Gerschenkron Redux? Analysing New Evidence on Joint‐Stock Enterprise in Pre‐War Shanghai

A lexander G erschenkron (1904–78) famously postulated that the more backward an economy was at the outset of industrialisation, the more reliant it would be on state‐backed banks as a means of directing investment. G erschenkron thereby implied that impersonal equity markets were likely to play a less significant role in countries aiming to catch up with the West. This article is aimed at examining G erschenkron's thesis primarily through an analysis of shareholding in 1930s S hanghai. Drawing on newly discovered archival material as well as on recent studies, the paper clarifies the magnitude of joint‐stock enterprise and the ubiquity of stock‐exchange trade in a city that was by far C hina's most important economic hub. The pattern of joint‐stock enterprise in pre‐war C hina is compared with that of J apan, the first non‐Western society to become fully industrialised. The argument advanced is that G erschenkron's thesis incorrectly played down the significance of impersonal equity markets to pre‐war J apan's successful industrialisation and to the limited nature of pre‐war C hina's industrialisation. J apan could sustain its industrialisation thrust in the early 20th century on a nation‐wide scale partly because of the growing vitality of its equity markets in T okyo and O saka. By contrast, C hina's pre‐war industrialisation was much less extensive because its equity markets were more limited.