Publication Year: 2013
Published by: University of Pennsylvania Press
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Title Page, Copyright Page
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Chapter 1. The Corporation Nation Emerges
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The development of the for-profit business corporation over time has never been well understood, even in the nation most responsible for its economic ascendance, the United States. “American-style corporate capitalism,” two business scholars recently proclaimed, “is an international juggernaut” (an overwhelmingly destructive force) and perhaps the single most important institutional...
Chapter 2. Before the Constitution
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Before describing the rise of corporations in America in detail, it is important to define terms and to describe the early development of the corporate form. The Western legal tradition countenanced three major types of corporations: municipal (towns and cities); nonprofit (charities, churches, schools, various societies); and for-profit (business). Each type was important in its own right;...
Chapter 3. Corporate Iniquity
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The U.S. Constitution does not mention business corporations because the delegates to the constitutional convention that met in Philadelphia in 1787 decided not to give the federal government the explicit power to charter corporations of any sort. Ironically, ratification of the Constitution touched off a chartering spree at the state level that has not abated to this day. The reason is...
Chapter 4. Corporate Ubiquity
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Figure 1 plots, on a log scale, the number of special charters granted to businesses each year throughout the United States between 1790 and 1860. The sheer number of corporations was important to the rise of the corporation nation, but so was their size. Size is best measured by total assets; unfortunately, early corporations, especially nonbanks and especially before the...
Chapter 5. The Benefits of Big
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Early American entrepreneurs, more than 131,000 of them, went through the trouble of obtaining a special act of incorporation for the 22,419 corporations documented in Table 1 in Chapter 4 because they expected that the total benefits of incorporation exceeded its total costs. They knew that investors were eager for the profits that promised to flow in the form of dividends or share ...
Chapter 6. Governance Principles
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Early corporate charters were somewhat experimental at first and hence marked by diversity. Convergence occurred with some rapidity as incorporators and legislators discovered what worked and what did not.2 What worked was whatever prevented employees, managers, officers, directors, or large stockholders from stealing from a corporation’s other stakeholders. As Chapter...
Chapter 7. Governance Failures
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Chapter 6 explored how and why most early corporations were able to mitigate the principal-agent problem that their critics believed would overwhelm them—or, in the words of a contemporary board of directors, how corporations were able “to promote the permanence, value and usefulness of the...
Chapter 8. Regulation Rising
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Entrepreneurs and legislators first responded to lapses in corporate governance like those described in Chapter 7 by tightening charters and bylaws. After William Duer simply walked off with corporate securities owned by the SEUM, for example, corporations began to hire treasurers and buy chests that could be opened only by two different keys turned simultaneously. When...
Chapter 9. Corporate Governance and Regulation since the Civil War
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Traditional criticisms of the corporation survived the Civil War and apparently intensified over time.2 In 1873, James A. Garfield told the student body of Hudson College that business corporations were a threat to the republic because “the vast powers of the railroad and the telegraph, the great instruments by which modern communities live, move and have their being” were...
Chapter 10. Reforming Corporate Governance
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Despite their weakening governance systems, U.S. corporations have continued to grow larger, more numerous, and more complex, and have become an ever larger component of the national economy. In the late nineteenth century, one corporate jurist noted that few entities other than corporations promoted...
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Page Count: 328
Illustrations: 6 illus.
Publication Year: 2013
Series Title: Haney Foundation Series