| Following the American revolution, incorporation was viewed as an objectionable form of elitist privilege and corporate law, as a result, was characterized by strict doctrinal restraints. But the privileges--such as limited liability--that could be conferred in corporate charters fostered a widely-held perception that incorporation could be an agent of commercial development. Thus, early American corporation law was characterized by both political distrust for the institution's potential power and a willingness to use incorporation for the promotion of economic growth.; But the English doctrine adopted by American legislatures was quite limited in its ability to permit the organizational changes that would accompany this growth. Corporate charters were granted for limited purposes and fixed periods, thus allowing legislatures to retain a certain level of control over corporate activities. The requirement of periodic reorganization, however, was ill-adapted to the pressure and pace of nineteenth century business ventures. The demands of technological innovation led lawyers and legislators to experiment with the doctrines of corporation law.; Corporations formed to build turnpikes and canals soon crossed the borders of small states. Since England had no federalized system of multiple sovereigns, there was no precedent for organizing multi-state ventures. In an ad-hoc adjustment to this problem, turnpikes and canals were organized with reciprocal charters from each of the states along the route. Later, railroads were constructed using this system, but their technology created much greater financial incentives to combine with other corporations. Significantly, corporations were increasingly oriented as entrepreneurial ventures more than public franchises. By the mid nineteenth century, unifications aimed at simplifying administration had given way to combinations directed at financial gain. To accommodate these changes, a doctrinal infrastructure was gradually developed to settle ambiguities and protect minority interests. Eventually, general statutes allowed corporations to combine at will--through merger, lease or inter-corporate stockholding. Distrust of corporate power resurfaced when American industry extensively utilized the newly-innovated doctrines of business combination; but the new doctrines remained. American corporate law had been transformed by the nineteenth century's dramatic changes--economic, social and technological. |
