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⁶ Sigurt Vitols, “Origins of Bank-Based and Market-Based Financial Systems,” Origins of Nonliberal Capitalism, 171–99. Vitols calls both American and German financial regimes “laissez faire” until a divergence in the 1930s. We largely agree, but date the divergence to key decisions made prior to 1914 that did not have full effect until after World War I; Depressionera reforms formalized emerging developments.

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⁸ A full historiographical discussion cannot be provided here. Caroline Fohlin offers the most sustained revision of the “orthodox” Gerschenkronian view in Finance Capitalism and Germany's Rise to Industrial Power (New York, 2007)Google Scholar and in the numerous articles listed in her bibliography. Overviews can be found in Feldman, Gerald D., “Banks, Bankenmacht, and Financial Institutions from 1900 to 1933,” Finanzmarkt-Kapitalismus: Analysen zum Wandel von Produktionsregimen (Wiesbaden, 2005), 316–30CrossRefGoogle Scholar; Guinnane, Timothy, “Delegated Monitors, Large and Small: Germany's Banking System, 1800–1914,” Journal of Economic Literature 40, no. 1 (2002): 73–124CrossRefGoogle Scholar; Ogilvie, Sheilagh and Edwards, Jeremy, “Universal Banks and German Industrialization: A Reappraisal,” Economic History Review 49, no. 3 (1996): 427–46.Google Scholar Even Gerschenkron did not think the guidance or influence of banks extended much past 1895: Gerschenkron, Alexander, Economic Backwardness in Historical Perspective (Cambridge, Mass., 1966)Google Scholar. For an argument about the importance of joint-stock investment banks prior to the 1880s, see Burhop, Carsten, “Did Banks Cause the German Industrialization?” Explorations in Economic History 43, no. 1 (2006): 39–63.CrossRefGoogle Scholar Key texts include: Burhop, Carsten, Die Kreditbanken in der Gründerzeit (Stuttgart, 2004)Google Scholar; Wixforth, Harald, Banken und Schwerindustrie in der Weimarer Republik (Cologne, 1995)Google Scholar; Petzina, Dietmar, ed., Zur Geschichte der Unternehmensfi nanzierung (Berlin, 1990)Google Scholar; Wellhöner, Volker, Großbanken und Großindustrie im Kaiserreich (Göttingen, 1989)CrossRefGoogle Scholar. For differences in bank financing preand post-1945, see Archiv, Bankhistorisches, ed., Bankkredit oder Kapitalmarkt: Alternativen der Industriefi nanzierung in Deutschland (Stuttgart, 2002).Google Scholar

⁹ To be clear, we are not discussing the obvious overall differences, including the prevalence of unit banking in the United States versus the ability to branch; the greater fragmentation of specialized banks (trust companies, buildings and loans, investment banks, etc.) versus “universal” banks; commercial banks' inability to own stock directly in the United States; or the higher percentage of private commercial banks in the United States versus public, municipally controlled savings banks (Sparkassen).

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¹² Our discussion is limited to those firms and banks with such ties at the heart of the traditional paradigms, not the broad base of limited liability (GmbHs) or family-owned Mittelstand firms, which would only further minimize the piloting role of banks in the German economy. See Guinnane, “Delegated Monitors”; Guinnane, Timothy et al., “Putting the Corporation in its Place,” Enterprise and Society 8, no. 3 (2007): 687–729.CrossRefGoogle Scholar

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²¹ This will be discussed in section two.

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²⁴ The important German industrialist Hugo Stinnes was often annoyed at such bank “jostling.” See Feldman, “Banks, Bankenmacht, and Financial Institutions,” 319–23. More examples can be found in Wellhöner, Grossbanken und Grossindustrie im Kaiserreich, and in Wixforth, Banken und Schwerindustrie in der Weimarer Republik.

