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Origins of the American Business Corporation

Published online by Cambridge University Press:  03 February 2011

Oscar Handlin
Harvard University
Mary F. Handlin
Harvard University


The concentration of business enterprise in corporate structures at the end of the last century called the attention of scholars to the history of the business corporation, the chartered joint-stock company. Even those who agreed that “the honour of originally inventing these political constitutions entirely belongs to the Romans” realized that their modern economic functions were relatively recent and demanded explanation. In this country, Williston's brilliant essay, the studies of Simeon Baldwin, and a number of other investigations probed into the origin and nature of the institution at about the period when it became a pressing social issue.

Copyright © The Economic History Association 1945

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1 For Roman origins, cf. Sir Blackstone, William, Commentaries on the Laws of England, ed. Christian, E. (London, 1793), 1, 468;Google ScholarAbbott, Charles C., Rise of the Business Corporation (Ann Arbor: Edwards Brothers, 1936), pp. 20Google Scholar ff. However, the absence of a link between Roman and modern business forms was demonstrated by Weber, Max, Zur Geschichte der Handelsgesellschoften im Mittelalter nach südeuropäischen Quellen (Stuttgart, 1889), pp. 314Google Scholar; also Lehmann, Karl, Die geschichtliche Entwicklung des Aktienreckts bis zum Code de Commerce (Berlin, 1895), p. 3.Google Scholar

2 Williston, Samuel, “History of the Law of Business Corporations before 1800,” Harvard Law Review, II (1888), 105 ff., 149 ff.;CrossRefGoogle ScholarBaldwin, S. E., “History of the Law of Private Corporations in the Colonies and States,” Select Essays in Anglo-American Legal History …. Compiled by …. the Association of American Law Schools (Boston: Little, Brown and Company, 19071909), III, 236 ff.;Google Scholaridem, Modern Political Institutions (Boston: Little, Brown and Company, 1898)Google Scholar; idem, “American Business Corporations before 1789,” Annual Report of the American Historical Association 1902 (Washington, 1903), I, 255 ff.Google Scholar

3 Cf. Butler, Nicholas Murray, Why Should We Change Our Form of Government? (New York: Charles Scribnpr's Sons, 1912), p. 82.Google Scholar

4 Goebel, Julius Jr, Cases and Materials on the Development of Legal Institutions (New York, 1931), p. 652.Google Scholar

5 Davis, Joseph S., Essays in the Earlier History of American Corporations (Cambridge: Harvard University Press, 1917), II, 6, 7.Google Scholar

6 Baldwin, “American Business Corporations,” Annual Report of A.H.A., 1902, I, 256, 257.

7 Cf. also Abbott, Rise of the Business Corporation, pp. 3 ff.; J. S. Davis, II, 329; Callender, G. S., “Early Transportation and Banking Enterprises of the States in Relation to the Growth of Corporations,” The Quarterly Journal of Economics, XVII (1902), 146.Google Scholar

8 Livermore, Shaw, Early American Land Companies: Their Influence on Corporate Development (New York: The Commonwealth Fund, 1939), p. 258.Google Scholar

9 Cf. DuBois, Armand B., The English Business Company after the Bubble Act, 1720–1800 (New York: The Commonwealth Fund, 1938), pp. 36, 38;Google ScholarShannon, H. A., “Coming of General Limited Liability,” Economic History (A Supplement to The Economic Journal), II (1931), 270 ff.;Google ScholarScott, William R., The Constitution and Finance of English, Scottish, and Irish Joint-Stock Companies to 1720 (Cambridge: The University Press, 19101912), I, 247.Google Scholar

10 Clapham, J. H., An Economic History of Modern Britain (Cambridge: The University Press, 19301938), I, 195, 267, 268.Google Scholar

11 Cf. Clifford, Frederick, History of Private Bill Legislation (London, 18851887), II, 12 ff.; Clapham, Economic History, I, 93; DuBois, p. 229.Google Scholar

12 Clifford, I, 39 ff.

13 Clifford, II, 430, 571, 591 ff.; Clapham, Economic History, I, 288 ff.

14 Clifford, II, 601 ff., 615, 616; Clapham, Economic History, I, 292 ff. Cf. also, in general, Hunt, Bishop C., The Development of the Business Corporation in England 1800–1867 (Cambridge: Harvard University Press, 1936), pp. 11, 12, 22 ff.CrossRefGoogle Scholar

15 Cf. Levi, Leone, History of British Commerce (London, 1880), p. 16; Hunt, pp. 5, 10.Google Scholar

16 Clapham, Economic History, II, 135,138 ff., 351; Hunt, pp. 50, 56 ff., 82 ff., 96 ff., 133 ff., 144; Shannon, “Limited Liability,” Economic History, II, 279 ff., 289; Levi, pp. 340–45. On the assumption that the corporate form was logical and natural, English historians face the problem of accounting for this tardy development. Some, like Hunt (p. 9), blame it on the Bubble Act, though that should not have restricted incorporations since it aimed only at the unincorporated companies. DuBois' excellent study shows, as a matter of fact, that the unincorporated company did develop in spite of the act. But he in.turn must reconcile the unwillingness of the government to permit company activities under the legal corporate form with its willingness to tolerate the same activities under the illegal joint-stock form (DuBois, pp. 39, 436 ff.; cf. also Shannon, II, 269).

