Abstract
R. L. Nelson and S. R. Reid pointed out that the first wave of the major merger movementes in the United States occurred at the turn of the century. This first wave, so-called “Trust Movement”, resulted in a high degree of concentration and corporationism in many industries, and through the movement, business finance in Amirica became gradually systematized.
W. H. Lough was a pioneer in the field of business finace at that time and made a great contribution to its systematization. Lough's theory, which was developed in his two books, Corporation Finance (1909) and Business Finance (1917), dealt, first, with the raising of initial capital needed for business enterprise, together with its proper apportionment for plant, equipment, and working capital second, with the accurate determination of profits and reserves, and the enlargement of capital permanently invested.
A matter of primary concern for me was how his essential assertions mentioned above was developed in the changing economic conditions of those days. After summarizing Lough's theory, I examined the effectiveness of his method by some case studies.
