Abstract: Whig Fables of Corporatization, 1776-1914

Leslie Hannah

Abstract

Incorporations by special act and general ones were standardized and cheapened, as state revenues from privileged incorporations—enthusiastically promoted by British monarchs and early U.S. political elites—were constrained. UK politicians moved faster, cheaply conferring privileged corporate status on scalable projects and those requiring eminent domain, extensively tolerating unauthorized companies, and thus facilitating levels of capital accumulation by companies higher than in the United States. Corporatization in the latter overtook leading continental nations in the 1830s, but did not match the UK's corporate capital/GDP ratio until the twentieth century. Parliament routinely required extensive shareholder protections in statutory corporations, most of whose shares were publicly subscribed and traded. Moreover, among the (laxly regulated and after mid-century more numerous) generically registered companies, the larger ones listing on the London Stock Exchange emulated them. This voluntary flight to the top fits libertarian models of rational investor/manager free contracting, but contrasts with the corporate flight to the New Jersey/Delaware bottom, criticized by American jurists. Thus by 1914 the United States had less than 5% of the world's companies quoted on open, transparent stock exchanges but more than half of the world's closed corporations.