UPPSALA PAPERS IN ECONOMIC HISTORY

1989

WORKING PAPER NO 3

BANK-INDUSTRY CONNECTIONS IN

HUNGARY AND SWEDEN

Two studies

byElizabeth A Boross and Håkan Lindgren

REPORT FROM THE VIENNA BANKING-INDUSTRY SYMPOSIUM 1988

DEPARTMENT OF ECONOMIC HISTORY

Contents

1. Financinq of Industry bya Biq Budapest Banks in the1920s by Elizabeth A. Boross . . . . . . . . . . . . . . . . . . . . . . . . . . 1

II. Lonu-Term Contracts in Finantial Markets.Bank-Industry Connections in Sweden, Illustrated by theOperations of Stockholms Enskilda Bank, 1900-1970by Håkan Lindgren . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Introduction...........................................l3The Growth of New Banking Institutions . . . . . . . . . . . . . . . . . 17The Bank-Orientation of the Swedish Finantial System . . . 22Stockholms Enskilda Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27The SEB Clients. A Classification . . . . . . . . . . . . . . . . . . . . . . 30Contractual Relations to Independent Clients . . . . . . . . . . . 32Combinations of Ownership and Credit Contracts . . . . . . . . . 35Big Business and their Long-Term FinantialContracts. AGeneralisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37Conclusions.......... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

FINANCING OF INDUSTRY BY TIZ BIG BUDAPEST BANES IN THE 1920s

by Elizabeth A. Boross

This paper Will endeavour to provide quantitative evidente ofthe policy of the Hungarian Commercial Bank of Pest (PMKB)between 1918 and 1929. This Bank has the most extensivedetailed source material as the Credit Register (Green Books;234) in which all manner of loans were recorded from 1907 to1948 is available for analysis.

This working paper Will be limited to the assessment of thefirst decade after the First World War. The Green Books containall domestic loans ranging from private individuals, to smallbusiness partnerships, to limited comganies, to torporationsand to other banks as well. It also retords some foreign credittransactions negotiated for a client or groups of clients bythe Bank. As the name of the Bank suggests, it concerned itselfwith a large number of small clients engaged in trade andcommerce, one-man businesses, small and large retailers andwholesalers, as well as manufacturing enterprises of differentkinds.

The PMEB was established on 14 October 1841 whenFerdinand V. signed the charter, which provided - apart fromlicence to operate - twenty five years of exemption from taxlevy on income and mobile capital. The establishment of theBank was proposed by Moritz Ullmann, a wealthy merchant ofPest, and had been promoted by other merchants who feltobstructed in their commercial activity by the adverse creditconditions prevailing in the city. They felt that aspecifically lotal finantial institution would best serve lotalinterests and would achieve the desired development of commercein Hungary. This period represented a heightened feeling ofnationalist fervour developing, and independence from theViennese banking houses was part of this process.

The Bank's charter addressed the development and supportof trade and industry and to 1867 it founded various industrial

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increasing demand from domestic sources. Equally important wasin food producing the PMKB supported Hungarian Pig-Breeding andMeat Producing Ltd., which played a major role during the FirstWorld War in the publit food supply.

By 19i4 the PMKB had become the leading finantialinstitute in Hungary with a share capita1 of K 163.8 Mill andK 298 Mill savings and deposits at its disposal, the setondlargest bank MAH only retords K 134.8 Mill share capita1 and K48.1 Mill savings and deposits by way of tomparison.

In the chemical industry Phylaxia Serum Producer Ltd. wassponsored by PMKB as early as 1914. In 1916 PMKB was a foundingmember of the K 27 Mill share capita1 venture to exploitnatural gas at Kissarmas (Magyar Fold Rt.), and wasinstrumental in financing the pipe system delivering the gas toDicsoszentmarton, which facilitated the establishment of theHungarian Nitrogen Artificial Fertiliser Ltd.

Also in 1916, PMKB purchased the First HungarianAgricultural Machinery Ltd., its success accruing fromproducing the milling machinery which enjoyed strong demand onthe Balkan markets.

After the First World War, again anticipating moderndevelopment the Bank participated in the railway and roadnetwork reconstruction and extension, and expetting automobiletransport to gain popularity it obtained Stobi Quarry Ltd.,later the Kissebes and Korlati Basalt Mines Ltd.'s sharemajority, and with substantial investment extended theircapacity to maximise their and the Bank's ability to profitfrom the country's modernisation programme.

After 1918 the Bank's wide range of interest narrowed,but in 1925 it procured a foreign loan for 48 Hungarian cities($10 Mill) which was to aid overcome the post-stabilizationcrisis. (K. Jenei, PMKB and affiliated companies (Budapest,1965, UL Manuscript).

During the post-war inflation years the Bank dideverything in its power to save, rescue and support its clientcompanies with share emmissions credit facility provisions andprolongations of the same.

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The following Table indicates PMKB's participation in themanufacturing industry in 1947, most of these clients werealready in the Bank's sphere of interest before or during theFirst World War.

PMKB's Participation in the Manufacturinq Industry in 1947

Budapest-Salgotarjan Machine and Iron Works Ltd.First Hungarian Mechanical Barrel Mtg Ltd.Hydroxigen Ltd.Kiralymalom, Hedrich & Strauss Ltd.Hungarian Asphalt Ltd.Hungarian Konfektio Works Ltd.Hungarian Possto Ltd. (Cloth mtg)Hungarian Food Transport and Goods Ltd.Filial: Hungarian Game Export Ltd.Mauthner Bros. & Co. (leather)Phylaxia Serum Producer Ltd.Salgotarjan Coal Mining Ltd.Filial Cos.: Industrial Explosion Ltd.

Hungarian Electric Ltd.Klotild, First Hung. Chemical Ind.Henrik Lapp Ltd.Salgo Glass Ltd.

Stobi Quarry Ltd.Szolnok Sugar Refinery Ltd.Hunting Cartridge, Charge & Metal Works Ltd.Zala County Basalt Mine Ltd,

88 %100 %

37 %40 %66 %18 %24 %75 %

64 %43 %

7 %

44 %55 %33 %48 %

One of the original purposes behind setting up a lotalbank was to collect and mobilise domestic capita1 to put to ause which was deemed important for the nation's development.The success of the Commercial Bank of Pest and the HungarianGeneral Credit Bank both in guaranteeing the safety ofindividual's savings, and mobilizing the savings in thenational interest in aiding the development of profitableenterprises thus furthering the modern industrial developmentof a predominantly agricultural was only partially carried outby domestic banks. A large proportion of the investment venturecapita1 still tame from abroad, mainly from the Viennesebanking houses during prewar period.

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During the chaotic inunediate postwar years, when thecountry reeled under the effects of a lost war, revolutions,undetermined reparation payments, territorial changesdisrupting the established finantial, economic order, shortageof goods, resulting from the aforementioned disruptions causingincreasingly galloping inflation resulted in venture capita1being in short supply for the better part of six years afterthe war.

This was the period, when the Hungarian banks had tofulfil a special role. As there was no alternative source ofcredit available, reconstruction of the country depended onbanks continuing a flexible credit policy towards productiveenterprises which were to carry out postwar reconstruction.Politital reconstruction, stable social order depended onaccommodating and employing returning soldiers, economicreconstruction depended on credit being available to begin theprocess, to establish sufficient confidence in the country'sability to function as a precondition for foreign capita1 totake a renewed interest in the disrupted region.

This is not to say that the Banks consciously set aboutto create a new policy to aid national reconstruction. Thepolicy evolved from existing preconditions. The Banks had alarge self interest in saving/rescuing companies in theirsphere of interest. Partly because the Banks may have had ashare holding in the Company, or at least known them to havebeen reliable source of income through conducting all theirfinantial business with them, from commercial credit, toworking capita1 provision, to share enunissions. Initially theylooked after their clients according to established, soundbanking principles, lending on justifiable demand, expettingrepayment according to agreed conditions. As, however,inflation increased pressure on provision of larger and largervolumes of working capital, in order not to render alreadydifficult conditions impossible, prolongations of repaymentswere carried out. Share capita1 increases also played a largerole in credit provision, but the bank's role in providing a

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steadily increasing flow of working capita1 was inestimable.This is the picture emerging from the case studies of the PMKB.

The Green Book register does not disclose the originalrequest from the client, more often than not the reasons forthe credit extension are withheld as well, and it also appearsthat some large clients in which PMKB had a special interest(usually largish shareholding) also negotiated for and obtainedso talled 'intern loans' which are rarely recorded in theRegister, but to which occasional references are made.

The selection of companies analysed in this paper ispurely arbitrary, based on an endeavour to include as manyindustrial branthes as possible, as well as companies whichwere clients throughout the 1920s in order to indicate theconsistency of the policy which the Bank followed towards themduring the postwar years which included inflation, stabiliz-ation, and a relatively prosperous development period.

One indication that a special bank-client relation wasbeing formed was the establishment of a so talled 'banker'sagreement'. This in effect meant that in exchange for creditfacilities, loans or overdrafts the client companies agreed toconduct all their finantial transactions with PMKB for astipulated period, usually for the anticipated duration ofcredit extension. This would have ensured all bank charges,tommissions accruing to the Bank, (including share emmissions)as well as being able to keep an eye on the companies' businessactivities to protect the Bank's investment.

The sample of 14 companies includes the followingindustrial branthes: Mining, smelting; engineering, timber,civil engineering, textile: cloth weaver, ready gasmentmanufacturer; food processing; chemical industry: artificialfertiliser; small arms: hunting cartridge manufacturer.

