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A Reappraisal of the Role of Finance in The Corporate Revolution of the Late Nineteenth Century
BibTeX
@MISC{Doyle_areappraisal,
author = {William Doyle},
title = {A Reappraisal of the Role of Finance in The Corporate Revolution of the Late Nineteenth Century},
year = {}
}
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Abstract
It is practically an article of faith among economists that financial activity involves little more than the exchange of claims against current output for claims against future output, and that financial development is driven primarily by changing deficit financing requirements within industry or government. The stylized fact that finance is concerned mainly with the allocation of real savings among competing uses, however, ignores the fact that securities perform a variety of functions for both their issuer and purchaser and are not always issued in order to obtain funds to finance spending in excess of current revenues. The new financial developments which accompanied the corporate revolution of the late nineteenth century, in fact, had far less to do with obtaining funds from savers than with changing, establishing or formalizing relationships within and between existing businesses. These new relationships enabled business to manage their internal affairs and coordinate their activities with other firms in ways that would have been impossible before.
