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built and then operated and refurbished electric utilities, at home and
abroad. Domestic patterns were replicated internationally. Over time,
manufacturers™ satellites tended to morph into operating companies
(sometimes foreign-owned and controlled, sometimes domestically owned
and controlled).
By 1913, Britain™s output of electrical goods was little more than a third
of Germany™s, and its electrical goods exports were not competitive.
Britain™s electricity supply industry was, in fact, markedly inferior to that in
the United States and Germany, and it had no ˜˜competitive advantage™™ in
electric utilities.79 Nonetheless, British manufacturers, boiler makers, cable
producers, and electrical manufacturers hoped to export. A substantial
number of foreign-owned, free standing operating companies in electric
utilities were headquartered in the United Kingdom. The British advantages
were a creditor nation status, a vigorous stock exchange, a strong con-
struction sector, an established engineering community, and formidable
long-term trading and banking expertise in international markets. Likewise,
Canada did not have any strength in electrotechnical manufacture (or in
any manufacturing activity, to speak of, related to supplying a generation
plant or distribution network), but Canadian entrepreneurs were key in
the spread of electric utilities into Latin America “ and for a time, in the
exceptional European case, into Spain. Here again, the Canadian advan-
tages lay in experience with home electric utilities, access to British capital
markets, and the ability to tap U.S. engineering talent. A strong domestic
electrotechnical manufacturing industry was not an imperative for large-
scale international investments in public utilities.
Banks, insurance companies, other ¬nancial intermediaries, and invest-
ment bankers/stockbrokers/promoters played different roles in different
countries and periods. They cooperated and competed for business with one
another. They were critical in networks and alliances. Overall, there tended
to be more capital market ¬nancing than bank ¬nancing, because of the
capital-intensive nature of this industry. Even though the roles of individual
¬nancial intermediaries were different and even though they changed over
time, they were important in all the principal home countries, because
Global Electri¬cation
66

electric utilities required so much capital. Some of the largest European
banks became depositories of vast amounts of expertise in relation to the
electric utility sector. Likewise, in the United Kingdom, Canada, and the
United States certain banks and other ¬nancial intermediaries accrued
specialized expertise in public utilities ¬nance. Within host countries, banks
(and other ¬nancial intermediaries) in various continental European
countries played very different roles from those ¬nancial institutions
headquartered in the United Kingdom, Canada, and the United States
(based on the separate home country national banking histories). In every
country, change occurred through time.
As the decades passed, the enclave form of foreign-owned companies
came to be found principally in the less-developed world. Within Europe
and the United States, by the end of the 1930s the enclave form had dis-
appeared. Globally, however, it remained, and new such facilities emerged.
Large power consumers continued to stimulate added facilities, and facili-
ties set up to meet such needs persisted, often, however, transformed into
separate operating companies. Holding companies (broadly de¬ned) in
their various forms originated, in their application to electri¬cation, in the
1890s, came of age in Europe in 1900“1914, and reached their heyday in
the 1920s. They survived, albeit with some restructuring, until the under-
lying ventures were no longer part of a multinational enterprise. Some
survived well beyond that as investment companies. Holding companies are
critical to the story of the international diffusion of electric utilities by
multinational enterprises. By the 1930s, while remaining important, the
process of Unternehmergeschaft (entrepreneurial holding companies, as
¨
explained earlier) went into partial retreat in Europe, and there were no
longer newly inaugurated ˜˜investor-owned™™ public utilities. This was not
true of American holding companies “ for example, American & Foreign
Power, which, despite adversity, continued in an entrepreneurial role well
into the 1960s, but it, too, was a creature of the 1920s and not of a later
era. Throughout, it could be said to be following the Unternehmergeschaft ¨
model. The holding companies in all their con¬gurations were able to
mobilize vast amounts of capital required by public utilities worldwide.
They were able to effectively use securities markets to assemble money for
productive purposes. Many also did much more: They deployed knowledge,
including engineering expertise and managerial talents, on a global scale,
although the extent to which they carried on such functions varied by
parent and af¬liate and over the course of time.
Foreign-owned operating companies in public utilities developed their
own managerial staffs within the multinational enterprise. Everywhere,
governments pushed for lower rates. Companies found that governments
(whether local, state, provincial, or national) increasingly in¬‚uenced their
business in a material manner. The passage of time within host countries
brought major changes in operating companies: name changes, mergers,
Chapter 2: Multinational Enterprise and International Finance 67

new owners (foreign or domestic), and restructuring. Operating companies
became part of enterprise groups, often holding companies. In some cases,
they became af¬liates of holding companies within an individual host
country.80 Over time, the notion of the free standing company became
increasingly out of place. Yet the clusters surrounding the free standing
companies “ the manufacturers, ¬nancial intermediaries, lawyers, accoun-
tants, engineers, people identi¬ed with construction ¬rms, and so forth “
continued to be participants, with some directly involved in the individual
holding and/or operating company, frequently internalized within larger
multinational enterprises.
Everywhere, foreign as well as domestic operating companies faced
political constraints. Often the foreign-owned operating companies had a
monopoly, usually for a city and its suburbs or a larger region within a
country. A rare exception was American & Foreign Power Company,
which supplied electricity to all of Cuba from the late 1920s. Usually, when
national grids took shape in developed countries, the ownership was not
foreign. Over the years (as indicated in Chapter 1, Table 1.4, and as will be
spelled out in detail in Chapter 6), foreign investors lost out, and domes-
tication of the operating company occurred. In many cases, the newly
expanded role of state, provincial, and national governments made the
difference.

the political dimension
This brings us to the important political dimension. There are two sepa-
rable ˜˜political™™ aspects. The ¬rst is speci¬c to public utilities, and in
Chapter 1 we included a brief overview of the role of governments at all
levels “ including subnational (municipal, state, and provincial) and
national governments “ in facilitating, regulating, and owning light and
power companies. As a Nova Scotia (Canada) politician put it in 1914: ˜˜If
the legislature [with its granting of a franchise] allowed businessmen to
monopolize heat and light of a city,™™ the businessmen in turn ˜˜owed™™
something to the community; ˜˜the citizens had a special right to be pro-
tected.™™ By de¬nition, the granting of a franchise (or a concession) engaged
the government. Yet the political dimension went beyond the matter of
˜˜concessions™™ and ˜˜franchises.™™81 National, regional, and municipal poli-
tics had profound impacts on domestic companies and domestic ¬nance and
on multinational enterprises and international ¬nance. We in no way desire
to underestimate this impact. Indeed, as Christopher Armstrong and
H. V. Nelles have put it, utilities furnished basic services; everywhere there
arose the dilemma of how to cope with ˜˜powerful economic institutions™™
and render them accountable ˜˜to some judgment other than that of the
owners.™™82 Put slightly differently, foreign ownership and control of a
sector whose output (light and power) over time became a necessity of life
Global Electri¬cation
68

(for both households and industry) meant that political con¬‚ict would often
characterize the relationship between the foreign-owned enterprise and the
customer.83 This was true in both developed and less-developed countries,
although in less-developed countries there probably was less intense con-
cern prior to World War II than there would be after the war, when ten-
sions heightened.84 In the more advanced countries, there was a true
ambivalence about foreign investments in the light and power sectors,
which surfaces in all the contemporary literature. Different countries dealt
in different ways and at different paces with the speci¬c problems at hand.
But everywhere, this predicament arose: Electric light and power companies
by the 1920s were clearly ˜˜natural monopolies™™ “ that is, ef¬ciencies came
from large-scale operations, and it did not make sense to have competition.
This led to concentration in the industry. It also created controversy over
the proper methods of ¬xing rates. What was a ˜˜fair return™™? And how
were costs to be measured when determining that rate of return?85 Could a
government have effective control with the presence of foreign investors?
The second political dimension was more general (not speci¬c to the
public utilities sector). Often, however, the ¬rst and second political
dimensions converged in the formulation of government policies. The
century 1878“1978 was one during which nation states achieved great
importance. Historians and political scientists have studied the clash of
nations in two world wars; the experiences of empires; after World War I,
the end of the German, Ottoman, Austro-Hungarian, and Russian empires;
and after World War II, the end of the European powers™ overseas empires,
which was accompanied by the emergence of a multitude of new nations.
Multinational enterprise and international ¬nance were deeply impacted by
these political events, which were exogenous to the public utilities sector.
Everywhere, capital movements were evaluated by politicians and general
commentators, who viewed their economic, political, social, cultural,
ethical, and moral aspects. The political economy of national economic
growth was different in different periods and countries. In the determina-
tion of national and subnational policies, the very term ˜˜foreign™™ often
carried a pejorative connotation, for the word by its nature had a slightly
(and at times far more than slightly) negative taint. Sometimes the antag-
onism toward the foreigner was general; at other times, it was related to
speci¬c foreigners. Our narrative will distinguish the rhetoric from the
actual consequences of these sentiments. Needless to say, the roles of
multinational enterprises and international ¬nance were usually perceived
differently from those of domestic business and ¬nance.
This said, we must never forget that multinational enterprises were
actors in their own right. They operated in sovereign states, subject to
national and subnational rules, regulations, and attitudes, and the concerns
over their activities were based in part on the reality that at times multi-
national enterprises had the means to circumvent national political
Chapter 2: Multinational Enterprise and International Finance 69