The policy of the PMKB is well illustrated by the firsttwo examples: 1. Hardwood Producer Ltd. and 2. HungarianPlywood Mtg. Ltd. Both companies had been clients of the Banksinte before 1918, both enjoyed credit facilites which wereextended on a short term (3 months) bases, which were renewedand increased repeatedly and conducted their business

exclusively with PMKB. Company fusion took place in November1921, presumably at the instigation of the Bank to reduceunnecessary tompetition between them and to rationalise theirtrade practices.

According to the retords Hardwood's initial overdraftlimit was K 650,000 in February 1919, which was graduallyincreased to K 2 Mill and prolonged without repayment, whilstenjoying occasional conunodity credits for bulk purchases, theselatter appear to have been repaid.

Plywood was granted a K 3 Mill overdraft facility in 1918for three years, which by 1921 grew to a total of K 26.5 Mill,made up of four different loans. On fusion a combined K 40 Milloverdraft was granted and in return the Bank was to appointhalf of the Directorate. By 1924 the credit limit had beenincreased to K 1500 Mill, but complete access to the company'sbooks/records had been requested by the Bank to ensure over-seeing the safety of the Bank's investment. By October 1926 thecredit limit went up to K 7350 Mill, not because the Companywas in any kind of finantial difficulty, but because the post-stabilization credit squeeze slowed down business activitygenerally, and the Bank had to step in to continue providingcredit during the lean period. The same overdraft facility wascarried on (converted to Pengo 600,000 in Dec. 1927) with aseasonal credit having been provided separately, and both ofthese were prolonged to 15 Dec. 1929.

The immediate post war years' increases in the creditfacility indicate the slower pater of inflation, but asinflation gathered pace the overdraft limit grew from K 40 Millin 1922 to K 1500 Mill in 1924. During 1925/6, operatingcapita1 was scarce due to the League of Nation's Controllersinsistence on toncentrating on balancing the budget. Thiscaused a slump in the economy, and further increases wereapproved in the overdraft provision from K 1500 Mill to K 7500Mill in 1926. It is quite clear that monetary stabilization didnot reduce the need for increasing capita1 injection by theBank. Whether this was due to increased business activity (asmight have been with the state sponsored and fast developing

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Textile industry) or difficulties experienced in coping withtompetition from domestic or international sources can only beascertained by following each companies' archive material,which is mainly available for the larger cancerns.

In the case of these two companies one can only makeeducated guesses, as Hungary lost the majority of its timberindustry due territorial changes after World War 1, so theincreasing credit demand after stabilization may indicatehaving to expand production to satisfy domestic demand.

The periodic adjustment of conditions to the creditfacilities also reflects the Bank's attempt to keep up withinflation in order to protect its liquidity.

For instance, interest charged was determined by a cartelagreement among the large banks, initially based on the baserate of the Austro-Hungarian Bank, later on the HungarianNational Bank's (shown as Bk+1.5%=6.5% in 1920). This wassupplemented by a quarterly l%o tommission on the outstandingamount. As monetary inflation quickened, the quarterlytommission grewto 0.375% in 1920, to 1% in 1921. When a longerterm (2 year) loan was negotiated (Hardwood 5710 25.5.1920) afixed sum of K 30 per cubic meter wood sold had to be paid tothe Bank over and above the existing interest/commission ratesto recoup losses on the devaluing loan.

Indicative of how scarce working/investment capita1 wasduring the post-stabilization credit squeese, in the case ofHungarian Brown-Boveri Ltd. (engineering Company) (Ref:9821),when in March 1925 they prolonged their K 500 Mill overdraft bya month, the cartel interest charged amounted to 14.5%, plusl%o turnover tommission, plus 0.75% bank tommission. Being anengineering Company of Swiss origin producing turbines, eventhe l%o tommission must have been considerable.

The Textile industry, which was a government sponsoredindustrialization project to enable reducing Hungary's tradedeficit by import substitution was not given preferentialtreatment by the Bank. 5. Hungarian Konfectio (Ref:5753) hadbeen charged in 1920 min. 5.5% interest, plus 1.5% turnovertommission, plus Quarterly 0.5% Bank tommission on the

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outstanding amount. By 1923, over and above cartel interest amonthly 3% bank tommission was charged (Ref:8622), so talled'credit insurance conunission'.

Whenever a foreign currency loan was requested, such asfor a quota of shares invested by industrial companies to helpset up the Hungarian National Bank (valuta loan), or having tofind foreign currency for the compulsory purchase of MNB sharesin 1924, the interest charged was 15-16% pa. (Ref:Konfectio9113/ Poszt 9112).

Occasional references are made to substantial interncredits as in 6. Posztogyar (Ref:11053) K 1500 Mill in July1926, which in this case was included in the Register becauseit had to be prolonged, but originally it was presumably keptout of sight because compared to the share capita1 of theCompany it was disproportionately large. It is not known howlong this intern credit been in operation, or for what purpose(investment or working capital) was it used?

9. Nitrogen (artificial fertilizer) was financed jointlyby the two large Banks, MAH 60%, PMKB 40%, and as early asNovember 1918 (Ref:5168) when the French put the Company intooperation the Bank's conditions to extend credit included arequest for an exclusive 'banker's agreement' for 15 years,conunission on sales, rather than interest charged, and in casethe French venture did not become profitable, the right tocancel the credit or to convert the loan amount to shares heldby the banks. Again, the amount of the loan grew in line withinflation from K 4 Mill in 1918 (5168) to K 3000 Mill in 1925(9904).

Much the same story can be told for the two foodprocessing companies. 7. Hungarian Pig-Breeding and MeatProducing Ltd. and 8. Mauthner (Seed Grower). Both enjoyedincreasing credit facilities, for an 'indefinite period', bothcontinued beyond stabilization, and apart from the commoditycredits the facility was extended to 1929.

12. Rimamurany-Salgotarjan Iron Works Ltd. was one of thelargest joint venture cancerns between a large coal miner(Salgo) and smelting works (Rima), created in 1921. (Ref:6434).

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PMKB was the main banker (75%) with Wienerbankverein as partner(25%). An agreement to this effect was drawn up for 10 years toprovide credit facility to the Company. The actual amount ofthe credit was not disclosed in 1921, but a note was made in1923 (Ref:8646) that over and above 'present intern credit' anadditional K 2000 Mill was granted for 2 weeks. Even if weassume that the additional amount was repaid in time, the nextreference (12968) still indicates P 1Mill (K equivalent 10,000Mill) loan was still outstanding and prolonged to as late asJune 1928. This was granted in spite of a large $3 Millrestructuring loan from Liesmann & Co. New York in 1925. Rima'slarge production capacity remained a problem despite productdiversification and increasing exporting to the largelyprotected markets of Eastern Europe.

13. Salgotarjan Köszén Rt.' s (coal miner) retord in theRegister only indicated 3 months acceptante credits, bill orexchange credits which were guaranteed by the Bank, and eventhese were prolonged repeatedly. Under the Bank's DocumentRegister (Z41), however, the intern credit arrangements arerevealed. This amounted to K 2 Mill in 1914, when a new'Banker's agreement' was signed for 5 years, which wasincreased and prolonged to an amount of K 1000 Mill in 1923(Ref:Z41/83). When during the later 1920s foreign capita1 wasagain available a $2.05 Mill two year loan had been negotiatedby PMKB (@ 7.5%, made up of three Swiss banks providing thebulk of the loan, $1.3 Mill in 1928. For the balante PMKB andWienerbankverein each contributed $350,000. This dollar loanhad been repaid on 21 April 1931.

14. Stobi Quarry Ltd. also has a full retord in the PMKBGreen Book Register. This Company was particularly supported bythe Bank as a potential profit spinner, as it was to takeadvantage of the reconstruction of rail and road system ofHungary and the anticipated development of road transport withthe advent of automobile as a new mode of transport. ThisCompany was set up during the War (Ref:5258), and retords inNovember 1919 a share capita1 of K 3 Mill, of which 50% wasowned by the Bank. This entitled the Bank to nominate half of

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the Directorate, and to provide K 1 Mill overdraft in 1920initially for 2 months. This was prolonged and increased to K2 Mill in April 1921, and prolonged again to June. (Ref:6309).The amount was increased over the months to K 3.5 Mill inJanuary 1922 and in May an additional K 6 Mill was granted forconstruction work for seven months. (Ref:7101). The conditionsstipulated that if the loan was not repaid on time the Bankcould insist on a share issue to recoup the loan. This appearsto have happened, for (Ref:9810) in March 1925 it is noted thatthe Bank then held a 54% majority of the shares (previously46.66%). Already in 1924 the Bank approved an overdraft of K2000 Mill so that the Company could sel1 on credit to publitauthorities, so as to utilize its increased capacity. At theheight of the inflation even a cartel interest plus monthly 3%tommission allowed this sale on credit a viable proposition.(Ref:9610).

Again it is notable that the post-stabilixation deflationimposed by the League of Nation's Controller forced the Bank tomaintain its credit facility towards the Company for itscapacity extension project (Ref:11657 1927) for an 'indefiniteperiod'. The reason for this appears to be not the desire ofthe Bank to increase its share holding in the Company, butbecause no other source of credit was available until thelatter part of the 192Os, when foreign capita1 began to flowin, albeit only towards the larger companies and mostly on ashort to medium bases.

