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The Limited Partnership in New York, 1822-1853: Partnerships without Kinship

Eric Hilt and Katharine E. O'Banion

No 14412, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In 1822, New York became the first common-law state to authorize the formation of limited partnerships, and over the ensuing decades, many other states followed. Most prior research has suggested that these statutes were utilized only rarely, but little is known about their effects. Using newly collected data, this paper analyzes the use of the limited partnership in nineteenth-century New York City. We find that the limited partnership form was adopted by a surprising number of firms, and that limited partnerships had more capital, failed at lower rates, and were less likely to be formed on the basis of kinship ties, compared to ordinary partnerships. The latter differences were not simply due to selection: even though the merchants who invested in limited partnerships were a wealthy and successful elite, their own ordinary partnerships were quite different from their limited partnerships. The results suggest that the limited partnership facilitated investments outside kinship networks, and into the hands of talented young merchants.

JEL-codes: K2 N81 (search for similar items in EconPapers)
Date: 2008-10
New Economics Papers: this item is included in nep-his and nep-law
Note: DAE LE
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Published as Hilt, Eric & O'Banion, Katharine, 2009. "The Limited Partnership in New York, 1822?1858: Partnerships Without Kinship," The Journal of Economic History, Cambridge University Press, vol. 69(03), pages 615-645, September.

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