17 For Prussia, cf. Bösselmann, Kurt, Die Entwicklung des deutschen Aktienwesens im 19, Jahrhundert (Berlin, 1939), pp. 67 ff., 179, 189 ff.;CrossRefGoogle ScholarPassow, Richard, Die Akliengesellschaft eine wirtschaftswissenschaftliche Studie (2d ed.; Jena, 1922), p. 17.Google Scholar For other parts of Germany, cf. Strauss, Alfred, Die Aktiengesellschaft nach allem bayerischen Recht (Munich, 1931), pp. 28 ff., 36 ff.;Google ScholarSehrt, Otto, Die niederrheinischen Aktiengesellschaften unter dem Code de Commerce (Cologne, 1912), pp. 928.Google Scholar For Holland, cf. Tekenbroek, E., De Verhouding Tusschen de Aandeelhouders en de Bestuurders bij de Publieke Naamlooze Vennootschap in Nederland (Delft, 1923), pp. 17 ff.Google Scholar Cf. also Clapham, J. H., The Economic Development of France and Germany 1815–1914 (Cambridge: The University Press, 1928), pp. 130 ff., 395 ff.;Google ScholarLehmann, Karl, Recht der Aktiengesellschaften (Berlin, 18981904), I, 6872;Google Scholaridem, Lehrbuch des Handelsrechts (Leipzig, 1912), pp. 374 ff.;Google ScholarRousseau, Rodolphe, Des sociétés commerciales françaises et étrangères (4th ed.; Paris, 1912), I, xi–xxxi, 706 ff.;Google ScholarKuhn, Arthur K., A Comparative Study of the Law of Corporations (New York: Columbia University Press, 1912), p. 65;Google ScholarBerle, A. A. and Means, G. C., “Corporation,” Encyclopaedia of the Social Sciences (New York, 1931), IV, 416.Google Scholar

18 We see no foundation for the assertion that the Code Savary (1673) endowed the société en commandite with “the status of a corporate entity.”—Livermore, Land Companies, p. 71. For the text of section IV, cf. Isambert, , Decrusy, , and Taillandier, , eds., Recueil général des anciennes lois françaises (Paris, 1829), XIX, 96 ff.Google Scholar Cf. also Cole, Charles W., Colbert and a Century of French Mercantilism (New York: Columbia University Press, 1939), I, 327Google Scholar, 360. On the origins of these forms, cf. William Mitchell, “Early Forms of Partnership,” Select Essays in Anglo-American Legal History, III, 191, 192; Weber, pp. 15 ff., 34, 35; Lehmann, Lehrbuch, pp. 287 ff.; Rousseau, I, 243 ff.; Holdsworth, W. S., A History of English Law (London: Methuen and Company, 1903 ff.), VIII, 104Google Scholar, 195 ff. For attempts to account for the absence of these forms in Anglo-American law, cf. infra, n. 45.

19 J.S.Davis, II, 8, 22.

20 For aqueduct corporations, st. 1798, ch. 59 (Feb. 21, 1799), Stearns, , Shaw, , and Metcalf, , eds., General Laws of Massachusetts (Boston, 1823), I, 571 ff. Baldwin, “American Business Corporations,” Annual Report of A.H.A., 1902, I, 274, cites an earlier North Carolina general incorporation law for canals; but J. S. Davis, II, 17–19, denies that it referred to corporations.Google Scholar

21 For the effect of the Revolution, cf., e.g., Abbott, p. 39. It is important to note in this connection, however, that there were no legal impediments to colonial incorporation. The Act of 1741 applied only to joint-stock companies, not to corporations. Cf. Davis, Andrew M., “Provincial Banks: Land and Silver,” Publications of the Colonial Society of Massachusetts (Boston, 1900), III, 26 ff. For the power to incorporate, cf. material in J. S. Davis, I, 8, 18, 27, 28; Baldwin, “American Business Corporations,” Annual Report of A. H. A., 1902, I, 257 ff.Google Scholar

22 Livermore, Land Companies, pp. I, 4 ff.

23 DuBois, pp. 216 ff.

24 For many examples, cf. S. E. Baldwin, “History of the Law of Private Corporations,” Select Essays in Legal History, III, 243–43; J. S. Davis, I, 92–7; Davis, Andrew M., Currency and Banking in the Province of the Massachusetts-Bay (New York: The Macmillan Company, 1901), II, 75 ff.Google Scholar

25 Baldwin, “History of the Law of Private Corporations,” Select Essays in Legal History, III, 246; idem, Modern Political Institutions, p. 187; Andrew M. Davis, Currency and Banking, II, 152, 161 ff.; Livermore, Land Companies, p. 66, n. 72.

