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Article
Political Economy, Interest Groups, Legal Institutions and the Repeal of the Bubble Act in 1825
Economic History Review (1997)
  • Ron Harris, Tel Aviv University
Abstract
For 105 years, beginning with the enactment of the Bubble Act in 1720, the free and spontaneous formation of joint-stock companies in England was prohibited. The only legal course of action opened to entrepreneurs seeking company formation was to first obtain specific state authorization, in the form of a charter or an act. During this period the English economy experienced unprecedented growth and substantial structural changes, which many still refer to as the industrial revolution. This legal framework of business organization seems to have formed a constraint upon the economy, inducing entrepreneurs to organize, willingly or reluctantly, in family firms, closed partnerships, or unincorporated companies of doubtful legality. The functional limitations experienced by these alternative forms of organization, which could not offer all the legal attributes of full incorporation, became more acute as the organizations grew larger, both in labour and in capital, as risks increased, and as managerial responsibilities became more complex. And then in the early summer of 1825, long after the canal era and the initial diffusion of new technologies into the iron and cotton industries, yet before the railway boom, the act was unexpectedly repealed.
Keywords
  • Bubble act
Disciplines
Publication Date
1997
Citation Information
Ron Harris. "Political Economy, Interest Groups, Legal Institutions and the Repeal of the Bubble Act in 1825" Economic History Review Vol. 1 Iss. 4 (1997)
Available at: http://works.bepress.com/ron_harris/10/