considerations. Thus, historians point out that the initial use of Swiss and
Belgian holding companies served as a way of joining German and French
business in a ˜˜neutral™™ environment. In nationalistic Germany and France
before 1914, there was a great suspicion about international bankers. Many
in France yearned to correct the injustices that they saw as imposed by the
Franco-Prussian War of 1870“1871. Cooperation between French and
German ¬nance could be interpreted as ˜˜treachery.™™ Similarly, after World
War I many politicians in Germany sought to regain the ˜˜dignity™™ lost in
Germany™s defeat and tried to mold international investment to achieve
national goals.
All through the century, 1878“1978, in numerous countries there were
debates on whether foreign capital in general (inward and/or outward) was
desirable. Both foreign policy and national security concerns came into
play. Sometimes, governments wanted to use “ or, alternatively, thought
rival governments were using “ foreign investors for political and/or eco-
nomic ends. Thus, in a parliamentary debate in France in 1912, the Minister
of Foreign Affairs said of French business abroad, ˜˜We ask ordinarily that
France be represented in the boards of directors that may be set up as a
result of the operation [abroad], so that our commerce and industry are
enabled to pro¬t as much as possible from the use of the borrowed
funds.™™86 As another, earlier example, in 1903 the French government,
which regarded the Baghdad railway as a means of German imperial
spread, refused to allow a stock exchange listing to the railroad bonds that
had been acquired by French banks.87
Many people took for granted that ˜˜politics and ¬nance go hand in
hand.™™88 Writing in 1914, before the outbreak of war, C. K. Hobson held
the widely accepted view that: ˜˜European States are at present day anxious
to gain political and economic advantage for themselves and their subjects,
and readily make use of their ¬nancial power.™™89 In 1912, French Prime
Minister Raymond Poincare was explicit in this regard, insisting that his
´
government would do all it could to link French military (and naval) power
with its ¬nancial power, ˜˜which is so great an aid to France.™™90 Much of
the pre- and post-1914 ˜˜¬nance and politics™™ discussions related to lending
to governments, but the subject was extended more broadly to assume
political intent related to nongovernmental recipients and political con-
siderations connected to all foreign investments.
During and after both World Wars, the political plans of the victors had
profound impact on the nature and structure of multinational enterprise
and international capital movements. The predecessor company to
American & Foreign Power was pushed to go abroad in the ¬rst instance by
the U.S. government, so as not to have German interests near the Panama
Canal.91 To the extent that foreign investment in electric utilities was linked
with trade (manufacturers™ exports), there was an important role of Europe
(in particular, Germany and Britain), as well as the U.S. government, in
Global Electri¬cation
70

encouraging export activities. Political goals were general, with foreign
investments in the public utility sector swept up in the politics of both home
and host nations.
Political considerations were linked with national economic development
aspirations, from both a home and host nation standpoint. European
governments wanted to support exports; and if foreign investment (outward
or inward) accomplished that, it was to be favored. Thus, in the 1920s the
British passed Trade Facilities Acts (1921, 1922, 1924, and 1926). The
British Treasury would guarantee loans to projects, including a number of
foreign nongovernmental electrical projects, on the condition that the loaned
money be used to purchase British goods.92 Within host nation states, views
varied on where foreign multinational enterprises and foreign capital ¬t into
national goals; there were general views, but many of the latter became
speci¬c to basic infrastructure, particularly light and power. If foreigners
were in a ˜˜vital sector™™ and if they had not merely ˜˜monopoly power™™ but
actual monopolies, there was a questioning of their legitimacy, as newly
independent nations emerged and pushed forward their own economic
development agendas; these sentiments were also present in already advanced
countries. At the end of the 1920s, within Western Europe a large number of
companies took steps “ some approved and others not necessarily approved
by governments “ to protect themselves from ˜˜foreign™™ control by, for
example, con¬ning voting rights or board membership to nationals.93
˜˜Political risk™™ was something that multinational enterprises and actors
participating in international ¬nance always had to consider. Again, while
some of the risks were special to the public utilities sector, many were more
general. Broadly speaking, the international relationships between states
posed problems for foreign investors. More speci¬cally, and from a dif-
ferent perspective, government policies to cope with balance-of-payment
woes created political risk. New governments accompanied by policy
changes along with the incapacity of a government to provide law and
order frequently altered the overall conditions for all international inves-
tors, including those in public utilities. There was a long-standing, pervasive
view (to quote from a book published in 1914) that ˜˜[g]overnments of
weak and backward countries often fall an easy prey to the wiles of
¬nanciers. . . . ™™94 A wariness about the intentions of participants in inter-
national ¬nance and multinational enterprise activities made for political
perils far more widespread than those con¬ned to the public utilities sector.
Government corruption (and the inability of a political system to remedy it)
posed further dif¬culties for foreign direct and portfolio investors. And then
there were the issues that were more speci¬c to this industry: Were
˜˜powerful™™ foreign investors in vital sectors permissible? If a host nation
(or subnational governmental agency) answered that question with a ˜˜no,™™
that meant a major political risk. For many foreign investors, ˜˜politics™™
created ˜˜hazards of which businessmen have to beware,™™ and this was as
Chapter 2: Multinational Enterprise and International Finance 71

true in the late nineteenth and early twentieth centuries as in the 1950s and
beyond.95 Thus, as our story moves through time, we will keep in mind the
municipal, regional, national, and international political environment, even
though economic considerations rather than political ones were usually
foremost in the strategies of the private-sector actors in the international
transactions related to electri¬cation. Yet politics did intervene. Politics did
matter. The state assumed various, mounting economic and political
functions that affected all outgoing and incoming international investors.
And, indeed, because “ speci¬cally in the public utilities sector “ large sums
of money were involved and concessions from governments and regulation
by governments were critical; because these investments were basic infra-
structure investments; and because investments in light and power were
imbued with public interest considerations; the overall political environ-
ment became fundamental.
As time passed in the century 1878“1978, for various reasons (high
among them the attitudes of host country governments “ local, regional,
and national), the role of multinational enterprises in all forms in the
electric light and power sector decreased. Alternatives to private ¬nance
became available after World War II on a previously unprecedented scale.
In Chapter 6, we will summarize the ˜˜domestication process™™ and how
even though multinational enterprises in the public utilities sector persisted
for a long time after 1945, the overall process of domestication was (and
had been through the decades) a steady one. Over time, public utility regu-
lation “ or, alternatively, public ownership “ had become more and more
prevalent in developed and less-developed countries alike.

liberalization, restructuring, and privatization
By the late 1970s, this process had gone so far forward that attitudes reversed
and questions began to be asked “ especially in the more advanced countries “
about the extent of regulation and government ownership in general and
speci¬cally in public utilities. For the 1930s and post“World War II gen-
eration, there had been a distrust of the market. At one pole, there had been
the assumption that the market could not work well without government
help, and at the other pole there was the assumption that the market would
never work and so government intervention was a given.96 The long and
short of it was the viewpoint “ at both ends of the spectrum “ that some or a
great deal of government regulation and ownership was required. Indeed,
many within that generation saw no costs in the extension of government,
which they perceived as a counterbalance to greed in the private sector.
Gradually, however, it became increasingly apparent that the enlarged
governmental involvements did have both direct and indirect costs. Regula-
tions, it was suggested, were impeding entrepreneurial activities rather than
correcting inequities. With government ownership, where were the incentives
Global Electri¬cation
72

to reduce costs? From a range of different perspectives “ as the world
economy slowed down from the high growth rates of the 1950s and especially
the 1960s “ economists and political leaders began to ask whether expanding
governmental activities were the problem rather than the solution.
Indeed, no sooner had private international investments in electric light
and power been judged ˜˜old™™ investments and inappropriate in a modern
age, the climate changed. After 1978, with the new emphasis on markets,
once again “ quite gradually and then rather dramatically “ public utilities
became attractive investments to foreign multinational enterprises. As is
well known, in the Ronald Reagan and Margaret Thatcher era in the 1980s,
new attention was focused on the problems of ˜˜bloated™™ government. The
failure of command societies to achieve the growth rates of the West placed
added attention on removing the heavy hand of the state.
Forgetting why electric light and power companies had been regulated
and become government-owned in the ¬rst place, there came to be, in some
instances (far from universally), substantial deregulation and privatization.
At times, the removal of regulations and the privatization process were not
very skillfully accomplished, and deregulation was frequently partial, crea-
ting a mixture of regulated and deregulated sectors. Many times, privati-
zation was combined with a new regulatory regime. The consequences of
the restructuring were not simply domestic. They opened up the possibility
of new multinational enterprise investment. We had come full circle. By the
late 1990s, overnight, this sector once more became international.97 We are
not saying that everything was the same, for it was not. Business enterprises
were larger; and so was the size of the market. Financial instruments were
more numerous, and so were the ¬nancial needs. The speed of transactions
became unprecedented. The density of the transactions “ the numbers of
mergers and acquisitions “ was greater. In the late 1990s, there emerged
˜˜public utility multinational enterprises™™ “ that is, public utility operating
companies that extended over borders (which had been rare in prior years).
There were other variations in the forms of investments. What is fasci-
nating, however, is that many of the earlier forms, as outlined above,
reemerged. The clusters of participants involved in a single operating
company abroad bore a striking similarity to the historical structures. And
what is perhaps more germane is how quickly some problems began to arise
“ and how by the time the twenty-¬rst century was less than a decade old, a
number of the new international businesses in this sector had retreated from
foreign investments. Some had failed. Others had been spun off. It is pos-
sible that the wheel was turning once again, although as we write in 2007,
the signs were not altogether clear and, in some cases, failed ventures had
been replaced with different international businesses. We will save for our
last chapter that story as well as the lessons to be drawn from it.
part ii

