The Coming of Managerial Capitalism

Taught by Tom Nicholas

This second-year elective course explores the historical development of the most important economic actors and institutions—entrepreneurs, corporations, labor unions, and financial markets, as well as relevant government bodies—as the United States became increasingly industrial, urban, and technologically advanced.  Read More
Module 1: Historical Foundations of Entrepreneurship (Alexander Hamilton to Native Americans)

Class 1 Alexander Hamilton, 1757-1804


Alexander Hamilton 1757-1804 (Weeks 1&2 packet); not available online.

Class 2 Whaling Ventures


Whaling Ventures

Class 3 The Ice King


The Ice King

Class 4 The Travails of Rubber: Goodyear or Badyear?


The Travails of Rubber: Goodyear or Badyear?

Class 5 Slavery



Class 6 The Indian Removal Act


The Indian Removal Act and the Trail of Tears

Module 2: The Emergence of Organization (Railroads to the Wright Brothers)

Class 7 Railroads and the Beginnings of Modern Management


Railroads and the Beginnings of Modern Management

Class 8 Jay Gould


Jay Gould and the Coming of Railroad Consolidation

Class 9 J. P. Morgan


J. P. Morgan

Class 10 Standard Oil Co.: Combination, Consolidation, and Integration


Standard Oil Co.: Combination, Consolidation, and Integration (A)
Standard Oil Co.: Combination, Consolidation, and Integration (B)

Class 11 Du Pont: The Birth of the Modern Multidivisional Corporation


Du Pont: The Birth of the Modern Multidivisional Corporation

Class 12 Scientific Management


Mass Production and the Beginnings of Scientific Management

Class 13 The Wright Brothers and Their Flying Machines


The Wright Brothers and Their Flying Machines

Module 3: Prosperity, Depression and War

Class 14 Al Capone


Al Capone

Class 15 Maiden in America


Maiden in America

Class 16 Trouble with a Bubble


Trouble with a Bubble

Class 17 Neoprene



Class 18 Labor Movement between the Wars


Labor Movement between the Wars

Class 19 Crosley



Class 20 The Whiz Kids


The Whiz Kids

Module 4: Technological and Financial Revolutions (Georges Doriot to Bessemer Trust)

Class 21 Georges Doriot and the Origins of the American Venture Capital Industry


Georges Doriot and American Venture Capital

Class 22 Sole-Sourcing the Intel 386

Class 23 Online Pet Supply Retailing


Online Pet Supply Retailing

Class 24 Michael Milken


Michael Milken, by Nancy Koehn and Rowena Olegario, case 1-793-057 (rev. 1996); not available online; please contact Harvard Business Publishing.

Class 25 Lehman Brothers


Lehman Brothers

Class 26 Bessemer Trust: Guardians of Capital


Bessemer Trust: Guardians of Capital

Module 5: The American Dream (The American Dream in History)

Class 27 The American Dream


The American Dream in History

Entrepreneurship and Global Capitalism

Taught by Geoffrey Jones

This second-year elective offers a wide-ranging framework for understanding the role of entrepreneurs in shaping global capitalism. Through the eyes of entrepreneurs of the past two centuries, the course explores how global business opportunities have been identified and exploited, and the challenges and opportunities posed by "foreignness" as firms crossed national borders.  Read More

1. Objectives

EGC is taught in the second year of Harvard Business School’s MBA program. It offers a wide-ranging historical framework for understanding the role of entrepreneurs in shaping global capitalism. It provides cases on entrepreneurs and firms from many countries who were active in pursuits ranging from opium trading and luxury watches to fashion, beauty, shipping, finance and information and communications technologies. The course is organized into four modules which are broadly chronological.

Each module ends with a module review.

The course includes some of the world's most well-known entrepreneurs, as well as some of the most infamous, and shows their roles in the major events of the last century, from Gandhi's struggle for Indian Independence to the nightmare of Nazi Germany. The course is concerned to place business in a broad political, economic and cultural context as it explores the challenging decisions and ethical dilemmas entrepreneurs have faced in countries with repressive regimes and failed states in different historical eras. By reviewing the historical evidence on global entrepreneurship, it provides perspective and a unique learning opportunity for those considering careers both in entrepreneurship and general management.

2. Pedagogy

At the Harvard Business School EGC is taught entirely by case method. Each of the cases listed in the course can be purchased and downloaded from Harvard Business School Publishing website. ( Many of the cases have Teaching Notes which registered educators can also buy from the site. Professor Jones is also happy to share informal teaching plans and discuss teaching strategies for those new to case method teaching. Most of the cases on Latin America are available in Spanish and some are also in Portuguese. A major challenge of teaching historical material by case method is that students may lack adequate contextual information. In response, the course employs a data mapping tool known as Historical Data Visualization. It is intended to make this freely available as soon as possible. In addition, selective readings are made available to provide background. At many other schools, the cases listed here are combined with formal lectures and seminars, and used as a vehicle to encourage discussion. Geoffrey Jones, Multinationals and Global Capitalism (Oxford University Press, 2005) is a textbook covering the business history of global capitalism, and is used by some schools teaching this material.

Module 1: Building Global Capitalism

The first module examines how entrepreneurs built a global economy in the nineteenth century by creating business organizations that pursued resources and markets across borders. It shows how these pioneers in the United States, Latin America, Europe and Asia identified opportunities and managed risks in the face of challenging circumstances.

Class 1 Opium and Entrepreneurship

This case concerns the growth of multinational trading companies in the first global economy. It examines two Scottish-owned merchant houses, Jardine Matheson and James Finlay, and shows their changing trade and investment strategies as well as their use of an organizational form later known as business groups. It also demonstrates the role of ethnic networks in globalization during this historical period.


Opium and Entrepreneurship in the Nineteenth Century (805010)

Class 2 Globalizing Consumer Durables

This case examines the global strategy of Singer, one of the world's first multinationals, before 1911. Singer, a U.S. pioneer of the modern sewing machine, established its first foreign factory in Scotland in 1867. Investments followed in manufacturing and marketing in other countries, especially Russia. By 1914, Singer held a remarkable 90% share of all sewing machine sales outside the United States and was the seventh largest firm in the world. The case examines why sewing machines became one of the world's first global products and the entrepreneurial and organizational factors behind Singer's international success.


