4 ms·

Crowdfunding a Transcontinental Railroad in 1857

34 points by jasoncrawford 6y ago

99_00 6y ago
Selling shares to finance business ventures has been going on for hundreds of years. https://en.wikipedia.org/wiki/Joint-stock_company#Early_joint-stock_companies https://en.wikipedia.org/wiki/Joint-stock_company#Early_join...
Danieru 6y ago
The author seems to be unaware of two notable historic shifts in western investing. 1. Bonds used to be the preferred method for investing into businesses. Equity was considered so unsafe as to be not much more than gambling. Judging if a bond could be repaid or not was a key motivator in pricing. Nowadays bonds are a tool exclusive to highly stable mature corporations. The author appears surprised that early ventures could also issue bonds, but this was a common characteristic of financing. A notable improvement is how regulation and enforcement now effectively protects minority shareholders. Part of history's preference for bonds was how easy equity could be abused by controlling interests in a company. For a modern analogy look to Russia where equity trades at a strong discount to the west thanks to Russian oligarchy's habits of stealing money from minority shareholders. 2. IPOs used to be about raising required capital to finance capital intensive industries. The US railroad boom was financed by IPOs. These initial public offerings were different from todays. Stronger regulation and protection for investors has pushed IPOs to a late stage. Now only established businesses can IPO. Back in the era of over investment into railroads investors were putting up fresh money to build tracks and stations from scratch.
- 99_00 6y ago
  >IPOs used to be about raising required capital to finance capital intensive industries. It still is. For example the mining industry. >Now only established businesses can IPO. Absolutely not.
- refurb 6y ago
  What's old is new again! I'm waiting for the author's next article "Crowdfunding WW2" (war bonds).
- lumost 6y ago
  Curiously with preference stacks we're relatively close to scenario 1 today in private financing. It would be interesting if employees were granted bonds for early stage work. This would enable the company to defer payout to a future date when the company is presumably more profitable, and employees some stability/protection for the value of the deferred compensation.
- azepoi 6y ago
  Today many renewables project are partially financed by bonds or shares. Some examples, in french (actions = shares, obligations = bonds) https://enerfip.fr/placer-son-argent/ https://enerfip.fr/placer-son-argent/ https://www.wiseed.com/fr/projets-en-financement https://www.wiseed.com/fr/projets-en-financement https://www.lendopolis.com/projets-energies-renouvelables https://www.lendopolis.com/projets-energies-renouvelables and many others https://financeparticipative.org/college-du-financement-participatif/ https://financeparticipative.org/college-du-financement-part...
- LatteLazy 6y ago
  Back in the day, the whole idea of public stock markets was considered socialist. Marx was a big fan!
alehul 6y ago
Related on the history of crowdfunding: I was recently researching a local community group my grandfather was a part of, and I found out that they frequently had "bond drives" [1]. It was really interesting to learn that U.S. bonds, which today we view as a low-risk inflation-beating investment, were actually used not just as an investment but as a representation of American pride. [1] https://www.okhistory.org/publications/enc/entry.php?entry=WA020 https://www.okhistory.org/publications/enc/entry.php?entry=W...
- dugmartin 6y ago
  I was also taught many years ago in a college history class they were also a means to reduce the money supply to protect against inflation as production shifted from domestic items to war material.
- adamjb 6y ago
  "Buy your share of freedom today" https://www.youtube.com/watch?v=Tyg8DwsHrvw https://www.youtube.com/watch?v=Tyg8DwsHrvw

34 points by jasoncrawford 6y ago

Selling shares to finance business ventures has been going on for hundreds of years. https://en.wikipedia.org/wiki/Joint-stock_company#Early_joint-stock_companies https://en.wikipedia.org/wiki/Joint-stock_company#Early_join...

Danieru 6y ago

The author seems to be unaware of two notable historic shifts in western investing. 1. Bonds used to be the preferred method for investing into businesses. Equity was considered so unsafe as to be not much more than gambling. Judging if a bond could be repaid or not was a key motivator in pricing. Nowadays bonds are a tool exclusive to highly stable mature corporations. The author appears surprised that early ventures could also issue bonds, but this was a common characteristic of financing. A notable improvement is how regulation and enforcement now effectively protects minority shareholders. Part of history's preference for bonds was how easy equity could be abused by controlling interests in a company. For a modern analogy look to Russia where equity trades at a strong discount to the west thanks to Russian oligarchy's habits of stealing money from minority shareholders. 2. IPOs used to be about raising required capital to finance capital intensive industries. The US railroad boom was financed by IPOs. These initial public offerings were different from todays. Stronger regulation and protection for investors has pushed IPOs to a late stage. Now only established businesses can IPO. Back in the era of over investment into railroads investors were putting up fresh money to build tracks and stations from scratch.

99_00 6y ago
>IPOs used to be about raising required capital to finance capital intensive industries. It still is. For example the mining industry. >Now only established businesses can IPO. Absolutely not.
refurb 6y ago
What's old is new again! I'm waiting for the author's next article "Crowdfunding WW2" (war bonds).
lumost 6y ago
Curiously with preference stacks we're relatively close to scenario 1 today in private financing. It would be interesting if employees were granted bonds for early stage work. This would enable the company to defer payout to a future date when the company is presumably more profitable, and employees some stability/protection for the value of the deferred compensation.
azepoi 6y ago
Today many renewables project are partially financed by bonds or shares. Some examples, in french (actions = shares, obligations = bonds) https://enerfip.fr/placer-son-argent/ https://enerfip.fr/placer-son-argent/ https://www.wiseed.com/fr/projets-en-financement https://www.wiseed.com/fr/projets-en-financement https://www.lendopolis.com/projets-energies-renouvelables https://www.lendopolis.com/projets-energies-renouvelables and many others https://financeparticipative.org/college-du-financement-participatif/ https://financeparticipative.org/college-du-financement-part...
LatteLazy 6y ago
Back in the day, the whole idea of public stock markets was considered socialist. Marx was a big fan!

alehul 6y ago

Related on the history of crowdfunding: I was recently researching a local community group my grandfather was a part of, and I found out that they frequently had "bond drives" [1]. It was really interesting to learn that U.S. bonds, which today we view as a low-risk inflation-beating investment, were actually used not just as an investment but as a representation of American pride. [1] https://www.okhistory.org/publications/enc/entry.php?entry=WA020 https://www.okhistory.org/publications/enc/entry.php?entry=W...

dugmartin 6y ago
I was also taught many years ago in a college history class they were also a means to reduce the money supply to protect against inflation as production shifted from domestic items to war material.
adamjb 6y ago
"Buy your share of freedom today" https://www.youtube.com/watch?v=Tyg8DwsHrvw https://www.youtube.com/watch?v=Tyg8DwsHrvw