Dividends of development securities

markets in the history of U S capitalism

1865 1922 1st Edition Mary A.
O'Sullivan
Visit to download the full and correct content document:
https://textbookfull.com/product/dividends-of-development-securities-markets-in-the-hi
story-of-u-s-capitalism-1865-1922-1st-edition-mary-a-osullivan/
More products digital (pdf, epub, mobi) instant
download maybe you interests ...

A Short History of U S Interventions in Latin America

and the Caribbean 1st Edition Alan Mcpherson

https://textbookfull.com/product/a-short-history-of-u-s-
interventions-in-latin-america-and-the-caribbean-1st-edition-
alan-mcpherson/

A Cultural History of Underdevelopment Latin America in

the U S Imagination First Edition John Patrick Leary

https://textbookfull.com/product/a-cultural-history-of-
underdevelopment-latin-america-in-the-u-s-imagination-first-
edition-john-patrick-leary/

A Concise History of U S Foreign Policy 4th Edition

Joyce P. Kaufman

https://textbookfull.com/product/a-concise-history-of-u-s-
foreign-policy-4th-edition-joyce-p-kaufman/

A Marxist History of Capitalism Henry Heller

https://textbookfull.com/product/a-marxist-history-of-capitalism-
henry-heller/
A Concise History of Germany Mary Fulbrook

https://textbookfull.com/product/a-concise-history-of-germany-
mary-fulbrook/

A Brief History of Commercial Capitalism 1st Edition

Jairus Banaji

https://textbookfull.com/product/a-brief-history-of-commercial-
capitalism-1st-edition-jairus-banaji/

EU securities and financial markets regulation Niamh

Moloney

https://textbookfull.com/product/eu-securities-and-financial-
markets-regulation-niamh-moloney/

American Lucifers: The Dark History of Artificial

Light, 1750–1865 Jeremy Zallen

https://textbookfull.com/product/american-lucifers-the-dark-
history-of-artificial-light-1750-1865-jeremy-zallen/

American Lucifers: The Dark History Of Artificial

Light, 1750–1865 Jeremy Zallen

https://textbookfull.com/product/american-lucifers-the-dark-
history-of-artificial-light-1750-1865-jeremy-zallen-2/
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

DIVIDENDS OF DEVELOPMENT
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

Dividends of
Development
Securities Markets in the History
of US Capitalism, 1866–1922

M A R Y A . O ’S U L L I V A N

1
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

3
Great Clarendon Street, Oxford, OX2 6DP,
United Kingdom
Oxford University Press is a department of the University of Oxford.
It furthers the University’s objective of excellence in research, scholarship,
and education by publishing worldwide. Oxford is a registered trade mark of
Oxford University Press in the UK and in certain other countries
© Mary A. O’Sullivan 2016
The moral rights of the author have been asserted
First Edition published in 2016
Impression: 1
All rights reserved. No part of this publication may be reproduced, stored in
a retrieval system, or transmitted, in any form or by any means, without the
prior permission in writing of Oxford University Press, or as expressly permitted
by law, by licence or under terms agreed with the appropriate reprographics
rights organization. Enquiries concerning reproduction outside the scope of the
above should be sent to the Rights Department, Oxford University Press, at the
address above
You must not circulate this work in any other form
and you must impose this same condition on any acquirer
Published in the United States of America by Oxford University Press
198 Madison Avenue, New York, NY 10016, United States of America
British Library Cataloguing in Publication Data
Data available
Library of Congress Control Number: 2016932534
ISBN 978–0–19–958444–4
Printed in Great Britain by
Clays Ltd, St Ives plc
Links to third party websites are provided by Oxford in good faith and
for information only. Oxford disclaims any responsibility for the materials
contained in any third party website referenced in this work.
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

To Molly
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

Preface

To say that this book took longer than planned would be an understatement.
Many of the lessons I have learned along the way begin with ‘how not to’ and
they have limited value for anyone other than me. However, there is one lesson
that may be of broader interest since it says something about writing on the
subject that is the focus of this book. It is ‘how not to end up writing a different
book than the one you started’.
Financial history is written by a variety of scholars but, at the risk of some
simplification, they can be divided into two types. Some people who study
financial history are fascinated by finance for its intrinsic interest and are
keen to understand the complexities of the financial dynamics of the past
for their own sake. Other scholars, in contrast, are interested in financial
history insofar as it tells us something of larger importance about the societies
in which financial systems are embedded. The importance of the distinc-
tion can be seen in the way that different scholars write financial history
and, in particular, in the attention they accord to the intricacies of financial
structures and dynamics as compared with the links between the financial
system and other social, political, or economic spheres.
I belong firmly in the category of scholar interested in the broader import-
ance of financial structures and dynamics and, specifically, their implications
for the enterprises, industries, and nations that are building blocks of the real
economy. Therefore, when I began this project, I had a different book in mind,
one that was preoccupied with the ‘real’ economic impact of the US securities
markets from the Civil War through the First World War. It was based on a
series of case studies that analysed how different industries used the securities
markets and drew implications from these patterns for the way economists
and historians think about the role these markets play in the economy. If that
sounds like a concrete description of what I had in mind, that is because it was
not just in my mind. I completed a great deal of research for this original book,
generating drafts of chapters on brewing, steel, electrical equipment, retail,
automobiles, and aviation, and presenting them to different audiences. From
this vantage point, I learned a great deal about the financial implications of the
technological and market dynamics of different industries. However, even if
the various parts of this book made sense in their own right, I struggled to
bring them together into a coherent history of the US securities markets.
It took me a long time to figure out what was wrong and, when the
realization hit, it was not a good moment. Simply put, I had been writing
the wrong book. My interest in the ‘real’ impact of the financial sector made it
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

