Corporate Law and the Sovereignty of States

This article explores the origins of a social form with lasting and profound sociological implications: the corporation. Though corporations date back as far as the Roman Republic, the early United States fostered a significant transformation in corporate law. Shortly after the American Revolution, several states pioneered a system whereby corporate charters became available to almost anyone (at a price), leading (eventually) to a proliferation of corporate charters unlike anything ever seen before in world history. This proliferation of corporate charters first occurred in colonies that were originally chartered as corporations: Massachusetts, Connecticut, and Rhode Island, all of which used the corporate organizational form for a wide array of social pursuits. These colonies also experienced repeated conflict with the Crown over the rights and privileges of corporations. As American “states,” they built on these experiences to liberalize access to the means of incorporation and to elucidate the rights and freedoms of corporations. Other studies aptly document the diffusion of the corporate organizational form after 1800; this article takes up the antecedents to the use and popularity of the modern corporate organizational form. These observations do not supersede scholarly work regarding the economic origins of the American business corporation, but they do shed valuable light on the interdependence of states and markets, as well as the nature of institutional-legal transformation more generally.