. 13
( 20)


depending on circumstances such as the length of transmission lines and the
level of development. Line losses in 1933 as a proportion of production for
countries contained in the Statistical Year-Book ranged from 9 to 10 percent in
The Netherlands, Finland, and Czechoslovakia to 20 to 25 percent in Canada,
New Zealand, France, Argentina, Ireland, and China. Brown, Statistical Year-
Book, 103. In 1990, line losses were less than 10 percent in most high-income
countries and up to 40 to 50 percent in some low-income countries. World
Development Report 1994 (Oxford: Oxford University Press for the World
Bank, 1994), 224“25.
The data actually are millions of kilowatt-hours per thousand persons, which
we call per capita production. Production ¬gures are from Etemad and Luciani,
Notes to Chapter 1, Pages 25“27 319

World Energy Production, 91“165. Population ¬gures are from Mitchell,
International Historical Statistics: Africa, Asia & Oceana, Table A5, 47“65;
Mitchell, International Historical Statistics: The Americas, Table A5, 60“64;
Mitchell, International Historical Statistics: Europe, Table A5, 81“90.
The growth rates were estimated using ordinary least-squares regressions.
This is not unexpected. It is easier to achieve higher rates of growth from a
small base, which would be the case early in the process of electri¬cation.
On the invention and adoption of various electrical devices, see Smil, Creating
the Twentieth Century, 91“94; and Nye, Electrifying America, Ch. 6. For a
discussion of electricial devices being used in many North and South American
countries in 1927, see U.S. Department of Commerce, Bureau of Foreign and
Domestic Commerce, Central Light and Power Plants in the Western
Hemisphere, with Notes on the Market for Electrical Goods, Trade Information
Bulletin No. 469, April 1927. A series of these bulletins published in the 1920s
and 1930s discussed electrical appliances in various countries of the world.
See, for example, Sam H. Schurr, Calvin C. Burwell, Warren D. Devine, Jr., and
Sidney Sonenblum, Electricity in the American Economy: Agent of Technical
Progress (New York: Greenwood Press, 1990). Robert Whaples has shown that
electri¬cation of the factory ¬‚oor in the United States was a signi¬cant factor in
the reduction of the manufacturing work day in the early twentieth century.
Robert Whaples, ˜˜Winning the Eight-Hour Day, 1909“1919,™™ Journal of
Economic History, 50 (June 1990), 393“406. In a study of factory electri¬cation
in the 1920s and 1930s, Ristuccia and Solomou found that electricity diffusion in
the manufacturing sectors of the United States, U.K., and Japan resulted in
signi¬cant positive effects on the growth rate of labor productivity. The authors
conclude that their paper ˜˜con¬rms that electricity diffusion can persuasively
explain the generalized growth in labour productivity in manufacturing in the
industrialized world in the 1920s and 1930s.™™ Christiano Andrea Ristuccia and
Solomos Solomou, ˜˜Electricity Diffusion and Trend Acceleration in Inter-War
Manufacturing Productivity,™™ Feb. 2002, University of Cambridge Working
Paper No. 0202, available at SSRN (http://ssrn.com/abstract=303799, accessed
March 28, 2006). On the importance of the induction motor, see Smil, Creating
the Twentieth Century, 79“83.
On the U.S. proposals, which never were implemented, see Leonard DeGraaf,
˜˜Corporate Liberalism and Electric System Planning in the 1920s,™™ Business
History Review, 64 (Spring 1990), 1“31. On the creation of the British grid, see
Leslie Hannah, Electricity Before Nationalisation (Baltimore: Johns Hopkins
University Press, 1979).
Brown, Statistical Year-Book, 1936
Note that this is not the same as the proportion of the population actually using
electricity, because those in areas where electricity was available might not
have been using it. Another source has Switzerland with the highest proportion
(99 percent) of electri¬ed homes in 1935. Some of the states in the northeastern
United States and California had coverage that was slightly less than this
(90“96 percent), while countries such as France, Norway, Sweden, Belgium,
Germany, and the United States overall had middling percentages (60“70
percent). Italy and Great Britain were just over 50 percent. Floyd L. Carlisle,
Notes to Chapter 2, Pages 27“37

˜˜National Power and Resources Policy,™™ Transactions, Third World Power
Conference, vol. 9 (Washington, DC: USGPO, 1938), 174.
For countries included in the statistical yearbook of the World Power
Conference, electricity for traction purposes ranged from negligible to around
one-third of usage. Public lighting and indoor usage ranged from under 10
percent to around 75 percent. The use of electricity in agriculture was notable
for its complete absence in most countries. Brown, Statistical Year-Book,
Brown, Statistical Year-Book, 102.
Lewis L. Lorwin, economic advisor to the International Labor Of¬ce, Geneva,
commented, ˜˜While it is true that for the time being power is not to any large
extent, or in many places, an export product, it has immense signi¬cance in the
¬eld of international ¬nance and investment, in its capacity for bringing about
industrial and trade expansion, in the competitive power which it gives to newly
industrialized countries, and in the dislocations of their industrial economy
which such competition is producing in the older countries.™™ ˜˜Discussion,™™
Transactions, Third World Power Conference, vol. 9 (Washington, DC: USGPO,
1938), 226.
There are some discrepancies in the data. The amount reported as imported
into the United States was only 64 percent of the amount reported as exported
by Canada.
This remains the case today. In 2001, total world exports of electricity were
only 3 percent of production. Exports were 7.4 percent of production in
Europe, where the European Union in 2002 established a 10 percent
interconnection target. The largest European exporter by volume was France
(13 percent of production), and the largest importer by volume was Italy
(17 percent of production). Moderately large net exporters, by percent of
production, included Sweden, Ukraine, Russia, Poland, Czech Republic, and
Lithuania. Moderately large net importers, by percent of production, included
Belgium, Finland, Belarus, The Netherlands, Spain, and Hungary. Countries
that were roughly balanced included Austria, Portugal, and Germany. United
Nations, Energy Statistics Yearbook, 2001, 478“94.

2 multinational enterprise and international ¬nance
1. Thomas Hughes, ˜˜From Firm to Networked Systems,™™ Business History
Review, 79 (Autumn 2005), 587“593, and his Networks of Power: Electri¬ca-
tion in Western Society, 1880“1930 (Baltimore: Johns Hopkins University Press,
2. Colonies were often hosts (and only rarely homes) to multinational enterprise. It
is necessary to specify that we include them, for at times in the literature they are
excluded. We de¬ne the term ˜˜foreign™™ with a broad brush. A British (or a
German) nonresident investment in colonial India or a French (or a German)
nonresident investment in colonial Algeria will be considered by us to be
˜˜foreign.™™ By nonresident, we mean that there is a home of¬ce abroad.
3. Our de¬nition is conventional. For a similar de¬nition, see Mira Wilkins, ˜˜What
Is International Business?™™ in Peter J. Buckley, ed., What Is International
Notes to Chapter 2, Pages 37“38 321

Business? (London: Palgrave, 2005), 133. In our de¬nition, we have been
in¬‚uenced by Oliver Williamson, who wrote, ˜˜[R]ather than characterize the ¬rm
as a production function, transaction cost economics maintains that the ¬rm is
(for many purposes at least) more usefully regarded as a governance structure.™™
Oliver E. Williamson, Economic Institutions of Capitalism (New York: Free
Press, 1985), 13. Alfred Chandler used the term ˜˜governance structure™™ in the
same manner as Williamson in Alfred D. Chandler, Jr., ˜˜A Framework for
Analyzing the Modern Multinational Enterprise and Its Competitive Advantage,™™
Business and Economic History, 2nd ser., 16 (1987), 3“17, and subsequently in
Alfred D. Chandler, Jr., Scale and Scope (Cambridge, MA: Harvard University
Press, 1990), 14. When the authors of the present book write of the multinational
enterprise as an administered (managed) unit, we are talking about a ˜˜governance
structure™™ as the phrase was used by Williamson and Chandler.
We used the phrase ˜˜multinational enterprise and ¬nancial institutions™™ with
great discomfort, falsely implying a necessary separation. Financial institutions
could be multinational enterprises, extending themselves as ¬rms over borders.
See discussion below.
We are saying the same thing here about electric utilities as others have said
more generally in a purely domestic context: ˜˜The ¬nancial market has been, is,
and was willing and able to supply monies to established ¬rms with good credit
history and the potential for growth.™™ Taking risks with new ¬rms was more
dif¬cult. See Sue Bowen, ˜˜Corporate Finance,™™ in Joel Mokyr, ed., Oxford
Encyclopedia of Economic History, 5 vol. (Oxford: Oxford University Press,
2003), II, 5.
See Mira Wilkins, The History of Foreign Investment in the United States, 1914“
1945 (Cambridge, MA: Harvard University Press, 2004), 616“17, 626“27, for a
concise discussion of the formidable problems of de¬nitions of foreign portfolio
and foreign direct investments and on statistical measures over time. (This book is
henceforth cited as Wilkins, History . . . 1914“1945.) See also the discussion in
Mira Wilkins, ˜˜Conduits for Long-Term Foreign Investment in the Gold Standard
Era,™™ in Marc Flandreau, Carl-Ludwig Holtfrerich, and Harold James,
International Financial History in the Twentieth Century: System and Anarchy
(Cambridge: Cambridge University Press, 2003), 51“76.
De¬nitions of ˜˜foreign portfolio investment™™ vary widely. A recent example of
the separation in thinking about foreign portfolio and foreign direct investment
is Daniel Verdier, Moving Money: Banking and Finance in the Industrial World
(Cambridge: Cambridge University Press, 2002). Examples of the de¬nitional
problems are: Sometimes foreign portfolio investment is de¬ned as comprising
everything in a country™s international position that is not foreign direct
investment (this is the usage, for example, in U.S. Congressional Budget Of¬ce,
˜˜Why Does U.S. Investment Abroad Earn Higher Returns than Foreign
Investment in the United States?™™ Economic and Budget Issue Brief, Nov. 30,
2005, a study that sought to deal with both foreign portfolio and foreign direct
investments). Sometimes, foreign portfolio investments include short-term
foreign trade ¬nancing. Some de¬nitions of ˜˜portfolio investment™™ are narrow,
involving only equity holdings that are not direct investments and excluding
debt. Discussions of international ¬nance include debt, whether it be bank loans
Notes to Chapter 2, Pages 38“38

