YOU NEED MONEY TO MAKE MONEY 257Britain had to find special ways to pay for public and quasi-public un
dertakings like docks, canals, and railways. Because the Bubble Act of
1720, passed in the wake of the notorious South Sea speculation and
crash, prevented the creation of a joint stock with freely transferable
shares, big projects typically went to large partnerships with assets
vested in trustees. Not a happy solution in a commercial world of un
limited liability "to the last shilling and acre." Yet the absence of seri
ous legal change for a century testifies to the solidity of these
undertakings and the general vitality of the British economy. (I am as
suming here that if a need for bank financing had existed, a society so
responsive to business interests would have changed the rules.)
In the nineteenth century, when things got cosdier and risks greater,
the most effective device for mobilizing capital was the chartered joint-
stock company with limited liability—chartered because limited liabil
ity could be conferred only by the crown or Parliament. These large,
semipublic enterprises never made much use of long-term bank fi
nancing, because no bank was big enough. The charter of the Bank of
England provided that no other bank could have more than six part
ners. Not until 1826, and then only outside a sixty-five-mile radius
from London, were joint-stock banks permitted; and only in 1833
were non-note-issuing joint-stock banks permitted inside that radius.
Yet these new banks were litde different in size and policy from their
private counterparts, and even the railway builders didn't need their
help.
That was Britain. By the time Europe's first follower countries got
going (post-1815), Britain had known two human generations of
growth and industrial development. That delay was in part an accident
of political history, which has a nasty way of interfering with the best-
laid plans. Twenty-five years of revolution and war from 1789 to 1815
diverted Continental resources from building to destruction, played
havoc with enterprise and trade, generated some invention but de
layed much application, inspired projects but then inhibited them—in
effect, delayed industrial emulation of Britain an extra generation.
Not that the balance sheet was exclusively negative. The turmoil
also promoted social and institutional changes favorable to industrial
development. In particular, the French abolition of "feudal" dues and
cial transactions, partly to pull in capital from local depositors. Insofar as such firms im
mobilized (invested) funds payable to depositors on demand, they were highly vul
nerable to contractions and crises. In any event, the direction of the initiative, from
industry to banking, testifies to the wealth of British industrial resources.