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The Economics of Badmouthing: Libel Law and the Underworld of the Financial Press in France Before World War I

Published online by Cambridge University Press:  13 September 2011

Vincent Bignon  and
Marc Flandreau
Vincent Bignon*
Affiliation:
Economist, Bank of France, POMONE Department, , DGEI-EMFI, 39 rue des Petits Champs, 75001 Paris, France. E-mail: [email protected].
Marc Flandreau*
Affiliation:
Professor, Graduate Institute of International and Development Studies, 16, Voie Creuse, 1202 Geneva, Switzerland. E-mail: [email protected]..
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Abstract

This article analyzes the economics of “badmouthing” in the context of the pre-1914 French capital market. We argue that badmouthing was a means through which racketeering journals sought to secure property rights over issuers' reputation. We provide a theoretical study of the market setup that emerged to deal with such problems, and we test our predictions using new evidence from contemporary sources.

“A newspaper that wishes to make its fortune should never waste its columns and weary its readers by praising anything. Eulogy is invariably dull—a fact that Mr. Alf had discovered and utilized.”

A. Trollope, The Way We Live Now, 1875

“And did you threaten him with the newspapers?”

H. de Balzac, La maison Nucingen, 1837

Type
ARTICLES
Information
The Journal of Economic History , Volume 71 , Issue 3 , 13 September 2011 , pp. 616 - 653
Copyright
Copyright © The Economic History Association 2011

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References

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