Chapter

The Twenties

Michael R. Yogg

in Passion for Reality

Published by Columbia University Press

Published in print February 2014 | ISBN: 9780231167468
Published online November 2015 | e-ISBN: 9780231537025 | DOI: http://dx.doi.org/10.7312/columbia/9780231167468.003.0002
The Twenties

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This chapter explores the contributions of Paul Cabot to the world of American finance during the 1920s. At the time, an average investor was often left to face alone the problems of betting on fluctuating stocks or of competing with other financially-abled investors. A proposed solution to these dilemmas was the formation of “investment corporations,” which managed investment stocks in a diversified portfolio in order to minimize risks. This situation prompted the formation of a mutual investment company, State Street Investment Corporation (SSIC), which was led by Paul Cabot and Richard Paine, Paul’s cousin; and later on, they were joined by Dick Saltonstall, a writer. SSIC features the Boston-type open-end mutual fund—an investment program that enabled the selling and the buying back of common stocks to shareholders at the latter’s discretion. After 1929, the Boston-type open-end mutual fund would be hailed as the best solution to the ensuing investment crisis.

Keywords: American finance; Paul Cabot; fluctuating stocks; investment corporations; investment stocks; State Street Investment Corporation; Richard Paine; Dick Saltonstall; mutual fund; Boston

Chapter.  8794 words.  Illustrated.

Subjects: History of Economic Thought

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