During the 1925-1928 period these additional credits costthe Company over and above cartel interest and tommission 5% ofpublit utility deliveries and 3% of private sales based onturnover and talled factura tommission. This was reduced to 2%in 1928 (Ref:12816) but the practice continued to operate to1928, indicating that shortage of venture capita1 must havebeen a very real bottleneck in the development of the manufac-turing industry.

15. Vadasztöltény (hunting cartridge mtg), the lastexample, also operated on cartel interest and commision and afairly high percentage of factura tommission. This was 10% in

1922 (Ref:6920), 15% in 1924, at the height of the inflation(8958) as the price for the credit facility. The harshestconditions applied were again in 1925, during the deflationperiod, when K 500 Mill overdraft (9836) was increased to K3000 Mill and cartel interest plus 7% pa credit insurancetommission plus 10% factura tommission was charged. The creditwas continually prolonged and the retord shows (9917, 12756)the substantial amounts of factura tommission collected, i.e.July to Dec 1924 K 1919 Mill, for 1927 P 98,593. Even as lateas 1927 the price of credit was high (11714), the cartelinterest plus monthly 0.125% tommission amounted to 10.7%, plus6% turnover tommission must have further reduced profitability.

It appears from the retords that the Banks, far fromtrying to maintain or extend their finante monopoly in theeconomy, - as Hungarian historiography still contends - wereforced by historital and economic circumstances and pressuresto continue to maintain the liquidity of the client companies,at times going against sound banking principles.

The long series of initially short-term credit extensions(3-6 months) as overdraft facilities, and their continuousprolongation, sometimes lasting for a decade or longer areevidente of this practice, even it in the first place it wasnot seen by the Bank as a policy. The fatt that during theinflation years of 1918-1924 the 'short-term' overdraft creditswere increased repeatedly to keep pace with monetary inflationas well as prolonged, also attests to this policy of having tobail client companies out, when no other source of finante wasavailable.

Most surprisingly this practice continued even afterstabilization, as only the large and well known companiesattracted foreign investment, the smaller companies paid a highprice for their domestic credit supply. Nothing indicates morethe critical shortage of venture capita1 in Hungary than thehigh cost of domestic credit, i.e.: 10.7% plus 6% facturatommission in 1927, compared to the 'lucky' few like Salgo'enly' having to pay 7.5% interest on its foreign loan with0.5% tommission to the procuring banks in 1928.

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LONG-TERN CONTRACTS IN FINANCIAL MARKETS.

Bank-Industry Connections in Sweden, Illustrated bythe Operations of Stockholms Enskilda Bank, 1900-1970

by Håkan Lindgren

Introduction

The object of this paper is to study, empiritally and histori-tally, the structure and quality of the relationships betweenSwedish commercial banks and their industrial clients. Aboveall, my intention is to demonstrate the existence of formaland informal contracts that regulated - and even allocated -the business relations of larger industrial finns with banks.This Will be done by an analysis of bank-tustomer relations inone of the most important commercial banks of Sweden in the20th Century, Stockholms Enskilda Bank. In some importantrespects, the operations of Stockholms Enskilda Bank weredistinctive. It was a family-owned bank, which from itsfoundation in 1856 up to its merger into Skandinaviska EnskildaBanken in 1972 was led by four generations of the Wallenbergfamily. And, beyond all doubt, its function as an industrialbank was more viable and had more deeply-rooted traditions thanin any other Swedish bank.'

Despite the unique characteristics of Stockholms Enskilda Bank,it is not difficult to see the principal features of bank-

1 See my study Bank, investmentbolag, bankirfirma.Stockholms Enskilda Bank 1924-1945 (Norstedts 1987), pp. 266-280. When no special reference is made in this paper, the con-clusions made refer to this study.

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industry connections on the national Swedish leve1 - and, 1 amconvinced, on a continental European leve1 as well - reflectedin a case study such as this one. The first and very obviousreason for this is that contracts allocating the businessrelations of industrial finns with banks involved more thanone, and sometimes up to four, of the major Swedish banks. Thesetond and more important reason is that the basic sourcematerial used for this study is extremely good, providinginformation not only on the relationships between StockholmsEnskilda Bank and its clients, but also on the competitivebehaviour of other banks vis-a-vis the industrial clients (seefurther p. 12).

The allotment of business among the commercial banks, and thelong-term stable connections between banks and industry, wasdue to the specific structure of the Swedish finantial system.Just as other late-tomers on the industrial scene with ambit-ions to keep up with those who were ahead, Sweden felt the needto use bank capita1 as a spear-head in the industrializationprocess. Venture capita1 provisions and risky operations on theone hand were balanced with stability and deposit protection onthe other. In order to explain why a high degree of bank-orientation arose and became so viable in Sweden, it isnecessary to closely investigate the banking system, itsgradual change and its vacillations between retail and invest-ment banking.

Bank-industry relations Will be discussed in a theoreticalframework which is basically institutional, including elementsfrom both contract and network theories. According to institut-ional theory, supply and demand conditions are not seen asbeing decisive or sufficient fortes behind the transformationof the economy. While the mechanisms of supply and demand havebeen applied successfully by neo-classical economists toexplain price formation, they are less adequate for understand-

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ing the process of historital development. For this, we mustlook to what happens in economic and social "institutions". Inevery society, different kinds of regulating mechanisms andsets of rules are established to - wholly or in part - replacepurely market relationships both for the allocation of product-ive resources and the distribution of the results of product-ion. The rules and organisations developed to maintain theseregulating mwchanisms are termed institutions.

It can also become necessary to develop new institutions inorder to make markets function smoothly. In the area offinante, we can only point to the important role played by thestate, the central bank and the banking legislation in creatingconfidence and stability in the credit market. Existinginstitutions change, albeit slowly. It is necessary to studyhow different kinds of institutions emerge, what needs theyfulfill, and how they develop and eventually disappear in orderto understand how different societies choose to organize theirproduction and distribute its results. It is in the intersect-ion between the purely supply and demand relationships on theone hand and institutions, either limiting or supporting, onthe other that we can explain existing systems of allocation.

The institutional approach and its concepts have been furtherdeveloped and refined within the modern contract and networktheories. In particular, Oliver Williamson has developed thetransaction costs approach, stressing their importante inexplaining cooperation and integration between economic actors.The creation of integrated firms and cancerns is one way ofmaking production and distribution more effective, i.e. ofreducing transaction costs. Because of insufficientinformationand uncertainties, the market is not always an efficient meansof allocation, which leads to high costs for carrying outtransactions. It thus becomes more efficient, within certainboundaries determined by the existing technologies of communic-

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ation and integration,ships with hierarchial

to replace impersonal markets relation-governance and control.

An operational problem in the present study has been to choosea concept that satisfactorily describes the business relation-ships between the commercial banks and their industrialcustomers. The application of a contractual approach is clearlymotivated by the fatt that these relationships sometimes tookthe form of written contracts wich regulated the ties betweenbank and Company. However, the term "contract" covers much morethan just formal agreements of this kind.

The term "contract" as it is used here refers to any form oforganized relations between two or more parties, its actualmeaning being identical with "atomized" networks of relation-ships.' The nature of these relations can vary - they can forexample be primarily economic or primarily social - as cantheir appearance. They can be legally binding contracts, butthey can also be what has been termed "implicit contracts",i.e. different kinds of verbal agreements and arrangements.However, the requirement that these relations must be orcanizedprecludes norms and conventions from being defined as con-tratts. The contracting parties can be individuals (actors) orinstitutions (organizations), and the contracts can - but donot necessarily have to - be part of a larger network ofrelations on a more aggregated leve1 of analysis.

' 0 E Williamson, The Economic Institutions of Capitalism(The Free Press 1985), pp 15-42; J Johanson, L G Mattsson,"Interorganizational Relations in Industrial Systems: A NetworkApproach compared with the Transaction-Cost Approach".International -Studies of Manaqement & Organization, %l XVII;No 1, Spring 1987, pp 34-48. For a plea for an institutionalmarket concept, see D C North, "Markets and Other AllocationSystems in History: The Challenge of Karl Polanyi", The Journalof European Economic History, Vol 6, No 3, Winter 1977, pp. 710-715.

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The Growth of New Banking Institutions.

Traditionally, finante activities are characterized by twoextremes, retail or tonsumer banking and investment banking.Retail banking is based on credit mediation, and it is carriedout by "banking" agents or institutions accepting depositsand providing loans for both consumption and investmentrequirements. To attract savings deposits it is necessary topay interest, and often one has to pay a rate even for cashdeposits. The income of a retail banking institution consistsmainly of what is talled net interest, that is the differentebetween lending and deposit rates. Another way of financinglending, which preceded and for a long period of time competedwith banking based on deposits, was to issue bank notes forcirculation. Thus, in the long run, the most important functionof the early banks was to create markets for paper money, a neweffective instrument of exchange, which tremendously reducedsociety's transaction costs. 3

The British commercial banks are generally referred to asarchetypes of a banking system, toncentrating on short-tennlending and cash deposition, being the administrators of themobile cash surpluses of business. Even if modern research hasmoderated this view, and even if there are important differenc-

3 Thedifficulties, characterizing pre-industrial societies,in finding reliable institutions to safeguard savings isillustrated by the fatt that even the famous publit Bank ofAmsterdam, founded in 1609 to regulate exchange and limit abusesof the currencies, charged a fee for its deposits service. Whenthe Central Bank of Sweden - Rikets Ständers Bank -wasestablished in 1668, the introduction of a deposit accountbearing interest was a true publit bank innovation. It is truethat at this time, in England, the London private goldsmithsaccepted deposits, paying 6 per cent interest, but when the Bankof England was chartered in 1694, its business was based on papernote issues and it was not allowed to pay interest on deposits(J K Galbraith, Money, Penguin 1983, pp. 25-27, 38-53; 1 Nygren,Från Stockholms Banco till Citibank, Liber 1985, pp. 15-23).

