“The Paperwork Crisis”

In the mid-1960s, a great conglomerate merger wave swept the American business landscape as companies built portfolios of unrelated businesses that let them bypass antitrust restrictions. These were the “go-go” years on Wall Street, which resulted in a sharp increase in trading volume on the New York Stock Exchange. The sheer mass of stock certificates overwhelmed back offices up and down Wall Street, resulting in a backlog of trades waiting to settle and clear.

For months, the NYSE remained closed on Wednesdays just to allow brokers time to catch up, but even this was not enough to stem the tide of failed trades. Thieves, meanwhile, exploited the chaos, with organized crime syndicates making off with more than $400 million in looted securities.

Brokers turned to mainframe computers to keep up, but these were expensive and demanded sophisticated management that few firms could provide. When trading volumes subsided during the bear market of 1969 and 1970, brokerage revenues dropped precipitously, leaving many brokers unable to cover their costs. By the end of 1970, nearly one-sixth of the nation’s brokerage firms were forced to merge, liquidate, or go public.

The longer-term impacts of the “Paperwork Crisis” were still more profound.

For one thing, it accelerated the automation of manual processes across Wall Street, which reduced transaction costs, increased trading volumes, and stimulated competition. Even the New York Stock Exchange had come under increasing pressure from secondary markets like the National Association of Securities Dealers, which in 1971 launched the NASDAQ, an automated quotation system for over-the-counter securities accessible to broker-dealers nationwide. On May 1, 1975, the NYSE finally yielded to this pressure and abolished fixed commissions on buying and selling stocks.

Automation also encouraged diversification. Firms that had once specialized in brokerage, underwriting, or commodities trading, for example, expanded into a wider variety of financial services, including individual retirement accounts and 401(k) retirement plans. Each expansion, in turn, required more technology, people, and capital, which led most of the surviving Wall Street partnerships to merge or go public—from Donaldson, Lufkin & Jenrette in 1970 to Alex. Brown & Sons in 1997 and Goldman Sachs in 1999.


For Further Reading

  • John Brooks, The Go-Go Years: The Drama and Crashing Finale of Wall Street’s Bullish 60s. New York: Allworth Press, 1973.
  • Joel Seligman, The Transformation of Wall Street: A History of the Securities and Exchange Commission and Modern Corporate Finance. New York: Aspen Publishers, 2003.
  • Janice M. Traflet, A Nation of Small Share-Holders. Baltimore: Johns Hopkins University Press, 2013.
  • Wyatt Wells, “Certificates and Computers: The Remaking of Wall Street, 1967 to 1971.” Business History Review, Summer 2000.
  • “When Paper Paralyzed Wall Street: Remembering the 1960s Paperwork Crisis,” August 19, 2015, https://www.finra.org/investors/when-paper-paralyzed-wall-street-remembering-1960s-paperwork-crisis


200 Years of Partnership

Brown Brothers Harriman & Co. (“BBH”) may be used as a generic term to reference the company as a whole and/or its various subsidiaries generally. This material and any products or services may be issued or provided in multiple jurisdictions by duly authorized and regulated subsidiaries.This material is for general information and reference purposes only and does not constitute legal, tax or investment advice and is not intended as an offer to sell, or a solicitation to buy securities, services or investment products. Any reference to tax matters is not intended to be used, and may not be used, for purposes of avoiding penalties under the U.S. Internal Revenue Code, or other applicable tax regimes, or for promotion, marketing or recommendation to third parties. All information has been obtained from sources believed to be reliable, but accuracy is not guaranteed, and reliance should not be placed on the information presented. This material may not be reproduced, copied or transmitted, or any of the content disclosed to third parties, without the permission of BBH. All trademarks and service marks included are the property of BBH or their respective owners.© Brown Brothers Harriman & Co. 2021. FIRM-00337-2021-04-20

As of June 15, 2022 Internet Explorer 11 is not supported by BBH.com.

Important Information for Non-U.S. Residents

You are required to read the following important information, which, in conjunction with the Terms and Conditions, governs your use of this website. Your use of this website and its contents constitute your acceptance of this information and those Terms and Conditions. If you do not agree with this information and the Terms and Conditions, you should immediately cease use of this website. The contents of this website have not been prepared for the benefit of investors outside of the United States. This website is not intended as a solicitation of the purchase or sale of any security or other financial instrument or any investment management services for any investor who resides in a jurisdiction other than the United States1. As a general matter, Brown Brothers Harriman & Co. and its subsidiaries (“BBH”) is not licensed or registered to solicit prospective investors and offer investment advisory services in jurisdictions outside of the United States. The information on this website is not intended to be distributed to, directed at or used by any person or entity in any jurisdiction or country where such distribution or use would be contrary to law or regulation. Persons in respect of whom such prohibitions apply must not access the website.  Under certain circumstances, BBH may provide services to investors located outside of the United States in accordance with applicable law. The conditions under which such services may be provided will be analyzed on a case-by-case basis by BBH. BBH will only accept investors from such jurisdictions or countries where it has made a determination that such an arrangement or relationship is permissible under the laws of that jurisdiction or country. The existence of this website is not intended to be a substitute for the type of analysis described above and is not intended as a solicitation of or recommendation to any prospective investor, including those located outside of the United States. Certain BBH products or services may not be available in certain jurisdictions. By choosing to access this website from any location other than the United States, you accept full responsibility for compliance with all local laws. The website contains content that has been obtained from sources that BBH believes to be reliable as of the date presented; however, BBH cannot guarantee the accuracy of such content, assure its completeness, or warrant that such information will not be changed. The content contained herein is current as of the date of issuance and is subject to change without notice. The website’s content does not constitute investment advice and should not be used as the basis for any investment decision. There is no guarantee that any investment objectives, expectations, targets described in this website or the  performance or profitability of any investment will be achieved. You understand that investing in securities and other financial instruments involves risks that may affect the value of the securities and may result in losses, including the potential loss of the principal invested, and you assume and are able to bear all such risks.  In no event shall BBH or any other affiliated party be liable for any direct, incidental, special, consequential, indirect, lost profits, loss of business or data, or punitive damages arising out of your use of this website. By clicking accept, you confirm that you accept  to the above Important Information along with Terms and Conditions.

1BBH sponsors UCITS Funds registered in Luxembourg, in certain jurisdictions. For information on those funds, please see bbhluxembourgfunds.com

captcha image

Type in the word seen on the picture

I am a current investor in another jurisdiction