In the difficulties of American commerce which cul minated in the war of 1812, the corporation found an important stimulus; for many of the states, led by New York and Massachusetts, passed incorporat ing acts to facilitate the formation of manufacturing companies. Perhaps these general corporation acts —under which companies can organize by filing their certificates of incorporation, instead of being com pelled to secure charters by special legislative acts— have constituted the most potent influence in the growth of the corporate form.
12. Struggle of the corporation for supremacy.— In recent years the corporation has grown im mensely in favor. But it must not be thought that its progress has been steady and unimpeded; even in the .early Roman days, popular wrath turned against the corporation as an instrument of aggression and oppression, and it was abolished. Again, in modern times the corporate form was practically wiped out in 1720, in England, by the Bubble Act. In the United States, too, the corporation seems to have been viewed with a great deal of suspicion in some quarters.
The attack. on the United States Bank ,at the end of the third decade of the nineteenth century, showed a spirit of hostility toward corporations which be came widespread. Pennsylvania, especially, seemed opposed to the granting of charters, since it was felt that the limited liability of corporate members was injurious to those in the same line of business who hazarded their entire fortunes in their business. In deed the growth of corporations is said to be one of the chief causes for the political decline of protec tion between 1830 and 1860. Corporations were in struments of oppression, so the argument ran, which brought the wealth of the nation into the hands of a few. An opinion of that time was, that "of 21,000,000 people, less than 300,000 are said to awn the immense public debt, and nearly the whole of the landed prop erty." 1 13. Early abuses.—That some of the charges against the corporation were Well founded cannot be doubted. In his "History of Manufacturers in the United States, Victor S. Clark makes It was asserted that about 1860 a small clique of Boston capitalists by improper methods perpetuated. voting control of those corporations, in which they owned a comparatively small amount of stock. They induced stockholders to sign proxies in their favor when they signed their dividend receipts. They also held annual meetings, in small rooms, to which but a fraction of the shareholders could get access, and called meetings of several companies at different places for the same day and hour, in order to divide the opposition of in dependent men who. owned stock in a number of companies. Less than a score of Boston capitalists were said thus to dictate the fortunes of most of the great manufacturing corporations of the State, and one man was cited who was director of 2.3 companies and president of all. The same
coterie owned a _Massachusetts life-insurance company, which, with a capital of $500,000, controlled nearly ten times that amount of investment funds. Having forced factories by mismanagement to accept loans fromt this company, they either foreclosed, or used their power to depress stock for their own benefit. The other spoils of this control were high-salaried offices and exorbitant agents' commissions.1 14. Disadvantages of the abuses that Mr. Clark describes were isolated and unneces sary. There are other inherent disadvantages in the corporate form, which will always prove a hindrance to this form of organization. The state will always regulate such an organization and require detailed reports from it. Probably taxes will be somewhat heavier on the corporation than on other forms of organization and will be collected with more certainty. Moreover, the corporate form will be forbidden in certain industries or vocations. In New York State, for instance, corporations cannot engage in the prac tice of law, medicine or dentistry. In small enter prises the corporation will probably always operate at a disadvantage, since it is "soulless" and those who deal with it will feel the lack of the personal touch and confidence that exists when the proprietor has his individual property as well as his personal reputa tion at stake.
15. Advantages of the corporation.—In spite of these disadvantages, however, the corporation has merits that cannot be denied. In the first place, its form is flexible. Thru the use of various kinds of stocks and bonds and thru the judicious drafting of charter and by-laws, the control of the corporation can be scientifically organized, the risk can be variously apportioned, and the income can be variously distrib uted among the owners and the creditors. The cor poration stands today as the typical form of modern business organization. It assembles huge quantities of capital, and then provides the means for efficiently administering it. Moreover, it possesses a degree of permanence that makes its business, as it were, extra human. It can outlive the men who make and manage it. Because flexible and permanent, it may serve some day more than it does today, to bring the benefits of efficiency and economy to society. In doing this, it will bring to each member of society what Ile deserves as a workman and a husbander of wealth. Certainly this is a more desirable end than the object of the so cialists, and it will be attained as rapidly as the abuses of manipulation can be eliminated. That progress is being made in this direction is evident to- anyone who will take the trouble to learn something of the scandals of previous generations. Corporate abuses, real and alleged, filo they receive more publicity than formerly are far from being more numerous.