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Two centuries of US financial development in comparative contexts: growth and crises

Jan 11, 2020



The US transportation revolution depended on finance: e.g. turnpike and bridge companies, the Erie and other canals, the railroadsThe US industrial revolution depended on finance: e.g., textile manufacturers raised equity capital by selling stock, and obtained working capital via bank loans. Rapid industrial growth began with the establishment of a modern financial system in the 1790sUS ExpansionModern finances from the 1790s promoted territorial expansion of the USA, as well as US economic growth.The USA territorially became one of the largest of all nations. Russia, of course, is quite a bit larger.In less than a century after 1790, the US economy is the worlds largest.
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In England, until 1825 all banks apart from the Bank of England had to be unlimited-liability partnerships with no more than six partners. By 1825 the US had 330 state banking corporations and a central bank with 25 branches carrying on interstate banking.England, France, and Germany did not offer general incorporation to banks and other business until the latter half of the 19th century. By that time the US had thousands of corporations.The US had 80 banks and branches by 1805, 600 by 1835, 1,600 by 1860, and 25,000 by 1910. In 1913, the US had at least 30% of the total bank deposits of the entire world, and at least 36% of commercial bank deposits--far more than any other country.