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es between the Scottish and the English systems of banking, itis quite clear that British deposit banks stressed short-tennoperations, relying to a great extent on cash deposits andpreferring self-liquidating discount credits and overdraftsrather than loans. In England international banking and theindustry investment business were dominated by institutionsoutside the banking system. The international banking business,which included foreign state loan issues, international billbrokerage and the credit-financing of the British import trade,was carried out by the so-talled merchant bankers, originatingfrom private banking houses. Industrial investment operationswere effected by private investment companies and investmenttrusts, and the market for long-term venture capita1 was farmore developed in England than in any other country.4

Investment banking refers to activities where finantial andconsultative service is given to business in all possible ways.It includes long-term lending and long-term capita1 mobil-ization. Moreover, it includes what is now known as corporatefinante, i.e. participation in new share issues and in restruc-turing and structuralizing operations. The origins were theprivate, family-owned banking houses such as the Rothschilds,which in the late 18th Century and during the Napoleonic warsearned large amounts of money by intermediary operations in thefast-growing market for state loans. The investment bankersspecialized in issuing and underwriting activities, both inbonds and shares. In this way they helped to create secondary

4 In a balanced and well-documented analysis, IndustrialFinante 1830-1914 (Methuen 1979), pp. 210-244, P L Cottrellpresents a number of arguments for his view that Britishcommercial banks were involved in industrial financing, in bothmedium- and long-tenn investments projects. The reason for the,by and large, small importante of bank credits was the lack ofdemand from industry, which continued its traditional relianceon internally generated funds. Cf. the more orthodox view in ageneral survey such as X E Born, International Banking in the19th and 20th Centuries (Berg 1983), pp. 46-72, 160-164.

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markets for two finantial instruments, the bond and the share,which were to become of great importante for financing theindustrial growth of the 20th century. Further the investmentbankers acted as middle-men in all sorts of transactions. Theybecame professionals in initiating and realizing mergers andindustrial transformation, and their income originated mainlyfrom tommissions and fees.

A prerequisite for successful investment banking was theexistence of legal possibilities to deal with stocks andshares, not only as a broker but also as an owner. Trade cyclesmade investment banking extremely risky, in particular whenissuing activities and merger operations were combined with apolicy of helping infant industries stand on their own twofeet. The considerable risks to which investment bankers wereexposed required special demands for liquidity and solvency.

The historital stage is crowded by investment bank failures,the most spectacular being the Crédit Mobilier-bankruptcy inFrance 1867. Crédit Mobilier was a programmatic attempt toorganize, with support from the publit authorities of thesetond empire (Napoleon III), venture capita1 mobilization tonew and growing industrial enterprises. The venture capita1was raised by bond issues of the Crédit-Mobilier-institution.Established in 1852 its operations were successful for somedecades, but the combined effect of inadequate liquidity andthe 1866 crises forced the bank into bankruptcy in 1867 andliquidation in 1871.

By posterity the Crédit Mobilier has been regarded as a modelfor the use of banking institutions as intermediaries topromote industrial development and growth, and for a long timethe name of the French institution has been used as a conceptdescribing investment banking activities in general. In fatt,however, the Crédit Mobilier was a very special, and even late,

20

type of bank toncentrating on long-term industrial finante. TOcontemporaries, the Belgian Big Banks - the Société Générale(1822), and the Banque de Belgique (1835) - seemed just asimportant as the Crédit Mobilier as models for establishinginvestment and share-issuing banks.5

Regional conunercial banks started to develop in Sweden in the183Os, but it was not until the late 1850s that they workedtogether in a system for national clearing and paymentsservice. The prototype of the Swedish banking system was theScottish one, although "developed and arranged to the require-ments of the country into which it has been adopted".6

This means that the Swedish commercial banks concentrated onbill discounting and short-term lending, attracting mainlyliquid and short-term deposits. In both Scotland and Swedenthey were organised as joint-stock banks with unlimitedliability for all shareholders. It also means that they workedboth with note issues and deposits acquisition as the basisfor their lending. And, as the most important tontrast to whatcharacterized the specifically English system, the functionspursued by both the Scottish and Swedish banks were much moreextensive. The finantial markets in these countries were lessdeveloped and specialized. Thus quite diverse banking functionswere concentrated in the commercial banks. These banks tame todominate the entire credit market, and they did this in a

5 G B Nilsson,Times,

Banker i brytningstid (Banking in PioneerEHF 1981), pp. 369-384; cf B Gille, Banking and

Industrialisation in Europe 1730-1914, The Fontana EconomicHistory of Europe 3 (1978), pp. 255-274.

6 R H Inglis Palgrave, Notes on Banking in Great Britainand Ireland, Sweden, Denmark and Hamburg (1873), cited in G BNilsson, op. cit., p. 384. The distinctions made between theEnglish, Scottish and Swedish systems of banking are also referedto in G B Nilsson's research, w., pp. 337-344, 381-383.

21

finantial system characterized by extensive co-operation andunification.

There were, however, significant differentes between theScottish and the Swedish systems of commercial banking. Owingto a less developed deposits market, note issuing became muchmore important to the Swedish so-talled "enskilda" ("private")banks than to their Scottish counterparts. In 1863 the firstnon-issuing joint stock bank was chartered in Sweden, itsliability limited to Company assets. The role of depositsincreased however, in particular during the boom of the 187Os,and when the Swedish enskilda banks definitely lost their note-issuing rights in 1903, the importante of notes as a basis forbank activities had long sinte become insignificant.

Two important trends can be observed in Swedish bankingpractices during the setond half of the 19th century. Firstly,the commercial banks gradually took over the role in financingindustry played earlier by the old merchant and trading houses.This process accelerated during the finantial crises of 1863and 1866 when some of the most respectable money-lenders andprivate merchant houses were liquidated. Setondly, the Swedishcommercial banks gradually inserted new activities within theirbanking functions. The relative backwardness of Sweden at thattime and the desire for industrial development gave rise tomore demand for long-term rather than short-term credits. Aboveall, the accommodation of the Scottish system of banking toSwedish requirements meant that Swedish banks were involved toan increasing degree in industrial medium- and long-termfinante, although venture capita1 provisions were still closedto the Swedish banks.

22

The Bank-Orientation of the Swedish Finantial System

It was not until the industrial break-through 1896-1913 thatthe commercial banks became totally dominant in industrialfinante. The banks then finally took over the financingfunctions of private merchant houses. Moreover, following theGerman model, the Swedish commercial banks started to includecorporate financing in their business. From this time thedominante of the banks was so articulated that the finantialsystem in Sweden can be described as clearly bank-orientated.

The rapid process of industrialization in Germany, and theparticipation of German banks in that process, became an idealfor those in Sweden who wanted to increase the growth andtransformation of society by using bank capita1 as venturecapital. In the last quarter of the 19th century, the Germanjoint-stock banks developed into big universal banks. Theyadopted a mixed banking program, combining regular retailbanking with corporate finante, including share acquisitionsand issuing activities. The German banks became known asinitiators and promoters of industrial change, co-operatingquite intimately with industry, initiating mergers and colla-borating with each other in the creation of cartels and syndi-cates.7

' The German mixed banking program was deeply rooted in theprivate banking traditions of the country, as has been shown bvRichard Tilly in his Financiai- Institutions andIndustrialization in the Rhineland, 1815-1870 (University ofWisconsin Press 1966), pp. 81-109.

The picture of an early "continental" system of industrialbanking is modified in a recent study by Richard Rudolph, Bankinqand Industrialization in Austro-Hungary. The Role of the Banksin the Industrialization of the Czech Crownlands,1976).

1973-1914 (CUPRudolph's results show interesting similarities between

Swedish and Austrian-Hungarian development. In the latter partof the 19th century, the Austrian banks were clearly adverse totaking risks and did not getcapital.

involved in providing venture“It was not", he states as a general conclusion, "until

23

In Sweden the introduction of corporate finante in commercialbanking was by no means undisputed. During the first decadesof this century, there was an intense publit debate on thequestion if, how and to what extent bank capita1 should be usedas venture capita1 to increase the pace of economic transfonna-tion. As a matter of fatt, the principal arguments can still berecognized in the Swedish publit debate of the 1980's. Thefundamental issue investigated by the present CommissionCapita1 Markets (set up by the Swedish Government in 1985)how far-reaching banking regulations should actually beorder to protect the rights of the depositors and the systempayments, but still make it possible for banks to operatethe risk capita1 markets.

The main arguments at the beginning of the century were as

onisinofon

follows. The deposit business is fundamental to Swedishcommercial banking. An increased exposure to risks can put thesafety of deposits into question. Mere suspicions aboutinsolvency can be devastating, both to the single bank and tothe whole system. Advocates for investment banking within theregular program for commercial banks argued that even lendingon share collateral, a recognized commercial banking function,is risky as stock prices show great flexibility. Even inlending it is up to the bank not to get involved in too riskyoperations by, for example, accepting high collateral poten-tials or collateral shares of venturesorne companies withcontroversial prospects. The advocates als0 stressed theadvantages of including the market for venture capita1 underthe domain of publit control. If banks are allowed to deal withshares, or if they are allowed to run special investment/issu-ing banks, this would be the case as the commercial banks are

after the turn of the century that serious connections haddeveloped, until the marriage between banks and industry couldbe said to have been consummated" (p. 185).

