ABSTRACT
The years from 1880 to 1914 were the City of London’s ‘Golden Age’. They were also the heyday of the City company promoter, but many of their undertakings were distinctly fool’s gold. The company promoter of the pre-Great War decades was an ancestor of the modern investment bank and also of the private equity business. He was the forerunner of the investment bank in the sense of being the nexus for the key elements in the appearance of a firm in the equity market – securing the services of the professionals needed (lawyers, accountants, brokers, printers – perhaps underwriters) and arranging the necessary publicity and marketing. He also anticipated the private equity model, through the operation of a sequential approach to the market, in which an initial ‘syndicate’ of investors, involving ‘friends and family’, allowed for an incubator or proof-of-concept stage, to be followed by later public flotation and the release of significant value to the early insiders. Put simply, before the Great War, firms were formed and floated by individual entrepreneurs and not by banks. There were hundreds, if not thousands, of such entrepreneur promoters, but their lasting reputation has largely been cemented by a handful of significant rogues who ended up in jail – characters whose column inches made them the Bernie Madoffs of their day.
