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A Fine Failure: Relationship Lending, Moses Taylor, and the Joliet Iron & Steel Company, 1869–1888

Part of: Henrietta Larson Award Winner

Published online by Cambridge University Press:  08 December 2014

Mary O'Sullivan
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Abstract

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In this study of lending in the emergence of a modern steel industry in the United States, I analyze the evolving interaction between borrowers and lenders in historical context. I show how “relationship lending” (that is, credit allocation in which personal contacts play a major role) can go wrong, despite good intentions at the outset, and that institutional conditions exert an important influence on how lenders and borrowers negotiate conflicts. Particularly important in the case of Moses Taylor and Joliet Iron & Steel Company were the uncertain jurisdictions and political maneuvering that stemmed from structural peculiarities of the U.S. legal system, peculiarities that belie claims of its efficacy for protecting creditor interests. Although this failure of relationship lending might seem to imply negative consequences for economic development, I show that, at least in this case, the opposite interpretation is more compelling.

Type
Research Article
Information
Business History Review , Volume 88 , Issue 4 , Winter 2014 , pp. 647 - 679
Copyright
Copyright © The President and Fellows of Harvard College 2014 

References

1 See, for example, Aoki, Masahiko, Patrick, Hugh, and Sheard, Paul, “The Japanese Main Banking System: An Introductory Overview,” in The Japanese Main Banking System, ed. Aoki, Masahiko and Patrick, Hugh (Oxford, 1994), 3–50Google Scholar; Calomiris, Charles, “The Costs of Rejecting Universal Banking: American Finance in the German Mirror, 1870–1914,” in Historical Perspectives on the Organization of Enterprise, ed. Lamoreaux, Naomi and Raff, Daniel (Chicago, 1995), 257–322Google Scholar; for an introduction to this topic in the context of German industrialization, see Burhop, Carsten, “Did Banks Cause the German Industrialization?” Explorations in Economic History 43 (Jan. 2006): 39–63Google Scholar.

2 See, for example, Rajan, Raghuram, “Insiders and Outsiders: The Choice between Informed and Arm's-Length Debt,” Journal of Finance 47 (Sept. 1992): 1367–1400Google Scholar; Porta, Rafael La, López-de-Silanes, Florencio, and Zamarripa, Guillermo, “Related Lending,” Quarterly Journal of Economics 118 (Feb. 2003): 231–68Google Scholar; Schenone, Carola, “Lending Relationships and Information Rents: Do Banks Exploit Their Information Advantages?” Review of Financial Studies 23 (Mar. 2010): 1149–99Google Scholar. These economists build on more general discussions of looting (Akerlof, George et al. , “Looting: The Economic Underworld of Bankruptcy for Profit,” Brookings Papers on Economic Activity 2 [1993]: 1–73Google Scholar) and tunneling (Johnson, Simon et al. , “Tunneling,” American Economic Review 90, no. 2 [2000]: 22–27Google Scholar).

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4 See, in particular, ibid., 52–83.

5 Maurer, Noel and Haber, Stephen, “Related Lending and Economic Performance: Evidence from Mexico,” Journal of Economic History 67 (Sept. 2007): 553Google Scholar.

6 Taylor began investing in Lackawanna in 1853 and, through a series of maneuvers, became the company's largest stockholder prior to the Civil War. See Hodas, Daniel, The Business Career of Moses Taylor (New York, 1976)Google Scholar, 106, 275–76. Hodas's reference to Taylor's involvement in Joliet Iron & Steel is limited, but it did allow me to identify James Frederick Joy's papers as one of the crucial sources for this article (337n46).

7 Fridenson, Patrick, “Business Failure and the Agenda of Business History,” Enterprise and Society 5 (2004): 578CrossRefGoogle Scholar.

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9 James F. Joy was a railroad manager and financier who made a career as a lawyer before becoming counsel for the Michigan Central Railroad in 1846 and its president in 1865. He played a prominent role in the management and organization of many other railroads including the Illinois Central and the Chicago, Burlington, and Quincy railroads. I consulted Moses Taylor's own papers in the New York Public Library but found them to be of only limited use for this project.

