The Limited Partnership in New York, 1822-1853: Partnerships Without Kinship

42 Pages Posted: 23 Oct 2008 Last revised: 20 May 2022

See all articles by Eric Hilt

Eric Hilt

National Bureau of Economic Research (NBER); Wellesley College

Katharine O'Banion

Yale University - Law School

Date Written: October 2008

Abstract

In 1822, New York became the first common-law state to authorize the formation of limited partnerships, and over the ensuing decades, many other states followed. Most prior research has suggested that these statutes were utilized only rarely, but little is known about their effects. Using newly collected data, this paper analyzes the use of the limited partnership in nineteenth-century New York City. We find that the limited partnership form was adopted by a surprising number of firms, and that limited partnerships had more capital, failed at lower rates, and were less likely to be formed on the basis of kinship ties, compared to ordinary partnerships. The latter differences were not simply due to selection: even though the merchants who invested in limited partnerships were a wealthy and successful elite, their own ordinary partnerships were quite different from their limited partnerships. The results suggest that the limited partnership facilitated investments outside kinship networks, and into the hands of talented young merchants.

Suggested Citation

Hilt, Eric and O'Banion, Katharine, The Limited Partnership in New York, 1822-1853: Partnerships Without Kinship (October 2008). NBER Working Paper No. w14412, Available at SSRN: https://ssrn.com/abstract=1288411

Eric Hilt (Contact Author)

National Bureau of Economic Research (NBER)

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Wellesley College ( email )

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HOME PAGE: http://www.erichilt.net

Katharine O'Banion

Yale University - Law School ( email )

P.O. Box 208215
New Haven, CT 06520-8215
United States

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