The Separation of Ownership and Control by 1914

Leslie Hannah has provocatively claimed ownership was divorced from control in large UK companies by the early 20th century, inviting re-examination of entrenched assumptions in so doing. This chapter shows his bold assertions need careful qualification. A listing rule of the London Stock Exchange that required companies seeking a quotation to offer two-thirds of their shares to the public prompted at least some unwinding of control. By 1914, major banks were joining railways as companies characterized by a separation of ownership and control, and there was some evidence of ownership...

Leslie Hannah has provocatively claimed ownership was divorced from control in large UK companies by the early 20th century, inviting re-examination of entrenched assumptions in so doing. This chapter shows his bold assertions need careful qualification. A listing rule of the London Stock Exchange that required companies seeking a quotation to offer two-thirds of their shares to the public prompted at least some unwinding of control. By 1914, major banks were joining railways as companies characterized by a separation of ownership and control, and there was some evidence of ownership dispersion among insurers. On the other hand, blockholding apparently remained prevalent in shipping and electricity companies. A case study of Britain's 15 largest industrial enterprises as of 1912 indicates the situation was the same in the industrial sector. Hence, Britain lacked an outsider/arm's-length system of ownership and control on the eve of the First World War.