viii Preface
natural for me to come at the history of the securities markets from the
perspective of the enterprises and industries that relied upon them. Yet, the
farther I advanced, the more I suspected that seeing the history of US securities
markets solely from the perspective of the productive sector was giving me a
lopsided view of them. Specifically, I needed to bring the financial aspects of
the story into sharper focus by placing the securities markets’ relationship with
the rest of the US financial system at the centre of my analysis.
My instinctive bias was typical of scholars who are interested in the broader
economic impact of financial systems and tend to focus on the relationship
between finance and investment. In contrast, those who emphasize the inher-
ent importance of the financial sector tend to be preoccupied with its internal
characteristics and rhythms and to pay only limited attention to its connec-
tions with the rest of the economy. As my book project proceeded, it became
increasingly clear to me that neither approach was sufficient. Eventually
I understood that to write a compelling history of the US securities markets,
I needed to analyse those markets in the context of both the productive and
financial dynamics of the US economy.
That realization generated a rather different book from the one I had set out
to write and, for some time, I resisted it. I prevaricated for a while, trying to
save chapters I had already written, and to patch on some new material to
broaden the book’s scope. Increasingly, however, I realized that I had recon-
ceived the book I was writing. Once that dawned upon me, the new clarity felt
so right that I could not resist it and it might even have been comforting were
it not for the fact that I then confronted the challenge of completing the new
book!
Now that it is finished, I wonder why I struggled so long to see what needed
to be done. This book addresses the historical evolution of the US securities
markets from the Civil War through the First World War by looking at their
changing relationships to the productive and financial sectors of the US
economy. It is a book that is primarily concerned with understanding how
these securities markets became integral to the US system of capitalism.
Specifically, it explains how the changing productive and financial systems
of the United States propelled securities markets into a central role in the
institutional constellation that sustained the country’s system of capitalism.
Working on this book project over a series of years, and maintaining
confidence in my capacity to complete it, depended on a great deal of
intellectual support. Some of the most helpful and insightful colleagues
I have found were at the Wharton School of the University of Pennsylvania.
It was there that I began working in earnest on a book project and even got to
the point where I thought I was close to finishing it. I could not have asked for
a better group of colleagues especially Mauro Guillén, Steve Kobrin, and Gerry
McDermott who engaged with what I was writing and offered advice and
encouragement. Other colleagues in the Management department at Wharton,
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

Preface ix
especially Wit Henisz, Dan Levinthal, Dan Raff, and Sid Winter, were a source
of constant stimulation as I developed my project, as was Walter Licht in
the history department at the University of Pennsylvania. My years in Phila-
delphia were further enriched by Richard Deeg and Kathy Steen from the
neighbouring universities of Temple and Drexel who offered intellectual
camaraderie and warm companionship.
When I left the United States in 2010, I regretted losing such great col-
leagues but I was convinced I needed to find a greater coherence between my
research and teaching. I hope to have found that in the Department of History,
Economics and Society at the University of Geneva. My immediate colleagues
are scholars who are passionate about history and economics and it strikes me
as a real luxury to interact with them on a daily basis. I owe a special word of
thanks to both Juan Flores and Matthieu Leimgruber for their intellectual
support and their collegiality. I would also like to thank Edoardo Altamura,
Sebastian Alvarez, Fionna Caloz, Cédric Chambru, Jérémy Ducros, Christophe
Farquet, Lea Haller, Liza Lombardi, Jamieson Myles, Sabine Pitteloud, Jean
Rochat, Sabrina Sigel, Christian Stohr, and Sylvain Wenger for the contribu-
tions they made to this book through their feedback, encouragement, and
occasional teasing. My colleague Delphine Gardey inspired me by surviving
the kind of administrative overload I faced on arrival to write a great book. And
Bernard Debarbieux, as dean of my faculty, realized just how much I needed
teaching relief at a crucial moment in the development of the manuscript
and made sure I got it. I am also extremely grateful to Gareth Austin, Philip
Benedict, Christoph Conrad, Marc Flandreau, Sandrine Kott, and Matthias Schulz
for integrating me into a broader network of historians in Geneva.
In addition, there are many colleagues in the broader world of economic,
financial, and business history whose identities did not change as I shifted institu-
tions and continents. Some of them have played a sustained role in influencing my
thinking on this book while others have offered insights on one or two crucial
occasions. Although it surely excludes some important names, the following
list will have to suffice in acknowledging them: Ed Balleisen, Tine Bruland, Youssef
Cassis, Andrea Colli, Thomas David, Jeff Fear, Olivier Feiertag, Patrick Fridenson,
Walter Friedman, Lou Galambos, Meg Graham, Les Hannah, Per Hansen, Pierre-
Cyrille Hautcoeur, Eric Hilt, Richard John, Chris Kobrak, Naomi Lamoreaux,
Maggie Levenstein, Ken Lipartito, Aldo Musacchio, Susie Pak, Tobias Straumann,
Ellis Tallman and Dick Sylla. In addition, I have drawn intellectual inspiration
and sustenance from colleagues in economics and political science over the last
few years. I am grateful for the stimulating discussions I have had with Mike
Best, François Chesnais, Benjamin Coriat, Bruce Kogut, Mariana Mazzucato, Dick
Nelson, Luigi Orsenigo, Carlota Perez, David Rueda, Catherine Sauviat, Keith
Smith, David Soskice, and Kathy Thelen and to Bill Lazonick for his many
insightful comments on drafts of various chapters. Finally, I appreciate the en-
gagement of audiences at the University of Bocconi, Copenhagen Business School,
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

x Preface
Cambridge University, Columbia University, the European University Institute,
University of Glasgow, Harvard University, London School of Economics, New
York University, University of Oxford, Paris School of Economics, Rutgers Uni-
versity, University of Toronto, and Yale University where I have presented the
various iterations of this book in recent years.
I greatly appreciate the unfailing support of the editorial team at
OUP–David Musson, Emma Booth and, most recently, Clare Kennedy–and
the invaluable assistance of Hayley Buckley, Jo North and Lydia Shinoj in getting
this book to press. Dedicated and knowledgeable archivists have proven
indispensable to me in writing it. I am especially grateful to Janet Linde at
the New York Stock Exchange who, along with Stephen Wheeler, was enor-
mously accommodating and helpful to me in my regular visits there over the
years. The staff at the Guildhall Library in London was extremely understand-
ing of the practical challenges that confronted a Geneva-based scholar in using
the archives of the London Stock Exchange. The excellent conditions and
competent staff at the Morgan Library and Museum as well as the Rare Book
and Manuscript Library at Columbia University made working there a real
pleasure. And a special word of thanks to Julie Sager at the archives of the
Federal Reserve Bank of New York for her resourcefulness and flexibility in
helping me access some fascinating material there. In recent years, I have had
the misfortune to have my archives in places other than the one where I live.
However, the challenges that situation generates were greatly reduced by
friends, especially Bruce and Monika Kogut, Kate Kuper, and Anne and
Evan Rawley, who looked after me on my trips to New York City and London.
Still on a personal note, my brothers and sisters and their families have
supported me, in very Irish fashion, through a combination of black humour,
warm affection, and a certain insouciance about whether ‘the’ book would ever
be finished. My mother was constantly mystified that it could take me so long
to write a book that so few people would ever read but she never lost
confidence in my ability to do so. Friends have offered much-needed breaks
from the grind at opportune moments and both Bettina Yadigaroglu and
Judith Benedict have been on hand in Geneva when I most needed it. Then
there are the people who are so close to home that they have had no choice but
to live with this book and its author on a daily basis. On his frequent trips to
see us, my stepson, Alex, managed to show constant enthusiasm for what I was
writing. More than anyone else, Jonas has lived with the quotidian vagaries of
this book over a long period of time and I am extremely grateful for the
invaluable support he has given me through penetrating intellectual criticism
and comforting culinary sustenance. Finally, there is Molly to whom this book
is dedicated partly because she does not remember a time when her mother
was not writing a book and mostly because she made sure that life was so
much more than that.
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