²⁵ Jeidels, Verhältnis, 127–39; Riesser, Jacob, Zur Entwicklungsgeschichte der deutschen Grossbanken mit besonderer Rücksicht auf die Konzentrationsbestrebungen (Jena, 1906), 292.Google Scholar

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⁴⁰ Feldman, “Banks, Bankenmacht, and Financial Institutions.”

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⁴⁵ Gall, The Deutsche Bank, 28; Wandel, Banken und Versicherungen; Ashauer, Ersparungscasse.

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⁴⁹ Quoted in “German and American Relations Growing Intimate,” New York Times, 5 Jan. 1908.Google Scholar Other examples, “Aldrich in Berlin Not Talking Tariff,” New York Times, 31 Aug. 1904, 4Google Scholar; “Busy with German Banking: Monetary Commission Finds Much to Learn in Berlin,” New York Times, 4 Sept. 1908, 4Google Scholar; “Growth of German Banking,” New York Times, 21 June 1910, 18Google Scholar; “The German ‘Money Trust,’” New York Times, 30 July 1911, 8Google Scholar; “The German System,” Wall Street Journal, 27 Oct. 1903, 1Google Scholar; “Elastic Clause of the German Bank Act,” Wall Street Journal, 15 Apr. 1905, 6Google Scholar; “Translation of German Imperial Banking Laws,” Wall Street Journal, 18 July 1910, 7.Google Scholar Redlich, Molding of American Banking, 221–22, notes 392–397.

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⁹⁴ Quoted in Marco Becht and J. Bradford DeLong, “Why has There Been so Little Block Holding in America,” A History of Corporate Governance around the World, 637n37.

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⁹⁷ See the contemporary critique by Emery, Henry Crosby, “The Results of the German Exchange Act of 1896,” Political Science Quarterly 13 (1898): 286–320;CrossRefGoogle ScholarMeier, Johann Christian, Die Entstehung des Börsengesetzes vom 22. Juni 1896 (St. Katharinen, 1992);Google ScholarWeber, Max, Börsenwesen, Schriften und Reden 1893–1898, ed. Borchardt, Knut (Tübingen, 1999);Google ScholarFohlin, Caroline, “Regulation, Taxation and the Development of the German Universal Banking System, 1884–1913,” European Review of Economic History 6 (2002): 221–54;CrossRefGoogle ScholarGelman, Sergey and Burhop, Carsten, “Taxation, Regulation and the Information Effi ciency of the Berlin Stock Exchange, 1892–1913,” European Review of Economic History 12, no. 1 (2008): 39–66.CrossRefGoogle Scholar

⁹⁸ Fohlin, “Does Civil Law Tradition and Universal Banking Crowd Out Securities Markets?” and Finance Capitalism, 222–76.

⁹⁹ The following discussion and quotes are from Stünzner, Banken und Wertpapierbörse, 33–44.

¹⁰⁰ Ibid., 37–39.

¹⁰¹ Stünzner, Banken und Wertpapierbörse, 38–44, argues that banks manipulated share prices frequently. Fohlin, “Does Civil Law Tradition and Universal Banking Crowd Out Securities Markets?” 631–33, fi nds little evidence for the effectiveness of price manipulation.

¹⁰² For an insightful discussion, see Elsas, Ralf and Krahnen, Jan Pieter, “Universal Banks and Relationships with Firms,” in The German Financial System, ed. Krahnen, Jan Pieter and Schmidt, Reinhard H. (Oxford, 2004), 197–232.CrossRefGoogle Scholar Also, Hirschman, Albert O., Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States (Cambridge, Mass., 1970).Google Scholar The case for exit is made by Jensen, Michael C., “The Modern Industrial Revolution, Exit, and the Failure of Internal Control Systems,” Journal of Finance 48, no. 3 (1993): 831–80.CrossRefGoogle Scholar

¹⁰³ “He [John C. Bogle of Vanguard] Doesn't Let Money Managers Off the Hook,” New York Times, 12 Apr. 2009.Google Scholar