26 Cf. Maitland, Frederic W., Collected Papers, ed. Fisher, H. A. L. (Cambridge: The University Press, 1911 ), III, 271 ff.Google Scholar, 336 ff., 356 ff., 372 ff., 389 ff., 394. For the origins of these concepts, cf. Holdsworth, IV, 410 ff., 439, 476 ff.; V, 304 ff. Excellent comparative studies may be found in Liefmann, Robert, Beteilungs- und Finanzierungsgesellschaften in Deutschland, den Vereinigten Staaten, der Schweiz, England, Frankreich und Belgien (4th ed.; Jena, 1923), esp. pp. 205 ff.;Google ScholarSchmey, Fritz E., Aktie und Aktionär im Recht der Vereinigten Staaten (Marburg, 1930), pp. 453 ff.Google Scholar, 509 ff. For recent developments, cf. Franceschelli, Remo, Il “Trust” nel diritto inglese (Padua, 1935), pp. 3 ff.Google Scholar

27 In Connecticut, J. S. Davis, II, 289. Cf. also Livermore, Land Companies, pp. 39–41.

28 Cf., for example, Weber, pp. 15 ff., for southern Europe; the companies discussed by Charles W. Cole, I, 116 ff., for France; Strieder, Jacob,Studien zur Geschichte kapitalistischer Organizationsformen (Munich, 1925), pp. 110 ff., for northern Europe; and Scott, II, also Lehmann, Recht der Aktiengesellschaften, I, 51; idem, Geschichtliche Entwicklung, pp. 7 ff.Google Scholar

29 Cf. Morison, Samuel Eliot, The Maritime History of Massachusetts, 1783–1860 (Boston and New York: Houghton Mifflin Company, 1921), pp. 41 ffGoogle Scholar. The fact that shipping was generally financed for individual voyages should have been no greater obstacle to incorporation for merchants in the United States than for the East India Company, or, for that matter, than individual ship underwriting was for the sponsors of marine-insurance corporations. Discussions in the constitutional convention questioned the power of Congress to incorporate commercial companies, but not that of the states. The Records of the Federal Convention of 1787, ed. Farrand, Max (New Haven: Yale University Press, 1911), II, 615 ff.; III, 375 ff.Google Scholar

30 The spread of private banking in Massachusetts, for instance, provoked a restrictive law, st. 1799, ch. 32. Cf. also Hardy, Edward R., Account of the Early Insurance Offices in Massachusetts (Boston, 1901), pp. 4751; J. S. Davis, II, 232 ff.Google Scholar

31 Cf., for example, J. S. Davis, II, 44 ff., 78.

32 For Adam Smith on the role of the corporation, see Wealth of Nations (London, 1786), III, 146 ff.Google Scholar

33 Cf. in general, East, Robert A., Business Enterprise in the American Revolutionary Era (New York: Columbia University Press, 1938), pp. 308 ff.Google Scholar

34 Shaw Livermore neatly evades this dilemma by asserting that there was no significant difference between incorporated and unincorporated companies, that “incorporation was not highly prized in the business world” before 1800, and that land companies voluntarily “passed by” the corporate form. Land Companies, pp. 61, 69, 73, 137, 245; Unlimited Liability in Early American Corporations,” The Journal of Political Economy, XLIII (1935), 674 ff. Aside from the fact that contemporaries thought a difference existed, this assertion still leaves unanswered the question of why some companies should, and others should not, have gone through the process of incorporation. The argument that limited liability was less necessary “in the merchandising of land” than in other enterprises (Land Companies, p. 215) would hardly have convinced Duer, Morris, and Macomb, the most prominent adventurers in that sphere, whose residence in debtors' jails was a consequence of land speculation (limited liability is discussed infra, pp. 8–17). In any case, there is evidence that at least one company attempted successfully, and another unsuccessfully, to secure a charter. Land Companies, pp. 136, 137; supra n. 27.Google Scholar

35 Computed from J. S. Davis, II, 22. Davis' explanation (II, 296) may stand when New England is contrasted with the southern, but not with the central states.

36 J. S. Davis, I, 131 ff., 278; II, 70 ff.

37 Thus, a North Bridgewater factory in which $8,000 was invested secured an act of incorporation in 1813 which limited its property to $150,000. Kingman, Bradford, History of North Bridgewater (Boston, 1866), pp. 377, 378.Google Scholar

38 Cf. examples cited by J. S. Davis, I, 369, 479; II, 271. Wansey, Henry, Journal of an Excursion to the United States (Salisbury, 1796), p. 85.Google Scholar Cf. also Ware, Caroline F., The Early New England Cotton Manufacture (Boston and New York: Houghton Mifflin Company, 1931), p. 20.Google Scholar

39 Cf. J. S. Davis, II, 47, 67, 192–94; East, pp. 255 ff., 260, 261.

40 Sir Pollock, Frederick and Maitland, Frederic W., History of English Law before the Time of Edward I (Cambridge: The University Press, 1899), I, 488.Google Scholar For a comparative study of some ultimate developments within these forms, cf. Ardigo, Fausto, La Società per azioni nel diritto inglese (Padova, 1939), chaps, i, ii.Google Scholar

41 Cf., for example, J. S. Davis, II, 317.

42 Cf. Lehmann, Lehrbuch, pp. 339 ff., 355 ff., 460 ff., 467 ff.; Rousseau, I, 268 ff., 682 ff.; Passow, pp. 558 ff. Among more specialized studies, cf. Bundschuh, Otto, Die wirtsckaftliche Entwicklung der deutschen Kommanditgesellschaften auf Aktien (Berlin, 1914). pp. 17 ff.;Google ScholarSaenger, August, Die stille Gesellschaft (Die private Unternehmung, VI, Mannheim, 1924), pp. 2844, 118–26.Google Scholar

43 21–22 Geo. III, ch. 46, Acts and Statutes, Made in a Session of Parliament at Dublin (Dublin, 1782), pp. 949 ff.Google Scholar; Hunt, p. 52. Cf. also Lipson, E., The Economic History of England (London: Macmillan and Company, 19291931), III, 218. For attempts by English unincorporated companies to secure limited liability, cf. Scott, I, 344; III, 276.Google Scholar

44 Baldwin, Modern Political Institutions, pp. 201 ff.; Livermore, “Unlimited Liability,” Journal of Political Economy, XLIII, 683; J. S. Davis, II, 260.

