Federalism and the Rise of the Corporate Economy in the Nineteenth-Century United States

  • Jinhua Cheng
Chapter
Part of the Governing China in the 21st Century book series (GC21)

Abstract

This chapter is a case study of the political foundation of market development in the nineteenth-century United States and an application of the dual intergovernmental transformation for market development (DITMD) model in the American case. It focuses on examining the impact of federal-state relations on the rise of the American domestic common market in the first century of the United States, roughly between the founding of the republic and the end of the nineteenth century. It first briefly introduces the general allocation of governmental powers in the antebellum American economy and then discusses state activism in the antebellum American corporate regime. Subsequently, the double economic effects of state activism on the corporate economy are analyzed. After that, the chapter further examines the contribution of jurisdictional competition and judicial nationalization to the national market respectively. Finally, there is a concluding remark on this case study.

References

  1. Angell, Joseph K., & Samuel Ames, A Treatise on the Law of Private Corporations Aggregate, Boston: Hilliard, Gray, Little & Wilkins, 1832.Google Scholar
  2. Balogh, Brian, A Government out of Sight: The Mystery of National Authority in Nineteenth-Century America, New York: Cambridge University Press, 2009.CrossRefGoogle Scholar
  3. Bebchuk, Lucian Arye, “Federalism and the Corporation: the desirable limits on state competition in corporate law,” 105 Harvard L. Rev. 1435 (1992).Google Scholar
  4. Berle, Adolf A., & Gardiner C. Means, The Modern Corporation and Private Property, Rev. ed., New York, Harcourt, Brace & World, 1968.Google Scholar
  5. Bodenhorn, Howard, “Bank Chartering and Political Corruption in Antebellum New York: Free Banking as Reform,” in Edward L. Glaeser & Claudia Goldin eds., Corruption and Reform: Lessons from America’s Economic History, Chicago: University of Chicago Press, 2006, pp. 231–257.Google Scholar
  6. Butler, Henry N., “Nineteenth-Century Jurisdictional Competition in the Granting of Corporate Privileges,” The Journal of Legal Studies, Vol. 14, No. 1, 1985, pp. 129–166.CrossRefGoogle Scholar
  7. Cary, William L., “Federalism and Corporate Law: Reflections upon Delaware,” The Yale Law Journal, Vol. 83, No. 4, 1974, pp. 663–705.CrossRefGoogle Scholar
  8. Chandler, Alfred D., Jr., “The Beginnings of ‘Big Business’ in American Industry,” The Business History Review, Vol. 33, No. 1, 1959, pp. 1–31.CrossRefGoogle Scholar
  9. Chandler, Alfred D. Jr., The Visible Hand: The Managerial Revolution in American Business, Cambridge, Mass.: Belknap Press, 1977.Google Scholar
  10. Cochran, Thomas C., “The Paradox of American Economic Growth,” The Journal of American History, Vol. 61, No. 4, 1975, pp. 925–942.CrossRefGoogle Scholar
  11. Conard, Alfred F., Corporations in Perspective, Mineola, N.Y.: Foundation Press, 1976.Google Scholar
  12. Creighton, Andrew L., The Emergence of Incorporation as a Legal Form for Organizations, Ph.D. Dissertation, Stanford University, 1990.Google Scholar
  13. Davis, Joseph S., Essays in the Earlier History of American Corporations, Vol. II, Cambridge, Mass.: Harvard University Press, 1917.Google Scholar
  14. Eisenberg, Melvin A., “The Modernization of Corporate Law: An Essay for Bill Cary,” 37 U. Miami L. Rev. 187 (1983).Google Scholar
  15. Ernst, Daniel R., Tocqueville’s Nightmare: The Administrative State Emerges in America, 1900–1940, New York: Oxford University Press, 2014.CrossRefGoogle Scholar
