Yesterday, the June issue of Enterprise & Society, the journal of the Business History Conference, arrived, and my paper Trust Company Failures and Institutional Change in New York, 1875–1925. Enterprise & Society 19, no. 2 (2018): 241-271, is the lead article. And Larry Neal emailed me to tell me how much he liked the paper.
I was think about how I came to write that paper because I did not plan to be a business historian, but there is considerable evidence suggesting that I am one. In addition to Enterprise & Society I have published papers in Business History Review, Business History, and Essays in Economic and Business History.
I had a great opportunity to become a business historian when I was working on my M.Sc. in Economic History at the LSE. I got to work with Geoff Jones, who is one of the leading business historians in the World and currently the Isidor Strauss Professor of Business History at Harvard Business School, but I was interested in the political economy of the opium trade, not business history. Because I was interested in political economy and institutional change I went on to work with Doug North and earn a Ph.D. in economics at Washington University. Prompted by discussions with Andy Rutten, I decided to write my dissertation on the evolution of bankruptcy law in the United States.
This story about institutional change, the origins of the first lasting bankruptcy law in the United States, turned out to be a story about business history ("Commercial Associations and the Creation of a National Economy: The Demand for Federal Bankruptcy Law," Business History Review 72 (Spring 1998): 86-113). Because corporate reorganization was not included in the 1898 Bankruptcy Act, I began a separate research project on the origins of corporate reorganization. This story about institutional change also turned out to be a story about businesses trying to shape the law to fit their needs and also ended up in Business History Review ("The People's Welfare and the Origins of Corporate Reorganization: The Wabash Receivership Reconsidered," Business History Review 74 (Autumn 2000): 377-405). That paper won the Newcomen-Harvard Special Award from Harvard Business School and the Newcomen Society. I’ve published papers on a few other things (see my CV if you are interested), but most of my work has been along two paths that were opened by those papers.
The bankruptcy paper led to other papers about the use of bankruptcy law and the evolution of bankruptcy law (“The Role of Path Dependence in the Development of U.S. Bankruptcy Law, 1880-1938” (with Mary Eschelbach Hansen) Journal of Institutional Economics 3 (August 2007): 203 225; “Crisis and Bankruptcy: The Mediating Role of State Law, 1922-1932,” (with Mary Eschelbach Hansen) Journal of Economic History 72 (2012):440-460; and “Religion, Social Capital and Business Bankruptcy in the United States, 1921-1932” (with Mary Eschelbach Hansen) Business History 50 (November 2008): 714-727). My wife joined me in this research and we are currently working on a book about bankruptcy in the twentieth century. She also developed another research project that involved collecting and digitizing bankruptcy records, and she has published additional papers out of that project.
The paper on corporate reorganization led to the study of trust companies. Several important corporate reorganization cases involved the Farmers’ Loan and Trust Company. The name was familiar to me from teaching American Economic History because of the income tax case, Pollock v. Farmers’ Loan and Trust Co., and two important railroad regulation cases, Reagan v. Farmers’ Loan and Trust Co. and Stone v. Farmers’ Loan and Trust Co. I was curious what this company did that left its fingerprints all over nineteenth century legal and economic history. So I wrote a book about the Farmers’ Loan and Trust company and its influence on the law. About the time I finished the book there was increased attention to the Panic of 1907. Descriptions of New York City trust companies as novel, unregulated and reckless did not fit with what I had been reading and writing about trust companies like the Farmers’ Loan and Trust Co. So I ended up writing a paper that argued that trust companies were not as unregulated as some people suggested and that to understand the Panic one has to understand that not all trust companies were the same. Because I argued that regulation was not as inadequate as had been suggested, I wanted to know how the regulation of trust companies evolved over time, which led to the paper on trust company failures.
In all the cases of institutional change that I have studied there were underlying changes in the costs and benefits of different institutions as well as the costs of seeking institutional change, the sort of things that appear in theories of institutional change, but what most interested me is the creative ways in which people responded to those changes in costs and benefits. I’m most interested in the role of the creative response, to use Schumpeter’s phrase, in the evolution of institutions. In short, I still see the business history that I do as part of the new institutional economics that I set out to do.