Abstract: This chapter traces developments in the investment banking industry in the first half of the 20th century. It discusses the contemporary reasoning that led away from the minimal state and towards a conception of the State as an ‘enterprise association’, in which the law serves ends rather than means. It argues that this thinking engendered a hostility towards investment banks, which was reflected in the New Deal legislation of the 1930s. Hence, it is argued that although the financing of two world wars, the emergence of retail securities investors, and the great depression of the 1920s all affected the industrial organization of investment banks, the most important influences upon the industry at this time were legal and political. The chapter then follows the legislative trail, culminating in the failed 1947-1953 anti-trust suit (US v. Morgan et. al.) that the Justice Department in the US brought against seventeen investment banks.

Keywords: New Deal, great depression, war finance, retail investors, US v. Morgan et. al.,