Finance: Historical Perspectives
Corporate finance, which is the acquisition and use of funds by business entities, has evolved as the scope of business enterprises has changed and as American society has become increasingly successful in achieving its economic goals. The history of finance in the United States is a story that began with rudimentary, unregulated means of securing funds in the early years of the newly established nation and reached in the closing decades of the twentieth century, a level of advanced innovation that made the United States the financial leader in the global community. The success of the finance function in corporate America is the result of a combination of business innovation in the design and strategies of securing funds and of governmental regulations that assure integrity in financial markets. Significant aspects in this development are discussed in the sections that follow.
Early American Finance
In the colonial United States, businesses were, for the most part, small and self-financed. However, the first settlers, who had been British subjects, were well acquainted with the corporate form of organization. As Davis (1917) noted, "before the end of the colonial period a considerable number of truly private corporations had been established for ecclesiastical, education, charitable, and even business purposes" (p.
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