Globalizing Consumer Durables: Singer Sewing Machine before 1914 (804001)

Class 3 The Victorian Internet

This case describes the nineteenth century founding by Werner Siemens of the Siemens electrical business in Germany. Werner's dual role as inventor and entrepreneur is explored as he created one of the world's first multinational enterprises, whose growth initially rested on its pioneering role in the new telegraph industry. Werner sent his brothers to open businesses in Great Britain and Russia, and the case explores the advantages and disadvantages of family business as a form of organization, as well as the challenges growing it poses for such family firms.


Werner von Siemens and the Electric Telegraph (811004)

Class 4 Building Global Infrastructure

This case explores the role of the British entrepreneur Weetman Pearson in developing the Mexican oil industry before 1911. It shows this entrepreneur's evolution from a domestic British builder to an international contractor, building tunnels, railroads, and harbors worldwide, including the United States and Mexico. In Mexico, where Pearson developed close relations with the dictator Porfirio Diaz, the government awarded large oil concessions. In 1910, Pearson discovered one of the world's largest oil wells, and this was used as a basis to build an integrated oil company. But by 1918--when the case ends--Pearson was considering whether to sell his investment in the face of growing political risk.


Weetman Pearson and the Mexican Oil Industry (A) (804085)

Class 5 Argentina Global Tiger

This case examines the career of Ernesto Tornquist, a cosmopolitan financier considered to be the most significant entrepreneur in Argentina at the end of the 19th century. Tornquist created a diversified business group, linked to the political elite, which integrated Argentina into the trading and financial networks of the first global economy. The case provides an opportunity to understand why Argentina was such a successful economy at this time, and to debate whether it’s very success laid the basis for the country's subsequent poor economic performance.


Ernesto Tornquist: Making a Fortune on the Pampas (807155)
William J. Baumol, “Entrepreneurship: Productive, Unproductive, and Destructive”
The Journal of Political Economy, Vol. 98 (Oct., 1990).

Class 6 Creating Modern Japan

This case considers the entrepreneurial career of the founder of Mitsubishi, Yataro Iwasaki, who built a large shipping company against the opposition of powerful Western incumbents. Although sometimes supported by the Japanese government, and often times opposed, the case identifies Iwasaki's entrepreneurial talent and organization-building skills as key drivers of success. This case provides a vehicle for examining the entrepreneurial factors behind Japan's remarkable transition from a feudal to a modern society in the second half of the nineteenth century.


Yataro Iwasaki: Founding Mitsubishi A (808158)

Class 7 Global Fraud

Globalization and corporate fraud are the central themes of this case on the international growth of Swedish Match in the interwar years. Between 1913 and 1932, Ivar Kreuger, known as the "Swedish Match King," built a small, family-owned match business into a $600 million global match empire. Despite the economic and political disruptions of the interwar period, Swedish Match owned manufacturing operations in 36 countries, had monopolies in 16 countries, and controlled 40% of the world's match production. Kreuger companies lent over $300 million dollars to governments in Europe, Latin America, and Asia in exchange for national match monopolies. Relying on international capital markets to finance acquisitions and monopoly deals, by 1929 the stocks and bonds of Kreuger companies were the most widely held securities in the United States and the world. After Kreuger's 1932 suicide, forensic auditors discovered that Kreuger had operated a giant pyramid scheme. His accounts were ridden with fictitious assets, the truth hidden in a maze of over 400 subsidiary companies. Swedish Match’s deficits exceeded Sweden's national debt.


Ivar Kreugar and the Swedish Match Empire (804078)
Hans Wilsdorf and Rolex (805138)
Geoffrey Jones, Entrepreneurship and Multinationals. Global Business and the Making of the Modern World (Edward Elgar 2013), chapter 3

Module 2: Globalization Reversed

The second module seeks to understand  the spectacular reversal of globalization from the 1920s, as wars, the Great Depression, and the enormous wealth gap between the rich West and the rest of the world, prompted governments to respond. At the heart of the module is the  paradox that geographical distance has been sharply reduced by innovation in communications and transport technologies, yet political boundaries grow rapidly with the spread of Communism and Fascism. It explores the role entrepreneurs played in causing the widespread questioning of the legitimacy of global capitalism during this period, and their responses to their challenging  environment. Managing governments becomes a major issue for firms. Global firms face “rare events” such as the Great Depression which undermine traditional business models. They respond by a vast extension of the number and scope of  international cartels.

Class 9 The Rise of Cartels

This case examines the development of an international cartel in the oil industry in the 1920s and 1930s. It focuses on the decisions and actions of the leading multinational oil companies -- particularly Standard Oil of New Jersey, Royal Dutch/ Shell, and Anglo-Persian (BP) -- in acting together to try to stabilize prices and market shares beginning in the late 1920s through the Achnacarry or "As-is" Agreement. Set against the backdrop of the development of the global oil industry, the case examines the causes of the change in firm strategy from competition to cooperation and offers an opportunity for readers to assess the success of efforts at inter-firm coordination and stabilization. It also explores the personal and professional relationships between the leading oil-industry executives who forged the cartel, including Henri Deterding, Walter Teagle and John Cadman. Important sub-issues include the changing nature of the oil industry in the 1910s and 1920s, the rise of oil diplomacy, and the impact of U.S. anti-trust laws on the global oil business.


Creating Global Oil, 1900-1935 (804089) 
Jeffrey Fear, "Cartels" in Geoffrey Jones and Jonathan Zeitlin (eds.) The Oxford Handbook of Business History (Oxford University Press, 2008).

Class 10 The Commodity Crisis

This case describes the growth of Guggenheim Brothers as one of the largest mining companies in the world in the early twentieth century. Global expansion led the firm to Chile, first in copper and later in natural nitrates. Chile's economic growth was driven by the profits from mining, especially its world monopoly of nitrates. The Guggenheims invested in Chilean nitrates after synthetics were developed by German chemists. Their strategies to modernize the industry collapsed with the outbreak of the Great Depression, during which Chile experienced the greatest fall of incomes of any country. The case serves as a vehicle to explore the devastating economic and political impact of the Great Depression on the countries of the South, such as Chile, which had specialized in primary commodities, and on mining and financial capitalists such as the Guggenheims.


