In December the Business Historical Society presented to its members a new book, WEAF: A Pioneer in Commercial Broadcasting, by William P. Banning. This volume is concerned with the beginnings of the radio industry, which has become so very important both economically and culturally in the brief span of about a quarter-century. The experimentation involved led to the creation of the American way of commercial broadcasting.

For a little over three-fourths of a century thousands of men in the United States have toiled to establish and develop the petroleum industry. Starting along Oil Creek in 1859, they moved up and down the Allegheny River, into West Virginia, and thence across the continent, opening up new sources of supply in Ohio, Oklahoma, Texas, California, and other States. Through their initiative, persistence, courage, resourcefulness, and vision, they created a new and magnificent industry — one typically American.

It was the topography of a trout stream which first set my thoughts in the direction of local business history, and then led to broader fields of research. Mill ponds and crumbling masonry are more or less traditional parts of the New England landscape. I should be willing to pass them over with the customary casual notice, were it not that increasing familiarity with some of Massachusetts' “backwoods” country began to reveal what looked like a remarkable pattern of local development. There was a positively idyllic stage of research when, with fly rod in hand, I examined the dams and sluiceways on half a dozen local streams, and pondered the archeological evidences of antique industry. Many questions came to mind. Too early for a place in the Industrial Revolution, too numerous to fit neatly into the colonial-agrarian pattern — what system of economy did these ruins represent ? Might they not stand apart, a system of their own, drawing from the earlier and nourishing the later? The phase of inquiry succeeding superficial curiosity led to local libraries and county records. It seemed wise to concentrate initial research efforts in one area, and on one representative watercourse.

Any person who could devise measures by which the fluctuations in modern business could be eliminated, or materially reduced, would undoubtedly carve for himself a deep niche in the Hall of Fame. Both business men and observers of economic phenomena have noted that recurring crises seem almost as inevitable as the setting of the sun, if not so regular. If the severity of crises could be mitigated, solvent firms might not fail as often as they do, and the erratic economic course of man might not be subject to such violent ups and downs.

The history of the part played by the sedentary merchant in financing the business of his time is a long and important story. We know that merchants served as suppliers of capital to others as far back as in twelfth-century Genoa. Through the centuries mercantile families and sedentary merchants, as they grew old and rich, tended to specialize in lending money for business purposes. This contribution of the sedentary merchant was important in the economic life of many countries over centuries of time.

Man has developed three types of explanation of phenomena. The oldest is deistic or theological. From earliest times man has explained happenings and situations by looking to outside powers, at first to many gods and later to one all-powerful deity. We still say, “God wills it,” “Thy will be done,” and “the Lord giveth and the Lord taketh away.” But, not later than the flowering of the Greek mind, a second type arose, namely, the metaphysical or philosophical. According to this type of explanation, there are great forces at work, such as the pursuit of liberty, economic determinism, and the unconscious urge of the reproduction of our kind. Such explanations or solutions are easy, economical, and satisfying to their devotees. They tend to reflect the working of the mind, however, rather than mirror the world that is. Reacting from the subjective, modern scholars have insisted upon a more objective approach. Impatient with deduction, they have proclaimed induction as the more fruitful method of discovering and dealing with phenomena, The result is positivism or science. For over a hundred years, workers have been allured by the new prospects, and in the group have been both Comte and Pareto: let us discover facts and classify them and avoid all metaphysical dogma.

The accompanying picture of a pawnbroker's shop and sign was taken in Boston in 1946. The sign of the three balls is a common sight in the poorer sections of many American cities, and its meaning is always the same: the balls signify that within the shop loans may be obtained on the pledge of personal property. This type of loan is centuries old: it existed in ancient Greece at the time of Pericles and in ancient Rome at the time of Augustus. Professional money-lenders, either Jews or Lombards, reappeared in the Middle Ages, and their activities elicited the opposition of the Church and the hatred of the populace. Attempts to get rid of the Jewish or Lombard pawnbrokers were repeatedly made, but the result was always the same: the need of consumers for credit accommodation was so great that the money-lenders were usually recalled after a short while.

