¹ Ross Levine, “More on Finance and Growth: More Finance, More Growth?” Federal Reserve of St. Louis Review (July–Aug. 2003): 31–46; see also Rajan, Raghuram and Zingales, Luigi, “Financial Dependence and Growth,” American Economic Review 88 (1998): 559–86Google Scholar; Luigi Zingales, “Commentary on More Finance, More Growth,” Federal Reserve of St. Louis Review (July–Aug. 2003): 47–52.

² See, for example, Chandler, Alfred D. Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass., 1977Google Scholar).

³ See, for example, Goldsmith, Raymond W., Financial Intermediaries in the American Economy since 1900 (Princeton, N.J., 1958Google Scholar); Taggart, Robert, “Secular Patterns in the Financing of U.S. Corporations,” in Corporate Capital Structures in the United States, ed. Friedman, Benjamin (Chicago, 1985Google Scholar); Dobrovolsky, Sergei, “Capital Formation and Financing Trends in Manufacturing and Mining, 1900–1953,” Journal of Finance 10 (1955): 250–65Google Scholar.

⁴ Baskin, Jonathan and Miranti, Paul Jr., A History of Corporate Finance (Cambridge, U.K., 1997CrossRefGoogle Scholar).

⁵ Paul Harrison, “Review of Jonathan Barron Baskin and Paul J. Miranti Jr., A History of Corporate Finance,” EH.Net, H-Net Reviews (1998).

⁶ See, for example, Dewing, Arthur, Corporate Promotions and Reorganizations (Cambridge, Mass., 1914)Google Scholar; Davis, Lance, “The New England Textile Mills and the Capital Markets: A Study of Industrial Borrowing, 1840–1860,” Journal of Economic History 20 (1960): 1–30CrossRefGoogle Scholar; Doyle, William M., “The Evolution of Financial Practices and Financial Structures among American Manufacturers, 1875–1905: Case Studies of the Sugar Refining and Meat Packing Industries,” Ph.D. diss., University of Tennessee, 1991Google Scholar; Lamoreaux, Naomi, Insider Lending: Banks, Personal Connections, and Economic Development in Industrial New England (Cambridge, U.K., 1994)CrossRefGoogle Scholar; Seltzer, Lawrence, A Financial History of the American Automobile Industry (Boston, 1928Google Scholar).

⁷ GE was incorporated on April 15, 1892 under the laws of New York, and it began trading in June of the same year.

⁸ WHS was incorporated in Pennsylvania as the Westinghouse Electric Company on January 8, 1886. A few years later, in 1889, the company took over an old charter granted to Chartiers Improvement Company by the state of Pennsylvania on April 9, 1872, and changed the name on the charter to its own. In 1890, a new name, the Westinghouse Electric and Manufacturing Company, was adopted.9

⁹ I also consulted archival records for GE at the Schenectady Museum Archives, Schenectady, New York, and for WHS at the Library and Archives Division, Historical Society of Western Pennsylvania, Pittsburgh, Pennsylvania. Although the GE collections contain a number of sources that refer to the issues of financing, investment, and dividends covered in this article, notably the minutes of the meetings of the company's board of directors from 1892 to 1984, most of the information contained therein is brief, and even perfunctory, and could almost always be gleaned from publicly available material (see note 21 for an example). The WHS collection is rich in material on technology, research and development, and engineering, but less relevant for an analysis of the company's financial history. However, there was some useful information on the company's organizational structure that was helpful for thinking about the relation between organization and capital utilization.

¹⁰ Beginning in 1971, U.S. companies were required by the Accounting Principles Board (APB) to disclose a “statement of changes in financial position,” which reported changes in a company's working capital position, as part of their audited financial statements. In 1987, the Financial Accounting Standards Board changed these disclosure requirements when it issued SFAS 95, which mandated that companies present a “statement of cash flow” that focuses more narrowly on changes in a company's cash and cash equivalents.

¹¹ See, in particular, Dewing, Corporate Promotions; Carpenter, Niles Jr., “The Westing-house Electric & Manufacturing Company, the General Electric Company, and the Panic of 1907, Part 1,” Journal of Political Economy 24 (1916): 230–53CrossRefGoogle Scholar; and “The Westinghouse Electric & Manufacturing Company, the General Electric Company, and the Panic of 1907, Part 2,” Journal of Political Economy 24 (1916): 382–99CrossRefGoogle Scholar.

