Role of corporations as seen and understood by the US founding fathers

by teomat4

What was the prevailing view of corporations, their charter and limit on their power at the time of founding of the United States? I am asking in context of the recent Citizen United ruling by the SCOTUS.

Mexatt

Corporations in this time resembled little what they are today.

For the most part, corporations were entirely creatures of the state that incorporated them. They were created for a specific purpose pursued by that state. Now, sometimes that purpose involved private benefit either as a means (the large joint stock colonial corporations like the VOC or Hudson Bay company) or an ends (religious or educational corporations), but they were ultimately chartered to accomplish some state purpose. Think: The US Post Office.

This was true, also, of more purely state corporations, such as municipal corporations.

There were no general incorporation laws, where the process of incorporation was done as a bureaucratic function, all charters were granted directly by a legislative authority, singly, to a specific individual or group.

This had actually began changing in their lifetimes, but only for religious corporations, the first general incorporation laws for religious institutions date to the late 18th century in the US. However, general incorporation laws for business activities were a few generations in the future, in the early 19th century, so they did not have opinions on what we view as corporations today because they -- more or less -- didn't exist in the same form.

Because of this set of facts, their views on corporations were very different from ours. They were often viewed with deep suspicion because they were often used by monarchs and European states to grant commercial monopolies to favored individuals or groups. A corporate charter with some guaranteed business and monopoly privileges is what William III offered the original shareholders of the Bank of England in return for lending him money.

Looking back on this history, the Founders would have often viewed corporations chartered for some commercial purpose as best kept on a short leash. They did often use them, especially for projects like canals or other major infrastructure, but they didn't have a concept of them as just more companies operating in a market structure: They were specifically created for some state purpose.

This started changing slowly as the 19th century dawned. Dartmouth v Woodward completely set this conception of corporations as exclusively creatures of the state on its head, turning corporate charters into a kind of contract between the legislature and some private group, which the Contracts Clause of the Constitution forbade interference with.

Around the same time, burgeoning commercial states along the Atlantic seaboard started creating the first general incorporation laws aimed at manufacturing operations, rather than religious or educational ones. This was when something more resembling the modern corporate environment started to develop. The first real, general, commercial business incorporation law came from New England in the 1830's. However, by this time, many of the Founders were either dead or retired from national politics, so we don't really get a great window into their thoughts as this new situation developed. By the time the business corporation was firmly entrenched in the American economy by the end of the 19th century, the world the Founders lived in had largely disappeared, so we can only guess what they may have thought of it.