The Guggenheims and Chilean Nitrates (810141)
Jeffrey D. Sachs, Andrew M. Warner, “Natural Resources and Economic Development: The Curse of Natural Resources,” European Economic Review

Class 11 Responsibility and Legitimacy

This case considers the strategy of U.S.-owned IBM, then a manufacturer of punch cards, in Nazi Germany before 1937. It opens with IBM CEO Thomas J. Watson meeting Adolf Hitler in his capacity as President of the International Chamber of Commerce. IBM had acquired a German company in 1922, and like other American companies, found itself operating after 1933 in a country whose government violently suppressed political dissent and engaged in intimidation and discrimination against Jews. The case explores the tensions between IBM's German affiliate and its parent, and provides an opportunity to explore the options and responsibilities of multinationals with investments in politically reprehensible regimes.


Thomas J. Watson, IBM, and Nazi Germany (807133)

Class 12 Colonialism

This case describes the role of a leading Indian business leader in the campaign for independence before 1947 and his close relationship with the legendary Mahatma Gandhi. Provides the opportunity to consider the impact of colonialism on shaping Indian entrepreneurship and the role of the small Marwari group, originally from the Marwar region of Rajasthan, in creating many of India's leading business houses, including the Bajaj. The Bajaj, like other Marwari, were traders who after World War I transitioned into manufacturing, including sugar manufacturing and steel rolling.


Jamnalal Bajaj, Mahatma Gandhi and the Struggle for Indian Independence (807028) 
Gandhi and the Salt March, 1930 (4 minute video)

Class 13 Banana Republics

This case examines the overthrow of President Jacobo Arbenz of Guatemala in 1954 in a U.S.-backed coup in support of the United Fruit Co. Over the previous half century, United Fruit had built a large vertically integrated tropical fruit business that owned large banana plantations in the "banana republics" of Central America, including Guatemala. The case examines the impact and role of United Fruit in the Guatemalan economy, one of the poorest in the world, and the reasons for growing hostility toward the company, culminating in Arbenz's agrarian reform policies aimed at redistributing some of the land held by United Fruit. The United States, which regarded Arbenz as pro-communist, supported United Fruit in the context of the Cold War.


The Octopus and the Generals: The United Fruit Company in Guatemala (805146)
Journey to Banana Land (1950), United Fruit Film
Charles  D. Brockett, “An Illusion of Omnipotence: U.S.  Policy toward Guatemala, 1954-1960” Latin American Politics and Society,  Vol. 44, No. 1 (Spring, 2002).
Unilever as "Multi-Local Multinational" (808025)

Module 3: Origins of the Second Global Economy

The third module shows how entrepreneurs rebuilt global capitalism and global markets after World War 2, though with much of the world opting out with closed economies and Communist states. The material covers the rapid economic growth of the West and Japan, and the changing consumer culture as middle class incomes rise and there is a democratization of fashion and celebrity. Beyond the West, latecomer countries such as Brazil and Turkey seek to catch-up, and experience major social changes, including growing women’s rights. The entrepreneurs in these decades are seen as major forces for the globalization of transport, trading and financial services. However many also capture value from de-globalization, both through regulatory arbitrage and alliances with the state actors who have become prominent in much of the world. Meanwhile import substitution policies permit the growth of new businesses and industries beyond the Western core.

Class 15 Global Shipping

The case examines the career of Aristotle Onassis and his creation of one of the world's largest shipping companies between 1945 and 1971. It explores the role of ethnic and family networks in Greek shipping and how Onassis was able to penetrate this system despite being an outsider. The case considers Onassis' role as a strategic innovator in flags of convenience and supertankers. It examines the dynamics of competitive advantage in shipping, as well as the strengths and weaknesses of family-owned firms. The case ends with the death of Onassis' only son in 1973 and the resulting vacuum in succession.


Aristotle Onassis and the Greek Shipping Industry (805141)

Class 16 Commodity Trading

The case examines the career of Marc Rich, the world's leading commodity trader before his criminal indictment in the United States in 1981. It covers the historical growth of commodity trading, especially in metals, from the late nineteenth century, and its evolving forms as governments intervened in markets after 1941. Rich joined Philipp Brothers, then the largest commodity trader, in 1951. He formed his own firm two decades later. He was instrumental in the creation of a spot market in petroleum, and assumed a pivotal role in the industry during the 1970s by selling Iranian oil to Israel and South Africa. The case provides a means to explore the rationale and advantages of giant commodity traders, as well as enabling students to debate corporate use of tax havens which expanded during the postwar decades.


Marc Rich and Global Commodity Trading (813020)
Bill Clinton, “My Reasons for the Pardon,” New York Times, Feb. 18, 2001

Class 17 Business and Apartheid

The case describes the career of Charles W. Engelhard, who inherited a family platinum business in the United States, and built a substantial gold, platinum, uranium, and forestry business in apartheid-era South Africa after 1947. The case explores how Engelhard leveraged share swaps, access to US capital markets, and a relationship with the South African magnate Harry Oppenheimer to build a strong position in South African precious metals. The mining industry was highly profitable. It benefitted from cheap Black African labor which was not allowed to form trade unions. South Africa was one of the world’s leading suppliers of precious and strategic metals to the non-Communist world. The case begins with demonstrators in New Jersey in 1966 protesting at the giving of a reward to Engelhard, and it is used to explore the growing debates about the ethical responsibilities of business after World War 2. There were significant shifts in social and ethical norms during this period concerning race and ethnicity, but these shifts happened at different times in different countries. Engelhard finds himself at the center of the resulting tensions. In the United States, he was active in the Democrat Party and a personal friend of President Lyndon B. Johnson, who introduced pioneering Civil Rights legislation during the 1960s. In South Africa, he was both a beneficiary of the apartheid regime and an active apologist for it. American anti-apartheid activists such as George M. Hauser became active in exposing the apparent contradiction in Engelhard’s position. The case can be used to enable a broader discussion whether engagement or divestment is the best response of business to repressive regimes. In the case of apartheid-era South Africa, Engelhard and numerous other Western firms stayed in the country, yet there was little political improvement. In 1963 Nelson Mandela was jailed for life by the regime, and was not released until February 1990, four months after the fall of the Berlin Wall.


Goldfinger: Charles W. Engelhard Jr. and Apartheid-era South Africa (313148)

In Search of Global Regulation (805025)

Class 18 Financial Centers

This case focuses on the development of London as a leading international financial center and the difficulties it faces maintaining its status. It examines London's history as a financial center from Roman times to the present day. London's position in the 19th century rested on the great importance of Britain in the world economy and the role of sterling as the major international currency. By the mid-20th century both of these factors were much reduced in importance, but London was renewed as the physical home of the Euromarkets. The case explores regulatory and other factors, including economies of agglomeration, which contribute to making a financial center. However the focus is on the role of the financial entrepreneurs, including George Bolton and Siegmund Warburg, who perceived opportunities to rebuild London as a global financial center despite the relative decline of the British economy and in the global importance of Sterling.


