William Durant

           In the early days of any industry, growth requires lots of external capital. Reinvested profits, if there are any profits at all, are usually woefully insufficient to meet the growth expected by visionary founders or eager customers alike. This means the founders and executives of firms in new industries have to be capable financiers, or

Insurance and the Titanic

           The Titanic tested the insurance industry. Ships of its luxury and scale were novel, bringing into question the correct pricing for insurance coverage on such a ship. In the end, it seemed that underwriters underpriced the risk, since when the Titanic’s sister ship Olympic secured coverage for its next transatlantic crossing after Titanic’s sinking, the

Japan’s 1980s Property Boom

           Financial bubbles become so large because they have the potential to self-perpetuate. When expectations for future prices are based on a recent trend, the best performing investments in the near future will usually be the same as those which have performed well thus far. If encouraged by greater publicity, credit availability, loose regulation, or an

Dow Jones & Co.

           Honest financial journalism is indispensable to ethical financial markets. It is hard to imagine a clean financial industry in operation if the state of its trade press was unchanged from that of the middle of the 19th century, when financial journalism could be summarized as the propagation of rumors, often with nefarious ends. The professionalization

Nicholas Barbon

           The need for insurance becomes most apparent after a major disaster, so disasters tend to be nurturing of innovation in insurance. London’s Great Fire of 1666 was one such disaster. Not only did the destruction require the rebuilding of much of the city, it also prompted the development and proliferation of fire insurance, hitherto little

Tobacco Money

           In the absence of metal coins or modern banknotes, commodities have been used as money. The commodities most suitable are those held in high demand by traders and merchants. In colonial America, examples of these included beads, beaver belts, and tobacco. The latter is particularly interesting not only because of its particularly broad acceptance as

Finance and the Revolution of 1848

           It is easy to think of economic and financial crises that have had stunning political consequences. Sometimes this goes so far as to turn normally arcane fiscal and monetary questions into objects of fierce public debate. The reverse can also happen. Political events can and have changed the context of economic and financial decision-making with

London Bills and World Trade

           Trade is capital intensive, even more so when transit times are slower or the distances vaster. Products sitting in warehouses, ships, and ports are deadweight, tying up capital until they are finally sold and used. Merchant banks, as their name implies, serve merchants and for centuries that meant devising a solution to the financial problems

Gold, Inflation, and Spanish Decline

           Any influx of new money, if poorly managed, can prove as ruinous as it seemed alluring. Misdirected riches can be frittered away and, by enabling years or decades of dissipation, growing indebtedness, or both, can leave its former holders in far worse position than where they began. Spain was able to capture large amounts of

Ivar Kreuger

           What do matches and money have in common? Not much perhaps, except that one man seemed an especially powerful supplier of each. Ivar Kreuger is possibly the person whose fame has diminished the most in the last century of financial history. During the 1920s, he was one of the largest creditors, and borrowers, in the

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