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Mobilizing Venture Capital during the Second Industrial Revolution: Cleveland, Ohio, 1870-1920

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Listed:
  • Lamoreaux Naomi R.

    (University of California, Los Angeles; NBER)

  • Levenstein Margaret

    (University of Michigan)

  • Sokoloff Kenneth L.

    (University of California, Los Angeles; NBER)

Abstract

During the Second Industrial Revolution of the late nineteenth and early twentieth centuries, Midwestern cities were important centers of innovation. Cleveland, the focus of this study, led in the development of a number of key industries, including electric light and power, steel, petroleum, chemicals, and automobiles, and was a hotbed of high-tech startups, much like Silicon Valley today. In an era when production and invention were increasingly capital-intensive, technologically creative individuals and firms required greater access to funds than ever before. This paper explores how Cleveland's leading inventors and technologically innovative firms obtained financing. We find that formal financial institutions, such as banks and securities markets, were of only limited significance. Instead our research highlights the vital role played by a small number of successful local enterprises that both exemplified the wealth-creation possibilities of the new technologies and served as hubs of overlapping networks of inventors and financiers. We conclude by suggesting that such nodal firms have spawned important clusters of innovative enterprises in other places and times as well.

Suggested Citation

  • Lamoreaux Naomi R. & Levenstein Margaret & Sokoloff Kenneth L., 2006. "Mobilizing Venture Capital during the Second Industrial Revolution: Cleveland, Ohio, 1870-1920," Capitalism and Society, De Gruyter, vol. 1(3), pages 1-64, December.
    • Handle: RePEc:bpj:capsoc:v:1:y:2006:i:3:n:5
    DOI: 10.2202/1932-0213.1016
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    Cited by:

    1. Mary Eschelbach Hansen, 2014. "Sources of Credit and the Extent of the Credit Market: A View from Bankruptcy Records, Mississippi 1929-1936," Working Papers 2014-09, American University, Department of Economics.
    2. William H. Phillips, 2008. "The Democratization of Invention in the American South: Antebellum and Post Bellum Technology Markets in the United States," Working Papers 0804, Tulane University, Department of Economics.
    3. Jordan, David, 2023. "Failing to level up? Industrial policy and productivity in interwar Northern Ireland," QUCEH Working Paper Series 23-04, Queen's University Belfast, Queen's University Centre for Economic History.
    4. Matt Marx & Deborah Strumsky & Lee Fleming, 2009. "Mobility, Skills, and the Michigan Non-Compete Experiment," Management Science, INFORMS, vol. 55(6), pages 875-889, June.
    5. David Jordan, 2023. "Macroeconomic Perspectives on Productivity," Working Papers 031, The Productivity Institute.

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