45 Scott's explanation that the failure of the Anglo-Italian banks before the peiiod of commercial expansion in England prevented the Italian partnership forms from entering English law is hardly convincing, particularly in view of the persistence of the Italian firms in Scotland (I, 2,13). Livermore's attempt (Land Companies, p. 10, n. 3) to account for it on the basis of their origin in Roman law is unconvincing because their origin was not in Roman law (cf. supra, n. 1) and because this would still not explain why Anglo-American law should not have adopted them in the eighteenth century, as it ultimately did in the nineteenth. On Italian law in England in general, cf. also Holdsworth, V, 67 ff.

46 For English petitions and bills without mention of limited liability, cf., for example, British Cast Plate Glass (1773), 13 Geo. III, ch. 38, Statutes at Large, VIII, 222; House of Commons Journals, XXXIV, 64, 149 ff., 190; Globe Insurance (1799), House of Commons Journals, LIV, 595. 697, 740. For those with mention, cf. Winchelsea Cambrick and Lawn (1764), ibid., XXIX, 752, 785; Northumberland Fisheries (1789), ibid., XLIV, 163, 167, 487; Sierra Leone, 31 Geo. III, ch. 55; London Flour (1800), ibid., LV, 599 ff., 626, 632 ff. Cf. also Hunt, pp. 10–12; DuBois, p. 76. Some students (for example, Hunt, p. 25; Scott, I, 270) have read limited liability into another provision. Many prospective investors in England were deterred by fear that stock ownership wculd make them and their lands liable to the onerous bankruptcy laws, often involving felony, which applied only to traders. Cf. Holdsworth, I, 256 ff.; VIII, 205; Anderson, Adam, Historical and Chronological Deduction of the Origin of Commerce, ed. Coombe, (Dublin, 1790), III, 232Google Scholar, 237; Dunscomb, S. W., Bankruptcy: A Study in Comparative Legislation (New York, 1893), pp. 17 ff.Google Scholar Saving clauses beginning with 13–14 Charles II, ch. 24, therefore exempted them. Cf., for example, Linen and Cotton Cloth (1779), House of Commons Journals, XXXVII, 108; Succinct Digest of Laws Relating to Bankrupts (Dublin, 1791), p. 18;Google ScholarChalmer, James, Remarks upon the Scots Bankrupt Bill (Edinburgh, 1782), pp. 2 ff. That the bankruptcy provision was completely distinct from limited liability is shown by the fact that some charters like the Winchelsea Cambrick and Lawn and the Northumberland Fisheries contained both (cf. 4 Geo. Ill, ch. 37, Statutes at Large, pp. 485 ff.), as did the Irish limited partnership act (21–22 Geo. III, ch. 46, loc. cit., pp. 949 ff.). A conflation seems to have occurred later. Compare, for instance, the act incorporating the London Flour Company (1800), 39–40 Geo. III, ch. 97, Statutes at Large, pp. 448 ff., with the comments of Tierney and Perceval, Hansard's Parliamentary Debates, XXXV, 455, 460, and similarly the comments on the Gas and Coke Bill (1810), Hansard, XVII, 231 (cf. also House of Commons Journals, XXXVII, 147). DuBois, p. 156, n. 92, cites even earlier instances. The bankruptcy exemption seems historically similar to the privileges given the French nobility (Cole, pp. 249, 384).Google Scholar

47 The Bank of New York petition may have carried the clause as a special attraction to compete with the projected land bank. Cf. Domett, Henry W., History of the Bank of New York 1784–1884 (2d ed.; New York, 1884), pp. 6 ff., 14, 19, 34, 126 ff.Google Scholar

48 Cf., for example, Blandi, Joseph G., Maryland Business Corporations, 1783–1852 (Baltimore: The Johns Hopkins Press, 1934), pp. 16, 39, 43, who is troubled by these developments because he assumes limited liability already existed in the eighteenth century.Google Scholar

49 A grant to the Exchange Coffee House illustrates the exceptional nature of the privilege. The company charter (June 20, 1807) specifically affirmed individual liability (st. 1807, ch. 32, sec. 7), but a supplementary act (March 3, 1808) permitted the corporation to raise a mortgage “without personal responsibility” (st. 1807, ch. 78). Livermore, “Unlimited Liability,” Journal of Political Economy, XLIII, 678, cites the Newburyport Company as having limited liability. Cf., per contra, its charter, st. 1793, ch. 27.