¹² Throughout the paper, when I speak of working capital I use the term to refer to what might more precisely be called “operating working capital.” It excludes the predominantly financial components of working capital, notably cash and short-term debt. As a result, it slightly understates the working capital required for operations, since some cash is obviously needed for operating purposes. Nevertheless, for prosperous companies like GE that maintain large cash reserves, operating working capital gives a more accurate picture of the liquid resources they really need to run their businesses than is supplied by total working capital.

¹³ GE, Annual Report, 1987.

¹⁴ All figures are adjusted for inflation and restated in 2000 U.S. dollars based on the Consumer Price Index. These figures include all long-term issues of equity and debt whatever their purpose.

¹⁵ These totals exclude the monies that GE and WHS generated from the sale of stock to its employees under stock-option plans. These amounts reached very high levels for GE, especially during the 1990s, therefore distorting the two companies' relative dependence on, and autonomy from, the financial system. See the discussion under the heading “Patterns of External Finance, 1976 to 2000.”

¹⁶ Hammond, John W., Men and Volts: The Story of General Electric (Philadelphia, 1941), 220–22Google Scholar.

¹⁷ Wall Street Journal, 18 Jan. 1894, 4.

¹⁸ GE, Annual Report, 1903, 24.

¹⁹ Wall Street Journal, 15 May 1907, 1.

²⁰ Ibid. During the period from 1900 to 1911, GE also sought to stabilize its finances by issuing several tranches of stock in exchange for its outstanding debt. In a series of transactions in 1900, 1901, and 1902, the company issued close to $4 million in common stock to pay down the bonds that were still outstanding from its 1892 issues, as well as its preferred stock (GE, various years). In 1911 the company issued a large tranche of stock, nearly 20 percent of its common stock at the time, in exchange for the majority of its convertible bonds, an amount of just over $12 million, which it had issued in 1907. The company also issued two large stock dividends in 1902 and 1913 to restore a capital reduction that it had undertaken in 1898 in the wake of its financial crisis.

²¹ Meeting minutes for GE Board of Directors, 192nd Board Meeting, 25 July 1912, 197, Schenectady Museum Archives. The reference in these minutes to the 1912 debenture issue is a good example of the type of information one finds on financing herein. The following statement was made under the heading “Debenture Bonds”: “The President expressed the view that if the future business of the Company shall make it necessary to procure additional capital, it should be obtained, in part at least, by the issue and sale of debenture bonds bearing interest at a 5% or lower rate. The Board concurred in this view and upon motion, duly seconded, it was RESOLVED that an issue of 40-year debenture bonds callable at not exceeding 110 in total amount not exceeding $60,000,000, be and hereby is authorized, to be sold from time to time as required.” All of this information was also recorded in GE, Annual Report, 1913, 9.

²² Wall Street Journal, 21 Sept. 1912, 5.

²³ GE, Annual Report, 1918, 8.

²⁴ See description of these requirements by Charles A. Coffin, chairman of the board, in GE, Annual Report, 1918, 5.

²⁵ GE, Annual Report, 1921, 8; Commercial and Financial Chronicle, 14 Feb. 1920, 663.

²⁶ The second of these issues was announced in November 1920, and most of the proceeds were actually paid in during 1921. However, part of this stock issue was reserved for GE employees, and the proceeds from this issue, $4.7 million in total, were received during 1923 and 1924.

²⁷ GE, Annual Report, 1921, 8.

²⁸ Dewing, Corporate Promotions, 168–69, 173.

²⁹ Ibid., 171.

³⁰ Commercial and Financial Chronicle: 6 July 1895, 25; 11 Apr. 1896, 689; 13 Aug. 1898, 324; 26 Nov. 1898, 1112; 30 Sept. 1899, 705; 3 Feb. 1901, 395; Dewing, Corporate Promotions, 176–7.

³¹ Wall Street Journal, 16 Feb. 1906, 5.

³² Dewing, Corporate Promotions, 179.

