Business history, if it is to comprehend the men and movements with which it deals, must of necessity invade other academic fields. This article is an attempt to trace the social and economic influences which fashioned the ultimate business activities of German-Jewish investment bankers in the late nineteenth century. Second only to the group of houses of Yankee origin, the group led by Kuhn, Loeb & Co. provides us with an outstanding example of a business elite in operation. Significant from the point of view of business history is the fact that in origins, early activities, and outlook, these family firms displayed remarkable similarities. Once established in New York they became even more tightly knit through marriage and social life. Only when all these factors have been taken into account can we claim to understand the unique role which these businesses played in the development of the American capital market.

The main lines of the Eastern Rail-road served a rich coastal trade, yet even in an age of great commercial expansion this historic railroad enterprise courted continual disaster. The crisis of 1855 (Spring, 1957, Business History Review) had been compounded out of unprofitable branch connections, poor management, and a major defalcation. Reorganization promised a better future, but history repeated. Management generally chose to cover up, rather than correct, the operational and financial weaknesses that existed. New mistakes were made — and concealed. Ineffective management controls left power concentrated in a few careless hands. The inevitable final crisis in the mid-seventies paved the way for absorption of Eastern by the Boston & Maine — a major step in the building of that system. Through this narrative of repetitious error runs the thread of railroading progress — cut-and-try improvements in management techniques, in competitive strategy, and in operating methodology.

The early development of Rochester as a flour-milling center demonstrates several themes. Here, as in countless other places, the resiliency of the petty capitalist in the face of natural disasters and violent commodity price swings stands clear. But the early millers, flexible and energetic in entrepreneurial activity, were also, like their product, perishable. The broader and more important pattern is that of the persistence of an industry favored by basic geographic and market circumstances. Individual milk succumbed in rapid sequence, but rapidly they were replaced. Surviving the handicap of limited capital, the milling industry burst its heal bonds and exploited the regional potentialities of water access to Canada. Transition to what then amounted to a national market came in 1823, when the Erie Canal linked Rochester with the Hudson. Thus a new epoch was forecast, when a broadened market would not only stimulate local growth but shape it through complex economic influences hitherto little felt by the millers on the Genesee.

National divergencies in economic development produce variant national patterns of business organization. But the reverse is also true. In France, the legal structuring of business has been a causative factor of some importance, imparting a distinctive character to the timing and nature of French economic growth. At the same time, however, the history of organizational evolution in France has a certain universality. Here, as elsewhere, such evolution essentially has taken the form of a series of compromises between the need for greater corporate flexibility and the fear of abuse. From 1673, when the unlimited liability of partners was affirmed, the pressures of economic expansion produced a succession of devices aimed at facilitating the flow of investment funds into commerce and industry. When, however, that point was finally reached where limited investor liability, freely negotiable shares, and recognition of a corporate autonomy had been achieved, fear of fraudulent practice became a dominant factor. Legislative steps to protect the investing public introduced rigidities into French business at the very time when internal growth and international competition for markets called for a highly adaptable business system.