50 Cf., for example, J. S. Davis, I, 5, 383; Shannon, “Limited Liability,” Economic History, II, 267; Goebel, pp. 636 ff.; Hunt, p. 41 (citing a case of 1891); Livermore, “Unlimited Liability,” Journal of Political Economy, XLIII, 676. Corporations were far more numerous in Massachusetts than in any other state between 1782 and 1800. Even within the limits of a rather narrow definition fully eighty-three, one quarter of the total in the United States, were chartered there (cf. table in J. S. Davis, II, 22–23).

51 Lehmann, Geschichtliche Entwicklung, pp. 51, 52, defines this concept as beschränkte Haftung nach aussen. That is the only point involved in Lord Kenyon's famous decision in 1788 in Russell v. the Men of Devon—a case sometimes cited as upholding limited liability. 2 T. R., 672, English Reports (Edinburgh, 1909), C, 362. The verdict dealt with the question whether an English county was a corporation and held that the absence of a corporate fund was evidence it was not. Cf. also C. T. Carr, “Early Forms of Corporateness,” Select Essays in Anglo-American Legal History, III, 163.Google Scholar

52 Ulpian's much quoted statement in the Digest, III, 4. 7 (Milan ed., 1931), p. 98, has often been interpreted as maintaining limited liability. Cf., for example, Pollock and Maitland, I, 487; Goebel, p. 575. But it merely distinguished between individual and corporate obligations, without reference to liability for the debt of an insolvent corporation. Some evidence exists that in that event individuals might be liable.—Lehmann, Recht der Aktiengesellschaften, I, 15 ff.; Williston, “Business Corporations,” Harvard Law Review, II, 160; Baldwin, Modern Political Institutions, pp. 156 ff. In any case, the paucity of material and the uncertainty concerning the general character of Roman corporations render the drawing of analogies hazardous. Cf. Buckland, W. W., Manual of Roman Private Law (Cambridge: The University Press, 1939) pp. 34 ff., 294 ff.;Google ScholarRostovtzeff, M., The Social and Economic History of the Roman Empire (Oxford: Clarendon Press, 1926), pp. 532, n. 22, 602, n. 20;Google ScholarSchulz, Fritz, Principles of Roman Law (Oxford: Oxford University Press, 1936), pp. 25, 72.Google Scholar

52 See p. 10.

53 Special provisions in the charter, as in the case of the Compagnie des Indes Orientales, were needed until then (cf. Cole, I, 481). Cf. also Lehmann, Geschichtliche Entwicklung, pp. 23, 24, 54; idem, Recht der Aktiengesellschaften, I, 1, 2; Bösselmann, p. 62; Kuhn, p. 56. For the earlier character of the société anonyme, cf. Baldwin, Modern Political Institutions, pp. 181 ff.

54 Pollock and Maitland, I, 493. However, they did say that limited liability developed in practice if not in theory afterwards in the fifteenth century (I, 492 ff.). Cf. also Davis, John P., Corporations; A Study of the Origin and Development of Great Business Combinations (New York: G. P. Putnam's Sons, 1905), I, 26.Google Scholar

55 Cf. Clifford, II, 211; Eaton, Amasa M., “First Book in English on the Law of Incorporation,” Yale Law Journal, XII (1903), 372. For Rolle, cf. Holdsworth, V, 375 ff.Google Scholar

56 Cf. Chase v. Merrimack Bank (1837), 19 Pickering, 569 ff.; Dane, Nathan, General Abridgment and Digest of American Law (Boston, 1824), V, 158;Google ScholarIsraeli, Samuel M., Nature of the Liability of Shareholders of a Corporation (Philadelphia: Avil Printing Company, 1901), pp. 3 ff.Google Scholar

57 Cf., for example, West Boston Bridge Corporation (March 28, 1793), st. 1792, ch. 87, sec. 3; Proprietors of the Locks and Canals on the Connecticut River (February 23, 1792), st. 1791, ch. 32; Ten Mile Falls Canal (March 11, 1797), st. 1796, ch. 93. As late as 1884 Justice Field, discussing legislation on unlimited liability in the early period pointed out that it followed “the analogy of inhabitants of towns” (Child v. Boston & Fairhaven Iron Works, 137 Mass., 517). Cf. also infra, p. 14.

58 Three fifteenth-century cases have been cited to the contrary (cf. Holdsworth, III, 484; Hunt, p. 3). But these do not go beyond the mere distinction between corporate and individual purse. Cf. Y. B. 8 Hen. VI, Mich., pl. 2; Y. B. 19 Hen. VI, Pasch. pl. 1; Y. B. 20 Hen. VI, Mich., pl. 19 (London, 1679), I, 64, 9. The seventeenth-century case of Edmunds v. Brown and Tillord cited by Holdsworth (VIII, 203) refers to liability after the dissolution of the corporation, a problem that is completely different. Cf. 1 Lev. 237, English Reports, LXXXIII, 385; also infra, n. 62.

59 Cf. Williston, “Business Corporations,” Harvard Law Review, II, 113, 115, 116, 160. Cf. also Edward Coke, First Part of the Institutes of the Laws of England or, a Commentary upon Littleton, III, 6. 413 (Philadelphia, 1853). II, 250a.

