Business History Review

Articles

Financing Growth: New Issues by Australian Firms, 1920–1939

David T. Merretta1 and Simon Villea2

a1 Professor in the Department of Management and Marketing at the University of Melbourne, Australia

a2 Professor of economics at the School of Economics, Faculty of Commerce, University of Wollongong, Australia

Abstract

An expanding economy, new technologies, and changing consumer preferences provided growth opportunities for firms in interwar Australia. This period saw an increase in the number of large-scale firms in mining, manufacturing, and a wide range of service industries. Firms unable to rely solely on retained earnings to fund expansion turned to the domestic stock exchanges. A new data set of capital raisings constructed from reports of prospectuses published in the financial press forms the basis for the conclusion that many firms used substantial injections of equity finance to augment internally generated sources of funds. That they were able to do so indicates a strong increase in the capacity of local stock exchanges and a greater willingness of individuals to hold part of their wealthin transferable securities.

David Merrett is professor in the Department of Management and Marketing at the University of Melbourne. He is currently researching Australian and international economic and business history, including wool-marketing arrangements, international banking in the interwar period, Australian competition policy, and the internationalization of Australian firms in the last quarter of the twentieth century. His latest books are The Big End of Town: Big Business and Corporate Leadership in Twentieth-Century Australia (2004), cowritten with Grant Fleming and Simon Ville, and The Internationalisation Strategies of Small-Country Firms: The Australian Experience of Globalisation (2007), which he coedited with Howard Dick.

Simon Ville is professor and head of the School of Economics at the University of Wollongong in Australia, where he specializes in the economic and business history of Britain, Europe, Australia, and New Zealand. He is a fellow of the Academy of Social Sciences in Australia and president of the Economic History Society of Australia and New Zealand. His most recent books are The Development of Modern Business (with Gordon Boyce, 2002); The Big End of Town: Big Business and Corporate Leadership in Twentieth-Century Australia (with Grant Fleming and David Merrett, 2004); and How Organisations Connect: Investing in Communication (edited with Stuart Macintyre and Gordon Boyce, 2006).