Lawyers as Trusted Agents in Nineteenth Century American Commerce: The Influence of Fiduciary Norms and Equity on Economic Development
43 Pages Posted: 17 Feb 2017 Last revised: 23 Jul 2019
There are 2 versions of this paper
Lawyers as Trusted Agents in Nineteenth Century American Commerce: The Influence of Fiduciary Norms and Equity on Economic Development
The Influence of Fiduciary Laws and Norms on Economic Development: Lawyers as Trusted Agents in Nineteenth Century American Commerce
Date Written: June 12, 2019
Abstract
The role of fiduciary law in the development of North American capitalism has been overlooked by institutional economists, who interpret fiduciary law as a form of contract and make the judicial enforcement of contract central to the transaction-cost theory of economic development. This article argues that the emergence of distinctive, equity-based fiduciary laws and norms significantly influenced the development and growth of early nineteenth-century American markets. Our historical research identifies lawyers as important economic actors, who served as catalysts for the emergence of this governance culture. Lawyers adopted fiduciary principles that allowed them to become trusted intermediaries, thereby addressing the agency-cost problems inherent in complex economic exchange that vex the institutionalists’ contractual account of economic development.
Keywords: fiduciary law, agency, legal profession, law and development, institutional economics, legal history
JEL Classification: A12, B15, B50, D02, D80
Suggested Citation: Suggested Citation