or bonds. All foreign debt is not classi¬ed as portfolio investment. Today, the
U.S. Bureau of Economic Analysis includes some foreign debt as foreign direct
investment: if a foreign direct investment is established (by 10 percent or more
of equity share in a foreign af¬liate), then the net international debt ¬nancing
of the foreign af¬liate is included as foreign direct investment. In recent
International Monetary Fund and Federal Reserve publications, there are
discussions of foreign investments in ˜˜stock, bonds, and banking,™™ with no
differentiation at all between what is foreign direct investment and foreign
portfolio investment; also there is a confusion in this literature between trade in
foreign assets and investment.
8. There are some students of foreign direct investment who look at the
macroeconomic picture, paying little attention to the individual players.
9. The writings on multinational enterprise are vast. For a start, see Geoffrey Jones,
Multinationals and Global Capitalism (Oxford: Oxford University Press, 2005);
Alan M. Rugman and Thomas L. Brewer, eds., The Oxford Handbook of
International Business (Oxford: Oxford University Press, 2001); and John H.
Dunning, Theories and Paradigms of International Business Activities: The
Selected Essays of John H. Dunning, vol. 1 (Cheltenham, England: Edward Elgar,
2002). John H. Dunning™s important Multinational Enterprises and the Global
Economy (Wokingham, England: Addison-Wesley, 1993) is being revised and is
scheduled for publication in late 2008, by Edward Elgar. Although Giorgio Barba
Navaretti and Anthony J. Venable, Multinational Firms in the World Economy
(Princeton, NJ: Princeton University Press, 2004), 11, recognizes that almost
60 percent of world foreign direct investment stock is in services, the book re¬‚ects
the lingering theoretical bias toward manufacturing. In this regard, see also
Richard E. Caves, Multinational Enterprise and Economic Analysis, 3rd ed.
(Cambridge: Cambridge University Press, 2007), 5n; James R. Markusen,
˜˜International Trade Theory and International Business,™™ in Alan M. Rugman
and Thomas L. Brewer, eds., Oxford Handbook of International Business, 87;
and many of the articles published in recent years in the Journal of International
Economics. Yet Markusen™s knowledge capital model can be more broadly
applied, and as Peter Gray pointed out (conversation with Mira Wilkins, April 18,
2006), trade theorists now recognize that multinational enterprises in services
export intangibles, including know-how and accumulated experience. For a broad
coverage of the history of multinational enterprise, see Mira Wilkins, The
Emergence of Multinational Enterprise: American Business Abroad from the
Colonial Era to 1914 (Cambridge: MA: Harvard University Press, 1970); Mira
Wilkins, The Maturing of Multinational Enterprise: American Business Abroad
from 1914 to 1970 (Cambridge, MA: Harvard University Press, 1974); Mira
Wilkins, The History of Foreign Investment in the United States to 1914
(Cambridge, MA: Harvard University Press, 1989) (henceforth cited as Wilkins,
History . . . to 1914); and Wilkins, History . . . 1914“1945. Geoffrey Jones has
made a substantial contribution to bringing service sector multinationals into
prominence. See his edited book, Banks as Multinationals (London: Routledge,
1990), his British Multinational Banking 1830“1990 (Oxford: Oxford University
Press, 1993), and his Merchants to Multinationals (Oxford: Oxford University
Press, 2000). Aside from the authors cited above, works by Raymond Vernon,
Notes to Chapter 2, Pages 38“38 323

Jean-Francois Hennart, Mark Casson, Peter Buckley, Robert Lipsey, Kenneth
Froot and Jeremy Stein, and Benjamin Gomes-Casseres have been among the
many in¬‚uential studies on multinational enterprise that have enriched our
analysis. Today, for statistical purposes, an equity stake of at least 10 percent
de¬nes a foreign direct investment (this is the International Monetary Fund
criterion); historically, as statistical measures were introduced, different thresh-
olds were used (some countries still retain different statistical criteria); indeed, as
recently as 1997, for example, the United Kingdom de¬ned a foreign direct
investment as a ¬rm™s having an equity stake of 20 percent or more in the
af¬liate. See World Investment Report 2006, 293“98. For many years, a number
of countries used a 25 percent cutoff. While we know and have always kept in
mind the available statistical data, we have not set a percentage-of-equity
statistical measure in de¬ning foreign ˜˜ownership and control,™™ trying instead to
understand the behavior of multinational enterprise.
10. This is important. In one of our preliminary papers, it was suggested (in keeping
with some of the established literature) that Canada was remarkable in having
both inward and outward investments; we have found that this was true of all
advanced nations “ whether we are discussing the United Kingdom, the United
States, or France, for example. There were, however, varying foreign direct/
foreign portfolio investment ratios, as well as varying inward and outward
investment ratios, but in all advanced nations we found both foreign direct and
foreign portfolio cross-investments to be historically commonplace. See Mira
Wilkins, ˜˜Dutch Multinational Enterprises in the United States: A Historical
Summary,™™ Business History Review, 79 (Summer 2005), 263“67, for this
insight in an entirely different context. The electricity supply industry was not
11. Geoffrey Jones, The Evolution of International Business (London: Routledge,
1996), 33 (on the ˜˜grey world™™). The gray areas are also particularly in
evidence in foreign investments in railroads, as we note below.
12. For the genesis of some of the corporate governance literature in ¬nance, see, for
example, Oliver Hart, ˜˜Corporate Governance: Some Theory and Implications,™™
Economic Journal, 105 (1995), 678“98; Andrei Schleifer and Robert W. Vishny,
˜˜A Survey of Corporate Governance,™™ Journal of Finance, 52:2 (1997), 737“83.
The relationship between corporate governance and the corporate ¬nance
literature is apparent in the entry on ˜˜Corporate Finance™™ in Mokyr™s Oxford
Encyclopedia of Economic History (2000), II, 5“8, where practically all of Sue
Bowen™s bibliography is on corporate governance; the encyclopedia does not
have a separate entry for corporate governance. For an introduction to the
corporate governance literature, see Randall K. Morck, ed., A History of
Corporate Governance Around the World: Family Business Groups to
Professional Managers (Chicago: University of Chicago Press, 2005), beginning
with Randall K. Morck and Lloyd Steier, ˜˜The Global History of Corporate
Governance “ An Introduction,™™ in ibid., 1“64. An earlier version of the latter
(cited below) appeared as NBER Working Paper 11062, Jan. 2005. See also
Mary A. O™Sullivan, Contests for Corporate Control: Corporate Governance and
Economic Performance in the United States and Germany (Oxford: Oxford
University Press, 2000), and Randall Morck, Daniel Wolfenzon, and Bernard
Notes to Chapter 2, Pages 39“40

Yeung, ˜˜Corporate Governance, Economic Entrenchment and Growth,™™ Journal
of Economic Literature, 43 (Sept. 2005), 657“722. Whereas Williamson and
Chandler used the phrase ˜˜governance structure™™ to refer to the management of
¬rms and were not concerned with corporate ¬nance or the ownership of the ¬rm
(see Chap. 2, note 3 above), this literature considers the relationships between the
ownership of the ¬rm and its governance. Its focus is on differences between
nations: shareholder capitalism, family capitalism, bank capitalism, and state
capitalism. The business groups we will be discussing are far more intricate than
those presented in this literature, because ours crisscross borders.
Morck and Steier, ˜˜Global History of Corporate Governance,™™ NBER
Working Paper 11062, 1.
In one of the preliminary papers prepared in connection with this project, there
were important explorations of German versus Canadian style. See Peter
Hertner and H. V. Nelles, ˜˜Contrasting Styles of Foreign Investment: A
Comparison of the Entrepreneurship, Technology, and Finance of German and
Canadian Enterprises in Barcelona Electri¬cation,™™ Revue Economique, 58:1
(Jan. 2007), 191“214.
Peter A. Hall and David Soskice, eds., Varieties of Capitalism (Oxford: Oxford
University Press, 2001), articulates this view.
One reader of our manuscript asked why, in a book on global business, we were
˜˜wary of references™™ to national style, to national comparisons. What is basic
and original about our approach is not merely the comparisons of one home (or
host) country to another, but the consideration of commonalties and differences
in the forms of business that cross borders.
William J. McDonough, ˜˜Issues of Corporate Governance,™™ Federal Reserve
Bank of New York, Current Issues in Economics and Finance 8 (Sept.“Oct.
2002), 1“6; on the New York Federal Reserve™s attention to corporate
governance in the aftermath of the Enron collapse, see the entire issue of
Economic Policy Review (a publication of the Federal Reserve Bank of
New York), 9 (April 2003), 1“139.
Wilkins at ¬rst used the term ˜˜American model™™ to refer to such ¬rms, because
the initial research had been done on U.S. companies and this pattern was very
apparent in U.S. business abroad. Mira Wilkins, ˜˜The Free-Standing Company
Revisited,™™ in Mira Wilkins and Harm Schroter, eds., The Free-Standing
Company in the World Economy (Oxford: Oxford University Press, 1998),
5“6. Subsequently, she added “ and adopted the designation “ ˜˜classic form™™ of
multinational enterprises: Wilkins, ˜˜Conduits for Long-Term Foreign Invest-
ment,™™ 53, 64“65, 70“72. She did not use the word ˜˜classic™™ as associated with
classical or neoclassical economic theory, but rather as serving as a standard
model, accepted within the literature.
There were some such ¬rms headquartered in the United States and Canada as
On the concept, see Mira Wilkins, ˜˜The Free-Standing Company, 1870“1914:
An Important Type of British Foreign Direct Investment,™™ Economic History
Review, 2nd series, 41 (May 1988), 259“82; Wilkins and Schroter, eds., Free-
Standing Company, passim; and Wilkins, ˜˜Conduits for Long-Term Foreign
Investment,™™ 51“76.
Notes to Chapter 2, Pages 40“41 325