“Walking on a Tightrope”: Maintaining London as a Financial Center (804081)
Anthony J. Venables, “Shifts in Economic Geography and their Causes” Economic Review - Federal Reserve Bank of Kansas City (2006).

Class 19 Paris and Haute Couture

The case describes the foundation of Christian Dior, the leading Parisian fashion house, in 1946 and its subsequent globalization strategy. After explaining the historical origins of France's pre-eminence in upscale fashion, the case explores the challenges to this position from New York after World War 2, and the importance of Christian Dior's New Look in restoring French fashion to world leadership. The case examines, in particular, Dior's innovative strategy to combine a high fashion business in Paris with a ready-to-wear business in New York, and his subsequent pursuit of licensing opportunities in jewelry and other luxury products. The case provides an opportunity to explore the role of creativity in the luxury fashion industry, and the challenges and opportunities of globalizing such an industry.


Christian Dior: A New Look for Haute Couture (809159)

Class 20 Business Groups

This case describes the creation of Turkey's largest business group by Vehbi Koç. The foundation of this group in the interwar years, and its subsequent diversification into many industries, including automobiles, household goods, and services, are analyzed. The case serves as a vehicle to explain why diversified business groups are so important in emerging markets such as Turkey. It explores the role of market imperfections, government policies, and entrepreneurial ambition in their creation, as well as the organizational challenges posed by managing such diversified firms owned by a family. Much of the firm's growth came from licensing and joint venture agreements with multinational firms that were unable, or unwilling, to invest directly in Turkey because of political risk and government restrictions. The case ends in 1988, when the founder has received a report from the management consultancy Bain calling for the firm to reduce the range of activities it undertakes because of the competitive challenges resulting from the liberalization of the Turkish economy.


Vehbi Koç and the Making of Turkey’s Largest Business Group (811081)

Class 21 Building a Brazilian Automobile Industry

This case examines the costs and benefits of the Brazilian government's policies to encourage foreign multinationals to develop an automobile industry during the 1950s and 1960s. A combination of incentives and market closure were used to attract foreign direct investment. Volkswagen responded more positively than the U.S. firms Ford and GM, and was able to become market leader as a result. A brief comparison with the South Korean automobile industry enables a discussion whether foreign or local ownership of an industry such as automobiles is more beneficial to the economic development of a country. Brazil developed an automobile industry much more quickly than South Korea, and it remains the largest automobile industry in Latin America, but it had few home-grown brands, and the industry’s developed rested on the strategies of foreign multinationals.


Brazil at the Wheel (804081)

Module 4: Recreating Global Capitalism

The final module examines the creation of today’s new global economy between 1979 and the present day as China, India and other countries opened their borders to global capitalism. It employs the lessons of history to understand the nature of today's business opportunities, and explores how entrepreneurs can respond to current risks of de-globalization. Global markets for corporate control, capital and talent emerged in this period. There were large social changes, including for gender equality. The Great Convergence has seen some regions of the non-Western world sharply reduce their income gap with the West, although the growing wealth equality within countries during modules 2 and 3 has been reversed as income disparities have grown. Businesses have exploited new communication technologies and deregulation, and sought to exploit markets and attract talent in the non-Western world.

Class 22 Making China Beautiful

This module begins with the transformation of China between the late 1970s and the present day following the opening of the country to global capitalism by the ruling Communist Party. This broad issue is approached through the case of Shiseido, the leading Japanese cosmetics company, which entered China in 1981. In 1994 Shiseido launched Aupres, a large cosmetics brand specifically aimed at Chinese women. Further growth followed, and in 2003, it began to build a large network of voluntary chain stores. The case enables a discussion of central issues in the globalization of the cosmetics industry, including the extent to which local customization is needed to attract customers, and whether this need for customization is growing or not. However for EGC the primary purpose of the case is to highlight the extraordinary transformation of China in the second global economy. In 1978 the cosmetics market was close to zero, as the Communist regime prohibited the manufacture of such products. By the 2000s, China had grown to become the fourth largest beauty market in the world, with Shiseido and all the major beauty companies in the world heavily invested in it. The case also shows the new realities of the second global economy. Shiseido’s growth is shown to have rested heavily on the support of the Chinese authorities, especially the City of Beijing government, with whom it forged a close relationship.


Making China Beautiful: Shiseido and the China Market (805-003)

Class 23 Bollywood and the Globalization of Cinema

This case considers the past and future of global culture using the medium of film. The focus is the opportunities and challenges facing Indian film producers in accessing the global film market. It describes the history of the cinema and the rise of Hollywood to global dominance by the 1920s. Although film industries continued elsewhere, including Britain and France, their products had limited international appeal. However during the second global economy the growth in the economic importance of countries such as India and China is being accompanied by the growing international appeal of their cinemas. The Bollywood film industry, produced in Mumbai (formerly Bombay), was one of the world’s oldest and largest, but it was primarily focused on the domestic market before the 1990s. The classic movies had a distinct genre, being typically long, melodramatic, and musical. Over recent decades, diaspora markets have encouraged rising standards, while deregulation permitted much easier capital raising. A number of large Indian studios have developed, and Hollywood movie studios have also taken large stakes in the industry. Rising interest in India has also encouraged “crossover” films, typically incorporating the experience of the diaspora in Western countries. At the heart of the case is the issue whether Indian content films can compete with Hollywood in global markets, and to what extent a change in cultural content is necessary for this strategy to work.


Can Bollywood Go Global? (806040)

Class 24 Diaspora and the Growth of the Indian IT Services Industry

This case is focused on Jerry Rao, a former Citibank who a launched an IT services start-up called MphasiS in 1998. It enables a discussion of how India developed an IT services industry in Bangalore during the second global economy, but the real focus of the case is the role of diaspora in the economic growth of developing countries over the last thirty years. The case examines the international career paths of Indian engineers and business professionals like Rao since the development of public policies beginning in the 1960s to attract them to developed countries like the United States. It explores why these professionals often chose to leave India in pursuit of economic opportunities abroad, and why many began returning to their homeland to start or run businesses after the deregulation of the 1990s.