10 Of particular importance are articles from the Chicago Daily Tribune, which was controlled by Joseph Medill and known for its opinionated editorial line. In the context of this study, the most striking feature of the newspaper's commentary was its antipathy to easterners, especially eastern creditors, and its concern with the local economy. See Wyatt Rushton, “Joseph Medill and the Chicago Tribune,” PhD diss., University of Wisconsin–Madison, 1916, 37–42.

11 Porta, Rafael La et al. , “Legal Determinants of External Finance,” Journal of Finance 52 (July 1997): 1131–50Google Scholar, and “Law and Finance,” Journal of Political Economy 106 (Dec. 1998): 1113–55Google Scholar.

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13 Temin, Iron and Steel in Nineteenth-Century America, 274; Warren, The American Steel Industry, 93.

14 Temin, Iron and Steel in Nineteenth-Century America, 173.

15 Misa, Thomas, A Nation of Steel: The Making of Modern America, 1865–1925 (Baltimore, 1995), 22Google Scholar; Temin, Iron and Steel in Nineteenth-Century America, 185.

16 Bessemer production accounted for 87 percent of the cumulative volume of steel produced in the United States between 1867 and 1888, representing 70 percent or more of total steel output in every year between 1872 and 1887, and more than 90 percent in the early 1880s. See Temin, Iron and Steel in Nineteenth-Century America, 274–75; Table C.7, 276–78.

17 Temin, Iron and Steel in Nineteenth-Century America, Table 7.1, 166.

18 Ibid., 166.

19 Historical Statistics of the United States, Millennial Edition Online (Cambridge, U.K., 2006)Google Scholar, Series Df874.

20 Ibid., Series Df884 and Df882.

21 Davis, Lance, “The Capital Markets and Industrial Concentration: The U.S. and U.K., a Comparative Study,” Economic History Review 19 (1966): 264CrossRefGoogle Scholar.

22 Ibid.

23 Cleveland, Harold van B. and Huertas, Thomas F., Citibank, 1812–1970 (Cambridge, Mass., 1985), 17Google Scholar; Ely, Roland T., “The Old Cuba Trade: Highlights and Case Studies of Cuban-American Interdependence during the Nineteenth Century,” Business History Review 38 (Winter 1964): 458–63Google Scholar; Ayala, Cesar J., American Sugar Kingdom: The Plantation Economy of the Spanish Caribbean, 1898–1934 (Chapel Hill, 1999), 83Google Scholar.

24 Cleveland and Huertas, Citibank, 22.

25 When it converted to a national charter under the National Banking Act of 1864. Cleveland and Huertas, Citibank, 25.

26 Hodas, The Business Career of Moses Taylor, 274.

27 Ibid., 216, 274; Cleveland and Huertas, Citibank, 22–23.

28 Cleveland and Huertas, Citibank, 25.

29 Ibid., 28.

30 Lamoreaux, Insider Lending, 7.

31 The financing of Carnegie's steel venture, as well as of Bethlehem Steel, was based on relationships between steel entrepreneurs and financiers. See Bridge, James Howard, The Inside History of the Carnegie Steel Company: A Romance of Millions (New York, 1903), 71–78Google Scholar; Nasaw, David, Andrew Carnegie (New York, 2006), 141–53Google Scholar; and Warren, Kenneth, Bethlehem Steel: Builder and Arsenal of America (Pittsburgh, 2008), 15–31Google Scholar. Much the same can be said for the North Chicago Rolling Mill Company, which was funded by Nathaniel Thayer, Sidney Bartlett, John Forbes, and other powerful New England investors, often known as the “Forbes group,” which was actively involved in North Chicago's operations for years. See “Progress in Western Iron Manufactures,” Chicago Daily Tribune [hereafter CDT], 31 July 1869, 0–2; “The Big Steel Combine,” CDT, 5 May 1889, 9; “English Syndicate After It,” CDT, 23 Oct. 1890, 1. So too another Chicago-based steel pioneer, the Union Iron & Steel Company, relied heavily on the financial resources of its president and his brother, the Cleveland financiers A. B. and Amasa Stone. “A Huge Business Transaction,” New York Times, 24 Oct. 1879, 1.