21. For example, Wilkins, ˜˜Free-Standing Company, 1870“1914,™™ 261 (on the
foreign portfolio investment/foreign direct investment categories); Mark
Casson. ˜˜An Economic Theory of the Free-Standing Company,™™ in Wilkins
and Schroter, eds., Free-Standing Company, 102“06 (on control issues); and
Wilkins and Schroter, eds., Free-Standing Company, passim (on clusters).
22. Jean-Francois Hennart, ˜˜Transaction-Cost Theory and the Free-Standing
Firm,™™ in Wilkins and Schroter, eds., Free-Standing Company, 65“74 (for
insights on minority equity involvements).
23. Wilkins has in the past used the term ˜˜business group™™ to deal with the links
between ¬rms that often participated in the clusters surrounding free standing
companies. Randall Morck has equated business groups with the complex
holding company structures. (See Randall Morck, ˜˜How to Eliminate Pyramidal
Business Groups: The Double Taxation of Inter-Corporate Dividends and Other
Incisive Uses of Tax Policy,™™ NBER Working Paper 10944, Dec. 2004.) Bernard
Yeung has suggested three categories of business groups, those that are vertical
(the holding company structure), those that are horizontal (same activities), and
those that represent the kind of loose cluster, as in Wilkins™s usage (Wilkins™s
discussion with Bernard Yeung, April 21, 2006). What the authors of the present
volume are trying to capture are the sometimes uneasy distinctions between what
happens within a business ¬rm (a multinational enterprise) and across ¬rms.
Activities across ¬rms can be with related (albeit ˜˜independent™™ entities) or with
unrelated companies. See Mira Wilkins, ˜˜De¬ning a Firm: History and Theory,™™
and Peter Hertner, ˜˜German Multinational Enterprise Before 1914: Some Case
Studies,™™ in Peter Hertner and Geoffrey Jones, eds., Multinationals: History and
Theory (Aldershot, England: Gower, 1986), 80“95, 113“15.
24. See, for example, Jones, Multinationals and Global Capitalism.
25. In Chap. 2, note 9 above, we give only a small part of the huge literature on
multinational enterprise that has in¬‚uenced our analysis. We draw widely on
the literature that has been developed by economists, historians, business
school professors, political scientists, historians (in general), sociologists, and
economic geographers. We have been most in¬‚uenced by the economists,
economic and business historians, and business school professors. Among the
highly useful works by political scientists are those by Stephen Kobrin and
Witold J. Heinsz (both are business school professors). Frequently, historians
(and political scientists) have seen multinational enterprises solely in political
terms, perceiving business“government relationships as central to the story line.
Sometimes these studies are part of a broad political economy framework.
Sociologists have focused on ˜˜political power™™ or ˜˜power relationships.™™ A
speci¬c branch of the large political economy literature deals with ˜˜dependent
development™™ and studies the politics of alliances, those between governments,
local capital, and multinationals; it concentrates exclusively on multinationals
in less-developed regions of the world. Robert Vitalis, When Capitalists
Collide: Business Con¬‚ict and the End of Empire in Egypt (Berkeley: University
of California Press, 1995), xii, for example, takes this approach as a point of
departure and argues that ˜˜the politics of investment in Egypt was ultimately
less a struggle between foreign and local capital than a con¬‚ict among local
investors for access to resources and control over the rents. . . . ™™
Notes to Chapter 2, Pages 41“45

26. There are also other confusions in names that arise from translations: Thus, for
example, the Anglo-Japanese Hydro-Electric Company, Ltd., when translated
from the Japanese literature, is sometimes presented as the Anglo-Japanese
Water Power Company or the Anglo-Japanese Water Power Electric Company.
These are the same company.
27. See Chapter 1 on isolated plants.
28. Wilkins, Emergence of Multinational Enterprise, 37“45.
29. Wilkins, History . . . to 1914. The international activities of J. & P. Coats are
being documented by Dong-Woon Kim and others. See, for example, Dong-
Woon Kim, ˜˜J. & P. Coats in Tsarist Russia, 1889“1917,™™ Business History
Review, 69 (Winter 1995), 465“93; idem., ˜˜J. & P. Coats as a Multinational
Before 1914,™™ Business and Economic History, 26:2 (1997); and idem., ˜˜The
British Multinational Enterprise in the United States Before 1914: The Case of
J. & P. Coats,™™ Business History Review, 72 (Winter 1998): 523“51.
30. One is impressed with the historical analogies to the telecommunications
industry. Producers of telephones needed a telephone network.
31. The earliest electrical manufacturers frequently aided their customers in setting
up isolated plants; but when there was a move to establishing a central power
station, there was typically a separate company established.
32. See Killingworth Hedges, Continental Electric Light Central Stations (London:
E. F. N. Spon, 1892), v“vii; Wilfried Feldenkirchen, Siemens (Munich: Piper,
2000), 84, describes the ˜˜contractor business™™ as one where ˜˜the electrical
company acts simultaneously as a manufacturer of electrical equipment, as an
electricity supply utility and as a ¬nancing company.™™ He dates this process,
which he calls an important marketing strategy, to the 1880s. He adds a note:
˜˜Today [2000,] the contractor business is organized in the form of BOO (Build-
Operate-Own)/BOT (Build-Operate-Transfer) models. . . . ™™ Ibid., 401n54.
33. On this, see Thomas F. O™Brien, ˜˜The Revolutionary Mission,™™ American
Historical Review, 98:3 (June 1993), 774; and for the makers of boilers,
insulated cables, and other such producer goods, this second reason for the initial
investment in the utility was inapplicable. The So¬na Annual Report, 1939, 13,
read: ˜˜Until recent years the producers and distributors of electricity have left it
to the manufacturers of electrical plant and appliances to promote a more
widespread knowledge of the various uses of electricity. Latterly they have
departed from this policy. . . . [T]hey have seconded the efforts of those who sell
and install this apparatus, and have set out to explain to their subscribers the
advantages of their various and graduated scales of charges. The active part thus
taken by the [electricity] distributing undertakings in promoting the use of
electric energy has tended to maintain and increase the demand.™™
34. In recent literature, foreign direct investment in the ¬rst case is called
˜˜horizontal foreign direct investment™™; in the second case, it is called ˜˜vertical
foreign direct investment.™™ See, for example, articles in the Journal of
International Economics. The literature also discusses export platforms, where
the export is to a third country, not back to the home nation.
35. See Chapter 1, herein, on this. One estimate, made by the Dresdner Bank for
1928, indicated that only 1 percent of the world™s total production of current
was transmitted across political frontiers. This export of current was mainly
Notes to Chapter 2, Pages 45“48 327

accounted for by Switzerland, which was reported that year to export roughly
25 percent of its production to neighboring countries, and by Canada, which
transmitted to the United States about 10 percent of its electricity output. New
York Times, July 20, 1930. The high Swiss power exports that persisted all
during the interwar years appear to be exceptional. Another estimate of Swiss
power exports, 1930“1943, put them at 20“24 percent of output (with minor
annual ¬‚uctuations). Independent Commission of Experts Switzerland “ Second
World War, Switzerland, National Socialism and the Second World War: Final
Report (Zurich: Pendo Verlag, 2002), 221 (http://www.uek.ch/en/index.htm,
accessed online March 12, 2006). Ibid., 220, describes Swiss hydroelectric
power plants on the border rivers, the Rhine and the Rhone, and notes that ˜˜the
bi-national hydroelectric power stations on the Rhine were subject partly to
German and partly to Swiss law; their output was generally divided on a 50“50
basis, and their joint management usually functioned smoothly, even during the
war [World War II].™™ Manufacturers™ satellites were involved.
Here there was a major difference between electric power and telephones. For
many decades, the provision of telephones to the ¬nal user (the consumer) was
directly associated with the provider of the telephone service; telephone
companies actually owned manufacturers (American Telephone & Telegraph,
for example, owned Western Electric, which was a manufacturer). Electric light
and power was different, probably because of the wide range of electrical goods
that came to be available. One exception we have found to this was related to
the sale of meters. In some cases (in Latin America, for example), German
manufacturers that had ownership in public utilities insisted that the public pay
for meters furnished by the public utility (imported from the German
manufacturer by that electric utility). In other parts of the world, this was
not a consideration. And in recent years “ with deregulation, privatization, and
especially the introduction of cell phones “ the manufacturers of phones and the
providers of telecommunication services are now rarely identical.
H. V. Nelles, in a preliminary paper for this project.
Takeo Hoshi and Anil Kashyap, Corporate Financing and Governance in Japan
(Cambridge, MA: MIT Press, 2001), is very useful on this topic.
Charles W. Calomiris, U.S. Bank Deregulation in Historical Perspective
(Cambridge: Cambridge University Press, 2000), 236“38, comparing ˜˜banks™™
and banking systems.
See Stephanie Diaper, ˜˜The Sperling Combine and the Shipbuilding Industry,™™
in J. J. van Helten and Y. Cassis, Capitalism in a Mature Economy (Aldershot,
England: Edward Elgar, 1990), 75; and Ranald C. Michie, The London Stock
Exchange: A History (Oxford: Oxford University Press, 1999), 139.
See Vincent P. Carosso, Investment Banking in America (Cambridge, MA:
Harvard University Press, 1970), on investment banks.
Daniel Verdier, ˜˜Explaining Cross-National Variations in Universal Banking in
Nineteenth-Century Europe, North America, and Australasia,™™ in Douglas J.
Forsyth and Daniel Verdier, eds., The Origins of National Financial Systems:
Alexander Gerschenkron Reconsidered (London: Routledge, 2003), 23.
For example, domestically: In 1913, Britain had 104 banks, which controlled
8,156 branches; in the United States, there were 24,524 banks, which had
Notes to Chapter 2, Pages 49“52

