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

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