Someone may say that he has not yet learned what a business history is and therefore that he is in no position to consider the types of business history that may exist. Perhaps, however, it may help in grasping the essentials of business history if these types are set forth.

Right at the beginning of this effort we should note that we have in mind the history of a business unit — a business man, a firm, or a company. To be sure, there are other approaches to business history, namely, the history of a function, such as production or marketing, the history of a whole industry, such as meat-packing or cotton textiles, and, of course, the general history of business.

When we read about “government control” in recent years and then reflect upon the old term “government regulation,” we wonder whether a change has occurred. We ask our friends and find that they feel that there is a difference between the old regulation and the new control, but they hesitate to state what the difference is. Then we sit down to wrestle with the problem. The exercise is not easy. Perhaps the historical approach will be helpful.

In the history of man there have been many occupations but none more important than war, business, and religion. We shall consider at length the course of the first two, without neglecting the third, during the period of the last 600 years.

The lessons of the San Francisco earthquake and fire are constantly before any person interested in the preservation of the records of early business. So many of the actual facts will never be known because of the wholesale destruction of all the books of record of so many of the leading businesses dating back to the earliest days of commercial activity in California. For the business historian the extent of this catastrophe is far greater than the loss of the stories of individual businesses in San Francisco, insomuch as San Francisco was the financial center of not only California but Alaska, Nevada and, to a lesser degree, the Pacific Northwest. In order to tell the complete story of western business, the business historian must improvise and synthesize scattered records to get a connected account.

The development in the nineteenth century of new manufactured products which were made in large quantities and under increasing competition as the decades passed brought great changes in marketing organization, in the financing of marketing, and in selling methods. Since there was no adequate experience, no precedent, to go by, the changes that came were largely improvised and experimental. Some of the problems that arose and attempts at solving them are well illustrated by what happened in the marketing of sewing machines.

The way in which business men “translate” economic policy into business policy has never been studied systematically, but the subject is worth investigating. This problem first came to my attention in connection with some research in the field of economic history, and I have recently run across a case which merits description though broader conclusions cannot be drawn at this time.

The nation is just emerging from a state of wartime economic mobilization involving a degree of regimentation of its business life without precedent in this country and hardly surpassed by the most dictatorial régimes abroad. At the peak of the war effort a typical manufacturer was largely directed by the government as to what he might make, what raw materials he might use, to which customers he might sell, in what order, and at what price. He could not enlarge or substantially alter his plant without governmental authority. He was limited in both directions as to the wages he might pay. While not subject to direct coercive control in the selection of manpower, he could generally not hire workers beyond a semi-compulsory employment “ceiling,” and his manpower pool was radically limited by the demands of selective service and of competing war activities. His most important trade journal had become the Federal Register. While his discretion was not completely circumscribed, he moved within a framework so confined as to be tolerable only when the national existence was at stake.

Professor Gras has asked me to talk today on government regulation in the field of Finance. When he first mentioned the matter it seemed to me a most stimulating suggestion. The more I considered it, however, the more difficult the assignment appeared. The more I thought about it the more the subject seemed to be made up of a large number of topics relatively unrelated to each other. Management of insurance companies can hardly be treated in the same paragraph with the divorce of security affiliates from commercial banks, and competitive bidding has little in common with measures designed to protect bank depositors. While many of the particular segments of this subject possess great interest in their own right and deserve careful individual treatment, they are for the most part technical and cannot be dealt with adequately in the time at my disposal. Moreover, they are in many instances special subjects. By this I mean that they have wholly different backgrounds, that their internal logics are dissimilar, and that the kinds of knowledge needed to see each in its proper perspective are quite disassociated. The problem is to knit this compartmentalized subject together so as, on the one hand, to see it as a whole, and on the other hand, to avoid somewhat empty generalities.