J.P. Morgan, the Clayton Antitrust Act, and Industrial Finance-Constraints in the Early Twentieth Century

Abstract

Restrictions on the American banking system in the early Twentieth Century affected the ability of commercial banks to provide financing to large industrial firms. Consequently, the investment and growth of these firms may have been finance-constrained. This paper examines the ability of J.P. Morgan & Company to alleviate finance-constrained investment and growth for firms with which it became affiliated. The paper also studies the impact of the Clayton Antitrust Act on the investment and growth of Morgan-affiliated firms versus non-affiliated firms. The overall findings suggest that arelationship with Morgan helped firms reduce finance-constraints.