CHANGES
3

Every City, 1880“1914




Even before it became clear that electric lighting would be economically
feasible, there was an international electric lighting business. We begin this
chapter by considering the pioneering manufacturers “ Jablochkoff,
Siemens, Edison, and Thomson-Houston “ examining their business over
borders, which involved the setting up of manufacturing facilities abroad,
as well as the sale of isolated plants and the sponsorship of central power
stations. We will explore the manufacturers™ relationships with other key
players. As the chapter evolves, the activities of the many added actors that
contributed to the spread of electri¬cation on a global basis will emerge. By
1914, due to these actors™ efforts, the residents of every major city around
the world had become aware of the existence of electric light and power.
´
In 1877, the Societe Generale d™Electricite (SGEl) was formed in France
´´ ´ ´ ´
with capital of 8,000,000 francs. It arranged to install the Jablochkoff arc-
electric lighting system in Paris, Le Havre, and London. By November
1880, over 2,500 of its lights were shining in Europe, and plans were being
made to introduce this system in New York City. SGEl organized a Russian
subsidiary to spread electric lighting eastward. By 1881, Jablochkoff
enterprises were described as active in Europe, Asia, and South America.
Paul Jablochkoff™s ¬rms manufactured the lights as well as installing the
electric lighting system.1
Meanwhile, the German manufacturer Siemens & Halske was providing
competition. By 1880, lights at the British Museum had been put in place
by its British af¬liate, Siemens Brothers.2 In 1847, the Siemens & Halske
Telegraph Construction Company had been founded. That German ¬rm
had formed an af¬liate in England in 1858, which would become in 1865
Siemens Brothers. By then, the German Siemens had a subsidiary in

Authors: Mira Wilkins, William J. Hausman, H. V. Nelles, Peter Hertner, and Pierre Lanthier.
Signi¬cant advice from Theresa Collins, Christopher Kobrak, Ginette Kurgan-Van Hentenryk,
David Merrett, and Luciano Segreto.

75
Global Electri¬cation
76

St. Petersburg, and in 1878 it set up an ongoing subsidiary in Vienna.3 In
1881, the British manufacturing af¬liate Siemens Brothers inaugurated a
hydropower station on the River Wey, in Godalming, Surrey, England,
which municipality would later boast it was the ¬rst town in the world to
have electric public street lighting, a boast that could be disputed. Be that as
it may, Siemens Brothers installed the facility and operated the new power
plant under a yearly contract with the Town Council. The streets were lit
with both arc and incandescent lamps, and current was made more generally
available to the townsfolk. But the project proved to be unpro¬table; there
was inadequate demand in the small town; and the hydropower plant dis-
continued operations in 1884, and gas lighting was restored to the streets.4
Elsewhere, Siemens was active in demonstrating dynamos and arc lamps.5
Everywhere during the late 1870s and early 1880s, profound uncertainty
prevailed as to whether electric lights “ and the various proposed systems “
would be able to compete effectively with gas. In the United States, Thomas
Edison was making promises about his new electrical system. In August
1880, the New York Times (in an article on the progress of electric lights)
was convinced that foreign inventors were surpassing American ones.6 By
then, Edison had begun to promote his system, domestically and interna-
tionally.
While the story of the global spread of light and power facilities did not
begin with the Americans Edison (1847“1931) and J. Pierpont Morgan
(1837“1913), these two men were critical to the subsequent far-reaching
diffusion of incandescent electric lighting that occurred through a collection
of companies and worldwide investments. Both of these entrepreneurs had
an international perspective; both had taken part earlier in activities outside
the United States; and both had vision and imagination. Edison™s other
inventions “ the phonograph, microphone, and telephone “ had been
introduced abroad; and he was not satis¬ed to limit his electric lighting
system to the United States.7 Morgan, who supported Edison in all of his
endeavors, had long had intimate transatlantic associations; his father,
Junius Spencer Morgan, was the principal in J. S. Morgan & Co., a
prominent American merchant bank in London.8
As early as October 1878, J. P. Morgan had been aware of the potential
of Edison™s electric light system and had noted that rumors about Edison™s
achievement had sent gas prices plummeting on the London Stock
Exchange. (It wasn™t only Edison™s success; it was Jablochkoff™s, Brush™s,
and others™ as well.) By November 1878, J. P. Morgan was writing his
brother-in-law, Walter Burns, that he had ˜˜secured one third [of the] whole
thing [the Edison thing] with complete control and management. Our idea
is to offer London [J. S. Morgan & Co.] joint account for Great Britain if
satisfactory. . . . Impossible overestimate result if such success attained.™™9
Morgan feared that his father would ¬nd the project too speculative, but he
was convinced ˜˜he will change his mind.™™10
Chapter 3: Every City, 1880“1914 77

From 1880 to 1883, a variety of Edison companies related to electric
light and power, for business outside the United States, were organized; the
J. P. Morgan papers make it evident that the banker was closely involved,
as was Edison himself.11 Edison and Morgan interests (Drexel, Morgan &
Co., the banking house with which J. P. Morgan was then connected) were
direct investors in these pioneering foreign companies, which among their
many activities participated in installing isolated plants and inaugurating
lighting systems around the world.12 New York lawyer Grosvenor
P. Lowrey, who had ˜˜fallen under the spell of Edison,™™ saw to it that Edison™s
patents were secured in foreign markets.13 The relationship between the
banker and the inventor appears to have been one of mutual self-interest.
Lowrey intermediated the contacts between Edison and the Morgan partners
(partners other than J. P. Morgan were active in these international affairs).
Abroad, markets were delineated. Patent rights (licenses to operate under
Edison patents) were exchanged for equity interests, which was not atypical in
early international businesses.
The ¬rst of these Edison companies was the Edison Electric Light
Company of Europe Ltd. incorporated in New York on December 23,
1880. It controlled Edison™s electric light patents in Europe, excluding the
United Kingdom, which was covered by a separate agreement between
Drexel, Morgan and Edison dated December 31, 1878.14 In June 1881, two
companies were incorporated in New York: the Edison Electric Light
Company of Cuba and Porto Rico and the Edison Electric Light Company
of Havana, the ¬rst to promote the Edison system of electric lighting on the
two islands, the second speci¬cally for Havana, Cuba. In 1882, there was
formed the Edison Spanish and Colonial Electric Light Company, incor-
porated in New York to control Edison™s electric light patents in Cuba,
Puerto Rico, and other Spanish American colonies. Meanwhile, in the
summer of 1881 Edison Electric Light Company of Europe paid for an
exhibit of the Edison system at the Paris International Electrical Exhibition.
Visitors were ecstatic.15 And, in 1882, new Edison companies were orga-
nized in England (the Edison Electric Light Company Ltd. of London) and
France (Compagnie Continentale Edison, Societe Industrielle et Commer-
´´
´ lectrique Edison), while for Australasia, Ceylon,
ciale Edison, and Societe E
´´
India, and South Africa, a company was registered in England (Edison™s
Indian and Colonial Electric Company, Ltd.) to promote the Edison system
in those parts of the British empire. In 1883, Edison companies were
constituted in Germany, Italy, Switzerland, and Argentina. There were
separate Edison arrangements for Sweden and Norway, and others for
Portugal, New Zealand, and New South Wales, Queensland, and Victoria
in Australia, always with Drexel, Morgan & Co. involved.16
This multiplication of these new business ventures, which can be seen as
part of a multinational enterprise group, spurred the diffusion of the Edison
system. These ¬rms arranged to show off the Edison system and to advertise
Global Electri¬cation
78

incandescent lighting. Thus, from 1882 to 1884, the Edison Spanish and
Colonial Electric Light Company operated an ˜˜exhibition™™ plant in
Havana, Cuba.17
The Edison Electric Light Company, Ltd., of London, demonstrated the
Edison system in London, where city streets, homes of the wealthy, and
prosperous businesses had long been lit by low-priced gas, which was
highly competitive with electricity. The Jablochkoff ˜˜candle™™ (arc light)
had already made an impression. Edison™s English representatives obtained
approval to run electric lines beneath the Holborn Viaduct, and Edison
Electric Light Company, Ltd. of London leased a property. On April 12,
1882, the New York Times ran a terse item stating that ˜˜Edison™s system of
electric lighting with the incandescent lamp was satisfactorily demonstrated
on Holborn Viaduct London last evening.™™ This trial “ like the earlier
exhibit in Paris in the summer of 1881 “ gave further proof that the Edison
system could work. The Holborn Viaduct installation served as a ˜˜testing
ground for Edison™s ¬rst permanent station,™™ the Pearl Street central power
station in New York City, which began service on September 4, 1882.18
The path-breaking Edison activity at the Holborn Viaduct station was
short-lived. In 1882, the British Parliament passed the Electric Lighting Act,
with new regulatory restrictions. The following year, the Edison Electric
Light Company, Ltd., of London, was absorbed into the Edison & Swan
United Electric Light Company. (Recall that Joseph Swan had invented his
own incandescent lamp, and for a while he and Edison had been rivals.)
The Edison Holborn Viaduct station became an asset (or more properly, a
liability) of Edison & Swan. By November 1884, Edison & Swan™s mana-
gement was reporting to the company™s stockholders that the central
station was a money-losing proposition. By 1886, Edison & Swan had
˜˜abandoned™™ it.19
Meanwhile, the 1880 Edison Electric Light Company of Europe, Ltd.
had given birth in France in 1882 to the three af¬liates mentioned earlier.
´´´
For example, Societe Electrique Edison set up isolated plants to light large
stores, railroad stations, and printing houses. The working capital for the
three French enterprises was provided by Seligman Freres & Co., Drexel,
`
Harjes & Cie. (Morgan™s Paris house), Banque d™Escompte de Paris, Ban-
que Centrale de Commerce et de l™Industrie (Paris), and Speyer Brothers
(London). In 1886, the three French Edison companies were merged into
Compagnie Continentale Edison (CCE).20 CCE gave up manufacturing
(which had been done by one of the Edison ¬rms) and specialized in pro-
ducing and distributing electricity in Paris. Subsequently, it had nothing
more to do with the Americans.21 Meanwhile, the Jablochkoff system (and
the business organization formed to introduce it) proved unable to compete
with Edison™s system or his companies. Jablochkoff lost out, as one writer
put it, a victim to its too rapid success. The minutes of the Edison Electric
Light Company of Europe, Ltd., board of directors meeting, January 21,
Chapter 3: Every City, 1880“1914 79

