Hostname: page-component-848d4c4894-wg55d Total loading time: 0 Render date: 2024-04-30T17:01:26.680Z Has data issue: false hasContentIssue false
  • English
  • Français

Rediscovering Risk: Country Banks as Venture Capital Firms in the First Industrial Revolution

Published online by Cambridge University Press:  17 March 2006

LIAM BRUNT
LIAM BRUNT
Affiliation:
Visiting Professor, Ecole des Hautes Etudes Commerciales, Université de Lausanne, CH 1015-Dorigny, Internef Bureau 536, Switzerland. E-mail: liam.brunt@unil.ch.
Get access Rights & Permissions [Opens in a new window]

Abstract

Some English country banks were more like modern venture capital firms than modern banks in terms of legal and managerial structure, size and source of investment funding, size and nature of investments, and riskiness. This is exemplified by Praed & Co. of Truro, which was heavily engaged in financing the adoption of a risky new technology—Watt steam engines—by Cornish copper mines in the period 1775–1800. If some banks were proto–venture capital firms, rather than proto-banks, then their illiquid and relatively undiversified investment strategies are more reasonable and their bankruptcies more understandable: high-risk investments sometimes earn negative returns.

Type
ARTICLES
Information
The Journal of Economic History , Volume 66 , Issue 1 , March 2006 , pp. 74 - 102
Copyright
© 2006 The Economic History Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Ashton T. S. 1977 An Economic History of England: The Eighteenth Century. London: Methuen.
Bagehot Walter. 1873 Lombard Street: A Description of the Money Market, 5th edition. London: Henry S. King.
Bamberg J. H. 1988 “The Rationalization of the British Cotton Industry in the Interwar Years.” Textile History 19, no. 1 81– 103.Google Scholar
Banham John. 1999 “‘Backhouses' Bank of Darlington, 1774–1836.” University of Teesside Paper in North Eastern History No. 9,
Barton D. Bradford. 1969 The Cornish Beam Engine. Exeter: Cornwall Books.
Benson Arthur. C. 1923 The Trefoil: Wellington College, Lincoln and Truro. London: J. Murray.
British Parliamentary Papers (First Series of Reports). 1803 “Report on the state of the Copper Mines and Copper Trade.” vol. 10 651– 750.
British Parliamentary Papers (First Series of Reports). 1820 “An Enquiry into the State of Agriculture.” vol. 32 1– 520.
Brunt Liam, and Edmund S. Cannon. 2004 “Financial Market Integration in the Industrial Revolution.” Mimeo.
Burke Gillian, and Peter Richardson. 1981 “The Decline and Fall of the Cost Book System in the Cornish Tin Mining Industry, 1895–1914.” Business History 23, no. 1 4– 18.Google Scholar
Burt Roger, and Norikazu Kudo. 1983 “The Adaptability of the Cornish Cost Book System.” Business History 25, no. 1 30– 41.Google Scholar
Bygrave William. D., and Jeffrey A. Timmons. Venture Capital at the Crossroads. Boston: HBS Press, 1992.
Cameron Rondo. 1962 Banking in the Early Stages of Industrialization. Oxford: University Press,
Capie Forrest, and Michael Collins. 1996 “Industrial Lending by English Commercial Banks, 1860s–1914: Why Did Banks Refuse Loans?” Business History 38, no. 1 26– 44.Google Scholar
Caunce Steven. 2003 “Banks, Communities and Manufacturing in West Yorkshire Textiles, c. 1800–1830.” In Industrial Clusters and Regional Business Networks in England, 1750–1970, edited by John F. Wilson and Andrew Poppm, 112– 29. Aldershot: Ashgate.
Collins Michael. 1991 Banks and Industrial Finance in Britain, 1800–1939. London: MacMillian,
Davis Lance, and Larry Neal. 2003 “Why Did Finance Capitalism and the Second Industrial Revolution Arise in the 1890s?” Unpublished mimeo,
Feveryear Sir. Albert. 1963 The Pound Sterling. Oxford: Clarendon Press,
Galassi Francesco. L., and Lucy A. Newton. June 2001 “My Word is my Bond: Reputation as Collateral in Nineteenth Century English Provincial Banking.” University of Warwick Department of Economics Discussion Paper 599
Gerschenkron Alexander. 1962 Economic Backwardness in Historical Perspective. Cambridge: Cambridge University Press,
