was exported to Germany. By then, the jute manufacturers of Calcutta were already prospering with higher exports.