1885, included a note that the fusion in Europe with the Jablochkoff
Company was planned.22
In Germany, where Deutsche Edison Gesellschaft had started in 1883, it
emerged as a new and strong manufacturer, the precursor to the important
1887 Allgemeine Elektrizitats Gesellschaft (AEG). Whereas Siemens had
¨
German origins, Deutsche Edison Gesellschaft was the result of U.S. mul-
tinational enterprise expansion. While it was a manufacturer, over time it
would become responsible for the inauguration of numerous electric utili-
ties. From its beginnings, the ¬rm had associations with the well-established
Siemens & Halske, links of both competition and cooperation and for a
considerable time of deference. Siemens and AEG (and its predecessor) had
banking connections, sometimes separate, sometimes shared.23 Not until
1889 could Emil Rathenau, head of AEG, declare his ¬rm™s ˜˜indepen-
dence™™ from its Edison ancestry. When Thomas Edison had written to
request AEG not to compete in Japan, Rathenau countered (February 19,
1889), ˜˜You have not taken into consideration the fact that we have during
the last year entirely discharged all the duties toward your rightful suc-
cessors in Europe. . . . [A]nd since we have accomplished this we do not
stand any longer, as you describe it, as one of the Edison companies,
con¬ned to a certain territory. . . . The market for our product is the entire
world.™™24
When later in 1889 the Edison General Electric Company was organized
in the United States as a manufacturing company, the coin was turned over:
Siemens & Halske and AEG, along with the Deutsche Bank, apparently
owned $8.3 million of the $12 million capital of Edison General Electric.
Cross investments (and complexities) in the international business story had
begun to take shape. The new Edison General Electric, as well as being a
manufacturer, also had interests in electric utilities “ in some 375 central
stations “ and had done some 2,300 isolated plant installations in the
United States.25 Edison General Electric took stock in electric utilities in
exchange for the sale of Edison equipment and for patent licenses. The
Germans™ ownership and control of Edison General Electric proved tran-
sitory; and when in 1892 Edison General Electric and Thomson-Houston
merged to form General Electric, the German investment had already been
withdrawn.26 This did not mean, however, an end to international business
by AEG, Siemens, or the Deutsche Bank, which, as we will see, expanded
greatly in the years that followed. For the manufacturers, much of the
international business investments would be in manufacturing abroad,
although a substantial part of it was in stimulating the development of
public utilities (as manufacturers™ satellites or extended manufacturers™
satellites).27
In the meantime, Henry Villard (the Deutsche Bank™s U.S. representative,
who had brought the Germans into Edison General Electric) formed the
holding company North American Company in June 1890. This new
Global Electri¬cation
80

company, capitalized at $50 million, was designed to participate in the
electri¬cation of railroads and the transmission of the electric energy
required. It would build central power stations in Milwaukee, Cincinnati,
St. Paul, and Minneapolis. The company had a broad charter, giving it
authority to transact business not only in the United States, but also in
Mexico, Central and South America, British North America, including
Canada, and all of Europe. The plan was that it would acquire Edison
General Electric™s holdings in the operating utilities. At its start, the new
company attracted Deutsche Bank backing, although when it was in trouble
in the fall of 1890 (with the ˜˜contagion™™ from the Baring Crisis), the
Deutsche Bank was not listed as one of its creditors “ or at least was not on
the reorganization committee. The North American Company survived the
crisis of 1890 (althought there is no evidence that North American ever
used its broad mandate to expand internationally).28
By this time, the initial group of Edison foreign companies had either
been liquidated around the world or, more often, transformed. We have
discussed what happened with the principal British, French, and German
Edison enterprises. In Milan, Societa Generale Italiana di Elettricita Sistema
` `
Edison (set up in 1883, renamed in 1895 Societa Generale Italiana Edison
`
di Elettricita, and sometimes called Societa Edison or the Edison Company)
` `
had become Italy™s foremost electric utility. Like the British, French, and
German Edison companies, it quickly became detached from Edison
ownership and control.29
The fate of each of the pioneer Edison companies was distinct: In 1886,
Edison™s Indian and Colonial Electric Company had been brought into the
Australasian Electric Light Power and Storage Company; in Latin America,
where Edison representatives and af¬liated companies had sold isolated
plants and where there were attempts to develop and promote Edison™s
lighting system, Thomas Edison felt that his efforts were thwarted; and in
Japan, the Edison system was adopted, but there were never any Edison-
owned and -controlled enterprises. Indeed, by the mid to late1880s “ certainly
by the time Edison General Electric was organized in 1889 “ the outward
foreign direct investments by Edison were history. The remaining companies
had declared independence. Yet, the legacies of these companies afforded a
very strong foundation for the next phases in the international diffusion of
electrical public utilities.30
In sum, when in the late 1880s Edison retired from active involvement in
the Edison electric light enterprises, he personally maintained some
minority interests in certain of the foreign companies and their successors, but
there was nothing equivalent to direct investments.31 Drexel, Morgan, and
then from 1895 J. P. Morgan & Co., sustained its commitment to support
the U.S. domestic electrical manufacturing industry and to develop U.S.
light and power facilities, and it was never fully out of international busi-
ness in electric power, although the ¬rm and its successor™s involvements
Chapter 3: Every City, 1880“1914 81

ebbed and ¬‚owed. When Edison General Electric was folded into General
Electric in 1892, Morgan took the initiative. General Electric at its origin
did have an extensive international business, which (the Morgan-Edison
connection apart) came from Thomson-Houston.
Thomson-Houston was the second of the two principal U.S. manu-
facturers that in 1892 combined into General Electric. At the dawn of the age
of electric lighting “ before Edison™s systems were accepted “ in the summer
of 1878, Elihu Thomson had been in Europe, touring France, Switzerland,
and Germany and visiting the Paris Universal Exposition. When in Paris,
Thomson saw the Avenue de l™Opera lit up with Jablochkoff ˜˜candles.™™32 In
´
December 1878, back in the United States, Elihu Thomson and Edwin
J. Houston demonstrated their own alternating-current system of arc lights.33
The stories of Thomson and Houston in the years from 1878 onward need
not concern us except to note that on the eve of the 1892 formation of
General Electric, the Thomson-Houston Electric Company had already built
an international business and had taken part in the origination of some 870
central stations in the United States.34 Unlike Edison General Electric, which
acquired stock in utilities in exchange for equipment sales and patent licen-
ses, Thomson-Houston took utility bonds, which it arranged to have con-
verted into a series of trust funds, which next resold the securities to
Thomson-Houston stockholders. Then in 1890, Thomson-Houston orga-
nized the United Electric Securities Company to specialize in the resale of
utilities securities and to issue its own debt instruments (bonds and deben-
tures). Thomson-Houston did not need (or desire) to run the utilities; it
wanted them ¬nanced and functioning. The utilities would provide a market
for Thomson-Houston™s manufactured output. In 1885, Thomson-Houston
International Electric Company had been formed to sell electric lighting
systems worldwide. Its approach was to cooperate with engineering ¬rms in
foreign markets.35 In 1889, Thomson-Houston acquired the controlling
interest in the United States in Brush Electric Company. Although Brush
Electric had once been involved in international business (and the ˜˜Brush™™
name was well known in Europe), by the time of the Thomson-Houston
acquisition, Brush Electric seems to have added nothing to the by then rather
extensive foreign operations of Thomson-Houston.36 By 1889, Thomson-
Houston was actively engaged in trying to market its own systems worldwide
and was making foreign direct investments in order to do so.37 When in 1892
General Electric was created, it not only obtained practically all its foreign
direct investments from Thomson-Houston, but also inherited chief execu-
tive Charles Cof¬n, who had shaped, and would continue to shape, a strategy
of running a domestic and international business. The domestic and inter-
national practices of General Electric came from its Thomson-Houston roots,
not from Edison General Electric.38
General Electric took over Thomson-Houston International, which it
would soon rename International General Electric. It also acquired
Global Electri¬cation
82

