The Social and Political Origins of the American Business Corporation, 1787-1861

Abstract

Why did the business corporation become so common in 19th century America? I argue against prevailing explanations for corporate proliferation that point primarily to the power of capitalist elites or to selection by market forces. Instead, I explain corporate development by demonstrating the importance of democratization to institutional change. Using a combination of historiographical and quantitative methods, I argue that the American business corporation was “democratized” through increasing popular participation in politics. Furthermore, I argue that this popular engagement in corporate law was not narrowly “economic” in nature, but was undertaken in an effort to create a more egalitarian and republican society. I pay special attention to how ideas about republican society and democratic governance interacted with the American party system to reshape corporate development. In particular, I argue that the Jacksonian Democrats played an integral role in corporate development because they helped popularize an understanding of the corporation as a good fit for American democracy. In so doing, Democrats blunted the critiques of the corporation that had the most cachet in American culture, thereby paving the way for corporate expansion after the Civil War.