24

rigidly controlled by a government office, the Bank Inspec-torate.'While the question was being discussed and publiely invest-igated, the commercial banks were by no means idle. Againstthe spirit of existing legislation, with its ban on the owningof shares by banks, embryonal forms of modern finantialcancerns developed. Leading managers of the larger banksorganized themselves into consortia or syndicates, eagerlylooking for opportunities to engage in share underwriting andstruttural reorganizational operations. Investment and issuingcompanies were formed, juridically separated from, but totallyfinanced by and working in close collaboration with, differentcommercial banks. Thus more permanent banking groups wereestablished, offering a complete program of investment bankingto industry, and close contacts developed between the commer-cial banks and their industrial clients.

In this way the banks had engaged themselves in supplyingventure capita1 to industry long before stock acquisitions onthe banks' own accounts were to some degree permitted by the

' There is a voluminous but somewhat diverse literature onSwedish banking developments 1860-1913. In English there is awell-balanced survey by Ingemar Nygren, "Transformation of BankStructures in the Industrial Period. The Case of Sweden 1820-1913", in The- Journal of European Economic History, Vol. 121983, pp. XX-XX. Moreover, there are some very interestingcontributions by Lars Sandberg, the mostimportant being "Bankingand Economic Growth in Sweden before World War I", Journal ofEconomic History Vol. XxX11X 1978, pp. 650-680. The role of thecommercial banks' in the early internationalization of Swedishfinns is analyzed by Ragnhild Lundström in her thought-provoking"Banks and early Swedish Multinationals", MultinationalEnterprise in Historital Perspective, edited by A Teichova, MLévy-Leboyer & H Nussbaum (CUP 1986), pp. 200-217. Stillunsurpassed in penetration and analysis is the Olle Gasslanderstudy on the History of Stockholms Enskilda Bank to 1914 (643

1962) in which the active role of banks in the SwedishE%ess of 'industrialization is clearly demonstrated.

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1911 Banking Law.g The limitations laid down by the new BankingLaw were not crucial impediments to the large scale involvementof larger banks in venture capita1 provisions during the hecticboom of World War 1. As a combined effect of a violent creditexpansion, finantial over-speculation and the deflation crisesof 1920-21, the interdependence of banks and industry furtherdeepened in the 1920s. Suddenly the commercial banks foundthemselves owners of a substantial part of Swedish largeindustry.A considerable portion of the stocks held by the banks weresold during the subsequent boom years, forming the base forthe rapid build-up of Ivar Kreuger's empire in the late 20s.The Kreuger collapse of 1932 returned these stocks to thebanks, also producing a redistribution of industrial ownershipbetween the leading commercial banks. For Swedish bankingpractices, however, the most important effect of the Kreugercrash was a new Government Bill in 1933, prohibiting the owningof shares by banks. The intention was to prevent the commercialbanks from mixing credit and entrepreneurial functions, therisks associated with loan operations being so substantial"that the banks should not assume the additional risks ofentrepreneurship"." The swing of the pendulum was now backwhere it started. The long-run significance of the 1933 Billwas to give priority to retail banking, careful credit examina-tion and the safety of deposits, thereby deliberately excludingcorporate finante from the functions of commercial banks.

' The provisians of the 1911 Banking Law and the changingrequlations of 20th centurv Sweden are the obiect of apenetrating analysis by Mats Larsson in his paper "Pubiic Controlof Commercial Banks and their Activities - the Swedish Example,1910-1970" (mimeo, Department of Economic Bistory, UppsalaUniversity 1988).

lo Quoted from SOU 1932:30, p. 49.

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These developments, however, did not essentially affect theclose connections between banks and industry built up duringearlier decades. As 1 have shown elsewhere, the larger banksdid not actually dispose of their shareholdings, buttransferr-ed them in the 1930s and the 1940s to affiliated investmentcompanies, indirectly controlled by the banks. It is quiteobvious that the fear of weakening the ties to industrialclients was one of the most important motives explaining thereactions of the bank managements to the Share Prohibition Billof 1933."In the very long-run perspective, the firm structure of bothlarge industry and large banking in Sweden shows an amazingcontinuity and stability during the 20th century. Finns thatbecame large and international in the beginning of the centurystill today belong to the backbane of Swedish industry,dominating their industrial environment still more. Despiteimportant changes within the top group of commercial banks,the banking structure that developed during World War 1 canstill be observed very clearly. And even if the relationsbetween big banks and big industry in many ways have changedduring the 1970s and the 198Os, involving greater industrialindspendence and greater mobility in bank connections, it isstill easy to trace existing bank-industry relationships farback into history.

Many of these client relationships were established beforeWorld War 1, when Swedish industry made its breakthrough on abroader front . One effect of the crisis of the early 1920swas tightening bonds between banks and industry. In thislonger-term perspective, the Kreuger debacle only meant someturbulente within the established finantial-industrialnetwork.

" The significance of banking regulations with referencesto the share ownership of the Swedish banks is discussed in Hbindgren, "Banking Group Investments in Swedish Industry",Uppsala Papers in Economic History. Research Report No 15, 1987.

27

After the Kreuger crash, when the commercial banks wereforbidden to own shares, they were still able to keep someindirect ownership-control in their spheres of industrialinterests by disposing of their shareholdings to affiliatedinvestment companies. This suggests that the Swedish finantialsystem up to the 1970s was typically bank-oriented, charact-erized by compact and stable long-tenn relationships betweenbanks and industry.

Stockholms Enskilda Bank.

Before analysing the client relationships of StockholmsEnskilda Bank, 1 would like to shortly introduce the bank tothe reader. An introduction of this kind is necessary toprovide a basis for judging what is unique and what is of moreuniversal application in the operations of this bank.

Originally founded in 1856 as a commercial bank of the Scottishmodel, Stockholms Enskilda Bank (SEB) followed the generaltrend, developing into a true banking cancern, bringingtogether normal commercial banking service with merchantbanking/international business and investment banking/indust-ria1 promotion. These developments were quite evident in theperiod 1886-1920, when SEB was managed by the "setond genera-tion", the two brothers K.A. and Marcus Wallenberg, Sr. In itscorporate finante policy SEB was not seriously impeded by therestraints on share dealing and share owning placed upon itbefore 1912 by the law. Like the Stockholms Handelsbank, latertalled Svenska Handelsbanken, SEB was considered an industrialbank par préferenceat the eve of World War 1.

28

In 1910 a merger movement began, which during the next decadetransformed the whole fina structure of Swedish commercialbanking." Stockholms Enskilda Bank was not involved in thesemergers and succeeded in defending or even strengthening itsposition without having to incorporate any other bank. SEB didbusiness nation-wide, but remained, in terms of its location,a typical Stockholm bank, only occasionally establishingbranthes outside the capital. Its relative size, as measuredby total assets, grew slightly, from 6% in 1907 to 8% by themid-1920s, thereafter oscillating around the eight percentfigure right up to the merger with Skandinaviska Banken in1972.

One effect of the intensive merger activities of the 1910s wasthat two of the conunercial banks, Svenska Handelsbanken andSkandinaviska Banken, became the largest banks in Sweden. Inthe mid-1920s they ranked in a elass of their own, accountingfor more than one fifth each of total Swedish banking business.Despite its moderate size, SEB was considered one of the majorcommercial banks, a position which also was attributed toGöteborgs Bank and - sinte 1951 - to the state-owned SverigesXreaitbank (today PK Bank, PKB). The importante of SEB could,however, easily be compared with that of the two largest banks,

l2 The number of commercial banks, being 83 in 1908,declined quickly, though the number of branch offices increasedat the same time. There were only 32 banks left in 1924, by 1945the number had declined to 22, and by the end of the 1960s therewere only 16 commercial banks active in Sweden. During recentyears, however, the whole competitive situation in Swedishbanking has changed. Savings banks and rural credit societies("farmers banks") have acquired conunercial bank functions, andduring the 1980s a lot of finantial finns have been fonned, manyof them being completely independent of the establishedcommercial banks. Moreover, sinte 1 January 1986 foreignestablishments are allowed in the Swedish banking sector, and thenumber of conunercial banks suddenlv increased from 14 to 26during 1986 (Den svenska kreditmarknaden, Svenska Bankföreningen1987).

29

thanks to the distinct character of the bank. In reality,Stockholms Enskilda Bank managed to maintain its character asa universal bank for a long time, including investment bankingoperations in its business by working within a network ofclosely related finantial and investment companies.

In this way SEB emerged as the leading institution in a groupof companies, which ultimately were associated with theWallenberg family (or rather that part of the family constitut-ing the bank's management). The organisation of a solid andviable Wallenberg group made it possible to use the resourcesof the bank in structuralizing operations and in promotinglarge industrial development schemes.13

The Wallenbergs' interests in Swedish industry has grownsteadily during this century. In 1924 the number of employeesin industrial finns linked to the Wallenberg group has beenestimated to be only 4%. At the end of World War II, thisfigure had increased to 11%, and at the end of the 1960s thepercentage had doubled once more. In 1969 almost 23% of theindustrial working forte were employed in companies tied inone way or another to the Wallenbergs' sphere of interest.14

In a programmatic way the SEB management actively combinedownership, entrepreneurial and creditor functions. In allprobability the Wallenberg group was unique when it comes to

l3 One of the most illustrative examples showing theintimate cooperation between the SEB and the industrial companieswithin the Wallenberg group in organizing large-scale industrialentrepreneurship is given by Ulf Olsson in a cogent analysis ofthe Nymölla-investments in the 1960 in his Bank, familj ochföretagande. Stockholms Enskilda Bank 1946-1971, Norstedts 1976,PP* 246-260.

l4 U Olsson, op. cit., p. 239; H Lindgren, op. cit., p. 407.

