The Rise of a Market for Industrial Securities, 1887-1902

The performance of industrial securities in the depression of 1893-97 went far toward ridding the financial community of the idea that such securities generally lacked investment quality. This ship in investing sentiment was a factor of major significance in accelerating the merger movement, the promoters of which, in turn, broadened the market for industrials still further. This they accomplished by offering wide participations in promising ventures, by sweetening those participations through extensive recourse to preferred stocks, and by employing promotional techniques new to the field of industrial security marketing. The creation of a broad market for industrial stocks, hitherto highly inflexible administrative tools, meant vastly increased fluidity of ownership. By the turn of the century the transition was well under way from closely held, “inside” ownership of American business to semipublic, “outside” hands.