"American capitalism primarily operates as a financial capitalism."

According to “Le Monde” columnist Antoine Reverchon’s column, as of 1812, the United States had more joint-stock firms than any other nation in the world, with banks accounting for about half of them.

As every French child was taught in school, the year 1812 marked the beginning of Napoleon’s downfall when his Grande Armée was lost in the Russian snows. It was also the year—and this is less well known—that the British, who were at war with the United States at the time, destroyed Washington, D.C. Around the same time, two American economists,

Henry Kaufman of the Stern School of Business at New York University and Robert Wright of Augustana University in South Dakota, conducted a census that revealed that, in 1824, there were 156 chartered corporations in the United States, which had a population of 7.5 million at the time. In contrast, France had 13 and Prussia had 8.

The most surprising thing, though, is that the two researchers, following in the footsteps of Fortune magazine, which has been ranking the 500 biggest American (and then international) companies based on capital size since 1955, developed a thesis that, in a way, rewrites the traditional narrative of the history of business: the “merchant” capitalism of the 17th and 18th centuries, which was followed by the “industrial” capitalism of factories and railways in the middle of the 19th century, and the “financial” capitalism of banks, stock exchanges, and speculative funds in the early 1980s.

Out of the 500 greatest capitalizations of 1812 in the US, 130 (or 26%) are banks (the largest five, nine of the ten largest, a fur trader for the ninth, and 27 of the 30 largest are banks). 72% of the 500 banks’ total capital is gathered by these 130 banks alone.

In contrast, industrialists account for 20% of the workforce and 11% of the capital, while infrastructure builders (bridges, canals, and highways) include 32% of the 500 but only 12% of the capital. The City Bank of New York, which was ranked fifth in the illustrious Fortune 500 in 1812, has evolved into Citigroup, the biggest financial services firm globally. Currently ranked eighth, The Manhattan Company is home to JP Morgan Chase, the biggest bank in the country.

Here, mistrust is the norm.

The United States overtook Great Britain as the world’s greatest industrial and agricultural power between the end of the Civil War (1861–1867) and the end of the 19th century. In 1913, the country overtook its rival as the top exporting nation. However, this boom was fueled by the investments made by the large banks, which were established between 1791 and 1812. The primary focus of American capitalism was finance, which drained the earnings of retailers, banks, and landowners. However, the Fortune 500 of 1812 was concentrated in the northeast rather than the south, with New York, Massachusetts, and Pennsylvania accounting for 63% of the enterprises and 56% of the capital.

“American capitalism primarily operates as a financial capitalism.”

By nr39r

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