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the consistent vigour by which this program was realised.Nevertheless neither industrial finante nor the organizing ofbanking groups were unfamiliar to the other major banks.Without having such extensive ambitions as SEB it is quiteclear that both Svenska Handelsbanken and Skandinaviska Bankenestablished "spheres of interest", actively enforting anddefending their client relationships and making importantcontributions to industrial development by corporate finanteoperations.

!J%e SEB Clients. A Classification.

As the first commercial bank in Sweden, Stockholms EnskildaBank created a separate department for credit information in1900. The prototype was to be found in the organisation ofCrédit Lyonnais, SEB:s correspondent bank in Paris. At thistime it was a delicate business to make credit ranking invest-igations, and the new SEB division was neutrally talled theStatistical Department. All information on clients, and onother finns of interest, was accumulated in this department,which supplied the base material for credit decisions made bythe Credits Department or by the managing directors. Thanks toa careful control of credit balantes and to an elaboratekeeping of diaries for each client, showing all contacts madeand each decision taken, the Statistical Department has givenposterity a unique material for analysing bank-client relation-ships.

The top managers of Stockholms Enskilda Bank often surprisedinspectors from the governmental banking authorities by havingdetailed information on individual credit arrangements.Contributing to this, of course, was the extensive work oncredit rating and credit control done by the Statistical

31

Department. Another prerequisite was, however, the verytoncentration of the SEB business. The number of regularclients was rather few, and the bank's lending was veryconcentrated: up to 1945, some hundreds of clients each yearaccounted for 90-95% of all credits. The combination ofbusiness toncentration and unique retords makes it possible toreconstruct and systematize all contacts, either made inperson, by phone or by letter, between the clients and the bankfor a longer period of time.

First of all there were the "unproblematic" relationshipsbetween SEB and those clients - individuals and affiliatedfinante-, holding- and investment companies - which workedintimately with the bank, being the tools of the Wallenbergbusiness. Together with the SEB, these companies constituted atrue banking group, the Wallenberg group. These relationshipsare easily described in contractual terms. Stockholms EnskildaBank was responsible for creditor, ownership and managerialfunctions. The two contracting bodies, the bank and itsclient, were operating within the same governance structure,being subordinated to one and the same decision-making centre.

The other clients of the bank can be classified in two dif-ferent groups:

1) Independent clients with respect to ownership. Inrelation to these clients, SEB mainly fulfilled creditorfunctions, although a deepening credit often involved monitor-ing activities from the bank.

2) Client companies, mainly in industry, in which the SEBmanagement has a distinct influence. As a basic principle forclassification, such "influence" is said to be exercised whentwo conditions are jointly fulfilled. First, the banking groupshould own a minority interest of at least 5% of share votes,

32

and setondly, the bank should be represented on the board ofthe Company. Vis-à-vis the clients in this group, SEB mix to avarying degree creditor, ownership, managerial and evenentrepreneurial functions.

The credits granted by Stockholms Enskilda Bank during theinterwar years can be divided, roughly speaking, into threeequal portions. This means that as much as one-third of totalcredits were used by affiliated companies within the group.The implication is also that only 37% of credits (on average)were granted to clients independent of the Wallenberg group,the rest being destined for the industrial companies in whichthe group had a decisive influence. During the 1940s and 1950sthe importante of credits granted to independent clients as aproportion of total credits increased, and lending within thegroup diminished. Most striking, however, during the periodafter World War II, is the increase, most pronounced in the6Os, of credits granted to the growing industrial cancernsdominated in one way or another by bank management.15

Contractual Relations to Independent Clients.

In relation to clients without ownership bonds to the bankinggroup, SEB mainly performed purely credit functions. In thiscategory some of the most well-known finantial and industrialgroups of Sweden, such as the Bonnier, the Johnson and theSöderberg groups of companies, are to be found. These groupsoperated quite independently of the bank, and the contractualrelations - beside the explicit credit contracts - were basedon tommon business interests. It was from among the leading

l5 U Olsson, op. cit., pp. 242-245; H Lindgren, op. cit.,PP. 247-251.

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figures of these groups that prestigious members of theStockholm Enskilda Bank board of directors were recruited, dulyqualifing when belonging to the permanent customers of the bankand "owning one's own firm".16 This meant, probably, that oneshould combine as did the Wallenbergs themselves - ownershipand governance, being independent to other capitalist groups.

The contractual relations between SEB and its clients were muchmore asymmetrital when it comes to the numerous small andmedium-sized finns having an independent managerial andownership position with regard to the bank. These finns weremainly located in Stockholm and its suburbs and secured by SEBby active recruitment work. They were reckoned an importantfield for acquisition work, and a lot of energy was used bythe Statistical Department to trace small finns with growthpotentials that could be secured as clients. The reason whytompetition between banks was intense in this field was, asWill be shown later, that big business was finnly tied to itsbanks by tradition and long-tenn contracts. One possible wayfor banks to enlarge their markets was to invest in new clientconnections or networks, which might be maintained and develop-ed into important long-term contracts as the finn grew.

l6 Quoted from Marcus Wallenberg, Sr. The long-term balanteof relationships between the mostimportant clients and SEB couldtemporarily be disturbed. An illustrative example to this is thatwhen Nordiska Kompaniet (NK, the corner-stone of the Sachs'group) ran into difficulties in the 20s and 3Os, the Wallenbergsmobilised venture capita1 to support the position of the Sachsfamily in NK. In 1934 the Wallenberg group was the largestshareholder of NK, controlling 11% of the stock measured byvoting power. At this time the Sachs family was forced to givean account of their total finantial position to StockholmsEnskilda Bank, a most exceptionalmove to take in connection withclients of the Sachs' category (H Lindgren, op. cit., pp. 54-55).

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The credit balantes and the entire economic situation of thosesmall finns were exposed to close examination from the CreditsDepartment. Before accepting a new client, a formal visit waspaid to the firm. A visit of this kind was to be compared toan inspection, including examination of books and book-keepingpractices. The impressions of the visiting bank manager werecompiled into a detailed and comprehensive report. Currentcredit balantes were controlled regularly, and all parties tobills were examined every 1-3 year. If the bill holdings wereunsatisfactory, the examination was followed up by correspon-dence or private interviews, in which uncreditworthy names wererejected.

When the finantes of these independent clients got into amuddle, the SEB's demands for information became more insis-tent. Yearly final accounts were requested, plans for amor-tiziation were approved, and the bank gave more or lessdetailed instructions on how to run the business. In thesecases the Stockholm Enskilda Bank often nominated one of theaccountants, or, as an indication of tighter control, even amember of the board of directors. Somewhere on this slidingscale, independence was transferred into credit dependence. Myempirital research supports the idea that a convenient criteri-on for determining this boundary is when business was con-tinuously supervised by a bank representative on the board ofthe client Company.

It is an interesting question why independent, small-sizedfinns without shaky finantes accepted a close examination ofbalantes, showing their total finantial situation, whentompetition between banks for new clients demonstrably wasintense. It is obvious that the client finns also had someadvantages of contracting on these terms. These benefits canbe summarized as long-term finantial support and security.Being "reliable" and "cooperative", accepting some bank control

in one's business - "mutual confidence" were the prestige wordsused in this tontext - one had, as a matter of fatt, boughtinsurance to be helped by Stockholms Enskilda Bank both in

35

growth and crises. Another condition for reliable bank supportwas to stick to one bank only. A consistent SEB ambition was,if possible, to be recognized the sole bank connection of afinn. In practise, however, Stockholms Enskilda Bank often hadto give up this ambition.

Combinations of Ownership and Credit Contracts.

The qualitative relationships between SEB and its clients aremost varied, and thus hardest to grasp, when it comes to thegroup of companies in which the bank combined ownership andcreditor functions, often mixed with managerial or entrepreneu-ria1 functions to a varying degree. To exert influence in aCompany, the SEB management supplemented minority ownershipwith board membership. It is quite obvious, however, that thebasic function of the bank representative in the board ofdirectors of an industrial Company was to be an Observer andinformant, and, not least, to secure the Company as a client ofthe bank.

In fatt, between the bank and its clients in this group, therewas a continuous spettrum of contracting relations. There weresome industrial companies, often but not always majority owned,in which the bank management very actively influenced evenshort-run operations, as in the cases of Scania-Vabis or Atlas-copco. On the other hand there were minority-owned companies,with clear Wallenberg ownership dominence, in which theposition of lotal management, by tradition or by coincidence,was very strong. In ASKA and in Stora Kopparberg during the1930s and 194Os, for example, the relationships between bank

36

and client can hardly be described as a principal-agentrelation, Despite a considerable minority interest, establishedby SEB in 1929, and despite bank representatives as boardmembers of both ASEA and STORA, conflicts between lotalmanagement and SEB were by no means settled by instructions ororders, but rather by negotiations and compromises between thecontracting parties. The managing directors of big business,traditionally having strong positions in "their" companies,were often very eager to emphasise their independence withrespect to different group of owners.