merely 548 branches; and Canada had 24 banks, with 2,962 branches. Ranald
Michie, ˜˜Banks and Securities Markets 1870“1914,™™ in Forsyth and Verdier,
The Origins, 47.
Hertner and Nelles, ˜˜Contrasting Styles of Foreign Investment,™™ 201.
Christopher Armstrong and H. V. Nelles, Monopoly™s Moment: The Organiza-
tion and Regulation of Canadian Utilities, 1830“1930 (Philadelphia: Temple
University Press, 1986), 120. (We added ˜˜at home and abroad,™™ for there came
to be large Canadian insurance company investments in the U.S. public utility
Richard Sylla, Review for EH-Net, March 25, 2005, of Forsyth and Verdier,
eds., Origins of National Financial Systems. Ranald Michie™s contribution is
Chapter 2.
Joost Jonker, ˜˜Competing in Tandem: Securities Markets and Commercial
Banking Patterns in Europe During the Nineteenth Century,™™ in Forsyth and
Verdier, eds., Origins of National Financial Systems, 84.
Wilkins, Emergence of Multinational Enterprise and Wilkins, Maturing of
Multinational Enterprise, document numerous such American companies.
Dominque Barjot, et al., eds., L™Electri¬cationOoutre-mer de la Fin du XIXe
Siecle aux Premiere Decolonisations (Paris: EDF, [n.d. 2002?]).
` ` ´
Our discussion of holding companies has been particularly in¬‚uenced by
conversations with and the works by Jean-Francois Hennart, Peter Hertner,
Luciano Segreto, and Thomas Hughes. A large literature exists on the history of
holding companies. On those in Europe, the standard sources are Robert
Liefmann, Beteiligungs- und Finanzierungsgesellschaften: Eine Studie uber den
modernen Kapitalismus und das Effektenwesen (Jena, Germany: G. Fischer,
1913), and Cartels, Concerns, and Trusts (London: Methuen, 1932), which
edition was originally published in German as Kartelle, Konzerne und Trusts. On
U.S. holding companies, see James C. Bonbright and Gardiner C. Means, The
Holding Company: Its Public Signi¬cance and Its Regulation (New York:
McGraw-Hill, 1932), and William J. Hausman, ˜˜The Historical Antecedents of
Restructuring: Mergers and Concentration in the U.S. Electric Utility Industry,
1879“1935™™ (unpublished paper prepared for the American Public Power
Association, March 4, 1997). For insightful treatments of holding companies and
their relationships with investment trusts and investment companies, see
Theodore Grayson, Investment Trusts (New York: John Wiley, 1928), and
Hugh Bullock, The Story of Investment Companies (New York: Columbia
University Press, 1959). On holding companies, see also Richard F. Hirsh, Power
Loss: The Origins of Deregulation and Restructuring in the American Electric
Utility System (Cambridge, MA: MIT Press, 1999), and Hughes, Networks of
Power. Morck, ˜˜How to Eliminate Pyramidal Business Groups,™™ 38“42, deals
with national (not multinational) enterprises, but his materials on holding
companies are exceptionally valuable; see also Morck and Steier, ˜˜Global
History of Corporate Governance,™™ which like Morck™s prior work takes the
view that there were sharp differences by country in holding company structures.
Morck sees the pyramided holding company as a means of concentrating control.
In 1936, after the 1935 Public Utility Holding Company Act had been passed in
the United States and there was a governmental attempt to alter the structure of
Notes to Chapter 2, Pages 53“53 329

holding companies in public utilities, Max Horn (from the Belgian holding
company So¬na) at the Third World Power Conference came to the defense of
holding companies and the coordination of business activities made possible by
them. He contrasted the holding company with ˜˜investment trusts,™™ arguing
there was not the same ˜˜permanent relation™™ between the investment trust and
the companies in which it is interested as between the holding company and the
operating companies. Whereas the holding company had responsibility for the
operating company, by contrast the investment trust, he argued, felt less
responsibility for the operating companies™ activities. He believed that a
fundamental advantage of the holding company was its ability to supply
technical advice in construction, in research, in obtaining the advantages of
large-scale purchases, and in providing ¬nancing. Max Horn, ˜˜Comments,™™
Transactions, Third World Power Conference, vol. 5 (Washington, DC: USGPO,
1936), 340“41. Plummer made the same distinction in 1938: ˜˜The term ˜holding
company,™ as understood in England, means a company whose chief function is
to hold the shares or stock of other companies, with the intention of controlling
their operations or policy. It is this intention to exercise control which
distinguishes the holding company from the investment or trust company.™™
Alfred Plummer, International Combines in Modern Industry (1938; reprint ed.,
Freeport, NY: Books for Libraries, 1971), 33 (emphasis in original). Although
the term ˜˜multinational enterprise™™ was not used, clearly Horn and Plummer™s
descriptions would ¬t neatly contemporary descriptions of multinational
Survey of Current Business, July 2001, 23. In 1982, foreign af¬liates of U.S.
companies classi¬ed as holding companies had represented 9 percent of the U.S.
direct investment position abroad. By 2004, holding companies comprised 35
percent of the American business-abroad position (in 2005, the percentage fell
to 30 percent for very speci¬c tax reasons). Ibid., July 2006, 24. Holding
company af¬liates meant that for the U.S. Bureau of Economic Analysis ˜˜the
industry patterns and the country patterns of the position estimates differ from
those of the estimates of the operations of foreign af¬liates™™ (our emphasis).
Ibid. When we read this, we had a sense of deja vu; it echoed some of our
frustrations in writing the present volume. Note that in this formulation the
entire multinational enterprise is not thought of as a holding company, only the
foreign af¬liates that were in a different industrial classi¬cation and in turn had
other holdings.
By ˜˜third-country™™ holding company, we mean a holding company owned in
part by a foreign parent that in turn owns securities in af¬liates that operate in
another country(ies) abroad.
On Unternehmergeschaft, see Peter Hertner, ˜˜Financial Strategies and
Adaptation to Foreign Markets: The German Electro-Technical Industry and
Its Multinational Activities, 1890s to 1939,™™ in Alice Teichova, Maurice Levy- ´
Leboyer, and Helga Nussbaum, eds., Multinational Enterprise in Historical
Perspective (Cambridge: Cambridge University Press, 1986), 150.
Newly created af¬liates of certain holding companies were sometimes forced by
statute to buy their electrotechnical supplies from the manufacturer(s) that
participated in the foundation of the holding company and of the operating
Notes to Chapter 2, Pages 53“55

enterprise. Hertner, ˜˜Financial Strategies and Adaptation to Foreign Markets,™™
Ginette Kurgan-Van Hentenryk, ˜˜Structure and Strategy of Belgian Business
Groups (1920“1990),™™ in Takeo Shiba and Masahiro Shimotani, Beyond the
Firm: Business Groups in International and Historical Perspective (London:
Oxford University Press, 1997), 90. Wilkins wondered about this analogy in the
international context: In the main, the zaibatsu structures brought in foreign
investments; Empain spread it outward. Yet, when Wilkins tried out the idea on
a Japanese audience (November 2005), they found it reasonable. On the
zaibatsu form, see Hoshi and Kashyap, Corporate Financing, 8“10. Holding
company groupings often had variations in the degree of looseness in the
relationships between corporations involved.
For a broad U.S. context, an interesting discussion of holding companies is that
in relation to Standard Oil. Originally, the Standard Oil group was organized as
a ˜˜trust™™ (at the pinnacle was the trust, which was not incorporated anywhere);
after an 1892 Ohio court decision, the group was reorganized so that some
companies were holding companies, some were holding and operating
companies, and others were purely operating companies. In 1899, Standard
Oil of New Jersey was at the pinnacle, an operating and holding company,
which ran a large integrated multinational industrial enterprise. Ralph W. Hidy
and Muriel Hidy, Pioneering in Big Business (New York: Harper & Brothers,
1955), 3“4, 40, 219“32, 305“38.
Hirsh, Power Loss, 36 (both quotations); Hausman, ˜˜Historical Antecedents,™™
32, and passim; see also William J. Hausman and John L. Neufeld, ˜˜U.S.
Foreign Direct Investment in Electrical Utilities in the 1920s,™™ in Wilkins and
Schroter, eds., Free-Standing Company, 361“90, for the replication of domestic
Hughes, Networks of Power, 393.
In the late 1920s, Switzerland exported roughly 25 percent of its power
production to neighboring countries, and the holding companies re¬‚ected these
network connections. A U.S. company on the American side of Niagara Falls
had a subsidiary across the border.
Numerous U.S. government hearings in the 1930s explored the terminology
and the characteristics of holding companies, trusts, and investment companies.
There was often confusion between (and long discussions about) investment
companies, investment trusts, and holding companies. We have mentioned such
distinctions in a note above. More recently, Serge Paquier in his ˜˜Swiss Holding
Companies from the Mid-Nineteenth Century to the Early 1930s,™™ Financial
History Review 8 (Oct. 2001), 163“82, argued that there were two main types
of holding companies: investment trusts and ¬nance companies. The former
˜˜always acquired minority stakes in other concerns,™™ and the aim of the
management of the investment trust ˜˜was never to take over, or control, the
companies whose shares were bought.™™ The second, the ¬nance companies,
were ˜˜characterised by their controlling interests in ¬rms that all operated in
the same industry;™™ and they spread risk through geographical diversi¬cation.
While Paquier™s two types of holding companies (one without and one with
controlling interests) correspond with the distinctions that others have made
Notes to Chapter 2, Pages 55“63 331

