Early Fields of Investment

During the eighteenth century, investment as it is known today developed rapidly. This was due chiefly to two circumstances: the increase in the size of business organizations, and the growth of national indebtedness.

Shipping and commercial operations began to be conducted on a large scale in the period following the great geographical discoveries. Business enterprises became larger than a single individual could generally undertake with his private store of capital. The logical outcome was the banding together of business men to inaugurate, operate, and control industrial or commercial enterprises. This, in turn, created an industrial class, known as "promoters," or "enterprisers," who induced their wealthy friends and others to advance money for their undertakings, such, for example, as the buying and chartering of ocean vessels, or the building and operation of factories. Aside from land and real estate, shipping and trading companies were the early fields for business investment. Good examples of early large trading concerns were the British East India Company and the Dutch East India Company that settled in New York, the ownership of which was well distributed among investors.

In addition to trading undertakings the loans, which in the eighteenth century the national governments began to receive from their richer citizens, furnished an investment use for idle funds. The growth of national or public indebtedness has been one of the many important results of modern wars. The development of great nations and the spread of constitutional authority based on democratic principles have encouraged speculation and investment in government securities. These factors, together with the large-size industrial and commercial undertakings, created modern investment as we know it.