Introduction

In continental Europe, the advent of railways, public utility companies and other capital-intensive industries took place from the mid-nineteenth century onwards as the progressive diffusion of a new wave of innovations, characterizing and giving shape to the energetic and technological paradigm known as the second industrial revolution. The affirmation and consolidation of this new paradigm stemmed from imitation and adoption of the new technologies throughout European industrializing countries, fostering convergence in the long run both in their economic and social structures, and eventually in income. Such a process, nevertheless, required the adoption of a financial innovation, which appeared around the 1850s and consolidated in the following decades, the joint-stock investment bank. As pointed out by a vast literature on economic development, starting from Gerschenkron's works, these banks were able to mobilize and rise large amounts of capital, and to allocate it to those ‘new combinations of means of production’ – the (big) business enterprises – characterized by high capital intensity, differed profitability and high degree of risk. Moreover, by creating and issuing tradable securities representing those investments and by organizing secondary markets wherein to trade them, the new banks increased industrial assets’ liquidity, thus enhancing investors’ willingness to buy and to hold them. Incorporated investment banks had often a common origin and fulfilled the same functions in continental Europe, starting a financial revolution and fostering both financial and industrial growth in second- or late-coming countries. This notwithstanding, while a certain degree of economic convergence can be observed in those countries as their growth went on, it seems to be questionable that their financial systems, and especially their financial intermediaries, experienced that same degree of convergence. The observation of their structures, organization and activities suggests, in fact, that these investment banks were not all the same, but that they often adopted different patterns and degrees of specialization.

Retracing the financial revolutions which took place in continental Europe in the nineteenth century, this work focuses in particular on investment banking patterns’ comparison in France, Germany and, especially, Italy, over the long run.