Founding Corporate Power in Early National Philadelphia (review)

In an era when corporate executives jet to Washington on private planes to beg Congress for bailout funds, and when careers can be made by pursuing, defending, or following particular companies, it is essential for historians to remind us of the comparatively humble and vulnerable origins of the corporate form in late eighteenth-century America. Corporations are partnerships that enjoy the legal privilege of a fictional personhood, sometimes exercise the power of eminent domain, and can pass property from one generation of elected directors to the next. They can be efficient, or not; politically influential, or not; well regulated, or not. Corporations are many things, but they are managed by mortals and conjured by charter rather than magic.

As early Americanists reincorporate institutions and the state into the historical narrative, Andrew Schocket’s Founding Corporate Power in Early National Philadelphia makes a valuable contribution by placing a specific set of corporations in an integrated economic, geographic, and political context. The author’s chapters are cleverly structured as a series of case studies examining the emergence of incorporated banking in Philadelphia (3), the development of a municipal waterworks in the city (4), and the construction of a canal in the suburban hinterland (5).

Schocket’s analysis shines in these latter two chapters, merging his deep primary source research in Philadelphia-area archives with an appreciation for the historiographical legacies of George Rogers Taylor, Carter Goodrich, Louis Hartz, and Charles Sellers.¹ Schocket knows his subjects well enough to recognize that historians who partition transportation initiatives, politics, and market relations are missing a bigger picture; these subjects are interdependent, as he masterfully illustrates.

Discussing the “complexities of municipal finance” in the period, Schocket shows how Philadelphia officials funded the nation’s first waterworks by selling bonds and making interest payments through use of a city-established sinking fund—a separate pool of money specifically designated for bondholders’ interest. By assuring buyers that municipal bonds were a safe investment, the city increased its debt capacity to fund infrastructure investments, which ignited broader economic development; bondholders demanded neither “efficiency” nor “even competence,” just interest payments every six months. Thus, as the city grew, its debt grew, and the effect was to concentrate capital and economic opportunity in Philadelphia even as the city lost its edge as the nation’s financial and political capital to New York and Washington, DC, respectively.

The Philadelphia Waterworks gave a “corporate community” an “extended reach” that stretched from the city to the suburbs and was further empowered by “internal navigations . . . far beyond metropolitan limits” (137). When recalling the story of the 108-mile Schuylkill Navigation Company canal, nearly completed by 1825 after a long bout of construction funding hiccups, Schocket credits the navigation’s success to anthracite coal mining. Coal shipped on the canal helped create the country’s “first heavy industry” and set off an “economic explosion” in the Schuylkill River Valley (151, 150). The canal was a “nexus” that channeled economic development to the region and empowered incorporated canal promoters to set tolls and usage fees for particular customers or goods (151, 152). Schocket compellingly describes the economic geography of coal and canals, an implicit nod to Sean Patrick Adams’s study of antebellum anthracite, and appreciates the political power wielded by canal directors who regulated the region’s commercial artery.²

Corporations are political, Schocket repeatedly argues, providing a necessary corrective to a historiography of banking and incorporation that in recent decades steered away from Bray Hammond’s sensitivity for partisanship and toward more economic-focused studies such as those of Alfred Chandler and Howard Bodenhorn.³ That said, the weakest points in this book are when Schocket attempts to paint corporate board members as a “corporate class.” To be sure, the consistency of a few names among directors and shareholders provides ample evidence for the argument that there was indeed an “economic elite” who “profited disproportionately from . . . regional economic integration” in this period...