32 Nor was this company's sorry experience unique among pioneering steel enterprises, with the finances of the Union Iron & Steel Company also taking a melodramatic turn. The company was declared bankrupt, its leading financier Amasa Stone committed suicide in the face of his financial troubles, and the company's mills remained closed for years while claims on its assets were the subject of complicated legal disputes.

33 Its original name was the Union Cast Iron and Transportation Company, but that was changed to the Joliet name in 1871. See entry for 15 Mar. 1875, Joliet Iron & Steel Company, Illinois, vol. 37, Chicago (Cook Co.) 11 (hereafter Joliet Iron & Steel), 367, R. G. Dun & Company Collection, Baker Library, Harvard Business School, Boston, Mass. (hereafter RGD). The company was one of only eleven firms licensed to commercially exploit patents related to the Bessemer process in the United States between 1866 and 1876. Misa, A Nation of Steel, 22.

34 Entry for 15 Mar. 1875, Joliet Iron & Steel, 367, RGD; Temin, Iron and Steel in Nineteenth-Century America; 174; Gernon, Blaine Brooks, “Hinckley's Railroad Empire,” Journal of the Illinois State Historical Society 47 (Winter 1954): 361–72Google Scholar; Hodas, The Business Career of Moses Taylor, 203–4.

35 Entries for 21 Nov. 1871, 5 Aug. 1872, Joliet Iron & Steel, 321, RGD.

36 “Iron and Steel: Description of A. B. Meeker & Co.'s Works at Joliet,” CDT, 20 Apr. 1872, 5.

37 Entry for 15 Mar. 1875, Joliet Iron & Steel, 367, RGD.

38 Hodas, The Business Career of Moses Taylor, 275. Taylor sold these bonds to other investors. Joliet Iron & Steel Co., Bond Register, 1871–1874, Papers of Moses Taylor, volume 791, New York Public Library, New York, N.Y.

39 “The Joliet Iron & Steel Co.,” CDT, 10 June 1881, 6.

40 Francis E. Hinckley to Moses Taylor, 9 Aug. 1877, Box 184, James Frederick Joy Papers, Burton Historical Collection, Detroit Public Library, Detroit, Mich. (hereafter JFJP); Hodas, The Business Career of Moses Taylor, 275.

41 Hodas, The Business Career of Moses Taylor, 206–7.

42 Francis E. Hinckley to James F. Joy, 27 Sept. 1877, Box 185, JFJP; Hinckley to Joy, 20 Aug. 1877, Box 184, JFJP.

43 “Joliet: Affairs of the Iron and Steel Works,” CDT, 3 Apr. 1874, 5; see also Hinckley to Taylor, 9 Aug. 1877, Box 184, JFJP.

44 American Iron and Steel Association, Bulletin, 15 Oct. 1873.

45 Entries for 28 Oct. 1873, 25 Nov. 1873, Joliet Iron & Steel, 321, RGD.

46 Entry for 30 Jan. 1874, Joliet Iron & Steel, 321, RGD.

47 Ibid.

48 “The Financial Condition of the Iron and Steel Company,” CDT, 31 Mar. 1874.

49 Ibid.

50 “The Joliet Iron & Steel Company—How They Manufactured More Bonds than Steel,” Daily Inter-Ocean, 4 May 1874, 3.

51 Ibid.

52 “Joliet: Affairs of the Iron and Steel Works,” CDT, 3 Apr. 1874, 5.

53 “Joliet: The Financial Condition of the Iron and Steel Company,” CDT, 31 Mar. 1874, 5.