³³ Wall Street Journal, 16 May 1907, 7.

³⁴ Dewing, Corporate Promotions, 182.

³⁵ Ibid., 192.

³⁶ Ibid., 198.

³⁷ Ibid., 198–99.

³⁸ WHS, Annual Report, 1916, 7.

³⁹ Quoted in Wall Street Journal, 13 Dec. 1916, 7.

⁴⁰ WHS, Annual Report, 1921, 1923, 1924.

⁴¹ GE, Annual Report, 1946, 7.

⁴² New York Times, 12 Nov. 1946, 55; see also GE, Annual Report, 1946, 7.

⁴³ New York Times, 15 May 1956, 55; Wall Street Journal, 3 Apr. 1956, 21.

⁴⁴ WHS, Annual Report, 1941, 4.

⁴⁵ Ibid., 1942, 10.

⁴⁶ Ibid., 1946.

⁴⁷ Ibid., 7.

⁴⁸ Wall Street Journal, 21 Nov. 1946, 16.49

⁴⁹ Ibid., 27 Sept. 1951, 5; 15 Dec. 1951, 8.

⁵⁰ WHS, Annual Report, 1951, 3–4; 1953, 3.

⁵¹ WHS, Annual Report, 1972.

⁵² GE, Annual Report, 1990, 38.

⁵³ WHS, Annual Report, 1991, 21.

⁵⁴ Ibid., 16.

⁵⁵ WHS, Annual Report, 1992, 17.

⁵⁶ Donaldson, Gordon, Corporate Debt Capacity: A Study of Corporate Debt Policy and the Determination of Corporate Debt Capacity (Cambridge, Mass., 1961Google Scholar), and Strategy for Financial Mobility (Cambridge, Mass., 1969Google Scholar); Myers, Stewart C. and Majluf, Nicholas S., “Corporate Financing and Investment Decisions When Firms Have Information that Investors Do Not Have,” Journal of Financial Economics 13 (1984): 187–221CrossRefGoogle Scholar.

⁵⁷ Seltzer, A Financial History, 132.

⁵⁸ Buchanan, Norman, “The Origin and Development of the Public Utility Holding Company,” Journal of Political Economy 44 (1936): 1, 31–53CrossRefGoogle Scholar; Hughes, Thomas, “The Electrification of America: The System Builders,” Technology and Culture 20 (1979): 124–61CrossRefGoogle Scholar.

⁵⁹ Wall Street Journal, 12 Oct. 1907, 8.

⁶⁰ Field, Alexander, “Modern Business Enterprise as a Capital-Saving Innovation,” Journal of Economic History 47 (1987: 473CrossRefGoogle Scholar.

⁶¹ WHS, Applications for Relief under Section 722 of the Internal Revenue Code, Exhibit III-A-2, 11 Feb. 1952, 3–4, Library and Archives Division, Historical Society of Western Pennsylvania, Westinghouse Electric Corporation Collection, box 7, folder 2.

⁶² Chandler, Alfred D. Jr., Strategy and Structure: Chapters in the History of the Industrial Enterprise (Cambridge, Mass.), 363–70Google Scholar.

⁶³ WHS, Growth Report, 1958, 7–8, Library and Archives Division, Historical Society of Western Pennsylvania, Westinghouse Electric Corporation Collection, box 8, folder 2.

⁶⁴ Baskin and Miranti, A History, 181

⁶⁵ “Increased Business Reported for the Electric Companies,” Wall Street Journal, 9 July 1912, 1.

⁶⁶ GE, Annual Reports, various years; WHS, Annual Reports, various years.

⁶⁷ Ibid.

⁶⁸ Ibid.

⁶⁹ Ibid.

⁷⁰ Ibid.

⁷¹ Pollard, Sidney, “Fixed Capital in the Industrial Revolution in Britain,” Journal of Economic History 24 (1964): 299–314CrossRefGoogle Scholar.

⁷² Sokoloff, Kenneth, “Investment in Fixed and Working Capital during Early Industrialization: Evidence from U.S. Manufacturing Firms,” Journal of Economic History 44 (1984): 545–56CrossRefGoogle Scholar.

⁷³ Seltzer, A Financial History.