The Making of the Modern Corporation

The large business corporation has a firm place in the American imagination as the dark repository of private power. There are no more reliable villains on TV or in movieland than these shadowy, soulless, omnipresent institutions and the faceless, greedy men and women who serve them. And yet today as much as ever before, corporations are accepted as the driving engines of our economy, as the places where most of us work. It sometimes seems that corporations in America are what lying was to the English schoolgirl: an abomination unto the Lord, but an ever-reliable friend in time of trouble.

The corporate charter was invented in medieval Europe. For centuries, incorporation legitimated a variety of public institutions and semiprivate enterprises, rather than private businesses. It found receptive soil in the American colonies, and during the early years of the Republic became a widely accessible instrument of economic growth. Yet from early on there was a tension between the public character and private purposes of corporations.

As the term corporation became a synonym for big business after the late 19th century, corporations increasingly became the subject of political debate and the target of legislation and regulation. But to an extent that is not generally appreciated, many of the challenges posed by the corporate form have been handled in the nation's courtrooms rather than in the political arena. In part, this is simply because corporations are creatures of the law. But turning the corporation to public purposes without impinging on its proven ability to create wealth (which is, in fact, another public purpose) has proved also to be a very delicate task-one of many such tasks that Americans have relied heavily upon the courts to carry out.

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