54 “Joliet: Affairs of the Iron and Steel Works,” CDT, 3 Apr. 1874, 5. The claim was filed in the United States District Court, Northern District of Illinois, where the presiding federal judge was Judge Henry Williams Blodgett.

55 The U.S. Congress passed only three federal bankruptcy laws prior to 1898: the 1800 Act, which was repealed three years later; the 1841 Act, which was in force only until 1843; and the 1867 Act, which, following its amendment in 1874, lasted until 1878. Skeel, David A., Debt's Dominion: A History of Bankruptcy Law in America (Princeton, 2001), 25Google Scholar; Hansen, Bradley, “Commercial Associations and the Creation of a National Economy: The Demand for Federal Bankruptcy Law,” Business History Review 72 (Spring 1998): 90Google Scholar. For a detailed discussion of what happened when the 1841 law was in force, see Balleisen, Edward, Navigating Failure: Bankruptcy and Commercial Society in Antebellum America (Chapel Hill, 2001)Google Scholar.

56 Capturing the spirit of the times, President Grant declared on December 1, 1873, that he had become convinced that the Act of 1867 “is productive of more evil than good at this time,” essentially, as he explained, because it privileged creditors over debtors. President Ulysses S. Grant, Message of December 1, 1873, http://millercenter.org/president/speeches/detail/3744; see also Warren, Charles, Bankruptcy in United States History (Cambridge, Mass., 1935), 103Google Scholar.

57 Warren, Bankruptcy in United States History, 120; see also Friedman, Lawrence, A History of American Law (New York, 2005), 416Google Scholar.

58 Warren, Bankruptcy in United States History, 127.

59 Compared, for example, to the situation in England where, especially with the passage of its Bankruptcy Act of 1883, rules governing the bankruptcy process were more explicitly defined. Skeel, Debt's Dominion, 37–38.

60 Two injunctions were granted—one restraining Moses Taylor, the Farmers' Loan and Trust Company, and their attorneys or agents from removing any property, and the other restraining the company's officers from so doing. “The Joliet Iron & Steel Company—How They Manufactured More Bonds than Steel,” 3.

61 Entry for 15 Mar. 1875, Joliet Iron & Steel, 367, RGD; “The Joliet Iron Works,” CDT, 31 May 1874, 16.

62 “The Joliet Iron Works,” Daily Inter-Ocean, 26 Aug. 1874, 8.

63 27 Oct. 1874, 15 Mar. 1875, Joliet Iron & Steel, 321, RGD.

64 27 Oct. 1874, Joliet Iron & Steel, 321, RGD; “Joliet Iron & Steel Company,” CDT, 17 Sept. 1874, 7.

65 27 Oct. 1874, Joliet Iron & Steel, 321, RGD.

66 19 Oct. 1876, 19 Feb. 1876, 29 June 1876, Joliet Iron & Steel, RGD.

67 Newbold et al. versus the Bessemer Steel Company (filed in late Dec. 1877), based on Moses Taylor to James F. Joy, 29 Dec. 1877, reporting that a bill had been served on him the day before, Box 187, JFJP.

68 “Joliet: Lease of the Iron and Steel Works,” CDT, 15 Mar. 1877, 7.

69 At the same time, it raised the royalty to be paid on the manufacture of a ton of Bessemer steel from 75 cents to $3 with the funds accumulated from this royalty to be distributed to the partners in the Bessemer Steel Company. Taylor to Joy, 28 Aug. 1877, Box 184, JFJP.

70 Extract from Proposition for Lease of the Works of the Joliet Iron and Steel Co. to A. B. Meeker and others, no date, Box 185, JFJP.

71 Report of the Committee of Five, signed by H. E. Bigelow, secretary, no date (filed under Aug. 1877), Box 184, JFJP.

72 “Joliet: Lease of the Iron and Steel Works,” 7.

73 Hinckley to Taylor, 9 Aug. 1877, Box 184, JFJP.

74 Copy of papers in Filley et al. versus Joliet Iron & Steel Co., sent to James F. Joy by court on 29 Aug. 1877, Box 184, JFJP.