Other examples can be given, showing how communities ofinterest were the sole basis for extensive cooperation,including both interlocking directorships and mutual minorityshareholdings. The relationships between Stockholms EnskildaBank and some of the larger Swedish insurance companies aretypical exponents of these bases for contracting. Skandia hadlong been a client of SEB, having both large deposits and, oc-casionally, large short-tenn loans. For a large insuranceCompany, however, it was very important to have more than onebanking connection, and Skandia also had close contacts withbotn Svenska Handelsbanken and Skandinaviska Banken. From theSEB point of view it could be justified to include the SkandiaCompany in a Wallenberg sphere of interest. But, as a matterof fatt, from the Skandia point of view it was as justified toinclude Stockholms Enskilda Bank in a Skandia sphere.

The importante of Skandia to SEB - and of SEB to Skandia - wasin mutual business. The bank could place underwritten bondissues and long-tenn loans in the portfolio of Skandia, andthe international contacts of the bank were often used bySkandia as a source of information when investing in foreignsecurit-ies. Moreover, through Stockholms Enskilda Bank,Skandia acquired industrial insurance, in particular fire

37

insurance for industrial plant, which for long time served as"a golden egg" in the insurance business.

To sum up, the qualitative tontent of contractual relationshipswere full of nuances in this group of companies in whichownership and credit contracts were combined. A generalconclusion is, however, that board membership was necessary tomake closer cooperation or some monitoring possible. A measureof minimum bank influence in a Company is whether, upon thenomination of a bank representative to the board of directors,this Company used SEB as bank connection. A rough measurementof the degree of influence is thus if SEB was made the solebanking connection or not.

Big Business and their Long-Term Finantial Contracts.A Generalization.

The existence of stable, historital relationships betweenindustrial finns and commercial banks in Sweden was observedin the 1960s by the Concentration Commission, a governmentalinvestigation on business structure. In its report on thecredit market, the system of banking connections was discussed,although no general conclusions were drawn." The industrial-finantial system as a whole was dominated by single-bankrelationships, but there were a number of industrial finnshaving one major bank connection, supplemented by one or more

” SOu 1968:3, "Kreditmarknadens struktur och funktionssätt"~(by Tony Hagström), pp. 186-189. In many respects this report isa most valuable historital document. However, no generalconclusions are made, either concerning the importante of stablerelationships on the market behaviour of different actors andinstitutions, or regarding the implications of these fundamentalmarket characteristics for the formation and growth of bankinggroups with ownership interests in industry.

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secondary bank connections. Of importante for this paper arethe empirital observations made by the Commission that thefrequency of multi-bank connections was increasing in the196Os, because of the tight credit squeexes which were a partof the anti-inflationary monetary policy. Still, however, thesystem with single and major/secondary bank-industry connec-tions clearly was predominant.

When scrutinizing the relationships between Stockholms EnskildaBank and its more important industrial clients, it is strikingthat SEB often shared business with other major banks. ASEA andLM Ericsson Will be used here as illustrative examples, but infatt the evidente could easily be multiplied. At the turn ofthe century, Stockholms Enskilda Bank was deeply involved inASEA. SEB reconstructed the business, provided new venturecapita1 and piloted the Company through the difficult crises of1900-03. Gradually SEB sold its ASEA shares, but, the relation-ship being strengthened by personal bonds between the managingdirectors, ASEA remained a faithful client to the bank.

In 1916 ASEA acquired the largest Swedish competitor, NFEA (NyaFörenade Elektriska AB), which had Skandinaviska Banken as itsbank connection. As a condition for the merger, it was statedthat Skandinaviska Banken would have 1/3 of ASFA's bankingbusiness in the future. This portion was diminished to 1/6 in1932, when the position of Skandinaviska Banken was weakenedfollowing the Kreuger crash. As a third bank connection SvenskaHandelsbanken now entered the scene, taking over the share lostby Skandinaviska Banken. In return for the portion allotted,Svenska Handels-banken promised to stimulate companies in itssphere of interest to buy electrical equipment from the ASEAgroup.18

" J Glete, ASEA under hundra år 1883-1983 (ASEA 1983), pp.42-48; ibid, Storföretaq i starkström (ASEA 1984), p. 61.

39

In 1918 the banking business of LM Ericsson - the telephoneCompany - was divided between Svenska Handelsbanken (75%) andSEB (25%). As in the case of ASEA, the division was a resultof a merger, the portions roughly corresponding to the twobanks' business with the merging companies. When Ivar Kreugerfor a period in 1930-31 acquired a controlling interest in LMEricssson, Kreuger's major bank connection Skandinaviska Bankenalso got a share of the LM Ericsson banking business and waseven allowed to nominate a member of the board of directors. Asa consequence of the Kreuger debacle however, SkandinaviskaBanken was removed. Svenska Handelsbanken and SEB engagedheavily in the reconstruction of LM Ericsson. In 1936 these twobanks decided to participate fairly in the banking business ofthe telephone Company, a state of things which still prevailedwhen Stockholms Enskilda Bank merged in 1972."

It is quite obvious that the long-term stable relationshipsbetween the major Swedish commercial banks and their largeindustrial clients to a very great extent can be traced backto the extensive merger movement in Swedish industry in the1910s. This was the case when AB Svenska Jämvägsverkstäderna(ASJ) in 1917 bought its two most important competitorsproducing railway rolling stocks, and also when SvenskaOljeslageri AB (SOAB), important producer of linseed oil forthe chemical industry, was founded by the merger of threeindependent finns with different bank connections in 1916.

That the origins of business quotas are to be found in themerger movement is quite natural. It was the end of theturbulent Griinderzeit of Swedish industry, when the initialstructure of finns changed. But, as Ragnhild Lundström hasstressed, during the period before World War 1, the inter-

lg A Attman, "From the Kreuger Crash to Stabilixation 1932-1940", in: LM Ericsson 100 Years, Vol. 1 (1977), p. 22-28.

40

mediating foreign loan business was the main source of revenue- and an important basis for deposits - for the commercialbanks. Whem capita1 imports ceased, Swedish industry grew moreimportant as clients of the banks." This growing importanteis clearly demonstrated by bank behaviour in industrialmergers. As has been shown, banks were very active in defendingtheir networks of client relationships when taking part instructuralizing operations.

A setond group of big business relationships refers to quotasagreed upon by SEB as the major bank connection and allottedto some regional bank. These kinds of relationships werestressed by the Concentration Commission of the 1960s whendefining major/secondary bank connections. With reference toStockholms Enskilda Bank, such allocations of quotas were madefor a limited number of industrial firms only. Common featuresof those firms were that they were controlled by the bankinggroup and situated far away from Stockholm. Obviously therewas a demand for a bank for current business", wheredocumentary credits, foreign exchange business, and occasionaloverdrafts could easily be taken care of. From the regionalbanh's point of view, the reason for contracting with one ofthe major commercial banks could be related to a problem ofscale: the desire of the regional bank to support a growingclient without, however, having the finantial resources tomaintain its position as the sole supplier of credits and otherbanking services.

Allotments between a major and a regional commercial bank weremade, for example, between SEB and the regional SundsvallsEnskilda Bank concerning the banking business of Wifstavarf.Wifstavarf was a large forest group (pulp-, saw- and board-

*' R Lundström, op. cit. (1986), p. 209.

41

mills) near Sundsvall, closely related by ownership intereststo the Wallenberg group. Another example is AB OskarshamnsKopparverk, producer of copper in the Orkla group of companiesand controlled by the Wallenberg group as well. The bankingbusiness of the Oskarshamn copper Company was shared by SEB asthe major bank and Smålands Enskilda Bank as the provincial,secondary bank.

Contracts consisting of banking business allocations of thetwo kinds mentioned were rarely formal. When banks initiatedor made structuralizing operations possible, stipulations onhow to share the business of the new Company can at times befound as an article in a formal agreement. Mostly, however,the lack of formalization is striking. As the banking businessrelationships often were combined with some monitoringfunctions in the form of minority ownerships or boardmemberships, these contracts were gentlemen's agreementsbetween, first of all, contracting banks. The industrialCompany entered into the contract as a secondary part. Oftenthe quotas were discussed and agreed upon in a personalmeeting, of which the diary retords of SEB bear testimony, andwere later confirmed by phone or letter.

More frequent were formal contracts, when the object from thebank's point of view was to secure future business relation-ships with a client leaving the ownership sphere of the bankinggroup. Such contracts were drawn up exclusively between thebank and the client Company, or rather between the bank and thenew owner of the client Company. Whenever changes in theWallenberg group's ownership interests were discussed, the bankmanagement considered how the SEB contacts with the clientcompanies would be affected by the changes. If it was decidedto sel1 an ownership interest, oral or written agreements wereregularly made with the buyer so that the Company would remaina client of SEB. Agreements of this kind were made, for

42

example, when stock interests in Svearederiet were sold toTorsten Kreuger in 1928, when Elektraverken was sold to theOsram Company in the same year, when Kol & Koks was sold to theBeijer group in 1935, when Wedevag Ironworks were sold in 1936,when Stockholms Transport & Bogsering was sold in 1938, whenthe bicycle production of AB A Wiklunds Maskin- och Velociped-fabrik was sold to Nymans in 1939 and when Köping EngineeringWorks were sold to Volvo in 1942.

Though often formalized and written, the contracts securingfuture bank business were hard to enforte, should any of thecontracting parties wish to break it. As an injured part onecould appeal to gentleman's honour and business ethics only;going to court about a case like this would be of no use. Theapplicability of contracts of this kind, even if they werewritten, was thus based on the prerequisite that the contract-ing parties clearly saw the advantages of contracting. This isclearly demonstrated in some cases inconnection to the SEBcontractual relationships.