Contents

List of Figures xiii

List of Tables xv
List of Abbreviations xvii

Introduction 1
1. Fits and Starts in the History of US Securities Markets, 1866–1914 21
2. Yankee Doodle Went to London: Anglo-American Breweries
and the London Securities Market, 1888–1892 74
3. An Inauspicious Beginning: Early US Flirtations with Industrial
Securities, 1889–1897 108
4. The Truth about the Trusts: Propitious Conditions for US
Markets for Industrial Securities, 1897–1902 146
5. From Undigested to Indigestible: US Industrials in the
Panic of 1907 189
6. Wall Street on the Defensive, 1908–1913 231
7. Too Much Ado about Morgan’s Men: The US Securities Markets,
1908–1914 273
8. The Wages of War, 1914–1922 311
Conclusion 357

Bibliography 365
Index 377
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

List of Figures

1.1 Transfer valuation of a seat on the NYSE, 1868–1914 28

1.2 Volumes of corporate securities traded on the Consolidated Stock
Exchange, 1885/6–1912/13 32
1.3 Volume of corporate shares traded on the NYSE, 1879–1913 33
1.4 Volume of corporate bonds traded on the NYSE, 1879–1913 34
1.5 Total demand loans on stock market collateral of New York City
national banks, on the fourth call of each year, 1870–1913 57
1.6 Total loans on collateral of New York trust companies, 1881–1913 58
1.7 Percentage of all US railroad mileage in receivership, 1872–1914 65
1.8 Net earnings per mile for US railroads, 1872–1914 66
1.9 High-grade US railroad bond yields, 1866–1914 66
1.10 Annual dividend income on industrial and railroad common stocks,
1871–1914 70
1.11 Ratio of price to par for common stocks of 100 largest industrial
companies, 1889–1914 71
2.1 US industrial and miscellaneous capital called on the London market,
1866–1913 79
2.2 Financial logic behind the New England Breweries deal 98
2.3 Valuations assigned to Anglo-American brewers on the London market 100
2.4 Excess demand for Anglo-American brewers’ shares 101
3.1 Monthly interest rates on New York money market, 1885–1895 134
4.1 Stock prices including cash dividends, 1896–1903 152
4.2 Monthly interest rates on New York money market, 1895–1903 187
5.1 Daily stock price of American Ice Securities common stock, 12–25
October 1907 208
8.1 Monthly interest rates on New York money market, 1914–1922 336
8.2 Brokers’ loans by New York City banks, 1917–1922 340
8.3 Volume of shares traded on the NYSE, 1895–1925 345
8.4 Monthly interest rates on New York money market, 1875–1930 355
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

List of Tables

1.1 Sectoral breakdown of traded bonds and stocks on the NYSE, 1866–1896 29
1.2 Industrial and miscellaneous stocks on the LSE, December 1888 35
1.3 Sectoral breakdown of traded bonds and stocks on the NYSE, 1896–1913 36
1.4 US financial institutions’ investments in corporate securities, 1866–1913 51
1.5 US railroad construction in comparative perspective 62
1.6 Gross investment in railroad construction and equipment 63
2.1 Anglo-American brewers and the listing requirements of the LSE 84
2.2 Underwriting of the Frank Jones Brewing Company flotation 87
2.3 Listing requirements of the London versus New York Stock Exchanges 92
2.4 Capital raised for investment in Anglo-American brewing deals 96
3.1 Investor demand in Chicago and London for Anglo-American
industrial shares 115
3.2 Building confidence in industrial securities in New York City 121
3.3 Indexes for stock prices, including dividends, for selected industries,
1889–1897 138
4.1 Common and preferred stock issues of more than $3 million by
industrial corporations, 1897–1904 148
4.2 All stock admitted to trading on the NYSE, 1897–1904 149
4.3 Volumes of corporate stocks traded on the NYSE, 1895–1903 152
4.4 Industrial consolidation activity, 1897–1902 153
4.5 Indexes for stock prices, including dividends, for best-performing
industries, 1896–1903 159
4.6 Leading national banks in New York City, 6 October 1896–6
September 1904 165
4.7 Leading New York trust companies, July 1895–January 1904 166
4.8 Loans by national banks secured by stocks, bonds, and other personal
securities, 6 October 1896–6 September 1904 170
4.9 Estimated call loans by New York trust companies, 1897–1904 171
5.1 Stock price and dividend indices for resource-based industries,
1901–1906 192
5.2 Five most heavily traded industrial stocks on the NYSE, 1903–1910 195
5.3 Volumes and prices of most highly traded industrials on the
NYSE, 1906 197
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

xvi List of Tables

5.4 Indexes for stock prices, including dividends, by sector, December
1906–December 1907 204
5.5 Indexes for stock prices, including dividends, for resource-based
industries, December 1906–December 1907 205
5.6 U.S. Treasury as lender of last resort for the New York call market 218
5.7 Trading volumes of most highly traded industrials on the NYSE during
the panic of 1907 224
5.8 Loans by national banks secured by stocks, bonds, and other personal
securities, 1904–1907 226
5.9 Estimated call loans by New York’s trust companies, 1904–1907 227
7.1 Corporate securities issues by the money trust shown in the ‘Pujo table’ 279
7.2 Corporate securities issues in the United States, 1905–1913 284
7.3 Money trust issues as shares of US corporate securities issues 285
7.4 Underwriters for corporate securities issues of $10m or more, 1911 287
7.5 Underwriters for industrial securities issues between $1m and $10m
in 1911 289
7.6 Estimates of the control of other people’s money by the money trust 291
7.7 Correspondents, correspondent deposits and collateral loans of
leading financial institutions in New York, 1911 294
7.8 National City Bank’s position as a lender in the call loan market 296
7.9 Prominent financiers on corporate boards 301
7.10 Representation of money trust ‘inner group’ on corporate boards 302
7.11 Largest US securities issues for steel companies, 1908–1912 308
8.1 Sectoral breakdown of trading activity on the Curb market, 1911–1914 319
8.2 Five most heavily traded industrial stocks on the NYSE, 1908–1913 323
8.3 US capital called on London market by industry, 1900–1914 326
8.4 Indexes for stock prices, including dividends, by sector, 1914–1922 332
8.5 Trading volume of stocks on the NYSE, 1913–1922 333
8.6 Indexes for stock prices, including dividends, for ‘war baby’ industries,
1914–1922 334
8.7 Sectoral breakdown of traded stocks on the NYSE, 1913–1922 335
8.8 Loans on stock market collateral by US national banks, 1913–1918 336
8.9 Distribution of trading volume of NYSE stocks, 1913–1922 346
8.10 Balance sheets of Chase National Bank, 1913 and 1922 353
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