75 Assignment to Alex J. Leith, Receiver, by Joliet Iron & Steel Co., July 1877, Box 184, JFJP; “The Joliet Iron and Steel Company,” CDT, 10 June 1881, 6; entry for 10 Nov. 1875, Joliet Iron & Steel, 367, RGD. Leith was already involved in the affairs of the Joliet Iron & Steel Company prior to his appointment as receiver, having been appointed to the board of Joliet Iron & Steel Company in February 1877, and then to the committee of five, to represent the interests of one of the company's main trade creditors, the Missouri Furnace Company of St. Louis.

76 See, for example, Friedman, A History of American Law, 416; Hansen, “Commercial Associations and the Creation of a National Economy,” 93–95.

77 Indeed, as late as 1909, Samuel Willotson noted, “The powers of the states when Congress has passed a bankruptcy law are by no means so clear.” Willotson, Samuel, “The Effect of a National Bankruptcy Law upon State Laws,” Harvard Law Review 22 (June 1909): 547–63Google Scholar. As another observer noted, it was clear that “the State laws were superseded and suspended so far as they were in conflict with the Federal legislation,” but “the difficulty has been in determining when there was such conflict.” E. H., “The Federal Bankruptcy Act and Its Effect on State Insolvency Laws,” Michigan Law Review 16 (May 1918): 540–43Google Scholar.

78 The conflict arose because these claims were made in the federal court administering A. B. Meeker & Co.'s bankruptcy, but the Will County Circuit Court had jurisdiction over the steel company's property. Hinckley to Joy, 24 Sept. 1877, Box 185, JFJP.

79 Hinckley to Joy, 2 Sept. 1877, Box 185, JFJP.

80 Warren, Charles, “Federal and State Court Interference,” Harvard Law Review 43 (Jan. 1930): 345–78Google Scholar.

81 If so, then it was likely, given the Supreme Court's rulings at the time, that the Will County Court would retain jurisdiction on the grounds that it had initially taken “possession of the controversy.” Warren, “Federal and State Court Interference,” 363.

82 Friedman, A History of American Law, 416.

83 The conflict was only resolved in 1903, through an amendment to the 1898 Bankruptcy Act, which declared it to be an act of bankruptcy for an insolvent corporation to have applied for, or been put in the charge of, a receiver or trustee under state laws. Had that been the case in 1877, then Joliet Iron & Steel Company would have been adjudged bankrupt, but the law was nowhere near as clear as that at the time.

84 Hinckley to Joy, 2 Sept. 1877, Box 185, JFJP.

85 Hinckley to Taylor, 9 Aug. 1877, Box 184, JFJP.

86 Ibid.; see also Hinckley to Joy, 24 Sept. 1877, Box 185, JFJP.

87 Hinckley to Taylor, 9 Aug. 1877, Box 184, JFJP; see also Hinckley to Joy, 24 Sept. 1877, Box 185, JFJP. In addition, Hinckley, along with some other major stockholders, submitted a petition to the Will County Court requesting a modification of the decree in the Joliet insolvency case and, in particular, that “the Corporation shall not be declared dissolved.” Hinckley to Joy, 8 Sept. 1877, Box 185, JFJP. That change was almost certainly designed to prevent the company's insolvency being interpreted as an act of bankruptcy and, in so doing, to bolster the state court's jurisdiction in the case.

88 Hinckley to Joy, 20 Aug. 1877, Box 184, JFJP.

89 Hinckley to Joy, 8 Sept. 1877, Box 185, JFJP.

90 G. W. Kretzinger to Joy, 30 Oct. 1877, Box 186, JFJP.

91 In filing for a modification of the insolvency decree to put aside the company's dissolution (see note 87), Hinckley took the additional precaution of requesting “that the Receiver shall not be authorized to run the works.” Hinckley to Joy, 8 Sept. 1877, Box 185, JFJP.