between investment trusts and holding companies, the correspondence in added
respects is uneasy (the ¬rst spreading risk by industry diversi¬cation, the second
by geographical diversi¬cation); there were investment trusts that concentrated
on investments in electric utilities and holding companies that con¬ned
themselves to a single country (foreign or domestic).
Normally, a company makes a foreign direct investment and the object of that
direct investment is considered to be a ˜˜direct investment.™™ What we are
suggesting here is the possibility that a company may make a foreign direct
investment (investing as part of an overall strategy, planning to have in¬‚uence,
its holding more than a purely ¬nancial one), yet the targeted ¬rm is not
in¬‚uenced or controlled in a major manner by the company undertaking the
investment. The targeted ¬rm makes its own fundamental decisions quite
independently of the investing company(ies). This situation prevailed particu-
larly when minority interests were involved.
Pamela Laird pointed this out to Mira Wilkins in June 2003.
Hughes, Networks of Power, 30, goes so far as to suggest that Lowrey ˜˜was
one of those who persuaded Edison to turn to electric lighting.™™
Hoshimi Uchida, ˜˜The Transfer of Electrical Technologies from the United
States and Europe to Japan, 1869“1914,™™ in David J. Jeremy, ed., International
Technology Transfer: Europe, Japan and the USA, 1700“1914 (Aldershot,
England: Elgar, 1991), 224“26, on the engineers.
On U.K. de¬nitions, see Derek F. Channon, The Strategy and Structure of
British Enterprise (Boston: Harvard Business School, 1973), Ch. 5.
The best material on the history of international construction ¬rms is in Marc
Linder, Projecting Capitalism: A History of the Internationalization of the
Construction Industry (Westport, CT: Greenwood Press, 1994).
In Wilkins, ˜˜Free-Standing Company,™™ 263, she recognized that the British free
standing company could be used to attract foreign as well as British
investments. She did not recognize, however, how common this was. After
World War I, when British tax laws changed, registration might be outside the
United Kingdom with no change in ownership and control, even though
registration overseas tended to loosen the potential for control.
See speci¬cally American & Foreign Power Co., Annual Report 1927, for the
board that year. The pattern was the same for the rest of the 1920s.
For the general proposition, see Wilkins, ˜˜Conduits for Long-Term Foreign
Investment,™™ 51“76.
See Peter Hertner, ˜˜Les Societes Financieres Suisses et le Developpement de
´´ ` ´
l™Industrie Electrique Jusqu™a la Premiere Guerre Mondiale,™™ in Fabienne
Cardot, ed., 1880“1980, Un Siecle d™Electricite dans le Monde (Paris: PUF,
` ´
1987), 341“55, esp. 342. There were also other advantages of Canadian, Swiss,
and Belgian registration, based on those nations™ corporate law.
See discussion of ˜˜lean governance™™ in Wilkins, ˜˜Free-Standing Company,
1870“1914,™™ 279, and Wilkins and Schroter, eds., Free-Standing Company, 6,
67, 349“52, 355“56. The phrase ˜˜lean governance™™ was used to indicate the
small (weak) head of¬ce of some free standing companies.
On the gray area related to railroads, see the dilemma faced by Michael
J. Twomey, ˜˜Patterns of Foreign Investment in Latin America in the Twentieth
Notes to Chapter 2, Pages 63“68

Century,™™ in John H. Coatsworth and Alan M. Taylor, eds., Latin America and
the World Economy Since 1800 (Cambridge, MA: Harvard University Press,
1998), 171.
Jules Dublin, Die Finanzierungs- und Kapitalanlage-Gesellschaften der
Schweizerishchen Grossbanken (Basel: Philographischer Verlag, 1937), 38“61.
Japanese direct investments in Chinese electric light and power that were
intimately associated with the Japanese direct investments in the South
Manchuria Railway were made from 1906 onward. In 1926, the South
Manchuria Electric Company was organized, and it took over the electric
power plants formerly owned by the South Manchuria Railway. C. F. Remer,
Foreign Investments in China (New York: Macmillan, 1933), 427“30, 490.
Chapter 1, herein, explains the advantage of electric tramways over steam
railroads in urban areas.
Hirsh, Power Loss, 12“31.
Sometimes the minority interests were above the 10 percent threshold that most
modern scholars use to de¬ne foreign direct investment, and sometimes they
were below. It did not really matter. The minority interests were principally for
information purposes and to in¬‚uence the purchasing decisions of the utilities.
Linda Jones, Charles Jones, and Robert Greenhill, ˜˜Public Utility Companies,™™
in D. C. M. Platt, Business Imperialism 1840“1930; an Inquiry Based on British
Experience in Latin America (Oxford: Oxford University Press, 1977), 81;
Hughes, Networks of Power, 227, 232.
For example, the Canadian-registered Mexican Light and Power and Brazilian
Traction, Light, and Power by the 1930s and well into the post“World War II
years were both ranked among the top foreign-owned ˜˜holding companies™™ in
public utilities in Latin America “ indeed, worldwide “ (as ranked by assets),
while all their operations and operating companies were still con¬ned within a
single country.
The quotation is from Armstrong and Nelles, Monopoly™s Moment, 321. There
is a modern literature that seeks to understand the development of U.S. and
Canadian (and by extension, global) electri¬cation in a broadly de¬ned political
economy framework with the focus on the regulatory structures. See Mark
Rose, Cities of Light and Heat (University Park: Pennsylvania State University
Press, 1995), and Hirsh, Power Loss. In a certain sense, Armstrong and Nelles,
Monopoly™s Moment, falls into that category.
Armstrong and Nelles, Monopoly™s Moment, 322.
This point is made in Chapter 1, but it seems important to reiterate.
On the other hand, we do not want to neglect the tensions of the earlier years.
Miguel S. Wionczek, ˜˜Electric Power,™™ in Raymond Vernon, ed., Public Policy
and Private Enterprise in Mexico (Cambridge, MA: Harvard University Press,
1964), 28, writes of Mexico, 1906“1910, and the bitter negotiations between
the municipalities and the companies, as the former complained about de¬cient
services and high rates; so, too, there was the intense hostility in Mexico in the
late 1930s. Ibid., 60. The more closely we look at the data, the earlier the
clashes seem to emerge in Chile and Argentina, for example.
See George Soule, Prosperity Decade (New York: Holt, Rinehart and Winston,
1964), 183, for the U.S. problems in the 1920s, but these problems extended far
Notes to Chapter 3, Pages 69“75 333

beyond the United States; there is an immense literature on public utility
regulation and methods of rate determination.
Herbert Feis, Europe: The World™s Banker 1870“1914 (1930; reprinted
New York: W. W. Norton, 1965), 131.
Ibid., 139. And as So¬na head Dannie Heineman recalled decades later, ˜˜In
England, the storm of public protest against British ¬nancial participation in
the Baghdad railway project frightened off the private group that had been
organized in the City and led to a cabinet decision forbidding the investment.™™
Dannie N. Heineman, ˜˜The Changing International Environment,™™ address to
the general meeting of shareholders of Societe Financiere de Transports et
´´ `
d™Entreprises Industrielles (So¬na), April 22, 1954 (published in booklet form),
10“11. For more details, see Jacques Thobie, ˜˜European Banks in the Middle
East,™™ in Rondo Cameron and V. I. Bovykin, eds., International Banking
(Oxford: Oxford University Press, 1991), 434.
C. K. Hobson, The Export of Capital (London: Constable & Co., 1914), xxii.
Quoted in Feis, Europe: World Banker, 123.
Wilkins, Maturing of Multinational Enterprise, 16.
See Chapter 4, herein, on loans for Greek, Hungarian, and Yugoslavian (this
last was planned but not made) as well as Japanese electrical ventures, based on
British Treasury guarantees.
Frank Southard, American Industry in Europe (Boston: Houghton Mif¬‚in,
1931), 181. Included in Southard™s long list of companies was the Swiss,
Motor“Columbus. See ibid., 176.
Hobson, Export of Capital, xxi.
The quotation is from Heineman, ˜˜Changing International Environment,™™ 12,
where the head of So¬na compared and contrasted conditions of doing business
in 1953 with those of his early experiences in the company, 1895“1905, ˜˜then
and now.™™
F. A. Hayek, The Road to Serfdom (1944; Reprinted Chicago: University of
Chicago Press, 1994) was the rare exception in bemoaning this trend (and not
sharing the assumption).
Donald R. Lessard, ˜˜Risk and the Dynamics of Globalization,™™ in Julian M.
Birkinshaw, et al., The Future of the Multinational Company (London: John
Wiley, 2003), 76“85.

3 every city, 1880“1914
1. On the technological contributions of Jablochkoff (1847“1894), see Chapter 1,
herein. On SGEl, see chronology in d™Arnaud Berthonnet, Guide du Chercheur
en Histoire de L™ Electricite (Paris: Editions La Mandragore, n.d.), 21; New
York Times, Dec. 30, 1878 (trial of electrical lights, Jablochkoff electric lighting
system, Holborn Viaduct), Feb. 16, 1879 (Jablochkoff electric lighting system at
Thames Embankment and Holborn Viaduct), Aug. 8, 1880 (capital of SGEl;
SGEl have maintained light on the Thames Embankment for 18 months; plans
for Russian company), Nov. 10, 1880 (2,500 lights); Serge Paquier, Histoire de
´ ´
l™Electricite en Suisse (Geneva: Editions Passe Present, 1998), I, 52“53; Jonathan
´ ´´
Notes to Chapter 3, Pages 75“76

Coopersmith, The Electri¬cation of Russia, 1880“1926 (Ithaca: Cornell Univer-
sity Press, 1992), passim; http://archives.iee.org/about/Arclamps/jabloch.htm,
accessed Oct. 2, 2007; and Allen M. Perry, ˜˜Tentative History of the Evolution
of the Electrical Industry,™™ 4 vol. typescript (Birmingham, AL: Alabama Power,
c. 1936), I, 99 (1881 activities).
New York Times, Aug. 8, 1880.
An earlier attempt to establish a subsidiary in Vienna had failed. Wilfried
Feldenkirchen, Siemens (Munich: Piper, 2000), 20, 35“36; Peter Hertner,
˜˜Financial Strategies and Adaptation to Foreign Markets: The German Electro-
Technical Industry and Its Multinational Activities, 1890s to 1939,™™ in Alice
Teichova, Maurice Levy-Leboyer, and Helga Nussbaum, eds., Multinational
Enterprise in Historical Perspective (Cambridge: Cambridge University Press,
1986), 146“47. See also Sigfrid von Weiher, Die Englischen Siemens-Werke und
das Siemens- Uberseegeschaft in der Zweiten Halfte des 19. Jahrhunderts
¨ ¨
(Berlin: Duncker & Humblot, 1990).
Godalming™s web page (http://www.godalming-tc.gov.uk/, accessed Oct. 2,
2007); R. H. Parsons, The Early Days of the Power Station Industry (Cambridge:
Printed for Babcock and Wilcox at the Cambridge University Press, 1939), 12;
others claim that California Electric Light Company (CELC), founded in 1879 in
San Francisco, was the ¬rst ˜˜central-station electrical utility.™™ W. Bernard
Carlson, Innovation as a Social Process: Elihu Thomson and the Rise of General
Electric, 1870“1900 (Cambridge: Cambridge University Press, 1991), 133“34;
William J. Hausman, ˜˜The Historical Antecedents of Restructuring: Mergers and
Concentration in the U.S. Electric Utility Industry, 1879“1935™™ (unpublished
paper prepared for the American Public Power Association, March 4, 1997), 11.
The CELC venture did not involve international business, but that is not at the
heart of the dispute, which may lie in the terms ˜˜incandescent lamps,™™ ˜˜entire
town,™™ and ˜˜street lights.™™ David S. Landes, The Unbound Prometheus:
Technological Change and Industrial Development in Western Europe from
1750 to the Present (Cambridge: Cambridge University Press, 1969), 285, writes
that ˜˜the ¬rst public power station in Europe was established at Godalming in
England by Siemens Brothers in 1881™™ (our emphasis).
For example, the Russian entrepreneur Vladimir N. Chikolev™s company,
Elektrotekhnik, had received permission in 1880 to light Nevskii Prospekt, the
main boulevard in St. Petersburg. By 1883, out of money, he sold out to the
Russian subsidiary of Siemens & Halske, which ¬nished the project late that
year. Coopersmith, Electri¬cation of Russia, 48.
New York Times, Aug. 8, 1880.
Mira Wilkins, The Emergence of Multinational Enterprise: American Business
Abroad from the Colonial Era to 1914 (Cambridge, MA: Harvard University
Press, 1970), 52.
Vincent P. Carosso, The Morgans (Cambridge, MA: Harvard University Press,
1987), and Ron Chernow, The House of Morgan (New York: Atlantic Monthly
Press, 1990).
Theresa Collins found and directed our attention to two key letters:
J. P. Morgan, New York, to Walter Burns, Oct. 30, 1878, and J. P. Morgan
to Walter Burns, Nov. 19, 1878. They were found in a box labeled ˜˜Pierpont
Notes to Chapter 3, Pages 76“78 335