Jerry Rao: Diaspora and Entrepreneurship in the Global Economy (805017)

Class 25 Globalizing the Media

This case examines the entrepreneurial career of Rupert Murdoch, and the growth of News Corporation from a small Australian newspaper to a global media giant. It shows how he expanded geographically to Europe, the United States, and Asia and from newspapers to the film and television industries. The case identifies the personal role of Murdoch in this growth, and the role of his family in its management. The case considers the political impact of News Corporation's newspapers and other media, and their alleged role in shaping political opinion.


Rupert Murdoch: The Last Tycoon (811017)
Stefano Della Vigna and Ethan Kaplan, The Fox News Effect: Media Bias and Voting, Quarterly Journal of Economics (2007)
Matthew Gentzkow and Jesse M. Shapiro, What drives Media Slant, Econometrica, Vol. 78, No. 1 (January, 2010)
BBC News, “News Corp Officially Splits in Two,” June 28, 2013.

Class 26 Routing China

Cisco, the corporate leader in the provision of infrastructure for the Internet, entered China in 1994. Companies such as Cisco, which designs products that are largely invisible and outsources their manufacture, face a number of opportunities and challenges in an emerging economy. China was among the fastest growing IT markets in the world, but Cisco faced growing competition from Chinese firms, including Huawei, and there were serious issues arising from software piracy. This case explores Cisco’s delicate relationship with the Chinese government, which was seeking international technology standards that favored Chinese technology firms.


Cisco Goes to China: Routing an Emerging Economy (805020)
Steve Stecklow, Farnaz Fassihi and Loretta Chao, “Chinese Tech Giant Aids Iran,” Wall Street Journal, Oct. 27, 2011
Matthew Miller, “Spy Scandal Weighs on US tech Firms in China, Cisco Takes Hit,” Reuters, Nov 14, 2013

Class 27 Female Entrepreneurship under and after the Taliban

This case explores the challenges of female entrepreneurship in Afghanistan through the case of Kamila Sidiqi, who built a business under the Taliban, and founded a consultancy in 2004. Sidiqi's experiences are positioned against the background of Afghanistan's turbulent history, with a focus on the contested role of women in Afghani society. The case enables a discussion of whether entrepreneurship can make a substantial difference in post-conflict economies such as Afghanistan, or whether the building of effective political institutions is the essential pre-condition. The case is accompanied by a note which surveys evidence about the role of female entrepreneurs in the developing world more generally, both historically and today.


Kaweyan: Female Entrepreneurship and the Past and Future of Afghanistan (811023)
Female Entrepreneurship in Developing Countries (807018)

Class 28 Globalization and Entrepreneurship

This wrap up session considers the conflicting views of scholars and journalists concerning whether the second global economy is “flat” or “spiky.” Students are presented with excerpts from a range of scholars who take different views on this issue. During the wrap up session there is a focus on what the historical evidence reviewed in this course can tell us about these trends.


Flat and Spiky Worlds

Creating the Modern Financial System

Taught by David Moss

This second-year elective offers a vital perspective on finance and the financial system by exploring the historical development of key financial instruments and institutions worldwide. The premise of the course is that students will gain a richer and more intuitive understanding of modern financial markets and organizations by examining where these institutions came from and how they evolved.  Read More


The course content covers seminal financial developments in a diverse set of countries  –  but with a special focus on the United States – from the 18th century to the present. Reaching across the chronological arc of the course are three broad topics: (1) financial markets and instruments, (2) financial intermediaries, and (3) financial behavior. Although nearly every case touches on all three topics, each case also has a primary focus. Whereas some cases highlight the introduction of new financial markets (such as the Dojima futures market in early modern Japan) or the creation of new instruments (such as mortgage-backed securities), others trace the emergence and maturation of critical financial institutions (including banks and insurance companies). Still others focus on the behavior of financial actors and groups, particularly in the context of financial bubbles and crashes. Because the course highlights the origins of financial markets and instruments as well as the fallout from numerous financial crises, government also looms large as an actor in many of the cases.

Throughout the course, the goal is to provide students with the broadest possible grounding in real-world finance by exposing them to some of the greatest (and, at times, most devastating) moments in modern financial history. Although the past is unlikely to repeat itself exactly, business managers who have a strong background in financial history are likely to be better prepared for the full diversity of financial innovations, shocks, and crises that they’ll face in the future.


Class 1 The South Sea Company (A)

In early 1720, the South Sea Company and the Bank of England were competing for the right to issue new shares and to exchange those shares for government bonds that were then in the hands of the public.  The British government had already executed two such debt conversions with the South Sea Company, in 1711 and 1719. The conversion under consideration in 1720, however, would be on a much larger scale. In time, the South Sea Company won the bidding war, and the House of Commons approved its debt conversion plan. Now it was up to the House of Lords to approve or reject the deal.


The South Sea Company (A) (708005)

Module 1: Institutional Foundations of Modern Finance

Class 2 The Dojima Rice Market and the Origins of Futures Trading

In 1730, Japanese merchants petitioned shogun Tokugawa Yoshimune to officially authorize trade in rice futures at the Dojima Exchange, the world’s first organized (but unsanctioned) futures market. For many years, the Japanese government had prohibited the trade of futures bills because it was widely regarded as a form of gambling that caused rice prices to rise. However, when the price of rice fell to record lows in the late 1720s, the samurai (whose income was tied to the value of rice) saw their economic position fall relative to the merchant class, whose growing economic power worried the nation’s elites. The shogun responded by easing restrictions on futures trading, but without officially sanctioning a futures market at Dojima. The question now was whether he should heed the merchants’ petition and take the next step.


The Dojima Rice Market and the Origins of Futures Trading(709044)

Class 3 Financial Turmoil, High Politics, and the U.S. Constitution

On February 11, 1790, James Madison walked onto the floor of the newly created House of Representatives and publicly rejected the financial handiwork of his old ally, Alexander Hamilton. At issue was Hamilton’s “Report Relative to a Provision for the Support of Public Credit,” which he submitted to Congress on January 14, 1790. The Report offered a sweeping financial program to deal with the many varieties of public debt accumulated during the American colonists’ War of Independence against Britain. For a number of years in the late 1780s, Madison and Hamilton had worked closely together to craft and promote a new Constitution for the United States of America. Their efforts reached fruition when the Constitution was ratified in 1788 and when a new federal government was established the following year. But now, with Hamilton serving as Secretary of the Treasury under President George Washington and Madison representing his Virginia constituents in the House, these two political and intellectual giants emerged as fierce rivals as they struggled over how best to deal with the new nation’s tenuous financial position.