92 Telegram from Hinckley to Joy, 31 Aug. 1877, Box 184, JFJP; telegram from Hinckley to Joy, 5 Sept. 1877, Box 185, JFJP.

93 Taylor to Joy, 28 Aug. 1877, Box 184, JFJP.

94 Taylor to Joy, 3 Sept. 1877, Box 185, JFJP.

95 Hinckley to Joy, 20 Nov. 1877, Box 187, JFJP; telegram from Hinckley to Joy, 29 Oct. 1877, Box 186, JFJP.

96 Telegram from Hinckley to Joy, 29 Oct. 1877, Box 186, JFJP.

97 Reasons why Alexander J. Leith should not be Receiver of the Joliet Iron & Steel Company, approximate date 21 Nov. 1877 (based on Hinckley to Joy, 27 Nov. 1877: “I also sent you last week a statement of reasons why Leith should not be Receiver of the Joliet Iron & Steel Company”), filed under July 1877, Box 184, JFJP.

98 Andrew Boardman to Taylor, 15 Aug. 1877, and Boardman to Rolston, 15 Aug. 1877, Box 184, JFJP.

99 Ibid.

100 Kretzinger to Joy, 23 Oct. 1877, Box 186, JFJP.

101 Boardman to Joy, 27 Dec. 1877, Box 187, JFJP.

102 Taylor to Joy, 1 Dec. 1877, and D. J. Morrell and Chester Griswold to Taylor, 30 Nov. 1877, Box 187, JFJP.

103 The Bessemer Steel Company brought together all the major producers of Bessemer steel in the United States and was represented by men like Daniel Morrell and Chester Griswold who were prominent in the industry. For a lively discussion of its activities, see Wall, Joseph Frazier, Andrew Carnegie (New York, 1970), 330–49Google Scholar; see also Misa, A Nation of Steel, 15–21.

104 Robert Wilson (acting for the Bessemer Steel Company Limited) to Taylor, 6 Nov. 1877, Box 187, JFJP.

105 Taylor to Joy, 1 Dec. 1877, and D. J. Morrell and Chester Griswold to Taylor, 30 Nov. 1877, Box 187, JFJP.

106 Order of Will County Court, 15 Jan. 1878, Box 188, JFJP.

107 Boardman to Joy, 27 Dec. 1877, Box 187, JFJP.

108 Hinckley to Joy and Hinckley to Taylor, 19 Jan. 1878, Box 188, JFJP.

109 Telegram from Leith to Joy, 3 Mar. 1878, Box 189, JFJP.

110 “Joliet Iron Works,” CDT, 18 Apr. 1878, 7.

111 Taylor to Joy, 17 Apr. 1878, Box 190, JFJP.

112 Joy to Leith, 19 Apr. 1878, Box 190, JFJP.

113 Leith to Joy, 22 Apr. 1878, Box 190, JFJP.

114 Telegram from Taylor to Joy, 22 Apr. 1878, Box 190, JFJP.

115 Hinckley to Joy, 19 Apr. 1878, Box 190, JFJP. Kretzinger echoed his analysis of the situation, claiming, “It would be much more difficult to remove Leith now than it would have been a month or six months ago, as the public in Joliet are strongly in favor of starting the works.” Kretzinger to Joy, 20 Apr. 1878, Box 190, JFJP.

116 Although early in the nineteenth century state judges tended to be appointed, as Friedman notes, “After the middle of the century, the popular election of judges was more and more accepted as normal.” States where judges were appointed, like Maine and Massachusetts, were the exception; the state of Illinois was not one of them. Friedman, A History of American Law, 279; Shugerman, Jed Handelsman, “The Twist of Long Terms: Judicial Elections, Role Fidelity, and American Tort Law,” Georgetown Law Journal 98 (2010): 1408Google Scholar.

117 And this was for good reason, in Taft's view, since “principles of right and justice and honesty and morality are not merely conventional and have a higher source than a plebiscite.” William H. Taft, “The Selection and Tenure of Judges,” presented at the meeting of the American Bar Association, Montreal, Canada, 1–3 Sept. 1913; see also Shugerman, “The Twist of Long Terms,” 3.