Morgan (1837“1913),™™ binder stamped J. S. M. & Co., No. 12. Letterbook No.
12, pp. 457“59, 478, J. Pierpont Morgan Library (JPML).
Morgan to Burns, Oct. 30, 1878. This letter is also quoted in Jean Strouse,
Morgan (New York: Random House, 1999), 182.
Data in the JPML, as researched by Collins, Stouse, and others. Wilkins used
the Edison archives (EA) in the preparation of her Emergence of Multinational
Enterprise. (The Edison papers that Wilkins used have subsequently been
included in the Thomas A. Edison Papers (TAEP), some of which are accessible
online; we have cited EA to indicate material taken from Wilkins™s notes as
distinct from the material that we have used from TAEP.) Note that some of the
˜˜foreign™™ companies were registered abroad, and some were registered in the
United States to do business abroad.
They did this although many had other speci¬c functions, i.e., their purpose
was to undertake exhibitions and to hold patents.
On Lowrey, see Matthew Josephson, Edison (New York: McGraw-Hill, 1959),
passim; the quote is on p. 185; Josephson, who used the Edison papers, notes
how early Lowrey was involved; see also Strouse, Morgan, 182.
Strouse, Morgan, 183; Thomas P. Hughes, Networks of Power: Electri¬cation
in Western Society, 1880“1930 (Baltimore: Johns Hopkins University Press,
1983), 49“50.
Paul Israel, Edison: A Life of Invention (New York: John Wiley, 1998), 214“15;
for the excitement over this exhibit, see Luciano Segreto, ˜˜Ciento Veinte Anos de
Electricidad: Dos Mundos Diferentes y Parecidos,™™ in Gonzalo Anes, ed.,
Un Siglo de Luz: Historia Empresarial de Iberdrola (Madrid: Iberdrola,
2005), 17.
A list of some of these Edison companies is included on the TAEP website
(http://edison.rutgers.edu/list.htm#Lightfor, accessed Dec. 30, 2006). See also
Wilkins, Emergence of Multinational Enterprise, 53“54, 57. The TAEP website
notes that not included were many additional companies set up in foreign
countries during the early 1880s. Thus, for example, a historian of Korea tells
of Edison™s seeking to obtain in the 1880s a concession for exclusive rights for
electric light systems. Peter Duus, ˜˜Economic Dimensions of Meiji Imperialism:
The Case of Korea, 1895“1910,™™ in Ramon H. Myers and Mark R. Peattie, eds.
The Japanese Colonial Empire, 1895“1945 (Princeton: Princeton University
Press, 1984), 139. Edison companies established central power stations from
Rotterdam to St. Petersburg. Israel, Edison, 215“16. See also G.P. Lowrey to
Drexel, Morgan & Co., March 25, 1880, JPML (p. 11 of Collins notes) on the
foreign companies.
TAEP website (http://edison.rutgers.edu/index.htm, accessed Dec. 30, 2006).
New York Times, Dec. 30, 1878, reprinting an article from the London News,
Dec. 16, 1878; see also New York Times, Jan. 16, 1879. Smithsonian website
(http://americanhistory.si.edu/lighting/scripts/s19c.htm, accessed Sept. 26,
2007); New York Times, April 12, 1882; on the British Edison company,
Wilkins, Emergence of Multinational Enterprise, 52“53, and data from EA and
from JPML. See also Hughes, Networks of Power, 54“65. The British Edison
company™s memorandum of association was dated Feb. 8, 1882 and its articles
of association were March 15, 1882; JPML (p. 8 of Collins notes on Drexel,
Notes to Chapter 3, Pages 78“79

Morgan & Co. Syndicates); the display that the New York Times reported was
on April 11, 1882.
Hughes, Networks of Power, 55“57 (Holborn Viaduct), 58“66 (details on the
new legislation), 21“22 (Swan), 62 (Edison & Swan). Hughes attributes the
abandonment, and the subsequent ˜˜backwardness,™™ of British electri¬cation,
not to technology, but to the requirements imposed under the British political
system. Ibid., 65“66. For an interesting discussion of the weak development of
British domestic electri¬cation (in the context of whether British capital went
abroad rather than investing at home), see Michael Edelstein, Overseas
Investment in the Age of High Imperialism: The United Kingdom, 1850“1914
(New York: Columbia University Press, 1982), 64. His culprits are different
from those of Hughes, as he seeks to explain why the anarchy of local
regulation and the absence of appropriate British legislation were not
Wilkins, Emergence of Multinational Enterprise, 54, 57, with corrections by
Pierre Lanthier.
Pierre Lanthier, ˜˜Les Constructions Electriques en France: Le Case de Six
Groupes Industriels Internationaux de 1880 a 1940,™™ Ph.D. diss., 3 vol. (Paris:
University of Paris X (Nanterre), 1988).
Paquier, Histoire de l™Electricite en Suisse, 54“55. Minutes of Meeting, Edison
Electric Light Company of Europe Ltd., Board of Directors, Jan. 21, 1885, EA.
The failure of the Jablochkoff system was undoubtedly also the result of a
noncompetitive technology.
Georg Siemens, History of the House of Siemens, 2 vol. (Freiburg/Munich: Karl
Alber, 1957), I, 90“100, is excellent on the reaction of Werner von Siemens and
his ¬rm, ˜˜who were regarded as the supreme authority in all matters concerning
electricity,™™ to the involvements of Emil Rathenau (and Edison interests) in the
German industry. Siemens & Halske actually contributed to the initial capital
of AEG, and the latter™s ¬rst chairman of the board was Georg Siemens, who
was the key ¬gure in the Deutsche Bank and was the cousin of Werner von
Siemens, founder of Siemens & Halske. Family ties notwithstanding, the AEG“
Deutsche Bank links were equally important. AEG was Deutsche Bank™s ¬rst
successful industrial ¬‚otation. Lothar Gall, ˜˜The Deutsche Bank from Its
Founding to the Great War, 1870“1914,™™ in Lothar Gall, et al., The Deutsche
Bank, 1870“1995 (London: Weidenfeld & Nicholson, 1995), 34.
Emil Rathenau to Thomas Edison, Feb. 19, 1889, EA. He added very bluntly and
emphatically, ˜˜[A]nd we cannot restrict ourselves in the sale of the same [our
product] any more than do Siemens and Halske and the other manufacturers of
incandescent lamps.™™ When Tokyo Electric Light Co. had ordered its ¬rst direct-
current system in 1886, it had done so from the Edison Co. in the United States.
Tokyo Electric changed to alternating current in 1894 and imported generators
from AEG. Hoshimi Uchida, ˜˜The Transfer of Electrical Technologies from the
United States and Europe to Japan, 1869“1914,™™ in David J. Jeremy, ed.,
International Technology Transfer. Europe, Japan and the USA, 1700“1914
(Aldershot, England: Elgar, 1991), 231. This related to trade, not to investments,
but it shows the independence of AEG. Peter Hertner found in AEG archives,
Berlin, documents on the relations between Siemens and AEG that indicated that
Notes to Chapter 3, Pages 79“80 337

