Abstract: Dividends of Development
This paper is the introduction to my book, Dividends of Development: Securities Markets in the History of U.S. Capitalism, 1865-1922, which focuses on how U.S. securities markets became central to the institutional fabric of U.S. capitalism. After the Civil War, these markets had a narrowly circumscribed relationship to the country’s real economy, being largely dominated by railroad securities. Moreover, their role in the U.S. financial system was of limited significance given the relatively modest amount of resources that financial institutions committed to investment in, and lending on, corporate securities. That situation was to undergo fundamental change from the Civil War through the end of World War 1 but the development of U.S. securities markets did not occur as a result of a smooth, or even, linear process. Instead, the book shows that their transformation was volatile and time-consuming, unscripted by powerful actors, and driven, above all else, by the dramatic but unstable character of the nation’s economic development. These claims about the trajectory, the operation and the underlying dynamics of the development of U.S. securities markets are brought together in a novel synthesis that portrays the historical evolution of securities markets in the United States as the "dividends" of the country's rather particular trajectory of economic development.