60 Eaton, “Law of Incorporation,” Yale Law Review, XII, 281. Cf. also the most popular of the law dictionaries, John Covvell, Interpreter or Booke Containing the Signification of Words (London, 1637); Cowel, [John], Law Dictionary (London, 1708). On Cowel and Shepherd, cf. Holdsworth, V, 20 ff., 391 ff.Google Scholar

61 Cf. Blackstone, I, 467, 468, 474 ff.; Stewart Kyd, Treatise on the Law of Corporations (London, 1793–1794), particularly I, 2 ff., 13, 69 ff.; Williston, “Business Corporations,” Harvard Law Review, II, 116–18.

62 Blackstone, 1,484; Kyd, II, 516. We are disposed to give heavy weight to Kyd's evidence despite recent attacks upon him, for example, Goebel, p. 610. The charge of medievalism hardly comports with his political activity in the Society for Constitutional Information and his sympathy with the French Revolution that brought him to trial for treason. Cf. Dictionary of National Biography, ed. Lee, S. (London, 1892), XXXI, 348. In any case the substance of these criticisms, as of similar strictures against the “solemn inanities of Blackstone,” is that they threw together an “aimless array of cases …. under the rubric ‘corporations.’”— Goebel's introduction, DuBois, pp. viii, ix. Whether their conception of the institution is intrinsically sounder than that of their modern critics is less important than the fact that eighteenth-century jurists saw the corporation in terms of the century which preceded rather than of the century which followed.Google Scholar

63 For continued resistance to limited liability, cf. material in DuBois, pp. 94, 96, 146, 150, n. 67; Hunt, pp. 25 ff.

64 Roberts, Christopher, Middlesex Canal, 1793–1860 (Cambridge: Harvard University Press, 1938), p. 179; J. S. Davis, II, 167, 168, 170–73. For origins and English precedents, cf. Scott, I, 45, 447; Anderson, III, 177.Google Scholar

65 Haftung nach innen, according to Lehmann, Geschichtliche Entwicklung, pp. 53 ff.

66 House of Lords Journals, III, 864 ff.

67 I Chan. Cas., 204, 206 (English Reports, XXII, 763 ff.). Cf. also Holdsworth, VIII, 203, 204; Oliver, A. L., Brief Inquiry into the Origin and Nature of Corporate Privileges (Cincinnati, 1850), p. 26; Israeli, p. 4.Google Scholar

68 Williston, “Business Corporations,” Harvard Law Review, II, 161, 162; Kyd, I, 272 ff. Per contra, Livermore, Land Companies, pp. 280 ff., but on the basis of later cases. The procedural difficulties to which Livermore refers arose out of the doctrine that a corporation could not be imprisoned (Holdsworth, III, 488) and the consequent limitation on chancery action, not out of a question on the merits of the principle. The whole case from the original petitions in 1667 to the aftermath in 1674 may be traced.—House of Lords Journals, XII, 198, 214, 224, 348, 359, 361, 404, 409 ff., 563, 564, 572, 583, 630, 640; Historical Manuscripts Commission, Eighth Report, App., 147; idem, Ninth Report, App. II, 29,47.

69 On the problem of chancery, cf. Journal of Debates and Proceedings in the Convention …. to Revise the Constitution of Massachusetts …. 1820 (Boston, 1853), p. 136;Google ScholarGager, E. B., “Equity, 1701–1901,” Two Centuries' Growth of American Law 1701–1901 by Members of the Faculty of the Yale Law School (New York: Charles Scribner's Sons, 1901), pp. 131Google Scholar, 136. On the ill repute of equity in the eighteenth century, cf. Holdsworth, I, 230, 231.

70 This deficiency was mentioned in petitions (cf., for example, Massachusetts Archives, H. D. 9244, S. D. 5875) and in tangential cases as late as 1819 (cf., for example, Vose v. Grant, 15 Tyng 521, 522; Spear v. Grant, 16 Tyng 15). Significantly, the question raised in these cases was ultimately settled in the federal court of equity, Wood, et al. v. Dummer, 3 Mason 308, Federal Cases (St. Paul, 1894 ff.), XXX, 435 ff.Google Scholar In South Carolina where equity existed the principle of the Hamborough Case was reaffirmed in Hume v. Winyaw and Wando Canal Company in 1826–28, in which the court pointed out that “without the aid of the extraordinary power of the Court of Chancery” the plaintiff “would be without a remedy.”— Carolina Law Journal (1831), I, 228.Google Scholar There was no explicit reversal anywhere until 1844. Cf. American Law Magazine(1843), I, 96 ff.Google Scholar; ibid. (1845), IV, 363 ff.; Israeli, pp. 4, 5, 7 ff.; Blandi, p. 40.