118 Entry for 9 Oct. 1877, Joliet Iron & Steel, 367, RGD.

119 Which reflected, in turn, a continued depression in U.S. railroad construction. With the panic of 1873, it declined to a low point in 1875, then increased in 1876, before declining again in 1877 and 1878. Historical Statistics of the United States, Series Df884 and Df882.

120 E. Y. Townsend to Joy, 6 Sept. 1878, Box 193, JFJP, Underlined in the original.

121 Kretzinger to Joy, 17 June 1878, Box 191, JFJP.

122 Charles D. Hinchman to Joy, 15 July 1878, Box 191, JFJP.

123 Hinckley to Joy, 10 Jan. 1878; Kretzinger to Joy, 25 Feb. 1878, Box 188, JFJP.

124 Hinckley to Joy, 18 Sept. 1878, Box 193, JFJP.

125 Taylor to Joy, 7 Nov. 1878, Box 193, JFJP.

126 Taylor to Joy, 30 Oct. 1878, Box 193, JFJP.

127 Taylor to Joy, 26 Oct. 1878, Box 193, JFJP, underlined in original. Andrew Carnegie arranged the payment from the Bessemer Steel Company to the Vulcan Iron Works, and a copy of his agreement with Vulcan, dated September 28, 1878, was attached to a further letter from Taylor to Joy on November 21, 1878. Memorandum of Agreement, Andrew Carnegie of New York City and Vulcan Iron Works, State of Missouri, 28 Sept. 1878, Box 194, JFJP.

128 Boardman to Joy, 13 Nov. 1878, Box 194, JFJP.

129 “The Joliet Iron and Steel Company's Works,” CDT, 10 June 1881, 6. Raising the question of whether Judge McRoberts even had the power to make that order.

130 Ibid.

131 Ibid.

132 Ibid.; entry for 19 June 1879, Joliet Iron & Steel, 421, RGD.

133 “The Joliet Iron and Steel Company's Works,” CDT, 25 May 1879, 8.

134 Ibid.

135 Ibid.

136 Hinckley to Joy, 18 Sept. 1878, Box 193, JFJP.

137 Ibid.

138 “The Joliet Iron and Steel Company's Works,” CDT, 10 June 1881, 6.

139 “Joliet Iron Works,” CDT, 18 Apr. 1878, 7.

140 Entries for 14 Feb. 1882 and 14 Apr. 1882, Joliet Iron & Steel, 421, RGD.

141 Ibid., 443.

142 Ibid.

143 For a discussion of the limitations of legal sanctions for regulating economic relationships, see Macauley, Stewart, “Non-Contractual Relations in Business: A Preliminary Study,” American Sociological Review 28 (Feb. 1963): 55–67Google Scholar.

144 See, for example, Sgard, Jérôme, “Do Legal Origins Matter? The Case of Bankruptcy Laws in Europe, 1808–1914,” European Review of Economic History 10 (Dec. 2006): 389–419Google Scholar.

145 Leith bought the castle in 1889, the year Joliet Steel was merged with two of its competitors to form the Illinois Steel Company, and he spent considerable money on the castle's renovation. However, he also remained prominent in the U.S. steel industry for some time, serving as president of the Illinois Steel Company and the Federal Steel Company of America. He was raised to the peerage in 1905. See “Fyvie Castle Reveals All,” Financial Times, 26 Nov. 1984, 17; “Lord Leith's Estate Valued at $5,317,425,” New York Times, 24 Apr. 1926, 20; “Alexander John Forbes-Leith, 1st and last Baron Leith of Fyvie,” http://thepeerage.com/p23660.htm; “Fyvie Castle,” the National Trust for Scotland, http://www.nts.org.uk/Property/Fyvie-Castle/.

146 See Balleisen, Navigating Failure.

147 See note 137 above.