List of Abbreviations

BSP Benjamin Strong, Jr. Papers, Federal Reserve Bank of New York
CDR Chicago Daily Tribune
FRB Federal Reserve Board
FRBNY Federal Reserve Bank of New York
FVP Frank A. Vanderlip Papers, Rare Book and Manuscript Library, Columbia
University
LSE London Stock Exchange
LSEA London Stock Exchange Archives, Guildhall Library, London
MGC Minutes of the Governing Committee
MLM The Morgan Library & Museum, New York
MSL Minutes of the Committee on Stock List
NMC National Monetary Committee
NYSE New York Stock Exchange
NYSEA New York Stock Exchange Archives, New York Stock Exchange, New York
NYT New York Times
PMW Paul Moritz Warburg papers, Sterling Memorial Library, Yale University
PWCA Price Waterhouse Coopers Archives, Rare Book & Manuscript Library,
Columbia University
TNA The (British) National Archives
WSJ Wall Street Journal
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

Introduction

Our immense National resources have enabled us to live and prosper in

spite of our present system, but so long as it is not thoroughly reformed it
will prevent us from ever becoming the financial centre of the world. As it
is, our wealth makes us an important but dangerous factor in the world’s
financial community …
We have reached the point in our financial development where it is
absolutely necessary that something be done to remedy the evils from
which we are suffering.1

Today, expansive and bubbling markets for corporate securities are inextricable
to the functioning of US capitalism. In comparative perspective, they are
among the most prominent features of the US financial system and their
relationship to the nation’s productive sector is a defining feature of the
country’s economic dynamics. It is obvious that these markets did not spring
fully formed upon the world since their past can be located in the annals of US
history and even at centre stage for some of its key moments. Nevertheless,
when, how, and why the US securities markets assumed such a central role in
US capitalism are questions to which it is difficult to find convincing answers.
This book tells the story of how markets for corporate securities became
integral to the institutional fabric of US capitalism during the period from the
Civil War to the end of the Great War. 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 US
financial system was of limited significance given the relatively modest
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 to the end of the First World War but the
development of US securities markets did not occur along a path that was
smooth, or even linear.

1
Paul M. Warburg, ‘Defects and Needs of our Banking System’, New York Times (hereafter
NYT), 6 January 1907, AFR14.
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

2 Dividends of Development
Instead, the book shows, the evolution of US securities markets was a
volatile and time-consuming process, it was unscripted by powerful actors,
and driven, above all else, by the dramatic and unstable character of the
nation’s economic development. These claims about the rhythm, the oper-
ation, and the causes of the development of US 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 distinctive,
even peculiar, trajectory of economic development from the Civil War until
the end of the Great War. And, from this perspective, the First World War can
be seen as a defining moment in the history of US securities markets, serving
both as a window on their past as well as a door to their future.

I.1 WINDOW ON THE PAST, DOOR TO THE F UTU RE

On 31 July 1914, only minutes before the normal start of trading, the Board of
Governors of the New York Stock Exchange (NYSE) took the momentous
decision to close its doors. H. G. S. Noble, the president of the exchange,
justified the decision as imperative ‘in order to forestall what would have
surely been a ruinous collapse’.2 As he explained: ‘A half hour’s session of the
Exchange that morning would have brought on a complete collapse in prices; a
general insolvency of brokerage houses would have forced the suspension of
all business; the banks, holding millions of unsaleable collateral, would have
become involved’.3 Wall Street was on the brink of a crisis and, even if its
consequences could not be predicted, it was clear they would be serious
enough to threaten the stability of the entire US financial system.
Crisis was averted, in Noble’s self-serving interpretation, by ‘the prompt
and determined action of the Stock Exchange, and by that alone’.4 Of course,
in closing its doors that day, the NYSE only did what exchanges in Europe and
elsewhere had already done. Yet, that is precisely what is surprising. On 31 July
1914, there was no doubt that the European powers were going to war but no
one seriously believed at the time that the United States would join battle with
them. Nor was there any reason to think that the war would undo the extraor-
dinary advances the US economy had made since the Civil War. So why was it,
on the brink of the First World War, that the president of the leading stock
exchange in the United States was so worried about a financial crisis?
The most pressing concern on Wall Street was the prospect, as Noble put it,
of a ‘complete collapse in prices’. To explain that fear, historians have empha-
sized the danger of a massive liquidation of European investments in US

2
H. G. S. Noble, The New York Stock Exchange in the Crisis of 1914 (New York, 1915), 4.
3 4
Noble, Crisis, 15. Noble, Crisis, 15.
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

Introduction 3
securities at the end of July 1914. There is truth in that claim but it is a partial
and misleading truth. As the Financial Review pointed out: ‘It is a mistake to
assume that the great collapse in prices which occurred had its origin in the
outbreak of war in Europe’.5 In fact, it was the limited breadth and depth of
domestic US securities markets, just as much as foreign selling pressures,
which threatened a ‘ruinous collapse’ in the summer of 1914.
There is a profound irony in this situation. By 1914, the United States
boasted the largest economy in the world, an economy that, to its champions
and critics, exemplified all that was characteristic of capitalism. And, yet, the
country’s capital markets, which might be seen as the very essence of capital-
ism, were in the doldrums. Largely because they had failed to harness the
potential of the country’s dynamic industrial sector, these markets’ fate
remained wedded to a railroad sector with limited prospects for the future.
On the eve of the First World War, as a result, Wall Street could be fairly
described as ‘suffering from dry rot for three years’ and even that was an
understatement of its troubles.6 In 1913, the volume of trading on the NYSE
had fallen to a third of its previous peaks, returning to levels it had attained in
the late nineteenth century.7
If the situation was ironic, it was also scary. The United States could not
boast liquid and diversified markets for its corporate securities, which made
the prospect of a collapse in prices a very real danger. At the same time, the
country’s financial system was highly dependent on these markets. Indeed, it
displayed such a high dependence on Wall Street that any precipitous decline
in securities prices threatened a systemic financial crisis. Sharp drops in
securities prices had resulted in severe financial and economic repercussions
on several occasions since the Civil War and, most recently, in the panic of
1907. And it was the risk of another such decline that turned the onset of war
in Europe into a financial crisis in the United States in the summer of 1914.
Thus, the outbreak of the First World War offers a fascinating window onto
the history of US capital markets. These markets, far from being the vibrant
heart of US capitalism, were an embarrassment to the most powerful economy
in the world. Certainly, as the opening quote from Paul Warburg suggests, that
is how many contemporaries saw them. Indeed, it was for that very reason that
the Federal Reserve Act of 1913 was formulated with the express intention of
reforming the US financial system to make it less dependent on the country’s
securities markets. But, in July 1914, these reforms had not yet come into