Constructing a Nation: The United States and their Constitution, 1763-1792 (795063)

Class 4 Wall Street’s First Panic

In the early 1790s, a flood of newly issued public and private securities sparked an investment boom in the nascent United States. In New York, the bustling commercial district along Wall Street emerged as the center of the city’s securities trade. One of the many Americans drawn into the frenetic and largely unregulated securities market was William Duer, who ultimately became a major player on the Street. As it turned out, however, Duer’s financial dealings proved unsustainable, and his financial collapse helped to bring the securities boom to a halt. Shocked by the widespread devastation wrought by Wall Street’s first panic, the New York legislature acted quickly to ban outdoor securities auctions and a popular class of financial instruments known as “time bargains,” both of which were thought to have contributed to the boom and bust on Wall Street. Facing public outrage along with the new legal restrictions, New York’s top brokers had to decide whether a new system for securities trading was needed and, if so, what it should look like.


Wall Street’s First Panic (A) (708002)

Class 5 Ruling the Modern Corporation: The Debate over Limited Liability in Massachusetts

In 1830, Governor Levi Lincoln, Jr. urged the Massachusetts state legislature to introduce a limited liability regime for manufacturing corporations similar to that adopted in neighboring states. At least since 1809, shareholders in the state’s manufacturing corporations had faced unlimited liability, which held shareholders personally liable for corporate debts. While unlimited liability was meant to ensure financial prudence, Lincoln and others worried that this policy was doing more harm than good and driving capital from the state. With the governor pushing for action, it was up to the state legislature to decide how to proceed.


Ruling the Modern Corporation:
The Debate over Limited Liability in Massachusetts (708016)

Module 2: Banking and Insurance

Class 6 The Campaign for Bank Insurance in Antebellum New York

The New York State legislature had come to a standstill in 1829 as lawmakers refused to charter any new banks or recharter any existing banks. Four of New York’s forty banks had failed since 1825, and many legislators believed that a significant change in the banking regime was needed to shore up the state’s financial system. Others, however, feared that a major change in the law was too risky, especially since over three-quarters of the state’s banks held charters that were slated to expire over the next four years. On the table was a completely untested proposal to create a mandatory public insurance fund that would back the banknotes and deposits of every state bank.  As bank charters throughout New York State rapidly approached expiration, lawmakers faced a tough decision: should they pass the bill and gamble with the untried insurance fund, or should they seek a more traditional solution to the state’s banking woes?


The Campaign for Bank Insurance in Antebellum New York (708037)

Class 7 Envisioning “Free Banking” in Antebellum New York

Banks throughout New York State suspended specie payments (i.e., payments in gold and silver) in May 1837 following the collapse of several state banks and the onset of a nationwide financial panic. Amid the chaos, the upstart Whigs were able to depose the longstanding Republican majority in the state legislature. Responding to citizen anger, as well as perennial calls for more banking capital, the Whigs drafted a novel “free banking” bill, which would override the established bank chartering mechanism and allow any association with sufficient capital the opportunity to open a bank and issue bank notes (a widely accepted form of paper money at the time). The bill also required that every note issued by a New York bank be fully backed by bonds or mortgages. If enacted, the bill seemed likely to encourage the establishment of many new banks. There was no telling what the economic impact of the bill’s special bank note provisions would be. Once the bill passed the legislature, Governor Marcy had to decide whether to sign this radical proposal into law.


Envisioning “Free Banking” in Antebellum New York (A) (708038)

Class 8 The Armstrong Investigation

In the early 20th century, public outrage at certain life insurance practices led to an investigation in New York State that threatened to curtail growth in the industry. Charles Evans Hughes guided the four-month-long Armstrong Investigation, which made startling revelations and offered a number of controversial recommendations, several of which would forbid the most popular form of life insurance (tontine insurance), limit the growth of life insurers (which included several of the nation’s largest financial institutions at the time), and prevent insurance firms from owning the stock of other companies. The New York State legislature approved all of the recommended measures and sent the bill to the Governor for his signature. The life insurance industry objected, however, claiming that some of the new rules would reduce consumer choice and unnecessarily lower returns on company investments.


The Armstrong Investigation (708034)

Class 13 The Pecora Investigation

In 1932, in the depths of the Great Depression, the Senate Banking Committee began a much-publicized investigation of the nation’s financial sector.  The hearings, which came to be known as the Pecora hearings after the Banking Committee’s lead counsel Ferdinand Pecora, revealed how the country’s most respected financial institutions knowingly misled investors as to the desirability of certain securities, engaged in irresponsible investment behavior, and offered privileges to insiders not afforded to ordinary investors. During the famous “Hundred Day” congressional session that began his presidency, Roosevelt signed two bills meant to prevent some of these abuses. The first law required companies to register new securities with the Federal Trade Commission (FTC) and to publish prospectuses with detailed information on their business ventures before they could offer new securities to the public. The second law established insurance for bank deposits and forced financial institutions to choose between investment and commercial banking.

Roosevelt also believed that the government should play a more active role in the financial system by regulating national securities exchanges. In February 1934, the president urged Congress to enact such legislation, prompting the introduction of a bill entitled the Securities Exchange Act. If enacted, this bill would force all securities exchanges to register with the Federal Trade Commission, would curtail the size of loans that could be advanced to securities investors, and would ban a number of practices (such as short-selling) that were thought to facilitate stock manipulation. Additionally, the legislation would require that all companies with exchange-listed securities publish detailed business reports as frequently as the FTC desired and would subject any company or exchange deemed to be in violation of the act’s provisions to increased legal liability.

Wall Street, represented in particular by New York Stock Exchange (NYSE) President Richard Whitney, took a strong position against the Securities Exchange Act.  Whitney was ultimately summoned to testify during the congressional hearings on the Securities Exchange Act in late February 1934.  Would he be able to convince lawmakers that the Securities Exchange Act would impose overly burdensome regulations on exchanges and stifle American securities markets, or would his arguments fail to win over those who believed that strict regulations were exactly what financial markets required following the Great Crash?


