- Founding Corporate Power in Early National Philadelphia
Andrew Schocket's Founding Corporate Power in Early National Philadelphia is a worthwhile addition to the historical fields of both Business and the Early Republic. The book's primary question is why the emerging economic elite of Philadelphia chose the corporate form over other types of business. In addition to reinvigorating this fundamental query of Business History, Schocket ties the rise of the corporation to the developing ideology of the new United States. The author weaves an intriguing tale, untangling myriad convolutions of political and social debate, as well as distilling numerous corporate records into revealing examples.
A key point of Schocket's thesis is that economic elites "exploited the corporate form" for diverse purposes, helping "transform the United States from a mercantile and agrarian society composed of [End Page 415] orders to a capitalist world divided by class" (11, 14). This statement is problematic for those of us who believe that merchants and farmers were capitalists, but, leaving this fundamental ideological disagreement aside, the key to understanding Founding Corporate Power is the juxtaposition of exploitation and practicality.
Philadelphians chose incorporation for familiar practical reasons such as limited liability and dividend income, but they also had complex socioeconomic motives. Schocket's corporations provide a useful tool, first for aspiring elites to take advantage of the birth pains of the new nation to gain wealth and regain lost prestige, and then for subsequent generations to exploit in order to maintain and enrich that wealth and status. Chapter 2 explains that incorporation was far from inevitable, but that ideological arguments against it often fell prey to practical self-interest, resulting instead in corporate proliferation. Three central chapters provide the main body of the work, and showcase Schocket's outstanding research efforts. These chapters narrate what Schocket calls the incorporation of money, the city, and the countryside; his examples are the Bank of Pennsylvania, the municipal corporation's waterworks, and the Schuylkill Navigation Company.
The final chapter is the most contentious of the book. The author seeks to define the true nature of the corporate men of Philadelphia. While these elites sometimes behaved as practical business colleagues, Schocket characterizes this group primarily as an exploitative capitalistic cabal. Schocket gives examples of practical decisions, described as exploitation. For example, the Board of the Schuylkill Navigation Company hired Joseph Lewis as the new president in 1825. Construction of the canal was nearly complete, so the Board chose an executive, rather than an engineer; they wanted someone who would understand the finances and strategic business goals of the company. The extent to which this demonstrates either an enforcement of class solidarity, as Schocket would have us believe, or merely rational business decision-making, is a matter for individual interpretation. Future work would benefit from a more sociologically nuanced approach to these men and their networks. This chapter raises intriguing questions for further study.
Although Schocket does not shirk from drawing his own strong conclusions, his detailed, well-rounded descriptions and explanations allow the reader to make up his own mind. The author takes care throughout the book to present both sides of the corporate struggle. His goal is to prove that the expansion of political and economic opportunity and the simultaneous narrowing of access to credit and other resources do not constitute a paradox but were in fact mutually reinforcing conditions. The book could use more [End Page 416] attention to the opportunities presented by incorporation, and to the men whose lives and careers were improved by their corporate interactions. Economic development is not necessarily a negative phenomenon.
Founding Corporate Power faces the challenge inherent in a case study, that of proving the subject unique yet sufficiently representative. The book's specific difficulty is with the assertion that a new economic elite in Philadelphia sought to regain the level of social control they held, as political elites, prior to the Revolution. Schocket's argument is confused because membership in these groups was neither static nor completely...