ECON 2200 Lecture Notes - Lecture 29: Investment Banking
ECON 2200
Lecture 29
• East India Tea Company, one of the first corporations (in 1800s?)
• Benefits of the corporate form of business organization:
o Easy to transfer ownership
o Access to financial capital through sale of stock
o Limited liability
o Unlimited life
• Most factories small even in early 20th c.:
• However, corporations emerged & grew
o # employees rose
o Complexity of operations increased
1. Due to mechanization and mass production
o Owners less involved in day-to-day operations
1. More reliant on paid managers
• By 1916, 340,000 corporations in U.S.
• Market size & urbanization
o Market Size: Concentration of consumers who were heavily
dependant on markets for goods and services
o Urbanization: RRs created national markets and
communications advances allowed for broader marketing
o Growth because of increased demand
• Development of formal financial markets
o Investment bankers
1. Help investors invest capital to get some rate of return
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