Much has been written about late-nineteenth-century multinationals and their relationship to the transnational firms of the present, but both historians and economists have largely discounted the relevance of the earlier chartered trading companies to this discussion. In an article emphasizing transaction cost analysis and the theory of the firm, Professors Carlos and Nicholas argue that the trading companies did meet the criteria of the modern MNE—the growth of a managerial hierarchy necessitated by a large volume of transactions and of systems to control those managers over space and time.

The problem of controlling overseas managers confronts all multilocational firms. Historians have argued that because of the extreme time lags in communication, chartered companies were unable to control managerial behavior. We argue that not only did the Hudson’s Bay Company understand the agency problem but also put into operation strategies designed to attenuate opportunistic behavior. The company used employment contracts and control systems and established a social structure compatible with the company’s aims.

In the seventeenth century, Amsterdam and London developed distinctive innovations in finance through both banks and markets that facilitated the growth of trade in each city. In the eighteenth century, a symbiotic relation developed that led to bank-oriented finance in Amsterdam cooperating with market-oriented finance in London. The relationship that emerged allowed each to rise to unprecedented dominance in Europe, while the respective financial innovations in each city provided the means for the continued expansion of European trade, both within Europe and with the rest of the world. The increasing strains of war finance for the competing European powers over the course of the eighteenth century stimulated fresh financial innovations in each city that initially reinforced the symbiosis of the two centers. The external shocks arising from revolutionary movements in America and France, however, interrupted the relationship long enough to leave London as the supreme financial center.

The dramatic expansion of public and private financial markets in the aftermath of the Glorious Revolution has received extensive attention. Despite this, little is known about how ordinary individual investors managed risk within this framework. Using a newly constructed dataset of share ownership for those joint-stock companies listed in the financial press of the day, we reconstruct individual portfolio holdings for investors in these companies. We examine individual portfolio holdings first for the decade after the Glorious Revolution and then for the years around the South Sea Bubble. Despite a fivefold increase in the number of unique individuals in the market between the 1690s and the 1720s, we find that in each period roughly 80 per cent of those active in the equity market held shares in only one company, even though many shareholders had the capacity or wealth to diversify share portfolios. These outcomes suggest diversification against idiosyncratic liquidity risk. Overall, however, there is limited evidence that individuals were using their financial portfolios to protect against diversifiable shocks. For many, we argue, company-specific voting and firm governance rules drove market activity.T he dramatic expansion of private and public financial markets following the Glorious Revolution has received extensive attention. Although predating the Glorious Revolution, the stock market flourished in its immediate aftermath, helped by well-defined ownership rights in shares, ease of purchase and sale, and transparency in pricing promulgated by the rise of the financial press. 2 By 1720, the stock market was well entrenched as a tool for commerce, public finance, and savings. Companies used it for initial public offerings or net additions to their capital stock, while merchants, tradesmen, and individuals could use shares as collateral. 3 The government used the market to rationalize its public debt through a series of debt-for-equity swaps, mediated through the so-called 'monied' companies: the Bank of England, the New East India Company, the United East India We are very grateful for all the comments and suggestions. We are also extremely grateful to Anne Murphy for the use of her data and to Anne Murphy, Angela Redish, three anonymous referees, and the editor for their helpful comments.2 Carlos,

Abundant land and strong property rights are conventionally viewed as key factors underpinning U.S. economic development success. This view relies on the “Pristine Myth” of an empty undeveloped land, but the abundant land of North America was already made productive and was the recognized territory of sovereign Indigenous Nations. We demonstrate that the development of strong property rights for European/American settlers was mirrored by the attenuation and increasing disregard of Indigenous property rights. We argue that the dearth of discussion of the dispossession of Indigenous nations results in a misunderstanding of some of the core themes of U.S. economic history.