Financial Bootstrapping Research Articles

Territorial Politics and Government in Montana, 1864-1889 (review)

172CIVIL WAR HISTORY the history of a process rather than a brief for the importance of a part of that process? Phillip S. Paludan University of Kansas Territorial Politics and Government in Montana, 1864-1889. By Clark C. Spence. (Urbana: University of Illinois Press, 1976. Pp. x, 327. $11.50.) Montana territorial politics were dominated by small coalitions of appointed officials, elected representatives and businessmen. The leaders of these small coalitions, whether Democrat or Republican, "represented upper class interests but were broadly supported by the electorate, and they effectively controlled territorial politics, minimizing in the process the direct influence both of appointed officials and voters" (p. 2). Through the ministrations of the coalition leaders, mining, ranching, railroad and other key economic interests were nurtured and protected from the ravages of territorial voters and federal officials. Coalition leaders such as Samuel T. Hauser (Democrat), Martin Maginnis (Democrat), and Benjamin Potts (Republican) in time fashioned a "no-party" political arrangement which simply meant that regardless of whether the federal and territorial governments were guided by Democrats or Republicans , the needs of territorial interest groups could be protected. The territorial legislatures of Montana generally reflected the voting preferences of a Democratic voter majority. Territorial executive officers and the judiciary were, however, for the most part Republicans, which allowed the highly partisan frontier press to print scurrilous editorials about the corruption, the maladministration , the absenteeism and the favoritivism of their political opponents . Most appointees, non-residents of Montana Territory, were accused of being carpetbaggers, defeated eastern political hacks, impecunious and unskilled lawyers and individuals totally incompetent to discharge their duties. Even the federal appointees' descriptions of the worth of their fellow-officeholders were on occasion cutting. Governor Benjamin Potts described a territorial secretary as, "a low drunken fellow who would sell out the whole territory if he was left to discharge the duty of Governor" (p. 138). Intraparty feuds were as disruptive as the political warfare between the Democrats and Republicans so that no appointee or politician in Montana Territory escaped bitter attacks upon his record and his private life. For twenty-five years Montanans chafed under Congressional rule. Legislators complained endlessly about the disallowance of territorial laws, the inadequacy of the court system, the exploita- BOOK REVIEWS173 tion of Montana resources for the national benefit, the lack of adequate federal appropriations, taxation without representation and the intolerable burden of supporting recipients of the federal patronage system. Only statehood in 1889 stilled these complaints despite the fact that Montana, according to Clark Spence, was treated as well as any other territory. The political history of Montana Territory is presented by the author chronologically, except for analytical chapters which deal with the territorial legislature, judiciary, territorial officers and finance. The depth of Spence's research is exceptional. Manuscript collections, published documents, newspapers and secondary sources are skillfully blended together by lucid prose and the logical exposition of concepts. While the principal focus is Montana Territory, Spence relates its history to the nation and the politics and practices of the Gilded Age. This exemplary volume ranks with Earl S. Pomeroy, The Territories and the United States and Howard R. Lamar, Dakota Territory as an important contribution to our understanding of Western history. Donald J. Berthronc Purdue University Acres for Cents: Delinquent Tax Auctions in Frontier Iowa. By Robert P. Swierenga. (Westport, Ct.: Greenwood Press, 1976. Pp. xix, 262. $14.95.) Legal historians never cease to be amazed by the ingenuity of nineteenth -century lawmakers on the Upper Mississippi Valley frontier . Men were impatient to force the pace of economic development , and they devised a bewildering array of legal mechanisms to mobilize scarce capital resources and thus give leverage for productive effort. Willard Hurst, whose Law and Economic Growth (1964) is a veritable digest of such devices, aptly termed the process "bootstrap finance." Robert Swierenga's remarkable book on Iowa tax titles is an empirical study of perhaps the most disarming manifestation of midnineteenth -centuiy lawmaking along these lines. Between 1850 and 1880 Iowa farmers had an insatiable appetite for short-term capital, and demand far outstripped available supplies of credit at the legal interest limit. At the same time governmental units, with the farmers ' full support...

Acres for Cents: Delinquent Tax Auctions in Frontier Iowa (review)