5
Noble, Crisis, 15.
6
‘Our Stocks Crumble: But Exchange Stands Strain Well—Heavy Foreign Liquidation’, NYT,
31 July 1914, 1.
7
The volume of shares traded on the NYSE amounted to 83.4m shares in 1913, down from its
previous peaks of 284.1m in 1906 and 265.3m in 1901 (NYSE, Factbook, various years).
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

4 Dividends of Development
operation so that the fate of the nation’s financial system remained extremely
vulnerable to the fortunes of its securities markets.
Thus, to anyone who understood the character of markets for corporate
securities in the United States, as well as the place they had come to assume in
the country’s financial system, there was good reason to be concerned in the
summer of 1914. However, as it happened, the worst fears of contemporaries
did not come to pass. There was no ruinous collapse during the war and when
the country emerged from its belated and profound post-war crisis, it became
clear that the character of domestic markets for US securities had changed. It
is commonplace for historians to emphasize the importance of the First World
War in propelling the United States into a central role in the international
financial system.8 This book makes a different claim, which historians have
tended to overlook, in arguing that the Great War was decisive for the
transformation of domestic markets for US corporate securities. When the
war was over, these markets had moved into a central position in the institu-
tional constellation of US capitalism.

I.2 THE STORY IN I TS ESSENTIALS

The central concern of this book is with understanding how US securities

markets evolved to became integral to the institutional fabric of US capitalism
in the years from 1866 to 1922. It focuses on three aspects of the history of the
US securities markets in that period. It addresses, in the first instance, the
timing of their evolution, to illustrate the waxing and waning of these markets’
activity and to highlight the really decisive moments in their development.
Second, the book characterizes the substantial changes that occurred in the
nature and operation of markets for US corporate securities over time. And,
finally, it seeks to identify the crucial economic dynamics that drove the
evolution of US securities markets during the period under investigation.
My analysis of the evolution of the US securities markets shows it to have
been both erratic and lengthy. Throughout the book, I emphasize that the
development of US securities markets occurred in fits and starts, with
dramatic breakthroughs followed by slowdowns, and even reversals, in the
momentum on which it relied. That characterization is substantially at odds
with the existing historical literature that gives the impression of more preco-
cious development or more decisive breakthroughs. Moreover, the process
through which the securities markets developed, through which they became

8
Mira Wilkins, ‘Cosmopolitan Finance: New York’s Emergence as an International Financial
Center’, in Richard Sylla, Richard Tilly, and Gabriel Tortella, eds., The State, the Financial System
and Economic Modernization (Cambridge, 1999), 271–91.
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

Introduction 5
diversified and liquid, or ‘broad and deep’ as economists are wont to put it, was
a protracted one. Certainly it had not occurred as early as many financial
historians would have it and not even by 1914 as most of them would claim.
Instead, the First World War proved vital in prompting the broadening and
deepening of these markets, notably through the impetus it gave to markets for
industrial securities.
The book is even more at odds with existing historical literature when it
comes to the operation of the US capital markets during this period. Private
financial actors, including the NYSE and J. P. Morgan & Co., feature prom-
inently in that literature for their putative capacity to determine who gained
access to the US securities markets and under what conditions. These players
feature in my story as financial gatekeepers but I show that the operation of the
US securities markets cannot be understood as having been scripted and
controlled by them. Properly situated in their historical context, these actors
can be seen as part of a much larger group of players, jostling for position on
the securities markets and struggling to deal with their vagaries. Important
though these actors were, they exercised nothing like the overwhelming
influence that many scholars attribute to them.
Finally, there is the question of what determined the evolution of US
securities markets from the Civil War through the First World War. In recent
years, scholars have taken a great interest in the causal dynamics that drive the
development of securities markets. A whole literature has emerged, drawing in
economists, legal scholars, sociologists, and political scientists, that seeks to
understand why some countries have broad and deep securities markets while
others do not. Many theories have emerged from this work, with the most
prominent ones emphasizing the importance of legal or political institutions
for the development of securities markets. What all of them have in common,
however, is a commitment to the idea that we can generalize across time and
space about the causal dynamics involved.
This book moves in the opposite direction, to propose a novel interpretation
of the historical dynamics of securities markets that is rooted in the particular
circumstances of time and place. It argues that the evolution of these markets
in the United States was determined, above all else, by the country’s dramatic,
but volatile, pattern of economic development. That pattern was transmitted,
in turn, to the US securities markets through its impact on the demand for,
and supply of, corporate securities.
This book is hardly original in emphasizing the importance of the changing
structure of the US economy for understanding the history of the US securities
markets. Indeed, in a bygone era in economic history it was commonplace to
recognize the influence of economic dynamics on the course of financial
history. Yet, much of this older work is frustrating for its lack of systematic
analysis of these dynamics and its treatment of their impact on securities
markets in vague or general terms. Scholars often point to the secular increase
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

