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SUMMARY:Of Rules and Exceptions:  Financing a Modern Steel Industry in the
  United States\, 1865-1888  - Professor Mary O'Sullivan\, University of Ge
 neva
DTSTART:20130204T170000Z
DTEND:20130204T190000Z
UID:TALK42517@talks.cam.ac.uk
CONTACT:D'Maris Coffman
DESCRIPTION:The existing historical literature on the financing of a moder
 n steel industry in the United States is characterised by a major disagree
 ment. One view\, advanced by Lance Davis\, is that the steel industry’s 
 expansion was constrained by a lack of external finance given limited mark
 ets for iron and steel securities in the United States in the post-bellum 
 decades. A contrasting perspective\, developed by Alfred Chandler\, is tha
 t external finance mattered little to pioneering steel enterprises given t
 heir privileged access to internal resources. Both historians take the Car
 negie steel business as their crucial reference point\, although Davis con
 siders it an exception while Chandler treats it as rule. This paper seeks 
 to broaden our purview by analysing the financing of three Chicago-based s
 teel companies which ranked among the most formidable of Carnegie’s riva
 ls during the early development of America’s modern steel industry. It s
 hows that a different starting point leads to a fresh perspective on the i
 mportant issues that Davis and Chandler raise. Contrary to Chandler’s cl
 aims\, none of these three Chicago steel makers had sufficient internal re
 sources at its disposal to be financially autonomous. All of them were hea
 vily dependent on external finance to fund their expansion\, and to surviv
 e the periodic crises that plagued the fledgling U.S. steel industry\, and
  notwithstanding Davis’ arguments\, they all succeeded in raising large 
 amounts of external finance. Outside money came from local capitalists as 
 well as more distant ones\, including some of the most prominent financier
 s in the country\, but in all cases we observe a personal capitalism with 
 financiers investing their own money\, and that of their family and friend
 s\, in enterprises with which they had direct contact. These relationships
  allowed for the financial flexibility necessary to respond to the uncerta
 inties that were integral to pioneering steel enterprises’ activities. H
 owever\, to function effectively\, these relationships depended on trust b
 y financiers in the men operating the iron and steel business. When trust 
 broke down\, contracts assumed a greater role but\, as we shall see\, they
  proved far from satisfactory and their shortcomings provide important ins
 ight into the obstacles to the development of markets for iron and steel s
 ecurities in the United States at this time. 
LOCATION:Lucia Windsor Room\, Newnham College
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