In 1936 the Wedevåg Ironworks was sold to a holding Company,AB Sveaexport, which was independent of the Wallenberg group.A clause, stipulating that Stockholms Enskilda Bank in futurewas to be the major bank connection of the Wedevåg Company wasincluded in the contract of sale. In an unpleasant surprise tothe SEB management in 1950, all advances and loans whichWedevåg had raised in SEB were paid by Svenska Handelsbanken.The head of the credits department of SEB immediately talledthe former client, reminding him of the clause, but nothingcould actually be done. Wedevåg had left SEB for SvenskaHandelsbanken.

The same difficulties with regard to enforting contracts canbe observed in the relationships between the bank and Köpings

43

Mekaniska Verkstad during the years following its sale to ABVolvo in 1942. Köpings Mekaniska Verkstad had specialized inproducing gearboxes for Volvo trucks, and an ownership transac-tion seemed quite natural. The managing director of Volvo,Assar Gabrielsson, promised by word of mouth, and with somesolemnity, that no change in the banking business of theacquired Company would take place, "neither directly, norindirectly". Despite this, after only a few years, inquirieson credits were made by Köpings Mekaniska Verkstad as invit-ations for open tender between SEB and Skandinaviska Banken, acompetitive method which soon made SEB give up bidding.

Of course it was a disappointing experience for a bank to seeits client relationships with a Company cease after the Companyhad been sold off to outside interests. An important implica-tion of this to bank behaviour was that a minority interest ina Company, large enough to influence the choice of bankconnections, was important factor for enforting client re-lationtionships. The fundamental need to secure a market forits credit services may be decisive in explaining the emergenceand viability of the banking group organizational structure ofthe Swedish economy."

Conclusions

From the bank's point of view the cost of contracting was aheavy market investment, which had to be both developed anddefended. One way of safe-guarding the contractual arrangementsof a bank was to control a minority ownership-interest in the

" This hypothesis is further developed in my paper "BankingGroup Investments in Swedish Industry", Uppsala Papers of Econom-ic History. Research Report No 15, 1987.

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finn, large enough to allow somemanagement when it comes to thements.

influence on the decisions ofchoice of finantial arrange-

The clustering of banks and industries in close networks ofrelationships was viable as long as the advantages of thesystem were felt by both the contracting parties. Up to the19709, at least, big industry in Sweden was closely tied tothe commercial banks by long-term contracts, frequently alsoinvolving indirect ownership arrangements. In this system thecommercial banks were expected to take a responsibility fortheir regular clients and, when necessary, also to play anactive role in restructuring and structuralizing industrialoperations. For a finn, whether or not it could count on thesupport of a bank when a crisis occurred could be a questionof survival. The support given by a major bank, not only incrises but also in the more comprehensive set of national andinternational contacts provided by the bank, was clearly ofgreat advantage to an industrial company.**

As big business grew still bigger, however, the restrictionsof this tight system started to outweigh the opportunities.The consequences of industrial failures and shut-downs becameof national urgency and an object of governmental industrialpolicy, as it meant unemployment and depopulation of entiretowns or distritts. In addition, the finantial markets grewmore complex, new finantial instruments were introduced andthe returns on finantial investments grew in relation toindustrial investments. The growing cadre of business

22 A popular, but very illustrative example of thedisadvantages of not having a bank connection and having to takeone's own responsibility for survival in crisis is the large andfast-growing separator Company AS Baltic, which went intobankruptcy in 1923 (M Fritz, Ettvärldsföretaq växer fram. Alfa-Laval 100 år (Norstedts 1983), pp. 69-77).

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economists of the expanding finantial departments of bigbusiness scented profit opportunities in internalisingfinantial functions and thus wanted to handle the finantialintermediation within their growing firms. And the rise of truegiant torporations increased the economic advantages ofinternalising the information function, previously provided bythe bank, within the organisation. Against this background theobservation made in Sweden in the 1960s that multi-bankconnections grew more general als0 gets a long-term, strutturalexplanation.

There were two main types of explicit contracts. One type was"gentlemen's agreements#l, in which two or even three banks werethe main contracting parties, allotting the banking business ofa monitored finn between themselves. Though these contractswere enforced by confidence and moral standards only, theyshowed both stability and long-tenn viability. This is probablyexplained by the importante of mutual reliance in finantialbusiness, but not least by the decreasing number of actors whenthe oligopolistic structure of Swedish banking increased up tothe 1970s. Contracts of this type served the purpose ofregulating the credit market, to avoid tompetition and securethe established network of relationships.

A setond type of contracts were those which were agreed uponbetween the bank and the client, when a Company within thebank's sphere of ownership interest was sold off to outsiders.These contracts had mostly a formal character, c'onstituting anarticle of the selling contract, or being explicitly formulatedas an additional stipulation. Despite their more formalappearance, these contracts seem to have been much moredifficult to enforte. Thus they were not an effective way ofsecuring bank-industry relationships in the long run. Explicitcontracts of this type could by no means replace minority

46

ownership interests as monitoring instruments when it tame tothe company's choice of finantial arrangements.

Uppsala Papers in Economic History consists of the following series:

RESEARCH REPORTS

1. Bo Gustafsson:

2. Mats Essemyr:

3. Göran Ryden:

4. Alf Johansson:

5. Lena Sommestad:

6. Li Bennich-Bjorkman:

7. Håkan Lindgren:

8. Alice Teichova:

9. Lynn Karlsson &Ulla Wikander

10. Bo Gustafsson:

11. Mats Morell:

12. Ragnhild Lundstrom &Kersti Ullenhag:

The Causes of the Expansion of the PublitSector in Sweden during the 20th Century. 1983.

Food Consumption and Standard of Living:Studies on Food Consumption among DifferentStrata of the Swedish Population 1686-1933.1983.

Gammelstilla stångjärnssmedja -en manufaktur-industri. 1984.

Market, Nature and Work: The basics of workorganization in a nineteenth-century exportsawmill. 1984.

Strukturomvandling och yrkessammansattning:Aia sågverk under mellankrigstiden. 1985.

Nationalekonomi och ekonomisk historia.Inställningen hos nationalekonomer till ämnetekonomisk historia 1929-1947. 1985.

International Firms and the Need for anHistorital Perspective. 1985.

Economic Policies in Interwar East Europe:Freedom and Constraints of Action. 1985.

Kvinnoarbete och konssegregering i svenskindustri 1870-1950: Tte uppsatser. 1985.

Det antika slaveriets nedgång: En ekonomiskteori. 1985.

Eli E Heckscher, utspisningsstaterna och densvenska livsmedelskonsumtionen från 1500-talettill 1800-talet. Sammanfattning och komplette-ring av en lång debatt. 1986.

Methodoiogical Problems in Business History:Two Papers. 1986.

13. Kersti Ullenhag(editor):

14. Georg Ptteri:

1.5. Håkan Lindgren:

16. Mats Morelk

17. Juergen Salay:

18. Göran B. Nilsson:

19. Maurits Nystrom:

20. Lars Magnusson:

Books and Articles from the Department ofEconomic History at Uppsala University. 1986.

The Role of State and Market in the Regulationof Capita1 Imports: Hungary 1924-1931. 1987.

Banking Group Investments in Swedish Industry:On the emergence of banks and associatedholding companies exercising shareholderinfluence on Swedish industty in the first halfof the 20th century. 1987.

Om mått- och viktsystemens utveckling i Sverigesedan 1500-talet. Vikt- och rymdmått fram tillmetersystemets inforande. 1988.

The Soviet Union River Diversion Project. FromPlan to Cancellation 1976-1986. 1988.

Kreditens jättekraft. Svenskt bankvasende ibrytningstid och genombrottstid vid 1800-taletsmitt. 1988.

En spegel av ett sekel. Riksdagens resor iNorrbotten 1880-1988. 1988.

Korruption och borgerlig ordning - naturratt ochekonomisk diskurs i Sverige under Frihetstiden.1989.

WORKING PAPERS

1. Alice Xichova: Rivals and Partners. Banking and Industry inEurope. in the First Decades of the TwentiethCentury. (Report ji-om the Bienna Banking -Zndustry Symposium 1988.) 1988.

2. Fritz/Kastner/Larsson: Banking and Bank Legislation in Europe1880 - 1970. (Reportffom the Vienna Banking -Zndwtry Symposium 1988.) 1989.

3. Elizabeth A Boross &Håkan Lindgren:

Bank-Industry Connections in Hungaty andSweden. Two Studies. (Repoti from the BiennaBanking -Zndu.st.y Symposium 1988.) 1989.

4. - 6.

7. Ulla Wikander (ed.):

BASIC READINGS

1. Håkan Lindgren &Kersti Ullenhag(eds.):

2. Britta Jonell-Ericsson:

3. Håkan Lindgren &Hans Modig:

4. Bo Gustafsson:

5. Bob Engelbertsson &Lynn Karlsson:

(Reports from the Vienna Banking - ZndushySymposium 1988. Under publication during1989)

The Sexttal Division of Labour, 19th & 20thCenturies. Six essays presented at the NinthInternational Economic History Congress, Berne1986. 1989.

‘Rorier och teoretisk tillampning i foretagshis-torisk forskning. Med bidrag av HermanDaems, Erik Dahmen, Håkan Lindgren ochKersti Ullenhag. 1985.

Skinnare i Malung. 1987.

The Swedish Match Company in the InterwarYears. An International Perspective. 1987.

Den ekonomiska vetenskapens utveckling.Del 1: Från Aristoteles till Adam Smith. 1988.

Seminarieuppsatsen. En genomgång av formellakrav. 1989.