Corporation History
Born in medieval Europe, the modern concept of the corporation came to fruition in the United States in the latter part of the nineteenth century, although the entity had been around for thousands of years. Bruce Brown writes in "The History of the Corporation, Volume One," when the American colonies declared independence from Britain, there were seven chartered corporations in what would become the United States. In early nineteenth century America a few hundred corporations existed. By 1900, there were tens of thousands, and by 2000, approximately 4.5 million.
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Antebellum Structures
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The idea of limited liability, in which owners are separate from the organization, is a crucial characteristic of the modern corporations. For decades, English parliaments granted charters of incorporation only in specific circumstances deemed necessary for public benefit. Similar sentiments held in the British colonies and in the newly formed United States up until the time of the American Civil War. State legislators were responsible for issuing charters of incorporation and did so sparingly. Charters were generally issued for limited periods and expired.
Delaware Corporations
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Following the end of the Civil War, many restrictions on corporations were dissolved through new legislation or overturned through court rulings. As corporations continued to gain power over the nation's economy, many states sought to curtail that power; others, like New Jersey and Delaware, passed regulations granting corporations enormous leniency in structure and function. Consequently, American companies could establish initial corporate structures in states that favored the entity.
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Business Booms
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During the 1880s, a plethora of corporations were chartered, many quite familiar to the American consumer today. These included Abbott Laboratories, Alcoa, Amoco, Avon Products, Berkshire Hathaway, Chiquita Brands, Coca-Cola, Consolidated Edison, Dresser Industries, Eastman Kodak, Hershey Foods, Honeywell, Johnson & Johnson, Kroger, Merck, Pennzoil, Scott Paper, Sears Roebuck, Sun Oil, Times Mirror, Tyco International, Union Carbide, Unisys, Upjohn, US West and Westinghouse. In 1888, former President Rutherford B. Hayes penned in his diary: "This is a government of the people, by the people and for the people no longer. It is a government of corporations, by corporations, for corporations."
Gilded Age
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As Stanley K. Schultz, University of Wisconsin Professor of History, emphasizes, corporations were not a product of the Gilded Age in the United States, but during that period of American history the corporate business structure underwent a major transformation as entrepreneurs and industrialists utilized limited liability and wealth of mid-size companies to acquire and absorb smaller enterprises. The mega-corporation was born.
Corporations Assume Constitutional Rights
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U.S. Supreme Court rulings over the years have preserved the powers of corporations, giving them "human rights" as outlined in the Constitution. For example, a 1978 ruling held that health and safety inspections violated the right to protection from illegal searches as stated in the Fourth Amendment. State regulations aimed at controlling corporate power in campaign financing have been struck down by Supreme Court decisions declaring corporate financing of political campaigns to be part of the entities' rights to free speech. Today, there are tens of thousands of professional corporate lobbyists based in Washington, D.C.. and corporations rule the world's economy.
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References
- Astonisher: The History of the Corporation, Volume One by Bruce Brown
- University of Wisconsin-Madison: H102 Lecture 05 Businessmen and "That Creature" the Corporation
- "The Oxford Companion to United States History"; Paul S. Boyer, editor; 2001
- University of Houston: Digital History
- "Empires Apart, A History of American and Russian Imperialism"; Brian Landers; 2009
Resources
- Photo Credit harvard university image by Stephen Orsillo from Fotolia.com
