Raising money for early ventures involves activating the more speculative compartments of the investor’s brain. These projects face a high likelihood of failure and have realized few proven results. Profits seem far more remote than losses. Some promoters might go too far and mischaracterize the nature of the investment, making it seem like a…
Spain implemented sweeping financial reforms in the middle of the 19th century that welcomed a wave of foreign investment in the country. This led to the development of a respectable railway network within a dozen years. Almost all of this foreign capital came from one country, France. Leading French banks established affiliates in Spain…
Railways received substantial investment in the middle of the 19th century and financing railway construction was one of the largest undertakings of financial institutions like banks and stock exchanges up to that point. Laying down track between cities required substantial investment and this need is well recorded and widely known. The financial history of…
New York City was somewhat delayed in developing its subway. London, Paris, and Boston were quicker than New York in building their first underground metro lines. When the project finally did get off the ground around 1900, it owed a lot of this progress to a private financier, August Belmont, Jr. Little remembered today,…
Many firms would struggle to invest in enough capital equipment and buildings needed for their business, these large expensive assets, if constrained only to reinvested profits. Similarly, local governments would struggle to invest in public infrastructure if constrained to using their budget surpluses alone. Any significant amount of infrastructure investment must be enabled by…
In the 1840s, Britain was gripped by a mania for railway company shares that saw share prices double before a change in prospects caused the market to give up all of these gains and more. Given the scale of the transformations promised by new railways were so substantial, railway mania was perhaps an inevitable frenzy.…
In 1879, the French Compagnie Universelle du Canal Interoceanique de Panama embarked on the project of cutting a canal through Panama to connect the Atlantic and Pacific oceans. This was a bold project but large canals had been built before and one crossing Egypt at Suez had already transformed the world a few years earlier.…
A transcontinental railroad across mid-19th century America was a colossal project, far larger than any American railroad built before then. While campaigned for and debated for years, work got underway while the country was in the midst of civil war. Trepidation on the part of investors meant it hardly got off the ground at all.…
The long-term benefits of a great project often have little to do with its exact timing, especially for undertakings years away from completion anyway. These extensive works must be planned and launched without a firm understanding of how the world will look once they are completed. The Erie Canal, which connects the Great Lakes, and…
Expensive ventures often entail borrowing money and the banking system is one of the largest and most accessible lenders around. Their role in financing grand projects give banks the ability to make or break the dreams of developers, entrepreneurs, and even governments. Because the latter can approve, form, and regulate banks, governments are in the…