6 Dividends of Development
in US savings, or the increasing capital requirements of the country’s railroad
and industrial sectors, as a boon to the development of the country’s securities
markets.9 Stated in such a general way, these claims imply a straightforward
and inevitable transformation of the country’s securities markets that ought to
have brought them through progressively advanced stages of development to
greater maturity. That is not what happened but, to understand why, we need
to go beyond generalities to understand the specific mechanisms through
which the country’s economic development influenced the market for corpor-
ate securities.
Funds invested in, and lent on, corporate securities by financial institutions
played a crucial role on the demand side of the market. During the period
discussed in this book, US financial institutions witnessed an expansion that
was both explosive in its scale and uneven in its rhythm. That expansion was
transmitted, in turn, to the demand for corporate securities as financial
institutions committed significant resources to investments in corporate
securities and, even more so, to loans made on securities as collateral. Historians
have paid far too limited attention to the impact of these changing commit-
ments on the evolution of the nation’s securities markets. Particularly unfortu-
nate is their neglect of New York’s massive call loan market and its crucial
implications for speculative demand for corporate securities.10 One of the
important contributions of this book is to restore the call market to its rightful
place as one of the central pillars of the US securities markets’ activity.
On the supply side of the market, the diffusion and expansion of powerful
corporate enterprises in the United States in the late nineteenth and early
twentieth centuries seemed to offer unlimited possibilities for the development
of the country’s securities markets. Successive booms in railroad construction,
before and after the Civil War, boosted the development of US securities
markets. However, as the country’s railroad network neared completion, it
was clear that the securities markets needed an alternative source of corporate
securities to sustain them. The industrial sector was the obvious candidate, as
commentators pointed out from the late 1880s, and many historians have

9
See, for example, Lance Davis and Robert Gallman, ‘International Capital Movements,
Domestic Capital Markets, and American Economic Growth, 1865–1914’, in idem, Evolving
Financial Markets and International Capital Flows: Britain, the Americas, and Australia,
1865–1914 (Cambridge, 2001), chapter 3, 244; Raymond Goldsmith, Institutional Investors
and Corporate Stock (Cambridge, MA, 1970), 35; Adolf Berle and Gardiner Means, The Modern
Corporation & Private Property (New York, 1932), chapter 2, 36.
10
Call loans were made to buyers of securities on the collateral of the stocks and bonds they
purchased, allowing them to acquire securities by paying only a ‘margin’ of their price in cash.
They could be obtained up to 70 or 80 per cent of the value of the collateral, depending on its
quality, allowing buyers to purchase securities by putting up only a margin of 20 to 30 per cent of
the price from their own pockets. These loans were described as ‘call’ loans to underscore the fact
that they could be terminated by either lender or borrower the day after they were made (J. Edgar
Meeker, The Work of the Stock Exchange [New York, 1922], 176).
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

Introduction 7
assumed that it soon displaced the railroad sector as the backbone of the
nation’s securities markets.
However, liquid markets for corporate securities can only emerge when
there are enterprises that are willing and able to generate adequate numbers of
stable and profitable securities on which such markets can be built. The US
railroad sector played that role for decades for the US securities markets but
the character of the country’s industrial sector was entirely different. As a
result, it was slow to generate a sufficiently large and attractive supply of stocks
and bonds that could serve as the lifeblood of an active market for industrial
securities. Indeed, it was only in the aftermath of the First World War that the
industrial sector definitively replaced the railroad sector as the foundation of
US markets for corporate securities.
By analysing the changing ways in which the securities markets were
linked to the financial and productive sectors of the US economy, we can
understand how they became integrated into the institutional fabric of US
capitalism. That integration did not occur either quickly or evenly. In the
decades between the Civil War and the First World War, the securities
markets became more important to the nation’s financial system through
its growing investments in, and especially lending on, corporate securities.
Yet, as securities markets became increasingly essential to the country’s
financial system, they remained far from the centre of its productive system.
They had long been important for the US railroad sector but on the eve of
the First World War the securities markets’ continued dependence on
railroads seemed like a burden. However, they had still established only
limited connections to US industry, the most dynamic sector of the US
productive system.
At the beginning of hostilities in Europe, therefore, the securities markets
had an asymmetric relationship to the US system of capitalism, being integral
to its financial system and more marginal to its productive system. In 1914,
this asymmetry seemed likely to be redressed by the Federal Reserve Act
which, if it worked as its proponents hoped, would diminish the dependence
of the nation’s financial system on its securities markets. In fact, the asym-
metry was addressed in an entirely different way with securities markets
unexpectedly becoming integral to both the US financial and productive
systems once the war was over.
The war brought major change to the relationship between the US securities
markets and the country’s productive system. The difficulties in finding an
alternative to railroads as the basis of US markets for corporate securities
largely reflected the obstacles to building a broad and deep market in indus-
trial securities. Those obstacles were removed by the war itself, which
prompted a significant broadening in the range of industrial securities that
were actively traded on the nation’s securities markets. In enlarging the
number of actively traded industrials, and in enhancing their appeal, the war
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

8 Dividends of Development
finally allowed the industrial sector to replace the railroad sector in a transition
that commentators had been predicting for almost thirty years!
On the demand side of the securities markets, the impact of the war was just
as important and more surprising. The Federal Reserve Act was intended
to precipitate a financial revolution that would diminish the US financial
system’s dependence on the securities markets through New York’s call
market. In the post-war period, contrary to predictions, demand for corporate
securities was boosted by increased, rather than reduced, lending on securities
as collateral. And that meant that one of the key pillars of support for the
demand for US corporate securities, which had been threatened by federal
banking and monetary legislation, was maintained and even reinforced in the
post-war years.
For good or for ill, therefore, broad and deep capital markets had become
truly integral to the productive and financial systems of US capitalism by the
early 1920s. The more one understands the dynamics of the demand for, and
supply of, corporate securities, the clearer it becomes that the history of the US
securities markets from the Civil War through the First World War is a quite
particular story. It was the United States’ distinctive process of economic
development, in the way it was transmitted through the demand for, and
supply of, corporate securities, that explains the fits and starts in the evolution
of its securities markets.
There are certainly parallels to be drawn between what happened in the
United States and in other countries during this period. However, what the
analysis in this book suggests is that such parallels, to be useful, must take
explicit account of other countries’ financial and productive systems and their
links with their securities markets. An important implication of my interpret-
ation, therefore, is that we need to resist the temptation to disembody secur-
ities markets from their broader economic contexts for the purpose of
comparing them. Much recent work in financial history is wont to do that,
since it makes comparisons so much easier, but it comes at the expense of real
insight into the similarities and differences that are essential for understanding
the history of securities markets.11

I .3 A TA L E T H A T N E E D S TE L L I N G

Until recently, the story of how the US securities markets became integral to
the institutional fabric of US capitalism would have been of concern only to a
small group of specialists of economic, financial, and business history.

