Abstract
It is becoming increasingly clear that the organisational structures of economic institutions evolve in response to the market environment in which the institutions operate. Thus, for example, Alfred Chandler has shown that the adoption by firms of the multi-divisional form of organisation in the US, beginning in the first quarter of the twentieth century, was an explicit response to the problems and opportunities of rapid growth and change in the US economy.1 It is similarly becoming clear that the relationship over time between the organisational structure of such economic institutions as firms and banks and economic development is not simply one in which the impact of growth and change determines institutional structure but rather it is one in which the suitability of the organisational structure adopted by institutions affects the ability of the economy to achieve and maintain a satisfactory rate of economic growth as well.
If it is alleged that manufacturers and commerce find abunddant [resources] for their successful pursuit [of expansion] in the hands of individuals in this country, I will answer —England cannot stand still. Edwin Moss, 1856
The social object of skilled investment should be to defeat the dark forces of time and ignorance which envelop our future. The actual, private object of the most skilled investment today is ‘to beat the gun’, as the Americans so well express it, to outwit the crowd, and to pass the bad, or depreciating, half crown to the other fellow.John Maynard Keynes, 1936
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Notes
Alfred D. Chandler Jr Strategy and Structure: Chapters in the History of the Industrial Enterprise ( Cambridge, Mass., 1962 ).
See Alfred D. Chandler Jr and Herman Daems, ‘Introduction–The Rise Managerial Capitalism and Its Impact on Investment Strategy in the Western World and Japan’, in Herman Daems and Herman Van Der Wee (eds.), The Rise of Managerial Capitalism ( The Hague, Netherlands, 1974 ) 28–32;
Jon Didrichsen ‘The Development of Diversified and Conglomerate Firms in the United States, 1920–1970’, Business History Review xlvi (1972) 202–19.
T. R. Navin and M. V. Sears, ‘The Rise of a Market for Industrial Securities, 1887–1902’, Business History Review, xxix (1955) 105–38.
L. E. Davis, ‘The Capital Markets and Industrial Concentration: The U.S. and U.K., a Comparative Study’, Purdue Faculty Papers in Economic History,1956–1966 (Homewood, 1967 ) 663–82.
L. E. Davis, ‘The Investment Market, 1870–1914: The Evolution of a National Market’, Purdue Faculty Papers in Economic History, 1956–1966 (Homewood, 1967) pp. 119–59. It is a reasonable assumption that the financial instruments Davis was concerned with were homogeneous in their risk characteristics even though it is possible that regional fluctuations in economic activity would justify some interest differential.
Clapham, op. cit., pp. 394–5. H. Neuberger and H. H. Stokes, ‘German Banks and German Growth, 1883–1913: An Empirical View’, Journal of Economic History, xxxiv (1974) 710–31.
See Edward Ames and Nathan Rosenberg, ‘Changing Technological Leadership and Industrial Growth’, Purdue Faculty Papers in Economic History, 1956–1966 (Homewood, 1967) pp. 363–82 for a discussion of some of the more implausible ways in which a head-start has been alleged to be a handicap.
For an exception, see J. R. T. Hughes, ‘Wicksell on the Facts: Prices and Interest Rates, 1844 to 1914’ in J. N. Wolfe (ed.), Value, Capital and Growth: Papers in honor of Sir John Hicks (Chicago, 1968 ) 215–56.
F. Crouzet, ‘Editor’s Introduction’ in F. Crouzet (ed.), Capital Formation in the Industrial Revolution (London, 1972 ) p. 33.
E. V. Morgan and W. A. Thomas, The Stock Exchange: Its History and Functions (London, 1962) pp. 38–40. They note, however, that the operation of the act seemed not to hinder company promotion unduly (p. 40).
J. R. T. Hughes, Fluctuations in Trade, Industry and Finance: a study of British economic development,1850–1860 (Oxford, 1960 ) pp. 229–31.
R. S. Sayers, Bank of England Operations,1890–1914 (London, 1936 ) p. 116–7.
J. B. Jefferys, Trends in Business Organization in Great Britain since 1856 (unpublished Ph.D. thesis, University of London, June, 1938 ) p. 142.
C. A. E. Goodhart, The Business of Banking, 1891–1914 (London, 1972). Commenting on the portfolio policies of the London clearing banks, which had absorbed most of the local banks through amalgamation, Goodhart notes that: ‘The major gap in portfolios was, as is well known, the absence of industrial, especially domestic industrial stocks, from their holdings’ (p. 135).
W. T. C. King, History of the London Discount Market (London, 1936 ) p. 232.
W. A. Thomas, The Provincial Stock Exchanges (London, 1973 ) pp. 137–9.
H. Burton and D. C. Corner, Investment and Unit Trusts in Britain and America (London, 1968 ) p. 46.
Barry Supple, The Royal Exchange Assurance: A History of British Insurance, 1720–1970 (Cambridge, 1970) pp. 330–48.
Also see P. G. M. Dickson, The Sun Insurance Office, 1710–1960 (Oxford, 1960) pp. 234, 262–3.
See D. K. Sheppard, The Growth and Role of U.K. Financial Institutions,1880–1962 (London, 1971) pp. 154–6. The highest figure given is 3.7 per cent, reached in 1911.
L. Hannah, ‘Electricity in Britain: The Pioneering Years (1882–1913)’, (unpublished paper prepared for the History Project of the Electricity Council, 1975)p.8.
I. C. R. Byatt, ‘The British Electrical Industry, 1875–1914’, ( D.Phil thesis, Oxford, 1962 ) pp. 342–3.
See Brinley Thomas, Migration and Economic Growth: A Study of Great Britain and the Atlantic Economy 2nd ed. (Cambridge, 1973) for a discussion of the relationships among domestic construction, foreign investment and emigration.
S. B. Saul, ‘The Motor Industry in Britain to 1914’, Business History, v (1962) 22.
G. L. Ayers, ‘Fluctuations in New Capital Issues on the London Market, 1899–1913’ (unpublished M.Sc. Thesis, University of London, 1934) Table 13.
Alfred Chandler, Giant Enterprise (New York, 1964) pp. 3–4.
See G. L. Ayers, Fluctuations in New Capital Issues on the London Money Market, 1899–1913 (unpublished M.Sc. Thesis, University of London, 1934) Table 13.
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Kennedy, W.P. (1976). Institutional Response to Economic Growth: Capital Markets in Britain to 1914. In: Hannah, L. (eds) Management Strategy and Business Development. Palgrave Macmillan, London. https://doi.org/10.1007/978-1-349-03051-4_9
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