71 Cf. Massachusetts Archives, H. D. 6265, H. D. 6413, H. D. 7232; Hillard, G. S., “Memoir of Joseph Story, LL.D.,” Proceedings of the Massachusetts Historical Society, X (1868), 180.Google Scholar

72 St. 1792, ch. 39 (February 25, 1793); st. 1793, ch. 21 (June 22, 1793).

73 Cf. Connecticut River Canal (st. 1791, ch. 32), and supra, n. 57.

74 Cf. Massachusetts Bank (March 9, I792), st. 1791, ch. 65, sec. 1; Maine Fire Insurance (February 7, 1800), st. 1799, ch. 42. The banking acts seemed to follow some precedents of the Bank of England. Cf. Andréadès, A., History of the Bank of England, tr. Meredith, C. (London: P. S. King and Son, 1909), p. 73;Google Scholar Anderson, III, 143. Mutual fire insurance company provisions were more complex since the same individuals were both creditors and stockholders. Cf. Massachusetts Mutual Fire Insurance (March 1, 1798), st. 1797, ch. 67. Cf. also Dodd, Edwin M. Jr, “First Half Century of Statutory Regulation of Business Corporations in Massachusetts,” Harvard Legal Essays (Cambridge: Harvard University Press, 1934), pp. 72, 79, 84, 86.Google Scholar

75 St. 1798, ch. 59, sec. 9.

76 For judicial interpretation of a similar provision in New York law, cf. Slee v. Bloom et al., 19 Johnson 456 ff.; infra, p. 16.

77 Cf. Beverly Cotton (February 3,1789), st. 1788, ch. 43; Newburyport Woollen (January 29, 1794), st. 1793, ch. 27; Calico Printing (February 25, 1796), st. 1795, ch. 58.

78 Salem Iron (March 4,1800), st. 1799, ch. 80, sec. 8.

79 St. 1808, ch. 65, sec. 6; also Dodd, pp. 88 ff.

80 Nathan Dane, A General Abridgment and Digest of American Low, I, 472; Livermore, “Unlimited Liability,” Journal of Political Economy, XLIII, 674 ff.

81 Slee v. Bloom et al., 19 Johnson 484.

82 Cf., for example, Middlesex Canal (January 25, 1800), St. 1799, ch. 35; Andover Bridge (February 27,1796), st. 1795, ch. 79. For English precedents, cf. Scott, II, 19.

83 On the absence of creditor losses, cf. J. S. Davis, II, 294.

84 In this period fixed value for shares appeared only in banks and joint-stock insurance companies and then only after 1792.—J. S. Davis, II, 105, 242 ff. For English precedents, cf. Scott, II, 28; DuBois, pp. 99 ff.

85 Cf. Holdsworth, VIII, 204, 205.

86 Cf., for example, Worcester Turnpike Corporation v. Willard (1809), 5 Tyng 80.

87 Cf. Sullivan], [James, Path to Riches (Boston, 1792), pp. 37, 48, 51.Google Scholar

88 Cf. the tabulation by Rappard, William E., Les Corporations d'affaires au Massachusetts (Paris, 1908), p. 244.Google Scholar Herein we agree with the general conclusion of Heckscher, Eli F., Mercantilism, tr. Shapiro, M. (London: G. Allen and Unwin, 1935), I, 367, 368. Cf. also Dodd, p. 92; Ware, p. 147.Google Scholar

89 For a contemporary statement of the idea of noninterference, cf. Paine, Thomas, Political Writings, ed. Evans, G. H. (Middletown, 1837), I, 412 ff. For a recent interpretation, cf. Livermore, Land Companies, pp. 259 ff.Google Scholar

90 The question of contractual protection was significant because it was generally agreed that the legislature, like Parliament, unless bound by such restrictions, was free to revoke a charter. Cf. Kyd, II, 446; [Outline of the Argument on Part of the Plfs, in the Cause between the Trustees of D. College & William H. Woodward] (s.l., n.d., Webster's copy, H.C.L.), 77 ff.; 4 Wheaton 643 (ed. B. R. Curtis, Boston, 1864). For a discussion on the case, cf. Wright, Benjamin F., Contract Clause of the Constitution (Cambridge: Harvard University Press, 1938), pp. 28 ff.Google Scholar, 39; [C. H. Hill], “Dartmouth College Case,” American Law Review, VIII, esp. 211 ff.; Swisher, Carl B., American Constitutional Development (Boston: Houghton Mifflin Company, 1943), pp. 157 ff.;Google ScholarShirley, John M., Dartmouth College Causes and the Supreme Court of the United States (St. Louis, 1879), pp. 411 ff.Google Scholar

91 Cf. Hutchinson, Thomas, The History of the Colony and Province of Massachusetts-Bay, ed. Mayo, L. S. (Cambridge: Harvard University Press, 1936), III, 258, 406;Google ScholarBaldwin, “History of the Law of Private Corporations,” Select Essays in Legal History, III, 252 ff.; Hockett, Homer C., The Constitutional History of the United States (New York: The Macmillan Company, 1939), I, 8, 94. For contemporary use of the argument, cf. Paine, I, 372, 378 ff., 397.Google Scholar

92 Even James Wilson, who argued in 1784 that a charter was a contract, seemed prepared to admit the authority of Congress, but not of the states, to modify or revoke.—Selected Political Essays of James Wilson, ed. Adams, R. G. (New York: Alfred A. Knopf, 1930), p. 148. Cf. also Wright, pp. 18 ff.; American Law Review, VIII, 195 ff.; Shirley, pp. 213 ff., for the development of the contract clause.Google Scholar

93 J. S. Davis, II, 68 ff.; Gras, N. S. B., The Massachusetts First National Bank of Boston, 1784–1934 (Cambridge: Harvard University Press, 1937), p. 63.Google Scholar

94 Brown v. Penobscot Bank (1812) 8 Tyng 448; Shirley, p. 185.

95 Quincy, Josiah, History of Harvard University (Cambridge, 1840), II, 301 ff.Google Scholar

96 Foster v. Essex Bank (1819) 16 Tyng 266 ff.

97 Cf., for example, Henshaw], [David, Remarks upon the Rights and Powers of Corporations (Boston, 1837), pp. 5 ff.Google Scholar

98 Cf. Rappard, p. 45.

99 9 Cranch 52 (Curtis, ed., 1865); cf. also 4 Wheaton 664, 667 ff.; Wright, p. 38; H. W. Rogers, “Municipal Corporations,” Two Centuries' Growth, p. 253.