See, for example, Raghuram Rajan and Luigi Zingales, ‘The Great Reversals: The Politics of
11

Financial Development in the 20th Century’, Journal of Financial Economics 69 (2003): 5–50.
 OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

Introduction 9
However, that has changed in recent years with a veritable explosion of
interest in the origins and evolution of the economic institutions of capitalism.
The growing enthusiasm for institutional history, in turn, has fostered an
unprecedented concern with understanding how securities markets fit into the
history of capitalism and nowhere is that more so than for the United States.
Today the US economy is seen as an archetype of a capitalist system in
which securities markets play a central role. Its large and active markets for
corporate stocks and bonds are of major importance both for its financial and
productive systems. In comparative perspective, moreover, its securities mar-
kets stand out as among the most distinctive features of US capitalism. And
the contemporary prominence of US securities markets naturally raises the
questions of when, how, and why they came to play such an important role in
US capitalism.
Political scientists and sociologists working on ‘comparative capitalisms’
have long emphasized institutional similarities and differences across coun-
tries. At the beginning of the twenty-first century, their research gained new
prominence at a time, moreover, when a broader interest in the institutional
foundations of economic activity was discernible.12 And, as the new institu-
tionalism gained momentum, social scientists increasingly turned to historical
research to understand the emergence and impact of economic institutions.
The history of financial institutions is prominent in this stream of research
with some of its leading contributors placing them at the very centre of their
analysis.13
Among historians too there are signs of a much greater interest in under-
standing the history of the economy in its broader institutional context. The
impulse has come, in part, from the impact of the ‘institutional turn’ on
economic historians who, with a few notable exceptions, had previously
shown little interest in the institutional foundations of economic systems.14
An even more striking change is the growing enthusiasm among political,
social, and cultural historians for reconnecting economic life to its broader
historical context.15 Historians’ interest in a renewal of the ‘history of

12
Especially with the publication of Peter Hall and David Soskice, eds., Varieties of Capital-
ism: The Institutional Foundations of Comparative Advantage (Oxford, 2001).
13
Not least in the work of Douglass North and, in particular, in his influential research with
Barry Weingast: Douglass North and Barry Weingast, ‘Constitutions and Commitment: The
Evolution of Institutions Governing Public Choice in Seventeenth-Century England’, Journal of
Economic History 49 (1989): 803–32.
14
Sheilagh Ogilvie, ‘Whatever Is, Is Right: Economic Institutions in Pre-Industrial Europe?’
Economic History Review 60 (2007): 649–84.
15
Jennifer Schuessler, ‘In History Departments It’s up with Capitalism’, NYT, 6 April 2013;
Jeremy Adelman and Jonathan Levy, ‘The Fall and Rise of Economic History’, Chronicle of
Higher Education, 1 December 2014; Jürgen Kocka, ‘Writing the History of Capitalism’, GHI
Bulletin 47 (Fall 2010): 7–24. <http://www.ghi-dc.org/files/publications/bulletin/bu047/bu47_
007.pdf>.
OUP CORRECTED PROOF – FINAL, 3/8/2016, SPi

10 Dividends of Development
capitalism’ has brought them into realms they had long neglected, not least the
history of securities markets and financial systems.
The development of securities markets is interesting to historians not just,
or even primarily, because these markets are so visible today but because they
have played a prominent role in the past. Nowhere is that more true than in
the United States since its history is so marked by dramatic moments—such as
the panic of 1907 or the crash of 1929—in which the securities markets
assumed centre stage in economic, cultural, and political terms. Therefore,
for historians, just as much as for social scientists, understanding how secur-
ities markets became integral to the institutional framework of US capitalism
is an important topic.
If the relevance of the history of US securities markets is clear, there is a
distinct challenge in writing it, precisely because of the prominence of these
markets in the present. It is tempting, even instinctive, to write history
backwards, to see the past as leading inexorably to the present. Certainly a
great deal of recent writing on financial history tends to be written backwards
from a definite future rather than forwards to an uncertain one. Focusing on
economies with highly developed financial systems, scholars have searched
their pasts for the conditions of their present success. These explanations
easily turn into a kind of determinism in which the presence, or absence, of
such conditions prompts an inexorable process that unfolds through history to
generate sophisticated, or unsophisticated, securities markets in the present.
A striking example is the claim that England’s Glorious Revolution of 1688,
in establishing political constraints on the arbitrary behaviour of the country’s
monarchs, prompted a ‘financial revolution’.16 In some accounts, that revolu-
tion fostered a sustained and continuous process of financial development—‘to
the modernization of the nation’s credit institutions, to the integration of its
capital market and to the development of a prosperous and efficient financial
sector’17—that led all the way to Britain’s industrial revolution.
Inspired by this narrative of England’s Glorious Revolution, certain histor-
ians have invoked the transformation of political institutions to explain an
earlier ‘financial revolution’ in the Dutch Republic and a later one in the
fledgling United States. Thus, prominent US financial historian Richard Sylla
claims that: ‘Although quicker and neater than what has been termed the
financial revolution in England during the eighteenth century (Dickson 1967),
the US financial revolution was every bit as important for the nation’s

16
This claim is usually traced to P. G. M. Dickson, The Financial Revolution in England:
A Study of the Development of Public Credit 1688–1756 (New York, 1967) but owes its recent
influence to North and Weingast, ‘Constitutions’.
17
Phyllis Deane, ‘The British Industrial Revolution’, in M. Teich and R. Porter, eds., The
Industrial Revolution in National Context (Cambridge, 1996), 13–35, cited at 23.
Another random document with
no related content on Scribd:
 copies of the works possessed in a physical medium and
discontinue all use of and all access to other copies of Project
Gutenberg™ works.

• You provide, in accordance with paragraph 1.F.3, a full refund of

any money paid for a work or a replacement copy, if a defect in
the electronic work is discovered and reported to you within 90
days of receipt of the work.

• You comply with all other terms of this agreement for free
distribution of Project Gutenberg™ works.

1.E.9. If you wish to charge a fee or distribute a Project Gutenberg™

electronic work or group of works on different terms than are set
forth in this agreement, you must obtain permission in writing from
the Project Gutenberg Literary Archive Foundation, the manager of
the Project Gutenberg™ trademark. Contact the Foundation as set
forth in Section 3 below.

1.F.

1.F.1. Project Gutenberg volunteers and employees expend

considerable effort to identify, do copyright research on, transcribe
and proofread works not protected by U.S. copyright law in creating
the Project Gutenberg™ collection. Despite these efforts, Project
Gutenberg™ electronic works, and the medium on which they may
be stored, may contain “Defects,” such as, but not limited to,
incomplete, inaccurate or corrupt data, transcription errors, a
copyright or other intellectual property infringement, a defective or
damaged disk or other medium, a computer virus, or computer
codes that damage or cannot be read by your equipment.

