• Skip to main content
  • Skip to primary sidebar

Big Site of History

History of Civilization

Money, Banking, and Limited Liability | The Industrial Society

June 12, 2008 by Marge Anderson

The exploitation of these new developments required a constant flow of fresh capital. From the first, the older commercial community supported the young industrial community. Bankers played such an important role that the Barings of London and the international house of Rothschild were among the great powers of Europe.

In the early nineteenth century each of five Rothschild brothers, sons of a German Jewish banker, established himself in an important economic center—London, Paris, Frankfurt, Naples, and Vienna. The Rothschilds prospered because, in an age of frequent speculation, they avoided unduly risky undertakings, and because they facilitated investment by residents of one state in the projects of other states.

Banks further assisted economic expansion by promoting the use of checks and bank notes in place of coins. During the Napoleonic wars, when the shortage of coins forced some British millowners to pay their workers in goods, the British government empowered local banks to issue paper notes supplementing the meager supply of coins.

But whenever financial crises occurred—and they came frequently before 1850 dozens of local banks failed, and their notes became valueless. Parliament therefore encouraged the absorption of shaky banks by the more solid institutions, and in 1844 it gave the Bank of England a virtual monopoly on issuing bank notes, thus providing a reliable paper currency. It also applied, the principle of limited liability (indicated by “Ltd.” after the name of British firms).

Earlier, the shareholders in most British companies were subject to unlimited liability, and they might find their personal fortunes seized to satisfy the creditors of an unsuccessful company. The practice of limiting each shareholder’s liability to the face value of that person’s shares encouraged investment by diminishing its risks.

By the mid-nineteenth century, the tangible signs of Britain’s economic predominance were evident on every hand—in the teeming docks and thriving financial houses of London; in the mushrooming factory and mining towns of the Midlands, the north of England, and Scotland; and in other quarters of the globe as well. Yet Britain, even in the heyday of its leadership, had no monopoly on inventive skill.

The French, for example, devised the chlorine process of bleaching cloth and the Jacquard loom for weaving intricate patterns. German technicians led the world in agricultural chemistry and in the utilization of the valuable by-products of coal. And from the United States came Eli Whitney and the cotton gin, Samuel E B. Morse (1791-1872) and the telegraph, Singer and the sewing machine, and the young Cyrus McCormick (1809-1884), whose reaper was the first of many agricultural machines developed for the vast agricultural expanse of America.

Related Posts

  • Banking | The Renaissance
  • Literature And The Arts In Industrial Societies | The Industrial Society
  • Stages of Industrial Growth | The Industrial Society
  • Literature in Industrial Societies | The Industrial Society
  • Painting in Industrial Societies | The Industrial Society

Filed Under: The Industrial Society

Primary Sidebar

Categories

  • Between The World Wars
  • Byzantium and Islam
  • Church and Society in the Medieval West
  • European Exploration and Expansion
  • Judaism and Christianity
  • Modern Empires and Imperialism
  • Romanticism, Reaction, and Revolution
  • The Beginnings of the Secular State
  • The Democracies
  • The Early Middle Ages in Western Europe
  • The Enlightenment
  • The First Civilizations
  • The First World War
  • The French Revolution
  • The Great Powers in Conflict
  • The Greeks
  • The Industrial Society
  • The Late Middle Ages in Eastern Europe
  • The Late Twentieth Century
  • The Modernization of Nations
  • The Non-Western World
  • The Old Regimes
  • The Problem of Divine-Right Monarchy
  • The Protestant Reformation
  • The Renaissance
  • The Rise of the Nation
  • The Romans
  • The Russian Revolution of 1917
  • The Second World War
  • The Written Record
  • Twentieth-Century Thought and Letters

About · Privacy · Contact
Copyright © 2021 Big Site of History