100 Cf. Paine, I, 373 ff.; also Adams, p. 138 ff.; Wright, p. 17; Lewis, Lawrence, History of the Bank of North America (Philadelphia, 1882), pp. 65 ff.; J. S. Davis, II, 310 ff.Google Scholar

101 English private laws were first issued in series in 1798. For their nature, cf. introduction to Vardon, Thomas, Index to the Local and Personal and Private Acts: 1798–1839, —38 Geo. 3—2 & 3 Vict. (London, 1840).Google ScholarFor American law, cf. Rev. St., ch. 2, sec. 3; Kent, James, Commentaries on American Law (Boston, 1884), p. 459; Henshaw, pp. 7, 11.Google Scholar

102 Cf. 4 Wheaton 659 ff., 669 ff., American Law Review, VIII, 220 ff.; Shirley, p. 364. Chief Justice Richardson of New Hampshire in the state decision against the trustees had drawn another distinction between public and private corporations, more logical in 1819, but equally invalid as applied to the law of the eighteenth century. Cf. Farrar, Timothy, Report of the Case of the Trustees of Dartmouth College against William H. Woodward (Portsmouth, 1819), pp. 211 ff.Google Scholar

103 Modern writers who have drawn that distinction for the eighteenth-century corporation have done so despite the fact that it was “a distinction then unrecognized.” Cf., for example, J. S. Davis, I, 49, 75.

104 Kyd, I, 12 ff., 25 ff.; cf. also William Shepherd (1659), quoted in Eaton, XII, 264; American Law Review, VIII, 216 ff. It is worth noting that Webster himself accepted this distinction in his first argument.—Outline of the Argument, p. 13; Shirley, pp. 176 ff. The Law of Corporations (1702) divided the lay into general, such as cities, and special, such as trades and charities.—Williston, “Business Corporations,” Harvard Law Review, II, 110.

105 Kyd, I, 28 ff.; Blackstone, pp. 470 ff.

106 For the argument that a town is not a corporation, cf. J. S. Davis, I, 61, 62.

107 Cf. Dillingham v. Snow (1809), 5 Tyng 547; 13 Mass. 193; Oliver, p. 5; J. S. Davis, I, 7. James Sullivan's memorandum to the legislature (1802), Massachusetts Archives, S. D. 2957/Si rested the distinction upon the absence of a common seal but eighteenth-century law held that unimportant, following Coke in Mayor of Stafford v. Bolton, in the position that corporations “when they are incorporated may make or use what seal they will.”—Williston, “Business Corporations,” Harvard Law Review, II, 116–18; Kyd, I, 268. Cf. also H. W. Rogers, p. 219.

108 J. S. Davis, I, 20.

109 For the corporateness of towns, cf. the opinion of the solicitor of the Board of Trade, 1774, cited ibid., I, 61; Wrentham Proprietors v. Metcalf (1763), Quincy, Josiab Jr, ed., Reports of Cases … between 1761 and 1772 (Boston, 1865), pp. 36 ff.; the state constitution of 1780, ch. I, sec. 3, cl. 2; st. 1785, ch. 75, sec. 8. It is interesting that in the first argument before the New Hampshire court, Marsh, of counsel for the trustees, accepted and used the similarity between corporation and town.—Shirley, pp. 159, 178.Google Scholar

110 Sullivan, p. 57.

111 Cf. 4 Wheaton 636.

112 Kyd, I, 15; American Law Review, VIII, 213 ff.

113 Livermore, Land Companies, p. 260.

114 Blackstone, 1, 467, 474.

115 Pollock and Maitland, I, 508; Kyd, I, 2 ff., 69; Wilson, James, Works, ed. Wilson, Bird (Philadelphia, 1804), II, 427. Cf. also cases cited Carr, Select Essays in Legal History, III, 174, 175.Google Scholar

116 Kyd, I, 17. Thus a seventeenth-century treatise spoke of actions: “I call those perpetuall …. which have not any set time expressly allotted for their continuance.” [John Cowell], Institutes of the Lawes of England, tr. W. G. (London, 1651), p. 238.

117 Thus an English statute (1719) 6 Geo. I, ch. 18, sec. I, Statutes at Large, 197, described a grant as both perpetual and revocable. Cf. also J. P. Davis, II, 121.

118 Gras.p. 80.

119 Massachusetts Archives, S. D. 2957/5. Sullivan's hesitancy is particularly significant in view of the fact that he had been chairman of the legislative committee that approved the bank charter in 1784. Cf. Amory, T. C., Life of James Sullivan (Boston, 1859), I, 146, 387.Google Scholar

120 We are preparing such a study which will present the positive aspects of this question, under the auspices of the Committee on Research in Economic History of the Social Science Research Council.