it was not until 1894 that Siemens ˜˜granted AEG complete independence.™™ Data
provided by Peter Hertner, June 2006.
Mira Wilkins, The History of Foreign Investment in the United States to 1914
(Cambridge, MA: Harvard University Press, 1989), 434, and Christopher
Kobrak, Banking on Global Markets: Deutsche Bank and the United States,
1870 to the Present (Cambridge: Cambridge University Press, forthcoming).
Sidney Alexander Mitchell, S. Z. Mitchell and the Electrical Industry (New York:
Farrer, Straus & Cudahy, 1960), 52 (on number of central power stations and
isolated plants of Edison General Electric on the eve of the 1892 formation of
General Electric). Hausman interprets the ¬gures as the number of central
stations and isolated stations set up by Edison General Electric; Theresa Collins
suggests Edison General Electric and its predecessor companies would probably
be even more accurate. There is no question that Edison General Electric, which
was a manufacturing ¬rm, had interests in electric utilities. See also Forrest
McDonald, Insull (Chicago: University of Chicago Press, 1962), 42“43. As
Carlson, Innovation, 289, points out, Edison General Electric accepted
substantial amounts of utilities stock as payment for equipment; the predecessor
companies seem to have followed the same path. In January 1890, Villard was
reporting to Deutsche Bank that Edison General Electric was making investments
in New York Illuminating Company and Boston Illuminating Company“insisting
that such investments would encourage the sale of Edison equipment. The
Deutsche Bank was extremely nervous about the amount of capital needs of
Edison General Electric and that its receivables were to related companies.
Kobrak, Banking on Global Markets. McDonald argues that Villard initially
envisaged Edison General Electric as a holding company that would manufacture
and sell only to its own central-station companies. McDonald, Insull, 42“43.
Wilkins, The History . . . to 1914, 434“35.
As a reminder to the reader, this is the terminology we used in Chapter 2.
The North American Company is of interest to us as one of the ways the
Germans participated in American business. It would become an important
public utility holding company. At origin, it was a ˜˜Henry Villard™™ company,
the successor to the Oregon & Transcontinental Company, which he had
organized for railroad ¬nance on June 28, 1881. New York Times, June 16, 17,
1890; Oct. 7, 1891; Dec. 16, 1891; Hausman, ˜˜Historical Antecedents,™™ 17;
North American Company, North American Company (Privately printed,
1926?), 15; Dietrich Buss, Henry Villard: A Study of Transatlantic Investment
and Interests, 1870“1895 (New York: Arno Press, 1978), 216 (on the charter);
ibid., 217 (on initial Deutsche Bank backing); ibid., 217, 247 (on the
withdrawal). Kobrak found in the Deutsche Bank archives, Frankfurt
(September balances, HADB, A-0671) information on the latter™s shareholdings
in the North American Company, as of September 1890. In 1890, the Deutsche
Bank was very unhappy with Villard™s constant calls on the bank for more
funding. A note below provides more on the Deutsche Bank“Villard relationship
as it related to electri¬cation in the United States.
Data on the TAEP website indicates that the Societa Generale Italiana di
Elettricita Sistema Edison was organized in December 1883, preceded by the
Comitato per le Applicazioni dell™Elettricita Sistema Edison in Italia, which
Notes to Chapter 3, Pages 80“81

built a central station in Milan in early 1883. According to Moody™s Manual
(Utilities) 1930, 1673, Societa Generale Italiana di Elettricita Sistema Edison
` `
was incorporated Jan. 6, 1884. See also Denis Mack Smith, Italy: A Modern
History (Ann Arbor: University of Michigan Press, 1959), 246, and Luciano
Segreto, Giacinto Motta (Laterza, Italy: Roma-Bari, 2004).
See partial list of the companies on the TAEP website (http://edison.rutgers.edu/
index.htm, accested Oct. 20, 2007).). The website provides links to the
documents, which makes it possible to trace the course of many of the
individual companies. Paul Israel makes the legitimate point that all the Edison
foreign companies were set up individually. ˜˜Neither Edison nor his business
associates seem to have considered [for example] bringing the European
enterprises together into a single multinational business, although Drexel
Morgan™s interest in Edison™s foreign patents and their international banking
connections might have logically led to such an enterprise.™™ Israel, Edison, 216.
As indicated, each of the European companies became detached from its
originators; so, too, did the companies around the world. In part, the loosely
knit origins might have been responsible.
Wilkins, Emergence of Multinational Enterprise, 57.
Carlson, Innovation, 48, 87“91.
Ibid., 66, 101.
Mitchell, S. Z Mitchell, 52, and Hausman, ˜˜Historical Antecedents,™™ 23.
Carlson, Innovation, 211“15, 224. United States Congress, Senate, Report on
Electric Power Industry: Control of Power Companies (Sen. Doc. 213), 69th
Cong., 2nd sess. (1927), 70, and William J. Hausman and John L. Neufeld,
˜˜U.S. Foreign Direct Investment in Electrical Utilities in the 1920s,™™ in Wilkins
and Schroter, eds., The Free-Standing Company in the World Economy
(Oxford: Oxford University Press, 1998), 365, 371, on United Electric
Securities Co., as one of the oldest holding companies. It should be noted
that its origins in 1890 were at the identical time as the North American Co.
Brush had been an early contender in the electric light ¬eld, moving from arc
lamps to incandescent lamps. Josephson, Edison, 341 (on Brush™s competition
with Edison); in 1885, Brush Electric in the United States began producing
incandescent lamps and developing lighting plants. Even earlier, in 1880, Brush
Electric had made a licensing agreement with Anglo-American Brush Electric
Light Corporation, Ltd., in England. Wilkins, Emergence of Multinational
Enterprise, 58. The latter became a manufacturing company and sold
˜˜concessions™™ to other British ˜˜Brush companies.™™ In the early 1880s, there
had been excitement as an array of Brush securities had been offered on the
London Stock Exchange, in what was known as the Brush boom, followed by a
collapse. David Kynaston, The City of London (London: Chatto & Windus,
1995), II, 148; Hughes, Networks of Power, 57, 61“62; and Arnold White,
London, to Thomas Edison, July 20, 1882, EA; I. C. R. Byatt, The British
Electrical Industry, 1875“1914 (Oxford: Oxford University Press, 1979),
18“19. The Brush companies ¬‚oated in England were both domestic and
foreign. Included, for example, were the International Electric Company, Ltd.
and the English-Austrian Brush Electric Company, Ltd., Vienna (set up
Sept. 22, 1882). The latter two companies were associated with the building of
Notes to Chapter 3, Pages 81“82 339

the ¬rst central power station in Bucarest (later in Romania). Paul Cartianu and
Calin Mihaileanu, ˜˜Les Debuts de l™Utilisation de l™ Electricite dans le Territoire
´ ´
de la Roumanie,™™ in Fabienne Cardot, ed., 1880“1980, Un Siecle d™ Electricite
` ´
dans le Monde (Paris: PUF, 1987), 167“68. Irving Stone, The Global Export of
Capital from Great Britain, 1865“1914 (Houndmills, England: Macmillan,
1999), 42“381, provides tabulations of British ˜˜Capital Calls™™ (1865“1914) in
the electric light and power sector (he has no company names or numbers of
companies). He found a surge in capital calls in this sector in 1882, including
calls for capital for companies operating in Austria-Hungary, Chile, India, and
South Africa. This obviously re¬‚ected the ˜˜Brush boom.™™ This is part of a
passing British business-abroad story rather than the American one, although
the initial impetus came from the U.S. Brush company (we will return later in
this chapter very brie¬‚y to the fate of the Brush companies). Apparently, the
U.S. Brush company in its licensing never acquired an equity interest in Anglo-
American Brush or in any of the other individually ¬‚oated Brush companies
within Great Britain or overseas. See Carlson, Innovation, 216, and New York
Times, Oct. 17, 18, 1889, and Jan. 21, 1890, on Thomson-Houston™s takeover
of Brush Electric in the United States. The Brush and the Edison international
business stories had something in common: Both spawned foreign business that
bore the ˜˜brand™™ identi¬cation of the parent. But whereas Edison initially
acquired stock in exchange for patent licensing, Brush apparently did not. And,
as indicated, Edison did not maintain control.
37. Everett Frazar to Edison, Jan. 16, 1889, EA, writes of the ˜˜unexpected active
competition of the Thomson-Houston Company, who are also represented in
Japan and China.™™ Frazar & Co. was a U.S. trading company that was Edison™s
representative in Japan. In 1887, it had sold the Japanese their ¬rst electric light
plant, an Edison plant, installed in the Imperial Palace. William W. Lockwood,
The Economic Development of Japan, Growth and Structural Change 1868“
1938 (Princeton: Princeton University Press, 1954), 329“30.
38. Wilkins, Emergence of Multinational Enterprise, 58, and Carlson, Innovation,
39. Hausman and Neufeld, ˜˜U.S. Foreign Direct Investment in Electrical Utilities in
the 1920s,™™ 371 (on the absorption of United Electric Securities); Carlson,
Innovation, 224 (on the French and British Thomson-Houston). The French
Thomson-Houston was not formed until 1893 (that is, after the establishment
of General Electric), even though Thomson-Houston was doing business in
France much earlier. The full name for the French Thomson-Houston company
was Compagnie Francais pour L™Exploitation des Procedes Thomson-Houston;
¸ ´´
the name explains why the Thomson-Houston designation was retained after
GE came into existence. The British Thomson-Houston was also organized
after GE was established: Thomson-Houston had worked with the British
engineering ¬rm Laing, Wharton & Down, which in 1894 became the British
Thomson-Houston. On the Thomson-Houston connection with Union
Elektrizitats Gesellschaft (UEG), once again, formed after General Electric™s
creation, see Liane Ranieri, Dannie Heineman: Un Destin Singulier,
1872“1962 (Brussels: Editions Racine, 2005), 40; UEG was a company of
the German entrepreneur Ludwig Loewe.
Notes to Chapter 3, Pages 82“84

