Financial Development and Economic Growth in Underdeveloped Countries**This paper has benefited from comments by Richard Parter, Donald Mead, Lester Chandler and the participants in the Conference on Banking in the Early States of Industrialization held at Bellagio, Aug. 1964.++Reprinted by permission of the University of Chicago Press from Economic Development and Cultural Change, Vol. 14, pp.174-89 (Jan. 1966).