1.F.2. LIMITED WARRANTY, DISCLAIMER OF DAMAGES - Except

for the “Right of Replacement or Refund” described in paragraph
1.F.3, the Project Gutenberg Literary Archive Foundation, the owner
of the Project Gutenberg™ trademark, and any other party
distributing a Project Gutenberg™ electronic work under this
agreement, disclaim all liability to you for damages, costs and
expenses, including legal fees. YOU AGREE THAT YOU HAVE NO
REMEDIES FOR NEGLIGENCE, STRICT LIABILITY, BREACH OF
WARRANTY OR BREACH OF CONTRACT EXCEPT THOSE
PROVIDED IN PARAGRAPH 1.F.3. YOU AGREE THAT THE
FOUNDATION, THE TRADEMARK OWNER, AND ANY
DISTRIBUTOR UNDER THIS AGREEMENT WILL NOT BE LIABLE
TO YOU FOR ACTUAL, DIRECT, INDIRECT, CONSEQUENTIAL,
PUNITIVE OR INCIDENTAL DAMAGES EVEN IF YOU GIVE
NOTICE OF THE POSSIBILITY OF SUCH DAMAGE.

1.F.3. LIMITED RIGHT OF REPLACEMENT OR REFUND - If you

discover a defect in this electronic work within 90 days of receiving it,
you can receive a refund of the money (if any) you paid for it by
sending a written explanation to the person you received the work
from. If you received the work on a physical medium, you must
return the medium with your written explanation. The person or entity
that provided you with the defective work may elect to provide a
replacement copy in lieu of a refund. If you received the work
electronically, the person or entity providing it to you may choose to
give you a second opportunity to receive the work electronically in
lieu of a refund. If the second copy is also defective, you may
demand a refund in writing without further opportunities to fix the
problem.

1.F.4. Except for the limited right of replacement or refund set forth in
paragraph 1.F.3, this work is provided to you ‘AS-IS’, WITH NO
OTHER WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED,
INCLUDING BUT NOT LIMITED TO WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR ANY PURPOSE.

1.F.5. Some states do not allow disclaimers of certain implied

warranties or the exclusion or limitation of certain types of damages.
If any disclaimer or limitation set forth in this agreement violates the
law of the state applicable to this agreement, the agreement shall be
interpreted to make the maximum disclaimer or limitation permitted
by the applicable state law. The invalidity or unenforceability of any
provision of this agreement shall not void the remaining provisions.
1.F.6. INDEMNITY - You agree to indemnify and hold the
Foundation, the trademark owner, any agent or employee of the
Foundation, anyone providing copies of Project Gutenberg™
electronic works in accordance with this agreement, and any
volunteers associated with the production, promotion and distribution
of Project Gutenberg™ electronic works, harmless from all liability,
costs and expenses, including legal fees, that arise directly or
indirectly from any of the following which you do or cause to occur:
(a) distribution of this or any Project Gutenberg™ work, (b)
alteration, modification, or additions or deletions to any Project
Gutenberg™ work, and (c) any Defect you cause.

Section 2. Information about the Mission of

Project Gutenberg™
Project Gutenberg™ is synonymous with the free distribution of
electronic works in formats readable by the widest variety of
computers including obsolete, old, middle-aged and new computers.
It exists because of the efforts of hundreds of volunteers and
donations from people in all walks of life.

Volunteers and financial support to provide volunteers with the

assistance they need are critical to reaching Project Gutenberg™’s
goals and ensuring that the Project Gutenberg™ collection will
remain freely available for generations to come. In 2001, the Project
Gutenberg Literary Archive Foundation was created to provide a
secure and permanent future for Project Gutenberg™ and future
generations. To learn more about the Project Gutenberg Literary
Archive Foundation and how your efforts and donations can help,
see Sections 3 and 4 and the Foundation information page at
www.gutenberg.org.

Section 3. Information about the Project

Gutenberg Literary Archive Foundation
The Project Gutenberg Literary Archive Foundation is a non-profit
501(c)(3) educational corporation organized under the laws of the
state of Mississippi and granted tax exempt status by the Internal
Revenue Service. The Foundation’s EIN or federal tax identification
number is 64-6221541. Contributions to the Project Gutenberg
Literary Archive Foundation are tax deductible to the full extent
permitted by U.S. federal laws and your state’s laws.

The Foundation’s business office is located at 809 North 1500 West,

Salt Lake City, UT 84116, (801) 596-1887. Email contact links and up
to date contact information can be found at the Foundation’s website
and official page at www.gutenberg.org/contact

Section 4. Information about Donations to

the Project Gutenberg Literary Archive
Foundation
Project Gutenberg™ depends upon and cannot survive without
widespread public support and donations to carry out its mission of
increasing the number of public domain and licensed works that can
be freely distributed in machine-readable form accessible by the
widest array of equipment including outdated equipment. Many small
donations ($1 to $5,000) are particularly important to maintaining tax
exempt status with the IRS.

The Foundation is committed to complying with the laws regulating

charities and charitable donations in all 50 states of the United
States. Compliance requirements are not uniform and it takes a
considerable effort, much paperwork and many fees to meet and
keep up with these requirements. We do not solicit donations in
locations where we have not received written confirmation of
compliance. To SEND DONATIONS or determine the status of
compliance for any particular state visit www.gutenberg.org/donate.

While we cannot and do not solicit contributions from states where

we have not met the solicitation requirements, we know of no
prohibition against accepting unsolicited donations from donors in
such states who approach us with offers to donate.

International donations are gratefully accepted, but we cannot make

any statements concerning tax treatment of donations received from
outside the United States. U.S. laws alone swamp our small staff.

Please check the Project Gutenberg web pages for current donation
methods and addresses. Donations are accepted in a number of
other ways including checks, online payments and credit card
donations. To donate, please visit: www.gutenberg.org/donate.

Section 5. General Information About Project

Gutenberg™ electronic works
Professor Michael S. Hart was the originator of the Project
Gutenberg™ concept of a library of electronic works that could be
freely shared with anyone. For forty years, he produced and
distributed Project Gutenberg™ eBooks with only a loose network of
volunteer support.

Project Gutenberg™ eBooks are often created from several printed

editions, all of which are confirmed as not protected by copyright in
the U.S. unless a copyright notice is included. Thus, we do not
necessarily keep eBooks in compliance with any particular paper
edition.

Most people start at our website which has the main PG search
facility: www.gutenberg.org.

This website includes information about Project Gutenberg™,

including how to make donations to the Project Gutenberg Literary
Archive Foundation, how to help produce our new eBooks, and how
to subscribe to our email newsletter to hear about new eBooks.