40. Mitchell, S. Z. Mitchell, 67“68, and U.S. Senate, Report on Electric Power
Industry, 71“73. Manufacturers would continue to build central power
stations, sometimes under contract and sometimes as owners; but if the latter,
there would rapidly be established separate companies and new ¬nancial
41. On Morgan™s and Higginson™s roles in the formation of General Electric and
the GE board membership, see Carosso, Morgans, 390“91; Vincent Carosso,
Investment Banking in America (Cambridge, MA: Harvard University Press,
1970), 43 (identi¬es Lee, Higginson as banker for Thomson-Houston Electric).
For Lee, Higginson™s role in railroad ¬nance, see ibid., 34. In 1906, Lee,
Higginson would open a London of¬ce; Carosso writes that prior to that, its
access to European capital ˜˜appears to have been through its connections with
Speyer & Co.™™ Carosso, Investment Banking in America, 91, 95n77.
42. Wilkins, History . . . to 1914, 204“7.
43. On international banking relationships in these years, Rondo Cameron and
V. I. Bovykin, eds., International Banking (Oxford: Oxford University Press,
1991); European Association for Business History, Handbook on the History of
European Banks (Aldershot, England: Edward Elgar, 1994), henceforth cited as
Handbook on the History of European Banks; Paul H. Emden, Money Powers
of Europe in the Nineteenth and Twentieth Centuries (London: Sampson Low,
Marston & Co., [1937]); Gall, et al., Deutsche Bank, 1870“1995; Kobrak,
Banking on Global Markets. We have also relied on bank histories and gone
into some European bank archives.
44. There seem to have been a number of reasons for this that came down to the
absence in The Netherlands of any comparative advantage in electric utilities.
The key Dutch participant in the electrical manufacturing industry, Philips, did
not make turbines and other heavy electrical equipment. Also, perhaps the
strength of Dutch banking in the age of railroads was greater than in the
subsequent age of electric utilities.
45. New York Times, Nov. 14, 1890 (on the creditor committee); see also Buss,
Henry Villard, 217.
46. Syndicate information, JPML, Collins notes, p. 10; Wilkins, History . . . to
1914, 221. Interestingly, Winslow, Lanier, & Co. was one of the earliest
customers of Edison™s Pearl Street Station, which opened in 1882. Mitchell,
S. Z. Mitchell, 37. The Pearl Street station began operations on September 4,
1882; by the end of that month, it had 59 customers, with Winslow, Lanier
among them. The of¬ce of J. P. Morgan at Drexel, Morgan (23 Wall Street,
New York) was lit when the current went on at the Pearl Street station. Ibid.,
35. Jill Jonnes, Empires of Light: Edison, Tesla, Westinghouse and the Race to
Electrify the World (New York: Random House, 2003), 282, 309 (on Adams
and the Edison companies). On Winslow, Lanier™s history and importance as an
investment bank, see Carosso, Investment Banking, 12“13, 37, 91.
47. At the age of 81, in 1927, Adams would write a two-volume history of Niagara
Power Company: Edward Dean Adams, Niagara Power. History of Niagara
Falls Power Company, 2 vol. (Niagara Falls, NY: Niagara Falls Power Co.,
1927); Wilkins, History . . . to 1914, 221, 548, and Kobrak, Banking on Global
Markets (on Adams). During the 1880s, Deutsche Bank had taken part in
Notes to Chapter 3, Pages 84“85 341

¬nancing the Northern Paci¬c Railroad; Villard, who had channeled Deutsche
Bank money into that railroad, became the bank™s representative in the
United States in 1886 and had been (as noted earlier) instrumental in bringing
Siemens and AEG as well as the Deutsche Bank into Edison General Electric,
1889“1891. In 1890, the British manufacturing af¬liate of Siemens, Siemens
Brothers, London, presented a proposal to supply the Niagara Falls project that
was not accepted (Wilkins, History . . . to 1914, 434“36, 549). While Deutsche
Bank had become discontented with Villard from 1890, it had continued to use
the man as its representative, and Villard brought Deutsche Bank investments
into U.S. public utilities (portfolio, not direct investments) in 1891“1892.
Indeed, when Deutsche Bank and the German banking house Jacob S. H. Stern
were in 1892 considering supporting Cincinnati Edison Electric as part of a
syndicate, the Deutsche Bank wrote Villard (Nov. 11, 1892) that it ˜˜would not
have invested ˜such considerable amounts™ in a business so unfamiliar to them
had it not been for Villard™s con¬dence in the project.™™ (Kobrak, Banking on
Global Markets). In the crisis of 1893, Deutsche Bank and the banking house
Jacob S. H. Stern were ˜˜disagreeably astonished™™ with Villard: They had made
a loan to the North American Company, ˜˜solely to satisfy Villard™™ and now
˜˜refused to put any more in.™™ They had relied on Villard ˜˜for protection of our
interest,™™ and Villard had let them down. (Based on Stern to Villard, June 23,
1893, Box 99, Folder 742, Villard Collection, Baker Library, Harvard Business
School; we are indebted to Kobrak for this document.) In 1893, as Villard™s
Northern Paci¬c went into receivership, Deutsche Bank reached its last straw.
Adams served on the reorganization committee for the Northern Paci¬c, and in
1893 the Deutsche Bank appointed Adams as its U.S. representative, ¬nally
replacing Villard. Kobrak documents the tumultuous Deutsche Bank“Villard
relationship in Kobrak, Banking on Global Markets. Kobrak has used the very
large collection of Villard“Deutsche Bank and Adams“Deutsche Bank
correspondence in the German Deutsche Bank archives. For more on Adams,
see also Manfred Pohl, ed., Arthur von Gwinner. Lebenserinnerungen, 2nd ed.
(Frankfurt am Main: Friz Knapp Verlag, 1992), 62“64, and Karl Helfferich,
Georg von Siemens: Ein Lebensbild aus Deutschlands Grosser Zeit, 2nd ed., II
(Berlin: Julius Springer, 1923), 260“72.
48. New York Times, Aug. 8, 1898 (Cripple Creek), Dec. 6, 1902 (seat on Stock
Exchange), Jan. 20, 1913 (advertisement on experience). On Cripple Creek
mining promotions in London, see Wilkins, History . . . to 1914, 242.
Guanajuato Power and Electric Co. was to develop electric light and power in
the Guanajuato district in Mexico. In 1910, Frederick Gerhard of William
P. Bonbright & Co. was appointed assistant secretary of the Guanajuato Power
and Electric Co. New York Times, July 1, 1908 and May 2, 1910. Bonbright
was probably associated with this electric utility from its origins in 1902. The
˜˜Mexican™™ company was headquartered in Colorado Springs, CO. Moody™s
1914, 375. On Guanajuato, Mexico, ˜˜the city that silver built,™™ where in 1903
Porf±rio D±az inaugurated a new Opera House, see New York Times, Sept.
´ ´
24, 2006.
49. On German banks abroad, see Hermann Wallich and Paul Wallich, Zwei
Generationen im Deutschen Bankwesen 1833“1914 (Frankfurt am Main: Fritz
Notes to Chapter 3, Pages 85“85

Knapp, 1978), 274“338; Gall, et al., Deutsche Bank, esp. 16, 18, 58“59; Peter
Hertner, ˜˜German Banks Abroad Before 1914,™™ in Geoffrey Jones, ed., Banks
as Multinationals (London: Routledge, 1990), 99“119; J. Riesser, The German
Great Banks and Their Concentration (1911; reprinted New York: Arno Press,
1977), esp. 420“545. Hertner, ˜˜German Banks,™™ 99, notes the growing share
of world trade in manufactured products by German enterprises. See also Henri
Hauser, Germany™s Commercial Grip on the World: Her Business Methods
Explained (New York: Charles Scribner™s Sons, 1918), wherein he quotes
(p. 64) Deutsche Bank™s Georg von Siemens as having said (in 1907) ˜˜Every
bank created abroad . . . is the pioneer of national industry.™™ The Banco
Aleman Transatlantico opened as a branch of the Deutsche Ubersee Bank, in
´ ´
Buenos Aires on Aug. 5, 1887. It continued to trade as the Banco Aleman ´
Transatlantico after the name change of its parent in 1893; it would be helpful
in the development of Compan±a Alemana Transatlantica de Electricidad
˜´ ´
Albert Broder, in ˜˜Banking and the Electrotechnical Industry in Western
Europe,™™ in Rondo Cameron and V. I. Bovykin, eds., International Banking
(Oxford: Oxford University Press, 1991), 468“84, emphasizes the initial
caution of French banks. See also Lanthier, ˜˜Les Constructions Electriques en
In the ¬rst decade of the twentieth century, Loewenstein was a partner in the
Belgian investment house Stallaerts & Loewenstein (Christopher Armstrong
and H. V. Nelles, Southern Exposure: Canadian Promoters in Latin America
and the Caribbean, 1896“1930 [Toronto: University of Toronto Press, 1988],
305n13, 80, 149). David Kynaston, The City of London (London: Chatto &
Windus, 1999), III, 145 (on Loewenstein™s ˜˜fortune™™). On the pre-1914
activities of Loewenstein in Brazilian electri¬cation, see Duncan McDowall,
The Light: Brazilian Traction, Light and Power Company Limited, 1899“1945
(Toronto: University of Toronto Press, 1988), 106, 140“41, 156, 161, 183,
Gianni Toniolo, One Hundred Years, 1894“1994: A Short History of the Banca
Commerciale Italiana (Milan: Banca Commerciale Italiana, 1994), 34 (relation to
the Italian Edison company). For the early years of the Italian Edison company, see
Antonio Confalonieri, Banca e Industria in Italia 1894“1906, III (Milano: Banca
Commerciale Italiana, 1976), 217“29. The initial shareholders in BCI in 1894 were
the major German banks (including Deutsche Bank, the Berliner Handelsge-
sellschaft, the Disconto Gesellschaft, the Bank fur Handels und Industrie, and the
Dresdner Bank); the private German banking house S. Bleichroder, Berlin; as well
as the Austrian and Swiss banks (the latter comprised one each from Zurich, Basel,
and Geneva: Credit Suisse, Basler Bankverein, and Union Financiere, respectively).
Toniolo, One Hundred Years, 28.
Toniolo, One Hundred Years, 34, 36“37 (where it is noted that BCI took part
in the ¬nancing the formation of thirteen ¬rms in the electrical sector in the
years before World War I); Handbook on the History of European Banks, 602;
Luciano Segreto, ˜˜Electi¬er un Reve,™™ in Dominique Barjot, et al., eds.,
´ lectri¬cation Outre-mer de la Fin du XIXe Siecle aux Premieres
L™E ` `
Decolonisations (Paris: EDF [2002]), 237“38; Peter Hertner, ˜˜Il Capitale
Notes to Chapter 3, Pages 85“86 343

Tedesco nell™Industria Elettrica Italiana Fino alla Prima Guerra Mondiale,™™ in
Bruno Bezza, ed., Energia e Sviluppo: L™Industria Elettrica Italiana e la Societa
Edison (Torino: Einaudi, 1986), 211“56; and Peter Hertner, ˜˜Il Capitale
Tedesco in Italia dall™Unita alla Prima Guerra Mondiale,™™ in Blanche Miste e
Sviluppo Economico Italiano (Bologna: II Mulino, 1984), 209“25. On the
Libyan company in 1913, see Atto Constitutivo delle Societa Elettrica `
Coloniale Italia, in So¬ndit (SOF), Box 33, BCI collection, Archivio Storico
di Banca Intesa, for the BCI, Banco di Roma, and the electricity supply
companies™ involvements in the newly constituted Libyan enterprise.
An important source for foreign investments in electric utilities in Spain is


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