Godley Andrew, and Duncan M. Ross. 1996 “Introduction: Banks, Networks and Small Firm Finance.” Business History 38, no. 1 1– 10.Google Scholar
Goodhart Charles. A. E. 1972 The Business of Banking, 1891–1914. Aldershot: Gower.
Haber Stephen. 1991 “Industrial Concentration and the Capital Markets: A Comparative Study of Brazil, Mexico, and the United States, 1830–1930.” This JOURNAL 51, no. 3 559– 80.Google Scholar
Haber Stephen, and Noel Maurer. 2004 “Related Lending and Economic Performance: Evidence from Mexico.” Unpublished mimeo,
Hamilton Henry. 1967 The English Brass and Copper Industries to 1800, 2nd edition. London: Frank Cass.
Hannah Leslie. 1976 The Rise of the Corporate Economy. London: Methuen.
Harris Ron. 2000 Industrializing English Law. Cambridge: Cambridge University Press.
Hoffman Philip, Jean-Laurent Rosenthal, and Gilles Postel-Vinay. 2000 Priceless Markets. Chicago: University of Chicago Press.
Kindelberger Charles. P. 1993 A Financial History of Western Europe. Oxford: Oxford University Press,
Lamoreaux Naomi. 1994 Insider Lending: Banks, Personal Connections, and Economic Development in Industrial New England. New York: Cambridge University Press.
Lamoreaux Naomi. R., and Jean-Laurent Rosenthal. “Legal Regime and Business's Organizational Choice: A Comparison of France and the United States during the Mid-Nineteenth Century.” American Law and Economics Review, forthcoming.
Lerner Joshua. 1994 “The Syndication of Venture Capital Investments,” Financial Management 23, no. 1 16– 27.Google Scholar
Matthews P. W., and Anthony W. Tuke. 1926 History of Barclays Bank Limited. London: Blades, East and Blades.
Mitchell Brian. R. 1962 Abstract of British Historical Statistics. Cambridge: Cambridge University Press.
Newell Edmund. 1988 The British Copper Ore Market in the Nineteenth Century, With Particular Reference to Cornwall and Swansea. Unpublished Ph.D. thesis, University of Oxford.
Newton Lucy. 1996 “Regional Bank-Industry Relations During the Mid-Nineteenth Century: Links Between Bankers and Manufacturing in Sheffield, c. 1850 to c. 1885.” Business History 38, no. 1 64– 83.Google Scholar
Newton Lucy. 2003 “Capital Networks in the Sheffield Region, 1850–1885.” In Industrial Clusters and Regional Business Networks in England, 1750–1970, edited by John F. Wilson and Andrew Popp, 130– 54. Aldershot: Ashgate.
Nuvolari Alessandro B. Verspagen, and Nick von Tunzelmann. 2004 “The Diffusion of the Steam Engine in Eighteenth Century Britain.” Mimeo.
Orbell John, and Alison Turton. 2001 British Banking: A Guide to Historical Records. Aldershot: Ashgate.
Pressnell Leslie. S. 1956 Country Banking in the Industrial Revolution. Oxford: Clarendon Press.
Price F. G. Hilton. 1876 A Handbook of London Bankers. New York: Burt Franklin.
Rousseau Peter. L. 1998 “Financial Intermediation and Economic Performance: Historical Evidence from Five Industrialized Countries.” Journal of Money, Credit and Banking 30, no. 4 657– 78.Google Scholar
Sahlman William. A. 1990 “The Structure and Governance of Venture-Capital Organizations.” Journal of Financial Economics 27, no. 2 473– 521.Google Scholar
Sayers Ralph. S. 1957 Lloyds Bank in the History of English Banking. Oxford: Clarendon Press.
Schumpeter Joseph. A. 1934 The Theory of Economic Development (1912; translated by Roger Opie). Cambridge, MA: Harvard University Press.
Smiles Samuel. 1878 Lives of the Engineers. London: John Murray.
Temin Peter. November 2002 “Financial Intermediation in the Early Roman Empire.” Massachusetts Institute of Technology Economic Working Paper 02-39,
Temin Peter, and Joachim Voth. January 2004 “Banking as an Emerging Technology: Hoare's Bank, 1702–42.” Massachusetts Institute of Technology Economic Working Paper 04-01
Tolliday Steven. 1987 Business, Banking and Politics: The Case of British Steel, 1918–39. Cambridge, MA: Harvard University Press.
Trebilcock Clive. 1969 “Spin-off in British Economic History: Armaments and Industry, 1760–1914.” Economic History Review 22, no. 3 474– 90.Google Scholar
Zider Bob. November-December, 1998 “How Venture Capital Works.” Harvard Business Review 132– dash;39.