CLASS SUMMARY WEEK 4 OCTOBER 23, 1996





ARTICLE SUMMARY:



"A Business Elite: German-Jewish Financiers in Nineteenth-Century New York," by Barry E. Supple (The Business History Review 21 (2), 1957: 143-178).


The study focuses on elite formations in a small group of families in order to understand the implications of these formations for network theory. To that end, routes to successful business/economic establishment are demarcated along two paths: immigrants who came with "qualified" resources and business expertise and those who came with "unqualified" or limited resources. Both groups eventually made up the business elite. In comparing interaction between business organizations and ethnic or family groups, the reading serves as a example of the strength of 1950's network theory in spite of the paucity of tools for network analysis.

Business success for the studied groups may have been dependent on their European connection to capital, because as Jews their cultural heritage meant that they were not necessarily interested in agriculture, or other less "business-oriented" immigrant enterprises. Another alternative hypothesis to these groups' success: their alliances were not as key as much as their common German culture.

Most important: they were outsiders in the Yankee business world. Since they were not assimilated, they formed a society in a society, along natural marriage and friendship lines because of their closeness. This formation provided a network that facilitated trust and credibility, which are both seen as important for good business practice (a practice also based on cooperation). Thus the economic basis for cooperation was shaped by social mobility, or a lack thereof. As mobility increased, the networks changed, and with those changing networks came new business linkages. At this point it might be helpful to examine the overall network of all people in the financing community, not just the distinct groups.

Other important points: 1) evolution of business laws allowed businesses to avoid risk (even go bankrupt) and formalized the cooperation that was previously dependent on informal networks; 2) interconnectivity of networks: critical because allows entities to raise large amounts of capital in a way that is optimal for parties in a homogenous elite; 3) trust and intermarriage in context of trade: it might be interesting to model this apparent question of agency -- greater cohesion (consolidating per capital, rather than expansion) best business practice -- to see if it is greater in elites than with at-large community. This study does not allow this because it is just a snippet.