Entrepreneurial capitalism : the making of the Central Pacific Railroad, 1861-1899
- Joseph Ng.
- [Stanford, California] : [Stanford University], 2018.
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- The second half of the nineteenth century witnessed unprecedented economic and social change in the United States. Largely agrarian in 1850, by 1900 the United States had become the world's premier manufacturer. My thesis is that these changes were wrought, in part, when millions of immigrants were engaged in entrepreneurial actives. In California over a million immigrants came to join the gold rush, and many stayed to build the railroad and/or engaged in agriculture and manufacturing. An examination of the development of the Central Pacific Railroad (CPRR) gives us a window into the workings of the early American capitalist system. Specifically, I demonstrate how the political power of the company's early investors and principals - Leland Stanford, Mark Hopkins, Collis Huntington, and Charles Crocker - was derived from social networks. During the period under study, the networks of trusts these entrepreneurs brought from home to operate in California were place-based, which was in essence race-based. Because the terms of economic exchange were set politically, groups with strong political connections experienced wealth accumulation that was significantly better than other social groups. These results were evident in the making of the CPRR. Using the CPRR's own accounting ledgers and daily cash books as supplemented by railroad commission testimonies, I analyzed the motivations and decisions made by management at critical junctures. By tracing the timing and amount of cash receipts and disbursements, I infer the relationship of the payee/payer to the company, including the early investors taking the most risks. I also examine the mechanism by which conflicted transactions involving transfer of company assets to individual shareholders were effected. I introduce a business perspective into the discussions of the CPRR born of my thirty-years at the intersection of technology and finance in the Silicon Valley. Very much like Mark Hopkins, I was chief financial officer of a start-up company, and our team managed the day-to-day cash flow, making sure we made payroll every two weeks. We went through private funding with venture capitalists and finally brought the company to Wall Street in a public offering. The road show covered money centers such as Boston, New York, and San Francisco, cities that Stanford and Huntington tapped in the 1870s. What emerges is a picture of an entrepreneurial capitalist system with strong ties to political power centers where legislation was often to benefit one group to the detriment of others. This study contributes to our understanding of how our sociopolitical system came about and how our world came to be.
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- Submitted to the Department of History.
- Thesis Ph.D. Stanford University 2018.
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