Creating Capitalism: Joint-Stock Enterprise in British Politics and Culture, 1800–1870 (review)

James Taylor sets out to blow away myths about the nineteenth-century upheaval in British business organization. The conventional view, accepted by all strands of political opinion, has been that the spread of joint stock and birth of limited liability were inevitable, for they chimed with an all-pervasive ideology and were widely welcomed. Taylor challenges this version, which he thinks has inhibited informed debate on the role of big business in modern society. Only by seeing “private enterprise” as nothing of the sort is there hope that companies can be made to serve the public interest.

Hostility to joint-stock, he argues, has been grossly understated. Such companies were considered less attentive and less committed in their dealings, and were viewed with suspicion by investors and with antipathy by the public. This was no abstract question in an age when businesses were seen as sharing the character of their owner. Furthermore, speculation was widely considered synonymous with gambling, an epidemic comparable to cholera. The very transferability of shares provided an opportunity to abrogate responsibility.

Joint-stock companies, while dazzling contemporaries by their high visibility, in fact made up a small numerical proportion, less than 10 percent, of “important business organisations” in Britain as late as 1885 (6–7). But, James Jefferys told us this in the 1930s. Taylor, though, breaks with earlier historiography and the teleology, which follows from it, and to do so develops his own explanation of events by the bold concept of invading the nineteenth-century imagination. This is achieved with aplomb, through a wise and convincing blend of sources conventionally used by business historians, along with more novel material, notably cultural and literary sources, peppered with a dozen pertinent cartoons reproduced in these pages.

This invasion of the Victorian mindset is illuminating, though not clear-cut, politically or socially. Unlikely party alliances formed, with Liberals and Tories assuming sometimes contradictory and unpredictable poses. The debate was suffused with moral arguments and historical misremembrances, the cash nexus viewed as a poor replacement for character in business dealings, and joint stock incompatible with thrift, efficiency, and fair competition. The new businesses tended to showy extravagance to attract support, while railway companies notoriously and without exception exceeded projected budgets and then operated as unhealthy monopolies. Outside the thriving ranks of bank architects and civil engineers, the public maintained a heavy cynicism. They also provided an enthusiastic readership for fictional morality tales that mirrored the falls from power and wealth of the likes of the Railway King, George Hudson.

Taylor divides his work into two parts, one on attitudes to joint-stock enterprise followed by another, chronologically arranged, about changes in the legal framework and the effects of the 1866 commercial crisis. Not least of this book’s achievements are its accounts of the history of medieval and early modern incorporation, of the law-making and associated debates during the 1840s and 1850s, and of the events of and reactions to the 1866 commercial crisis.

The intention behind company reform was, it is argued, to achieve economic stability rather than growth. An absence of any rush to incorporate after 1856 is taken as evidence of this assertion, and perhaps bears out the opinion that private continued to be viewed as superior to corporate. Taylor sees an irony in the way that limited liability came to dominate, and to be seen as the natural form of twentieth-century business organization. The road to limited liability he divides into three phases. 1840 was a turning point in Peel’s and Palmerston’s views on the subject, legislation in 1844 marking the end of a period in which corporate status had been jealously withheld. The Joint Stock Companies Registration Act of 1844 preceded railway mania, which provided plentiful opportunities for moral outrage and made further changes necessary. Effective company registration was vital to counter fraud, but the public was largely wary...