The Pecora Investigation (711046)

Class 14 The Deutsche Bank

Founded in 1870 to help finance surging German exports and imports, the Deutsche Bank soon moved into domestic banking.  In fact, its founders aimed to create both a commercial bank and an investment bank under one roof (that is, a “universal bank.”) By the end of the nineteenth century, the Deutsche Bank was not only the largest bank in Germany, but also a strategic actor in the broader European market and, indeed, in the world economy.  Over the first half of the twentieth century, however, the bank faced a series of national crises: defeat in WWI (1914-1918), revolution in 1919, hyperinflation in 1923, economic depression in the early 1930s, the rise of Hitler in 1933, another world war in 1939, and then total defeat in 1945.  At the end of WWII, the Soviets closed the Berlin headquarters of the Deutsche Bank as part of their denazification effort.  Meanwhile, the United States, Britain, and France, occupying the western portion of Germany, attempted to implement a policy of economic decentralization and broke what remained of the bank into small pieces.  By 1950, facing a proposal from leading German bankers to allow the big banks to begin reconstituting themselves, the Allied powers and the new German legislature had to decide whether to accept this proposal or reject it.


The Deutsche Bank (A) (708044)

Module 3: Housing Finance

Class 9 Financing American Housing Construction in the Aftermath of War

At the end of WWI, the United States faced a significant housing shortage. Public officials feared the spread of disease (“and even communism”) in the nation’s cramped urban centers where vacancy rates held near zero and families often “doubled up” in single housing units. Hoping to spark a burst of new construction, New York Senator William Calder called for the creation of eleven regional Federal Building Loan Banks that would serve as a new source of funds for mortgage lenders. The proposal was controversial, however. Opponents disliked the fact that the Federal Building Loan Banks would have the authority to issue tax-free, mortgage backed bonds, and many claimed that the private market would solve the housing shortage on its own. Proponents of the bill, meanwhile, believed that it was necessary to stave off a potentially disastrous and protracted housing shortage, and they cited the long-successful mortgage bond markets in France and Germany as evidence that their plan could succeed. Federal lawmakers had to assess the arguments on both sides and render a decision.


Financing American Housing Construction in the Aftermath of War (708032)

Class 16 Fannie Mae: Public or Private?

In 1987, President Ronald Reagan established the President’s Commission on Privatization to identify federal government functions that could be shifted to the private sector. One agency that the Commission considered was the Federal National Mortgage Association, or Fannie Mae. Fannie Mae was a Depression-era creation that was charged with establishing a secondary market for home loans. By purchasing qualifying residential mortgages from individual home loan issuers, Fannie Mae provided these institutions with funds for the continued issuance of mortgages, thereby promoting the government’s goal of increased homeownership. Although lawmakers had already partially privatized Fannie Mae in 1954 and again in 1968, the agency in 1987 still retained close links to the federal government, including an emergency line of credit from the U.S. Treasury. After its deliberations, the President’s Commission recommended Fannie Mae be restructured into a fully private firm. Now it was up to Congress and the President to decide whether to accept and implement the Commission’s findings.


Fannie Mae: Public or Private? (709025)

Module 4: Great Depression

Class 10 Forecasting the Great Depression

What is the proper role of professional economic forecasts in financial decision making? This case presents excerpts from three leading economic forecasters on the eve of, and just after, the stock market crash of October 1929. One set of excerpts is from Roger Babson, an entrepreneur from Wellesley, Massachusetts, who gained considerable fame for correctly predicting the market downturn on the basis of his own forecasting device, the “Babsonchart.” A second set of excerpts is from the staff of the Harvard Economic Society, an international group of illustrious economists and statisticians. To create its forecasts, the Harvard Economic Society developed a model that traced economic activity in three areas: speculation, business, and money. The Harvard group had great success when they introduced their model in the early 1920s, but failed to predict the stock crash in 1929. A third set of excerpts is from Irving Fisher, the premier monetary economist of his day and one of the most respected American economists of all time. Although the crash caught Fisher completely by surprise, he remained a major figure in the forecasting field in the 1930s. The case also includes a review of efforts following the crash, including those of the University of Chicago professor Garfield V. Cox, to estimate the accuracy of earlier forecasts.


Forecasting the Great Depression (708046)

Class 11 German Banking Crisis

In the summer of 1931, Germany was struggling with a deepening economic crisis. Production had fallen, unemployment was high, and bank deposits and gold were being withdrawn from the country at a rapid pace, threatening the value of the German mark. The country’s third largest bank, the Danatbank, was especially hard hit by the flagging economy and the flight of capital. By July, the Danatbank was on the verge of collapse, and the bank’s charismatic and controversial senior partner, Jakob Goldschmidt, appealed personally to the government, the central bank, and his private banking rivals for a lifeline.


Danatbank (710059)

Class 12 The Federal Reserve and the Banking Crisis of 1931

In early October 1931, in the midst of a global economic depression, the U.S. banking system was in crisis -- with bank suspensions running at near record levels. At the same time, the broader economy was sputtering, and U.S. gold reserves had come under severe pressure after Britain abandoned its gold standard in mid-September. As pressure continued to mount, the leaders of the Federal Reserve faced several critical decisions. Should they adjust interest rates? Was abandoning the gold standard an acceptable option? Should they lend more freely to the nation’s commercial banks? Or would this only ensure the sorts of financial excess that had gotten the country into trouble in the first place? Was it time to give in to the mounting pressure, or to hold firm?


The Federal Reserve and the Banking Crisis of 1931 (709040)

Module 5: Major Challenges in Recent Financial History

Class 15 Managing Failure: Bankruptcy in America

By the early 1970s, the U.S. bankruptcy system seemed increasingly out of control. Personal filings had shot up from 11,051 in 1945 to 178,202 in 1970, and critics complained that many consumer debtors were choosing bankruptcy as the "easiest way out." On the corporate side, critics charged that successful restructurings were rare. Given all this, lawmakers in Washington had to decide whether the time had come to reform the nation's bankruptcy code and, if so, how best to do it.


Managing Failure: American Bankruptcy Law at a Crossroads (705024)

Class 17 The French Pension System

In 1995, France’s large pay-as-you-go pension system was beginning to run into trouble. Ever-increasing longevity, the impending retirement of the baby boomers, and intense public pressure for a lower retirement age were all placing great strain on the existing system. The problem was only compounded by slackening economic growth, high unemployment, and the restrictions on deficit spending imposed by the European Maastricht accord. ”The problem is so immense,“ a senior economist at the OECD observed, ”that they’ll have to completely change the system.“ Many critics believed that fundamental reform would have to involve profound changes in the nation’s capital markets as well as reduced reliance on the public sector. And yet the existing public pension system remained enormously popular in France. Pension policy thus represented a major challenge facing the nation’s political and business leadership on the eve of the twenty-first century.


