"Associative Capitalism in the Age of Corporations: The Fall of a Powerful Norwegian Industrial Group 1895-1939"

This paper discusses the problematic transition from partnership capitalism of the 19th century to corporate capitalism under stress from the 1920s, arguing that old customs and principles from the partnership age survived under corporate structures and became sources of irreparable conflict in the new limited liability context. The paper follows the rise and fall of the fourth generation of a family of timber merchants, concentrating on the four cousins who in 1895 inherited their respective fathers’ business which at that moment was changed from a partnership to a modern limited liability corporation. The four cousins became the nucleus of the corporation (partly using share classes), but their several brothers and sisters also became minority shareholders. This new corporation, the four key shareholders as individuals, additional wealthy Norwegian individuals, constructed a huge constellation of paper and pulp enterprises in Northern Europe. However, the nationalization in 1918 of the enterprise Dubrowka in Russia led to a deep conflict between those who had guaranteed for the whole bank loan in their own name (in old partnership style) and other shareholders (who would have benefited from a possible upside). What had been a co-created ambitious strategy dissolved into conflicts, the deepest of which concerned cousins and close associates. Especially hurtful was the rift between the one who came to take the largest burden and the other who demanded he do so in order to protect the wealth of his eight shareholding sisters. The paper will reflect on the steep differences between partnerships and corporations, and between the use of corporations as an organisational form for several single-purpose businesses rather than for one or a few large multi-purpose corporations (“big business”) with a flexible shareholder base.