Thomson-Houston™s 1890 holding company for public utilities securities:
United Electric Securities (which retained that name). So, too, the French
Thomson-Houston and the British Thomson-Houston (both manufacturing
companies) would become General Electric af¬liates. In addition, General
Electric inherited from Thomson-Houston an equity interest in Union
Elektrizitats Gesellschaft (UEG), a new German manufacturer. While
¨
General Electric took over some miscellaneous (minor) foreign holdings
from Edison General Electric, it did not acquire any stake in Villard™s 1890
creation, the North American Company.39
Although at the start of the provision of electric light and power the line
between the manufacturer and the electrical generation enterprise was often
indistinct (manufacturing companies needed to set up their customers), over
time the two activities would become clearly differentiated. As the principal
electrotechnical manufacturers continued to participate in the setting up of
public utilities (and spinning off the electric utilities), they and the utilities
would continue to require banking connections to support the very capital-
intensive processes of building and expanding the utilities. In the 1893
Crisis, the newly formed General Electric faced near bankruptcy and made
particular efforts to gain revenues from its investments in electric utilities.
Accordingly, General Electric ˜˜transferred reams of utility securities™™ to the
unincorporated Street Railways and Illuminating Properties pool, which
was strictly a liquidating ¬rm, with no intention of entering the utilities
business. The liquidators, however, created expert management and engi-
neering skills to provide value for the shares that were being divested. Other
securities went to General Electric™s subsidiary United Electric Securities,
which once again developed new expertise to make these assets viable. In
these transactions, most of the public utilities securities were domestic, not
international, but the precedent of establishing the separation between
manufacturer and utilities was established.40

banks and other ¬nancial intermediaries
The identical banks associated with the electrotechnical manufacturers
stayed deeply engaged in the ¬nancing of electric power plants, domesti-
cally and internationally. Although, until Junius Morgan™s death in 1890,
J. S. Morgan & Co., London, was the lead bank in the House of Morgan,
the American J. P. Morgan rather than his father at the British house took
the initiative in all aspects of the new electrical industry. The international
cooperation that the two Morgan ¬rms (and the Paris af¬liate) had had in
the ¬nancing of railroads carried over and was important in providing the
U.S. banker™s background and knowledge. The House of Morgan™s invol-
vements in railroad ¬nance put it in a position to transfer that experience
into the electric utility context at home and abroad. General Electric was
Morgan™s ¬rst big industrial combination, with J. P. Morgan and his
Chapter 3: Every City, 1880“1914 83

partner Charles H. Coster serving on its board. So, too, Lee, Higginson,
Boston, which had been the bankers for Thomson-Houston and had a long
history in railroad ¬nance, became important in aiding electri¬cation.
Henry L. Higginson, the senior partner in Lee, Higginson, was on the
consolidation committee that put together General Electric and then joined
the Morgan partners on the ¬rst General Electric board of directors.41
Likewise, Kuhn, Loeb and Speyer & Co. in New York were able to apply
the expertise they gained from railroad ¬nance to electric utilities. So, too,
in European cities, banks (broadly de¬ned to include the merchant banks in
London) had experience in railroad ¬nance. The bankers had learned to
cooperate with one another, and syndicates had often been made up of
banks of different nationalities. Promoters/stockbrokers had organized
capital for railroads and other ventures, and their knowledge was portable
into electric utilities.
Wilkins™s The History of Foreign Investment in the United States to 1914
provides information on the principal international banks taking part in
transatlantic railroad ¬nance at the end of the 1870s “ that is, at the birth of
the electrical age.42 Many of these ¬nancial institutions, with their estab-
lished networks, assisted light and power developments. Bankers in both
Europe and the United States not only participated in transatlantic networks
but broadened their scope to take part in far more extensive international
business. In addition, many of the same European bankers were involved in
Latin American developments, ¬rst in railroads, in some instances in tram-
ways, and then in light and power.43 There were disparities among the
European and U.S. bankers that had been in railroads and then became key
participants in electric utilities. (The one giant difference that does stand out
was in the Dutch role, which was highly signi¬cant in railroads but in the
`-vis electric utilities.)44
background vis- a
The creditor committee for Villard™s North American Company in
November 1890 provides a glimpse of the U.S. bankers involved in railroads
(and now in electric utilities). The committee included William Rockefeller
(National City Bank), William Salomon (Speyer & Co.), J. H. Schiff (Kuhn,
Loeb), and C. H. Coster (Drexel, Morgan). No German bank had represen-
tation on the committee, nor were there any Britishers present, but Speyer &
Co. had both London (Speyer Brothers) and German (Lazard Speyer-Ellissen)
houses, while Kuhn, Loeb had close British ties (especially with Ernest Cassel)
and German family associations (in particular with M. M. Warburg,
Hamburg, but much broader ones as well). Both Speyer & Co. and Kuhn,
Loeb had ongoing relationships with the Deutsche Bank. And, of course, there
were the intimate associations between the Morgan ¬rms in New York,
London, and Paris, and the house of Morgan also took part in syndicates with
the Deutsche Bank.45
When viewing the apportionment of shares in the Edison & Swan
company in Great Britain in 1883 (a ¬rm that would initially participate in
Global Electri¬cation
84

both manufacturing and electric utilities), there were no surprises in the
ongoing Morgan involvement. What did jump out was the presence of
Charles Lanier and Edward Dean Adams. Adams was a partner in the
American banking house Winslow, Lanier & Co., which in the 1880s was
deeply engaged in railroad reorganizations. According to one source, Adams
had been a major stockholder in Edison companies since 1884 and would
brie¬‚y own shares in Edison General Electric Co.46 In 1889, promoters of
Niagara Falls electri¬cation sought ¬nancing from a banking group that
consisted of Morgan, Brown Brothers and Winslow, Lanier. Before Winslow,
Lanier was ready to make a commitment, it dispatched Adams to examine
the feasibility of the project. For the next three dozen years, Adams was a key
participant in the Niagara Falls developments. Indeed, from 1893 until 1914
Adams wore at least two hats: He headed the important Niagara Falls
enterprise, and he also served as the Deutsche Bank™s U.S. representative,
having replaced Villard in 1893. The Deutsche Bank made a small invest-
ment in the Niagara Falls project, an interest that appears to have been for
information purposes. The Adams connection, however, was central to
Deutsche Bank™s international business strategies.47
William P. Bonbright & Co. (later just Bonbright & Co.) was a Wall
Street ¬rm that would ¬gure importantly in public utilities ¬nance, both
domestic and foreign. This banking/brokerage ¬rm began in Colorado
Springs in 1898, near the Cripple Creek mining district, ˜˜the ¬rst
[western mining district in the United States] to possess an electric power
system.™™ The mining developments had been recently opened by the
railroad™s expansion westward. The Bonbright ¬rm purchased a seat on
the New York Stock Exchange in 1902, by which time it had of¬ces in
New York and London as well as its main of¬ce in Colorado Springs.
By 1913, it was advertising its ˜˜long experience with Lighting and
Electric Power Securities and the exhaustive engineering and accounting
examinations upon which our recommendations are based.™™ In 1908,
William P. Bonbright & Co. had declared, for example, of a property in
Mexico, ˜˜We will buy or sell any securities of Guanajuato Power and
Electric Co.™™48
By the end of 1880s, the railroad network in Western and Central
Europe was virtually completed. And, in an uneven manner, many of the
European banks that had participated in railroad ¬nance in the United
States and internationally started, in different con¬gurations, the ¬nancing
of electric railways, tramways, and light and power facilities “ ¬rst in
Europe and then farther a¬eld. If the Deutsche Bank™s interest in the
Niagara Falls company was small, in the 1890s and early twentieth century
that bank came to be a major global participant in electric utilities ¬nance
(generally along with AEG and/or Siemens). Other German banks were
involved, too, such as the Dresdner Bank and the Berliner Handels-
Gesellschaft.
Chapter 3: Every City, 1880“1914 85

German banks branched abroad, and af¬liates offered services for
German commerce and German businesses abroad. In 1873, the Deutsche
Bank opened a branch in London, and in 1886 it established the Deutsche
¨ ¨
Ubersee Bank (renamed in 1893 the Deutsche Uberseeische Bank) and in
¨
1889 the Deutsch-Asiatische Bank. The Deutsche Uberseeische Bank would
become deeply engaged in South America, and came to be of assistance to
the German-owned electric utilities in that region, especially in Argentina.
As the big German banks, which were closely aligned with the electro-
technical manufacturers, encouraged German exports of electrical and
other products, it was consistent for them to provide long-term ¬nancing to
electric utilities abroad to stimulate the trade.49
In France, the large banks would also assume a role in public utilities
¬nance, but it was initially with caution.50 As we will see later in this
chapter, Swiss and Belgian banks, principally associated with holding
companies, also became deeply committed. And then there were individual
promoters and stockbrokers “ for example, the Belgian promoter/stock-
broker/investment banker Alfred Loewenstein, who in the ¬rst decade of
the twentieth century was involved in Brazil and was having his initial
encounters with Canadian groups active in international business in electric
utilities. Loewenstein made his ˜˜fortune™™ on the Belgian stock market,
placing Brazilian railway securities there.51
In Italy, the German style of banking, the universal bank, was introduced
in 1894 with the founding of the Banca Commerciale Italiana (BCI) by a
group of German, Austrian, and Swiss banks. In 1894, BCI opened a credit
line for Societa Generale Italiana di Elettricita Sistema Edison.52 BCI helped
` `
funnel foreign capital into Italy™s electrical industry. By 1901“1902, the
German, Austrian, and Swiss banks that had established BCI held less than
9 percent of its capital, and the Banque de Paris et des Pays-Bas (Paribas)
had acquired an interest in BCI. BCI became an important participant in
electri¬cation in Italy and beyond. For Libya, in 1913, it took part in the
founding of Societa Elettrica Coloniale Italiana.53
`
Typically, banks and promoters on the European continent cooperated
in the electri¬cation process, both within their own nations and beyond
their borders. Networks in the ¬nancial groupings were the norm. Spain,
like Italy, was a major recipient of the new funding and of foreign direct
investment. German and French banks played a key role. In 1894, Deutsche
Bank, along with AEG, acquired controlling interest in Compan±a Barce-
˜´
54
lonesa de Electricidad (Barcelonesa).
As for Britain, its merchant banks joined in some of the European conti-
nental networks. Speyer Brothers, London (with its U.S. and German con-
nections), Wernher, Beit & Co. (a ¬rm that took shape based on money made
in South African gold and diamonds), along with the Rothschilds, Barings,
Glyn Mills, Sperling, Hambro, and Schroders, were all by the early twentieth
¨
century drawn, to varying extents, to some participation in international
Global Electri¬cation
86

