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…
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…
The world became more interconnected in the 19th century as railways and telegraph expanded the reach of business. By facilitating long-distance transactions, express shipping became vital to many industries, including finance. This softens any surprise accompanying the fact that two of the largest financial firms in the United States today, Wells Fargo and American Express,…
Leveraged buyouts, the acquisition of companies where the purchase price is paid primarily by borrowing, became increasingly common in the 1980s. Very often, existing management teams are invited to participate in a leveraged buyout by the acquirer. Occasionally, it is the management team themselves who initiate the transaction and in this variation the arrangement is…
When the Soviet Union collapsed in 1991, the abandonment of socialism in its former republics accelerated. In Russia in particular, industries were privatized at a breakneck pace. At first, this was done by so-called ‘voucher privatization’ where shares were purchased by ordinary people using vouchers distributed to almost all Russian citizens. One might expect such…
Americans know Benjamin Franklin for his civic and diplomatic work spanning the first few years of the country’s history. Old enough to be the grandfather of some of the other American ‘Founding Fathers’, he was a national treasure even before playing his part in the struggle for independence from Britain. In addition to being a…