BOOK REVIEWS173 tion of Montana resources for the national benefit, the lack of adequate federal appropriations, taxation without representation and the intolerable burden of supporting recipients of the federal patronage system. Only statehood in 1889 stilled these complaints despite the fact that Montana, according to Clark Spence, was treated as well as any other territory. The political history of Montana Territory is presented by the author chronologically, except for analytical chapters which deal with the territorial legislature, judiciary, territorial officers and finance. The depth of Spence's research is exceptional. Manuscript collections, published documents, newspapers and secondary sources are skillfully blended together by lucid prose and the logical exposition of concepts. While the principal focus is Montana Territory, Spence relates its history to the nation and the politics and practices of the Gilded Age. This exemplary volume ranks with Earl S. Pomeroy, The Territories and the United States and Howard R. Lamar, Dakota Territory as an important contribution to our understanding of Western history. Donald J. Berthronc Purdue University Acres for Cents: Delinquent Tax Auctions in Frontier Iowa. By Robert P. Swierenga. (Westport, Ct.: Greenwood Press, 1976. Pp. xix, 262. $14.95.) Legal historians never cease to be amazed by the ingenuity of nineteenth -century lawmakers on the Upper Mississippi Valley frontier . Men were impatient to force the pace of economic development , and they devised a bewildering array of legal mechanisms to mobilize scarce capital resources and thus give leverage for productive effort. Willard Hurst, whose Law and Economic Growth (1964) is a veritable digest of such devices, aptly termed the process "bootstrap finance." Robert Swierenga's remarkable book on Iowa tax titles is an empirical study of perhaps the most disarming manifestation of midnineteenth -centuiy lawmaking along these lines. Between 1850 and 1880 Iowa farmers had an insatiable appetite for short-term capital, and demand far outstripped available supplies of credit at the legal interest limit. At the same time governmental units, with the farmers ' full support, maintained relatively high tax rates in order to finance public improvements. But governmental bodies could hardly collect sufficient funds to service their debts when taxpayers were faced with a persistent credit crunch. The law of tax titles, as amended by the Iowa legislature on a score of occasions, enabled settlers to overcome all these difficulties. Local farmers in need of 174CIVIL WAR HISTORY working capital simply "borrowed" their taxes. Tax-title investors, attracted by state-sanctioned penalty and interest rates far above prevailing usury limits, "stood in" for delinquent property owners and paid their taxes, thus permitting government to finance its operations. The land itself served as security for the tax buyer's "loan." Local farmers then had five years to redeem (or liquidate) the tax buyer's equitable title. And between 1850 and 1880 more than 80 per cent of Iowa tax titles were in fact redeemed. "Thus in a real sense," Swierenga concludes, "owners, tax buyers, and the general public all benefitted from tax auctions" (p. 9). For all its utility during the initial stages of settlement and development , the tax title served quite different functions after 1880. Voluntary "borrowing" of taxes fell off sharply with the accompanying decline of the ratio between the farmers' tax bills and their available cash reserves. Thereafter increasingly mature financial institutions met demands for short-term loans, tax delinquency tended to indicate genuine distress among Iowa farmers, and the tax-buying business affected land tenure patterns to a far greater degree. It was in this quite different social setting that the law of tax titles assumed such great prominence during the Great Depression . Acres for Cents thus delineates the changing functions of tax titles and makes a substantial contribution to the social history of American law. For the skeptic, Swierenga has generated more than one-hundred pages of carefully prepared statistical tables, figures, and appendices to support the generalizations offered in a text of approximately equal length. The book will undoubtedly be employed in graduate seminars as a model application of both quantitative methods and legal records to the study of American history. Charles W. McCurdy University of Virginia The New Country: A Social History of the American Frontier, 17761890 . By Richard A. Bartlett...

SOURCES OF WORKING CAPITAL FINANCE: AN EXPLORATORY STUDY ON BANGLADESHI COMPANIES

Cost efficient and timely sourcing of funds to support the working capital (WC) needs of a company are essential for ensuring the continuity of operations and profitability of any company. Hence, a thorough understanding about potential sources of working capital finance (WCF) is of significant importance. This research therefore, investigates the sources of working capital finance and their relative proportions in meeting WC requirements. The research also delves into identifying factors considered by the companies while choosing from alternative sources and the challenges/constraints faced by the companies in sourcing WCF. Based on descriptive and thematic analysis of the data collected from interviewing the finance managers of 21 selected (purposively) manufacturing companies, the study reveals that trade credit (or credit purchase) is the most significant source of WCF followed by short-term bank loans, collection of dues, over drafts and revolving credit respectively. The results support the pecking order hypothesis (POH) of finance in the sense that companies follow an order in choosing the sources of WCF- starting with trade finance, which is a spontaneous source of finance, followed by short-term debt. However, the results contrast the hedging principle of WCF which suggests permanent needs of WC should be financed by long-term sources like equity (internal or external) and long-term debt; only the temporary or variable needs of WC should be financed by short-term sources of fund. Among the factors influencing the choice of WCF sources, cost, availability, amount, relationship with the lender, flexibility, and speed have been found to be of high importance. The study has compared practices with the existing theories of finance and found some discrepancies (mentioned above) between the two, which intrigue further research in the area and thereby have the potential to contribute in new knowledge creation. By identifying some alternative sources coined as ‘bootstrap financing’ and a number of under-explored sources of WCF, the study opens up opportunities for other companies as well as financiers.