business in electric utilities.55 And then there were individuals “ for example,
R. M. Horne-Payne of the British Empire Trust, who knew Canada well,
through his prior railroad and land company investments, and who acquired a
set of existing utilities in British Columbia, combining them into British
Columbia Electric Railway Co.56 All these ¬nancial intermediaries would
employ engineers with expertise in this new economic activity.
A number of the British promoters/merchant banking houses were part
of the clusters associated with free standing companies (see Chapter 2). For
example, Wernher, Beit & Co. purchased horse and mule tramways in
South Africa, Portugal, Chile, and Mexico. These, in turn, became electric
tramways: the Cape Electric Tramway, the Lisbon Electric Tramway, the
Chilean Electric Tramway and Light Co., and the Mexico Electric Tram-
ways Co.57 Investment trusts (for example, British Empire Trust and
Trustees™ Executors™ and Securities Insurance Corporation) also became
linked with the transfer of British money into electric utilities overseas.58
Robert Fleming™s coterie of trust companies, in their diversi¬ed invest-
ments, started to invest in electric utilities outside the United Kingdom.
There were particular British stockbrokers who came to specialize in
electric utilities. The historian of Foster & Braithwaite tells us that the
¬rm™s ˜˜most consistent interest was in companies formed either for elec-
trical engineering, or for the distribution of electric power in towns, or for
electrical traction.™™ Those companies in ˜˜the distribution of electric power
in towns™™ included City of London Electric Lighting (1891) and County of
London and Brush Provincial Electric Lighting (1894). In addition, Foster
& Braithwaite became involved in ¬rms formed in England in 1899 and
1905 for public utilities in Melbourne and Adelaide, Australia. We will
have more on these Australian undertakings later in this chapter; what is
important here is the role of stockbrokers in both domestic and interna-
tional utilities promotions. Foster & Braithwaite also became active in
British Electric Traction Co. (BET) in 1896 (if not before), which, in turn,
had business abroad in electric traction.
But most central to Foster & Braithwaite™s activities in the electricity
supply industry was its 1890 participation in the formation of the Electric
and General Investment Corporation, London, which would preside over
the birth of many of the late-nineteenth- and early-twentieth-century British
ventures in electric utilities at home and abroad. Electric and General
Investment undertook negotiations for power station sites and arranged
public issues of shares. The ¬rm™s prospectus indicated that ˜˜the principal
Electrical Manufacturing and Contracting Firms in this country, as well as
abroad . . . had neither the time nor the facilities for . . . promoting and
¬nancing new electrical undertakings.™™ Electric and General Investment
was designed to do this. The prospectus continued, ˜˜The corporation will
not itself manufacture any electrical appliances; neither will it employ any
staff for carrying out any installation contracts, but it will restrict itself to
Chapter 3: Every City, 1880“1914 87

the ¬nancial and commercial operations of assisting in the promotion and
the development of electrical undertakings.™™ Pro¬ts were to come from
underwriting commissions; from the acquisition and realization of con-
cessions; from fees for examining, reporting on, and assisting the promotion
and development of electrical undertakings; and from interest and pro¬ts
on electrical undertakings. Electric and General Investment (often referred
to as an investment trust and sometimes called Electric and General
Investment Trust) served at the pinnacle of an ˜˜investment group.™™ His-
torian William Reader writes that the cluster of electrical companies
assembled at a later period ˜˜might have been fused together under a
holding company, instead of remaining a relatively loose-jointed mutual aid
society.™™59
British promoters/merchant banks, investment trusts, and stockbrokers
were among the many ¬nancial actors that assumed a role in the informal
groups surrounding the numerous British free standing companies involved
in electri¬cation abroad. They hired the appropriate engineering talents,
and British overseas banks extended globally to promote British trade.60
Indeed, when the German banks set up branches abroad, it was to make
German foreign trade ˜˜independent of ¬nancing by British banks.™™ The
electrical industry was in the midst of a global British-German competitive
˜˜war.™™ In Argentina, for example, the London and River Plate Bank and
the Commercial Bank of the River Plate were well established when the
Germans sought to compete.61 Unlike the German banks, which were
closely associated with assisting the exports of the electrotechnical manu-
facturers, the British overseas banks were less involved in ¬nancing trade in
electrical equipment and end products. Yet the British overseas banks were
often linked, creating information channels, with the British free standing
companies in utilities that would be set up around the world. The banks
were sponsors of tramway, light and power companies, and general utilities
all through Latin America.62 Elsewhere, on the European continent and
around the world, the British competed with the Germans, with the latter
often far more skilled in electric utilities ¬nance.
From the mid-1890s, Canadian promoters/entrepreneurs enlisted a
variety of ¬nancial intermediaries “ banks and separate securities companies “
to augment business abroad in electric utilities. In Canada, where there
were no strong electrotechnical manufacturers to take the initiative (as was
the case in the United Kingdom), Canadian ¬nancial intermediaries engaged
in arranging for the establishment of public utilities abroad; the latter
brought in engineering ¬rms for investigations, design, and construction.
˜˜Because of the laxity of its securities and corporation law as well as the
latitude permitted to controlling shareholders in the event of dif¬culties,™™
Canada was an excellent legal domicile for corporate activities in public
utilities outside the Dominion.63 Canadians organized new free standing
companies. The principal ¬nancing came from Great Britain, where the
Global Electri¬cation
88

Canadians had well-established relationships, but the initiative, interest-
ingly enough, was usually Canadian.
When an electric utility began operations and started to report favorable
earnings (with corresponding advances in the stock price), the Canadian
underwriting syndicate would then conduct a primary distribution “ that is,
an initial public offering (IPO) “ selling all or part of its portfolio to indi-
vidual investors, unit trusts (mutual funds), insurance companies, and
banks, principally in Canada and the United Kingdom. These ¬nancial
intermediaries were passive investors and held the securities ˜˜as invest-
ments.™™ (Banks, in turn, would play a role in ¬nancing the investments of
individual investors.) In the early twentieth century, Canadian businessmen
developed an internationally recognized specialization in the ¬nance and
operation of utilities, particularly, but not exclusively, in Latin America.
Indeed, in 1911, when there was a major Canadian investment in Barcelona
Traction, Light and Power Company, Spain, it was in effect an extension of
what the Canadians had been undertaking in Latin America.64
Canadians were the entrepreneurs in these many international ventures
because they knew the utilities business from their experiences at home.
Canada had excellent hydroelectric power facilities and had early on been
involved in domestic electri¬cation. Thus, Canadians could transfer their
domestic knowledge to the setting up and running of utilities abroad. The
Canadian ¬nancial communities in Montreal and Toronto became deeply
engaged, and the leading commercial banks “ notably the Bank of Montreal
and the Bank of Commerce, Toronto “ participated in developing public
utilities abroad, along with such Canadian entrepreneurs as William
Mackenzie (earlier involved in railroads), American-born William Van
Horne (also taking part in railroads, particularly the Canadian Paci¬c), and
James Ross (who made his money in construction, linked with the
Canadian Paci¬c). By the end of the ¬rst decade of the twentieth century, a
group of forty or ¬fty Canadian bankers, securities companies™ executives,
brokers, lawyers, builders, and other businessmen formed free standing
companies abroad in electric utilities. These Canadians operated in
overlapping circles of relationships.65
Among the principal Canadian securities companies were (1) the
Montreal-headquartered Royal Securities, organized in 1903, and identi¬ed
at origin with Max Aitken (later Lord Beaverbrook), and (2) the Toronto-
headquartered Dominion Securities, formed in 1901 and run by E. R. Wood.66
Key among the involved law ¬rms was Blake, Lash, and Cassels. Canadian-
born Edward Peacock, James Dunn, and Aitken would move to London,
further enhancing the ties between the Canadians and British ¬nancial
groups.67 American engineer Fred Stark Pearson was brought into, or imposed
himself on, a number of the major Canadian projects abroad.68 By contrast,
the Royal Securities group would engage an af¬liated company, Montreal
Engineering (created in 1907), to handle its engineering needs.
Chapter 3: Every City, 1880“1914 89

