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The Rise and Fall of Bank Control in the United States: 1890-1939

Paper:ewp-fin/9803005
From: Patt Bagdon <   > 
Date: Mon, 23 Mar 1998 11:02:42 -0800

Title: The Rise and Fall of Bank Control in the United States: 1890-1939
Author: Miguel Cantillo Simon (University of California, Berkeley)
Contact:
Comments: Sent pdf file in binary Revised January 1997.
JEL: G21, G24, G3, K21, L41, N21
EWP References: none
Report-no:(Research Program in Finance Working Paper, University of California, Berkeley) IBER-CalBerk RPF-254-Rev

Abstract:

Abstract: This article studies how equity ownership and corporate control were separated in the United States. Initially, railroads and industrial firms were tightly controlled by a few shareholders; this situation was altered in the 1890s by massive mergers and reorganizations, which allowed private banks to control railroads and industrial firms. Between 1912 and 1939, bank control faded away as a result of a political reaction against financial institutions. Using stock market data from 1914, I show that the eviction of banks from corporate boards depressed firm values by about 7 percent, and that part of this value came from cartelization.

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