The first American corporations were developed in the 1790s, almost instantly becoming key institutions in the economy. Though corporations existed outside the United States in the early 19th century, particularly in Great Britain and the Netherlands, no country took to corporate development like America. Corporate development was dealt a blow toward the turn of the 20th century with the introduction of antitrust movements and legislation. The end of World War II created a period of unprecedented American corporate hegemony until the rise of Japanese competition in world markets.
Corporations have played a crucial, if not controversial, role in the economic, political and cultural identity of the United States. Easy access to capital and business development provided by the corporate structure was the driving force behind the American Industrial Revolution. America became the world’s greatest innovator and leading economic power during the Gilded Age of the so-called “Robber Barons.”
Corporations’ structure has changed over time. Part of this is attributed to new understanding of successful corporate governance models over time. Other changes can be attributed to the imposition of government regulation. More still resulted from savvy shareholder demands and foreign competition. The academic impact of corporate theory and the role of responsible governance has loomed large in corporations’ brief history.
The First Corporations
Small banking corporations existed in the first years after the American Revolution. However, most historians note that the first important industrial corporation was the Boston Manufacturing Co. in 1813. Its business model was imported from Great Britain, where textile corporations helped spark the first Industrial Revolution some four decades earlier.
Corporations could raise capital from diverse sources, providing an important mechanism for savers and producers alike. Voting rights were much less protected in the early years through processes of “graduating” certain shareholders, but corporations still embodied a new type of investment.
The Gilded Age
The Gilded Age was the name given by Mark Twain to the decades after the Civil War. This period was dominated by political scandal, the development of America’s first giant corporations, the railroads and the economization of oil and electricity.
Corporations took off in the United States, in part, because they were so easy to organize and start. Most states allowed free incorporation and required only a simple registration.
Some rich corporations soon became rent-seekers, reinforcing Henry Clay’s idea of state-assisted industrialization. Historian Charles A. Beard wrote that government gifts tended to go to the largest investments. Ironically, the two biggest names in American corporate history, John Rockefeller and Andrew Carnegie, were noteworthy for fighting against government favors and subsidized competitors.
The Post-War Period
American opinion of corporations sunk after the onset of the Great Depression, in part thanks to a book written by Berle and Means entitled “The Modern Corporation and Private Property.” Corporate perception rebounded after World War II.
After 1945, America was the only major industrial power to not be devastated by war. American corporations grew without major challenge for decades. This exalted status was eventually challenged by multinational Japanese and German corporations in the 1980s and 1990s.