Between 1896 and 1911, Canadians set up operating companies in
electric utilities, incorporated in Canada, to run electric utilities in the
United Kingdom (established in Birmingham in 1896, but short-lived and
sold to British interests in 1902), Brazil, British Guiana (Guyana), Cuba,
Jamaica, Mexico, Puerto Rico, Spain, and Trinidad.69 In 1912, when the
¬‚edgling Alabama Power Company could not ¬nd ¬nancing in the United
States, a Canadian company was established, the Alabama Traction Light
and Power Company, Ltd., which tapped British capital markets on behalf
of the American power company.70

enclave electri¬cation
In the late nineteenth and early twentieth centuries, plantation, mining,
and oil-producing companies extended out from Europe, the United
States, and, very occasionally, from elsewhere to develop new resources
around the world. Because the products were typically exported from the
country where they were produced, there would be within a host country
a complementary development of port facilities and electri¬cation in the
port city.
With agricultural investments “ such as those of United Fruit in bananas “
operations had minimal electri¬cation, and the linkage effects tended to be
far less than in mining and oil; but where foreigners invested in processing
the output “ as, for example, in the case of sugar mills “ there would be
substantial electri¬cation. Quite early, Cuban sugar mills came to be elec-
tri¬ed, and soon after independence from Spain, Cuba witnessed a sharp rise
in the number of electric utilities. Expatriates working for W. R. Grace on the
west coast of Latin America installed electric generators. In another part of
the world, the French Durand group received a concession for the develop-
ment of forest land and mining properties in Madagascar; what followed was
a company to develop water and electricity in the French colony.71
The industrial activities that accompanied mining and oil projects had
new electricity requirements. Whether we are talking about gold- and
diamond-mining groups in South Africa or the start of large-scale copper
mining in Chile, electri¬cation came on the heels of the industrial activity.
In South Africa, British, German, and American entrepreneurs pushed
forward electri¬cation along with the mining. General Electric had a paid
company representative in the Transvaal from 1894 onward. Wilfried
Feldenkirchen reports that in 1897 Siemens & Halske built a 10,000
volt three-phase power plant for industrial purposes at Brakpan, near
Johannesburg. Wernher, Beit & Co., ¬rst active in South Africa, would
subsequently push electri¬cation in Latin America. The British-registered
Victoria Falls & Transvaal Power Co., Ltd. in South Africa was, in reality,
German. In Chile, electrolytic processing of copper required major elec-
tri¬cation.72 The ¬rst hydroelectric power plant in what is now Malaysia
Global Electri¬cation
90

was built in 1900 by the Raub-Australian Mining Company.73 Similarly,
the new developments in the oil industry in Iran, Mexico, and the Dutch
East Indies (Indonesia) carried with them electri¬cation. For all these
enclave type activities and the port developments that accompanied them,
electri¬cation was secondary to the ¬rms™ primary agricultural, mining, and
oil business, yet it was of vital importance and had impacts far beyond the
company town and the port.
In addition, with fewer kilowatt hours and fewer consequences, when
colonial administrators went abroad in the early twentieth century, if they
had electri¬cation in the European capitals where they had lived, they did
not care to give up that comfort in the colonies, so they installed generators
in their homes for lighting. The stores where they shopped might have
electric lights or ice makers. Normally, this electri¬cation (with the isolated
plants) did not diffuse electri¬cation beyond the European communities.
Applications were still very partial. Nonetheless, the installations started to
offer a demonstration effect, so that with the spread of colonization in the
late nineteenth and early twentieth centuries, electri¬cation followed, to be
sure, slowly and unevenly. D. K. Fieldhouse has written that by 1914 ˜˜the
proportion of the world™s land surface actually occupied by European,
whether still under direct European control as colonies or as one-time
colonies [or as Europe itself],™™ was 84.4 percent.74

large power consumers
One signi¬cant form of multinational enterprise activity that disseminated
electri¬cation in the early twentieth century was that pushed by demands
from large industrial consumers of power. In certain industries, such as
aluminum and paper and pulp, electri¬cation was integral to the processes
of production. These companies sited their business where there was “ or
was the potential for “ cheap electric power. The German electrical man-
ufacturer Allgemeine Elektrizitats Gesellschaft (AEG) was one of the
¨
founders in 1889 of Aluminium Industrie AG (AIAG), the large Swiss
aluminum company.75 AIAG not only developed power resources in
Switzerland, but also expanded in 1898 to build power facilities in nearby
Lend-Rauris, Austria.76 Similarly, U.S. entrepreneur/promoter/banker John
Edward Aldred joined with the Pittsburgh Reduction Company “ to be
renamed the Aluminum Company of America (Alcoa) in 1907 “ in the large
Canadian public utilities venture Shawinigan Water and Power Company,
incorporated in 1898. Soon this company had extra power and over a long-
distance transmission line supplied wholesale power to the locally owned
Montreal electric utility. U.S.-owned paper and pulp mills were set up in
Canada, and some of the investors became suppliers of electric power,
along with their manufacturing investments.77 Elsewhere, the British Alu-
minium Company purchased a partially developed waterpower facility in
Chapter 3: Every City, 1880“1914 91

Norway in 1906, completing the power plant and the reduction works in
1908. Foreign-owned electrochemical enterprises also went to Norway,
making investments there to enlarge power facilities, by far the largest
being the huge operations of Norsk Hydro.78 Virtually all of these power-
intensive projects were associated with hydroelectric power, but there is
some evidence that in Russia and perhaps Central Europe there were for-
eign industrial establishments developed near coal mines, with the subse-
quent buildup of utilities to use the excess coal.79
In some cases, the start-up initiative for a new electrical facility was
provided by the owner of the rights to develop the power resources. His-
torian David Massell tells the fascinating story about how the Canadian
Thomas Willson got those rights for the Saguenay River. But having
acquired the rights, he needed customers. Thus, he invented an electro-
chemical process to make fertilizers and tried to market it in the United
States to the principal fertilizer producers. Yet, as Massell writes, ˜˜It is one
thing to purchase an option on a chemical process in order to prove or
disprove its commercial prospect, and quite another, as Willson knew all
too well, to take up vast outland water powers without a concrete plan for
their future use.™™ Willson attracted the struggling U.S. ¬rm Interstate
Chemical Co. to his as-yet-untested new fertilizer process. Through per-
sonal contacts Interstate Chemical, in 1911, attracted American tobacco
entrepreneur James B. Duke, who was immediately tempted by the possi-
bility of controlling the North American, if not the global, fertilizer industry
and, more important, of obtaining new power resources. Duke had ˜˜deep
pockets,™™ earlier investments in fertilizer companies, and experience in
developing waterpower sites in North and South Carolina, and he was
ready after the breakup of his American Tobacco Company in 1911, to
embark on a major new endeavor. As Massell puts it, ˜˜[F]rom the summer
of 1912, the centre of command [for the Saguenay River development]
shifted southward to the regional capital of Charleston, South Carolina,
before gravitating ultimately to the continent™s ¬nancial power centre, New
York. From the moment in September [1911] that Duke showed interest in
Interstate™s fertilizer scheme, there was no doubt among Interstate™s direc-
tors [and also Willson] as to who was running the show. The ˜boss™ was
now James B. Duke,™™ and so there was a transfer of this development from
Canadian to U.S. control.80

manufacturers and their satellites
By the mid-1890s, the big electrotechnical manufacturers General Electric,
Westinghouse (founded in 1886), Siemens, Allgemeine Elektrizita ¨ts
Gesellschaft, and the Swiss Brown, Boveri (founded in 1891), as well as other
electrical equipment manufacturers were undertaking large-scale interna-
tional business, principally the establishment of manufacturing facilities and
Global Electri¬cation
92

sales of¬ces abroad.81 By the eve of World War I, General Electric (GE) had
associated manufacturing plants in Canada, England, France, Germany, and
Japan, with a range of investments from 97 percent in British Thomson-
Houston to a small stake in AEG (apparently acquired when, in 1903“1905,
AEG merged with Union Elektrizita Gesellschaft). It is not clear that GE
¨ts
had any interest at all in its af¬liated Canadian manufacturing business.
From Mexico, to South Africa, to Australia, GE had wholly owned sales
outlets. As for Westinghouse, it had large manufacturing operations in the
United Kingdom, as well as plants in France, Russia, and Canada. As these
American companies set up manufacturing and distribution abroad, there
were new interests (often indirect and usually minority interests) in electric
utilities. So, too, AEG, Siemens, and Brown, Boveri developed international
networks of manufacturing and sales af¬liates with impact on the estab-
lishment of electric utilities.82
General Electric would, through its international business, take the
initiative in stimulating the establishment of foreign public utilities, as
did Westinghouse to a lesser extent. Their international business in
manufacturing was very extensive, and their interests in public utilities were
an outgrowth of that business. In the cases of the two German giants and
the Swiss electrical manufacturer, the arrangements to develop utility
companies outside Germany and Switzerland became even more far-
reaching. To jump ahead in time, as a 1927 publication put it, ˜˜Electrical
manufacturers in the United States and Europe adopted very early the
principle of large-scale production and of co-operative action, . . . They
recognized . . . the need [for] the formation of new power supply compa-
nies, which would open up new territory and so create a demand for the
products of the electrical manufacturer,™™83 domestically and internation-
ally. The big electrotechnical manufacturers continued to compete and
collaborate, depending on the circumstances. They divided markets and
joined in cartel relationships. Patent licensing became a way of dividing up
territories; and as the manufacturers formed alliances, this affected the
patterns of investments in electric utilities.84
The beginnings of the French electric utility industry, as Pierre Lanthier
has shown, were international: Compagnie Continentale Edison was
established in 1882, as we have seen, with French capital but American
patents (80 percent of the pro¬ts were to go to Edison interests, after cash
subscribers were reimbursed for their contribution “ which never hap-
pened). The French Thomson-Houston (FTH), a manufacturing ¬rm, was
an outgrowth, readers will recall, from Thomson-Houston after its merger
into General Electric. FTH, involved in French public utilities, was American
in origin but used French capital and over time came to be French-
controlled. Formed in 1893, it was initially owned 40 percent by GE and 60
percent by French interests; by 1902, the U.S. interests had been reduced to
6.5 percent. The FTH group would have important outward foreign
Chapter 3: Every City, 1880“1914 93