French Pension System: On the Verge of Retirement? (799143)

Class 18 The International Monetary Fund in Crisis

When Dominique Strauss-Kahn became the Managing Director of the International Monetary Fund (IMF) in late 2007, he faced a number of significant challenges. First, the organization was running out of money: over the previous decade developing countries had borrowed from the IMF less frequently, and when the IMF did not lend, it did not earn income. Instead, many developing countries had increased their foreign exchange reserves. The IMF also found itself unable to influence the macroeconomic policies of the United States and China in order to reduce global imbalances, and developing countries complained that they were underrepresented at the Fund. As the IMF’s new Managing Director, Strauss-Kahn had to decide how best to address these challenges and in what direction to steer the fund. And the world needed to decide whether the IMF was still a necessary piece of the international financial architecture.


The International Monetary Fund in Crisis (708035)

Class 19 Fed vs. ECB: Steering Monetary Policy Through Unprecedented Crises

In early April 2008, economic conditions in Europe appeared to be deteriorating on almost all fronts: sales figures were falling, business and consumer confidence were slumping, forecasts for European growth were being revised downward, and inflation was rising. In fact, figures for the month of March revealed that inflation had reached an annualized rate of 3.5%, Europe’s highest level since 1992. On top of these broad economic problems, the European financial sector indeed, the financial sector worldwide was in turmoil. By April 2008, global financial institutions had written down the value of their mortgage-related investments and other assets by at least $230 billion, and businesses around the world were complaining that it was ever more difficult to secure credit.

In America, meanwhile, consumer confidence was falling, consumer spending had slowed to a near halt, and inflation had crept above 4%. In reaction to these dismal economic conditions, the Federal Reserve had steadily cut interest rates over a seven-month period, most recently lowering its key rate to 2.25% on March 18.

In sharp contrast to the Fed, the European Central Bank (ECB) had long held its key rate at 4%, where it stood when the ECB’s Governing Council reconvened on April 10, 2008. Given both the market turmoil and the evident inflationary pressure, members of the ECB’s Governing Council would have to weigh the available data extremely carefully as they decided whether to raise, lower, or maintain their benchmark interest rate. The significance of this decision could hardly be overstated, since it had the potential to send a strong signal about the nature of European monetary policy and the priorities of the ECB going forward.


Steering Monetary Policy Through Unprecedented Crises (711048)

Class 20 The Financial Crisis of 2007-2009, Part I (Origins of the Crisis)

By the summer of 2009, many observers concluded that a catastrophic financial collapse which seemed all but imminent the previous fall and winter had been averted. Although the recession had still yet to be declared over and the economy's footing remained far from solid, many believed that the worst of the crisis was over. With the global financial system no longer spiraling into an abyss, government officials, business leaders, and American taxpayers could now take stock of where they had been and where they should be headed. In particular, many wondered how the disaster had happened in the first place: what exactly had caused the brutal financial crisis of 2007-2009?


Fighting a Dangerous Financial Fire:
The Federal Response to the Crisis of 2007 - 2009 (711104)

Class 21 The Financial Crisis of 2007-2009, Part II (The Federal Response and its Consequences

By the summer of 2009, many observers concluded that a catastrophic financial collapse which seemed all but imminent the previous fall and winter had been averted. Although the recession had still yet to be declared over and the economy’s footing remained far from solid, many believed that the worst of the crisis was over. With the global financial system no longer spiraling into an abyss, government officials, business leaders, and American taxpayers could now take stock of where they had been and where they should be headed. Had the federal government responded properly to the crisis, and what role, if any, should it play going forward to prevent another one?


Fighting a Dangerous Financial Fire:
The Federal Response to the Crisis of 2007 - 2009 (711104)

Optional Extra Session: Financing Higher Education in Australia

Even before Australian lawmakers abolished university tuition in 1973, students in Australia had long benefited from low tuition and large government subsidies. By the early 1980s, however, the nation’s universities faced growing budget challenges and an apparent shortage of capacity as demand for higher education surged. Policymakers, cognizant of a growing budget deficit as well as a hard-hitting recession, hesitated to provide increased funding to higher education.

The debate over how best to finance Australian higher education finally came to a head in the late 1980s, following publication of the Report of the Committee on Higher Education Funding (commonly known as the Wran Report). Although the Wran Committee had considered several potential funding schemes, it ultimately proposed a radical system in which students would pay tuition financed through income-contingent loans provided by the government.

The Wran Report proved to be of particular interest to the Australian Prime Minister, Robert Hawke. The government’s fiscal position seemed to demand that educational financing be overhauled, but there was no consensus on how best to do this. Could the Prime Minister convince his Australian Labor Party to abandon the free-education plank in its platform? And even if he could, how could he be sure that the Wran Committee’s strategy was the right one and that its recommendations were workable? Would following an American model of full tuition for higher education and government-guaranteed student loans make more sense? These were just a few of the questions that the Prime Minister confronted as he contemplated new approaches for financing higher education in Australia.


Financing Higher Education in Australia (711047)

The Doctoral Seminar in Business History

This seminar offers students access to the latest business history research. It provides a broad understanding of the main themes in business history of the last two centuries. Over the course of the Seminar, students also design, research and write a paper that will make use of primary research materials on business history. They are introduced to, and often base their research paper on, the unique historical collections held by the Baker Library.


The Business History Seminar explores the history of firms, industries, business systems, and entrepreneurs. We will read about, and discuss, the different trajectories and interpretations of firm growth, industry development, and entrepreneurial activity from the late eighteenth century to the present. We will also analyze the integration of firms into the economic, technological, cultural, and political contexts of the time. Among the topics covered are the emergence of modern management, the rise of big business, the impact of government policies and legal frameworks on business, the transformation of industries, and the role of entrepreneurship in capitalist economies. The course provides a framework for understanding the emergence of business institutions, structures, and practices embedded in specific historical and geographical contexts. The overall aim of the course is to introduce graduate students to central issues in the history of business and of capitalism and to explore the relevance of this literature to other disciplines.