
Crowdfunding a Transcontinental Railroad in 1857 - jasoncrawford
https://rootsofprogress.org/crowdfunding-a-transcontinental-railroad-in-1857
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Danieru
The author seems to be unaware of two notable historic shifts in western
investing.

1\. Bonds used to be the preferred method for investing into businesses.
Equity was considered so unsafe as to be not much more than gambling. Judging
if a bond could be repaid or not was a key motivator in pricing. Nowadays
bonds are a tool exclusive to highly stable mature corporations. The author
appears surprised that early ventures could also issue bonds, but this was a
common characteristic of financing.

A notable improvement is how regulation and enforcement now effectively
protects minority shareholders. Part of history's preference for bonds was how
easy equity could be abused by controlling interests in a company. For a
modern analogy look to Russia where equity trades at a strong discount to the
west thanks to Russian oligarchy's habits of stealing money from minority
shareholders.

2\. IPOs used to be about raising required capital to finance capital
intensive industries. The US railroad boom was financed by IPOs. These initial
public offerings were different from todays. Stronger regulation and
protection for investors has pushed IPOs to a late stage. Now only established
businesses can IPO. Back in the era of over investment into railroads
investors were putting up fresh money to build tracks and stations from
scratch.

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lumost
Curiously with preference stacks we're relatively close to scenario 1 today in
private financing. It would be interesting if employees were granted bonds for
early stage work. This would enable the company to defer payout to a future
date when the company is presumably more profitable, and employees some
stability/protection for the value of the deferred compensation.

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alehul
Related on the history of crowdfunding: I was recently researching a local
community group my grandfather was a part of, and I found out that they
frequently had "bond drives" [1].

It was really interesting to learn that U.S. bonds, which today we view as a
low-risk inflation-beating investment, were actually used not just as an
investment but as a representation of American pride.

[1]
[https://www.okhistory.org/publications/enc/entry.php?entry=W...](https://www.okhistory.org/publications/enc/entry.php?entry=WA020)

~~~
adamjb
"Buy your share of freedom today"

[https://www.youtube.com/watch?v=Tyg8DwsHrvw](https://www.youtube.com/watch?v=Tyg8DwsHrvw)

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99_00
Selling shares to finance business ventures has been going on for hundreds of
years.

[https://en.wikipedia.org/wiki/Joint-
stock_company#Early_join...](https://en.wikipedia.org/wiki/Joint-
stock_company#Early_joint-stock_companies)