holdings in electric utilities. Compagnie Generale de Traction was linked
´´
with Westinghouse in a joint subsidiary called the Societe Industrielle
´´
´ lectricite. And then there was Empain, with a Belgian head of¬ce
d™E ´
which combined Belgian and French interests.85 Compagnie Generale ´´
´ lectricite, founded in 1898, was an electrical manufacturing ¬rm with a
d™E ´
central power station in Rouen; Patrick Fridenson describes it as French in
origin, with some Swiss capital involved. Two of the ¬rst ¬ve key admin-
istrators of CGE were Swiss; one was from the electrical manufacturer
Brown, Boveri, the second from a bank.86 Except for Empain (more on
Empain to follow), all of these developers of light and power facilities in
France could be seen as evolving in a manufacturing context (a type of
manufacturers™ satellite or extended manufacturers™ satellite). CGE would
also make investments outside France, particularly in Spain™s Energ±a ´
87
Electrica de Cataluna in 1911.
´ ˜
When in 1893 the French Thomson-Houston was created, it was allo-
cated a territory by General Electric. In 1898, with GE™s German af¬liate
Union Elektrizitats Gesellschaft (UEG), it formed the Belgian-registered
¨
´ lectricite Thomson-Houston de la Mediterranee, otherwise
Compagnie d™E ´ ´ ´
88
known as Thomson-Houston de la Mediterranee (THM). THM obtained
´ ´
from GE ˜˜territory rights™™ over the Mediterranean countries Egypt, Greece,
Italy, and Spain, and in these countries THM acquired interests in and
contracts for tramways and central stations. THM purchased in 1898 a
power plant in Athens, built almost a decade earlier by a Greek (purely
domestic) company. With that Greek ¬rm and the National Bank of Greece,
´
THM founded Compagnie Hellenique d™Electricite (CHdE) in 1899.89 In
´ ´
addition, THM made investments in utilities in Egypt, Spain, and Italy.
´
Separately, in 1911, with the Societe Centrale pour l™Industrie Electrique
´´
(SCIE), Paris, FTH participated in the capital of the Constantinople Con-
´´ ´
sortium (see below) and the Societe d™Electricite de Rosario in Argentina. In
´
´ nergie Electrique de Bakou in
´
1913, FTH was also making investments in E
the key oil district of Russia (now Azerbaijan).90
Meanwhile, the German electrical manufacturing ¬rm Allgemeine
Elektrizitats Gesellschaft (AEG) was investing in electric utilities, at ¬rst in
¨
Germany. It had the brief U.S. stake (with Siemens and Deutsche Bank) in
Edison General Electric, discussed above. By 1890, AEG had entered the
Spanish public utilities business. With the Madrid Gas Company and the
Pereire Brothers, AEG formed Compan±a General Madrilena de Elec-
˜´ ˜
tricidad (Madrilena). Note the cluster: a manufacturer (AEG) with a gas
˜
company (Madrid Gas) and a banking group with railroad experience
(Pereire Brothers). For AEG, this was a short-lived investment, and in 1894
it divested.91 In the same year, AEG acquired a local company in Barcelona,
Sociedad Espanola de Electricidad, and transferred it to the newly created
˜
Compan±a Barcelonesa de Electricidad (Barcelonesa). AEG (with Deutsche
˜´
Bank and some other banks) obtained controlling interest (70 percent of the
Global Electri¬cation
94

´
capital). The French company Societe Lyonnaise des Eaux et de l™Eclairage
´´
took a 25 percent interest, and Spanish bankers picked up the remainder.92
In 1894“1895, AEG undertook to electrify lighting and urban transport in
Genoa, Italy, acquiring existing companies and modernizing their net-
works. There came to be an intimate nexus between the German electro-
technical industry and the emergence of public utilities in both Spain and
Italy.93 The same was true both in Central and Eastern Europe and much
farther a¬eld. Even though French and German companies sometimes
cooperated, often the more aggressive Germans pushed ahead.
In general, manufacturers™ satellites constituted an unstable mode. Once
a utility was up and running, it would usually be spun off and sold. It did
not remain a manufacturer™s satellite, although the period and the amount
of the manufacturer™s involvements varied. Luciano Segreto writes that
by the 1890s ˜˜the expanding market for electricity . . . brought new kinds
of complications to . . . the electrical equipment manufacturers. Direct
involvement in the management of electric [supply] companies . . . became
excessively complicated, because the activity of producing and distributing
energy required an elaborate bureaucratic structure which the great elec-
trical equipment manufacturers were not able to develop without incurring
burdensome costs.™™94 Another reason for the spin-offs related to the
manufacturers™ desire not to tie up capital in the utilities. Government
regulations may also have affected the longevity of the manufacturers™
involvements.95 Clearly, however, administering an electrical manufactur-
ing business and providing light and power services were different. Typi-
cally, there were lower costs in running them separately than in integrating
them within a single ¬rm. Yet, from a start-up standpoint the impetus often
came from the manufacturer (frequently joined by a bank or banks).
The manufacturers™ satellite initiatives were most evident where the big
electrotechnical companies had specialties in generating equipment. Thus,
the U.S. manufacturers General Electric and Westinghouse and their
extended activities, the German Allgemeine Elektrizitats Gesellschaft and
¨
Siemens, and the Swiss Brown, Boveri & Co. (which had special core
competence in hydroelectric power) stand out. French manufacturers were
important in certain markets. So, too, the Swedish Allmanna Svenska
¨
Elektriska AB (ASEA) had some interests in power companies abroad. The
British manufacturers were af¬liates of American ones or, in the case of
Siemens Brothers Ltd. and Siemens Brothers Dynamo Works Ltd., the
Germans. The way British overseas stakes in utilities most often manifested
themselves was not through satellites of the electrotechnical manufacturers.
Philips of Holland and Ericsson of Sweden, both important electrical
manufacturers, had specialties outside of generation equipment; they were
not caught up to any extent in the networks of electric utility ¬nance.
Domestically and internationally, a manufacturer never acted alone
when it entered the power supply business; it brought in (or associated itself
Chapter 3: Every City, 1880“1914 95

with) others in the founding of the utilities. When the manufacturer
expanded into international business and joined with national partners
abroad, this often became connected with the domestication of the light and
power facility, by which we mean the shift from the international genesis
(international direct involvement) to domestic ownership and control.
Thus, the European manufacturers and the utilities with which Edison had
been involved had for the most part become ˜˜domestic.™™ With General
Electric, Westinghouse, Siemens, AEG, Brown, Boveri, and ASEA and their
foreign af¬liates, the pattern with the utilities was in some cases complete
or partial domestication (the foreign retention of minority interests, often
through other intermediaries). In Italy, for instance, German capital
(principally that of the electrotechnical manufacturers and German banks)
accounted for roughly 40 percent of the capital invested in the electricity
supply sector in 1900, but in large part because of growing domestic
involvements, this was reduced to about 16.5 percent in 1913.96
The great German electrical companies in the 1890s were at the same
time manufacturers, suppliers of energy, and ¬nancing institutions. As the
prominent German economist Jacob Riesser (in 1911 a professor at the
University of Berlin) wrote, ˜˜[T]here was scarcely a form of management or
¬nancing which was not utilised in the nineties by the [German] electrical
industry. There were syndicates, subsidiary companies (Tochterge-
sellschaften), and trust companies, the latter especially intended to relieve
the banks of part of their enormous ¬nancial and other tasks connected
with electrical undertakings, operating companies proper, and manufactur-
ing companies, as well as ¬nancing institutions, increases and reductions of
capital, silent participations, commandites, issues and sales in the open
market, fusions, pooling of pro¬ts (Gewinngemeinschaften), buying of
shares, separations and combinations, independent and syndicated enter-
prises at home and abroad. In short, a medley of undertakings . . . .™™ By
1912, however, matters had calmed down, and prominent companies and
forms of doing business had taken shape in this hugely important German
industry.97

holding companies
In 1895“1896, the major German and Swiss electrical equipment manu-
facturers (including AEG, Siemens, and Brown, Boveri) made the decision
to organize holding companies to ¬nance and manage electric utilities.
Their precedent lay in the trusts that had been formed in continental Europe
to ¬nance railway companies. (Riesser and others called these holding
companies ˜˜trust companies™™.) Unlike the railroad trusts, which tended to
be exclusively for ¬nance, the new holding companies involved in electric
utilities would participate in all facets of the setting up of the electric
utilities, including the planning of the projects and the supervising of
Global Electri¬cation
96

construction, alone or with outside partners. They made foreign direct
investments and ran the businesses. The electrical equipment manufacturers
wanted to participate so they could sell their equipment. Once the electric
utility was in operation, the holding company would arrange to ¬‚oat the
shares of the operating company on the market, bringing in additional
investors. These holding companies did what is known in German as
Unternehmergeschaft. The word is important. The electrotechnical pro-
¨
ducers became “ in the context of the holding company “ electrical entre-
preneurs (Unternehmer), creating their own market or business (Geschaft). ¨
The holding companies acted as entrepreneurs; they were not simply
¬nancial architecture. They sponsored ef¬ciencies in the process of estab-
lishing and operating the business abroad. There were economies of scale in
the communication of knowledge and general expertise vis-a-vis electric
`
utilities. Sometimes these holding companies were called ˜˜power ¬nance
companies.™™ The holding companies™ principals had the advantage of
attracting others™ capital without relinquishing control.98
The ¬rst such European holding companies for electric utilities were
incorporated in 1895“1896 in Switzerland, a congenial nation for tax and
other reasons. Swiss commercial law allowed far larger bond issues than
German law. Switzerland was a neutral ground, where German and French
¬nance could meet and interact. And Switzerland already had an estab-

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