Corporate Rule: A Hidden History

Colonial Corporations
Corporations after the American Revolution
The Corporate Return to Power
Corporate Regulation
Corporations and Global Trade

After the American Revolution sovereign power was allegedly transferred from a monarch to “We the people.” Obviously the idea of vesting power in the people was noble, but only about 10% of the population counted as “people” with full citizenship rights. Those who were not white, male and property owners were not legally considered "people". Over the next two hundred years groups excluded from “We the People” have struggled to be legally defined as "persons."

For people immersed in a corporate world it is hard to imagine that in the 1800s corporations were only one form of doing business rather than the form. (As late as 1900 only 10 per cent of manufacturing companies in California even had a corporate charter.) The corporate form, was recognized to have certain utility in aggregating capital for large scale projects, which is why “the people” allowed them to exist at all.

Of course the concentration of capital also brings with it inherent risk for the populace. For this reason the formation of corporations was restricted to parameters set up by state constitutions and constrained by specific limitations in the state codes. The early 1800s frequently reiterated the fact that corporations could only be created for public benefit.

The Supreme Court of Virginia stated in 1809 that if an applicant for a corporate charter’s “object is merely private or selfish; if it is detrimental to, or not promotive of, the public good, they have no adequate claim upon the legislature for the privileges.” A comparison of state laws from the early 1800’s shows that corporations had limits on capitalization, debts, land holdings, and sometimes profits. They could not own stock in other corporations, could not have their headquarters outside their chartering state, nor could they keep their financial books closed to public representatives or make political or charitable contributions. In dramatic contrast to today, corporate stockholders and directors were often held personally responsible for crimes and harms they committed and debts they incurred under the name of the corporation.

Stated simply, corporations were properly understood to be public institutions created by democratically elected representatives of the sovereign people.

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