  16. Fischel, Daniel R., “The ‘Race to the Bottom’ Revisited: Reflections on Recent Developments in Delaware’s Corporation Law,” Northwest University Law Review, Vol. 76, No. 6, 1982, pp. 913–945.Google Scholar
  17. Fleishman, Simon, “The Influence of the Bar in the Selection of Judges throughout the United States,” The American Lawyer, Vol. 13, 1905, pp. 165–166.Google Scholar
  18. Forbath, William E., “Politics, State Building, and the Courts,” in Michael Grossberg and Christopher Tomlins eds., The Cambridge History of Law in America, New York: Cambridge University Press, 2008.Google Scholar
  19. Freyer, Tony A., Forums of Order: the Federal Courts and Business in American History, Greenwich, Conn.: JAI Press, 1979a.Google Scholar
  20. Freyer, Tony A., “The Federal Courts, Localism, and the National Economy, 1865–1900,” The Business History Review, Vol. 53, No, 3, 1979b, pp. 343–363.CrossRefGoogle Scholar
  21. Friedman, Lawrence M., A History of American Law, 2nd edition, New York: Simon & Schuster, 1985.Google Scholar
  22. Glaeser, Edward L., & Andrei Shleifer, “Legal Origins,” The Quarterly Journal of Economics, Vol. 117, No. 4, “The Rise of the Regulatory State,” Journal of Economic Literature, Vol. 41, No. 2, 2003, pp. 401–425.Google Scholar
  23. Goodrich, Carter, “Public Spirit and American Improvements,” Proceedings of the American Philosophical Society, XCII (1948a), pp. 305–309.Google Scholar
  24. Goodrich, Carter, “National Planning of Internal Improvements,” Political Science Quarterly, LXIII (1948b), pp. 16–44.CrossRefGoogle Scholar
  25. Goodrich, Carter, “The Virginia System of Mixed Enterprise: A Study of State Planning of Internal Improvements,” Political Science Quarterly, LXIV (1949), pp. 355–87.CrossRefGoogle Scholar
  26. Goodrich, Carter, “The Revulsion against Internal Improvements,” Journal of Economic History, X (1950), pp. 145–169.CrossRefGoogle Scholar
  27. Goodrich, Carter, “Local Planning of Internal Improvements,” Political Science Quarterly, LXVI (1951), pp. 411–445.CrossRefGoogle Scholar
  28. Goodrich, Carter, Government Promotion of American Canals and Railroads, 1800–1890, New York: Columbia University Press, 1960.Google Scholar
  29. Goodrich, Carter, & Harvey H. Segal, “Baltimore’s Aid to Railroads: A study in the municipal planning of internal improvements,” Journal of Economic History, XIII (1953), pp. 2–35.CrossRefGoogle Scholar
  30. Grandy, Christopher, “New Jersey Corporate Chartermongering, 1875–1929,” The Journal of Economic History, Vol. 49, No. 3, 1989, pp. 677–692.CrossRefGoogle Scholar
  31. Grandy, Christopher, New Jersey and the Fiscal Origins of Modern American Corporation Law, New York: Garland Pub., 1993.Google Scholar
  32. Hall, Kermit L., Paul Finkelman, & James W. Ely, American Legal History: Cases and Materials, Third edition, New York: Oxford University Press, 2005.Google Scholar
  33. Hammond, Bray, “Free Banks and Corporations: The New York Free Banking Act of 1838,” The Journal of Political Economy, Vol. 44, No. 2, 1936, pp. 184–209.CrossRefGoogle Scholar
  34. Handlin, Oscar, “Laissez-Faire Thought in Massachusetts, 1790–1880,” Journal of Economic History, Vol. 3, 1943, pp. 55–65.CrossRefGoogle Scholar
  35. Handlin, Oscar, & Mary F. Handlin, “Origins of the American Business Corporation,” Journal of Economic History, Vol. 5, No. 1, 1945, pp. 1–23.CrossRefGoogle Scholar
  36. Handlin, Oscar, & Mary F. Handlin, Commonwealth: A Study of the Role of Government in the American Economy: Massachusetts, 1774–1861, New York: New York University Press, 1947.Google Scholar
  37. Hartz, Louis, “Laissez Faire Thought in Pennsylvania, 1776–1860,” Journal of Economic History, Vol. 3, 1943, pp. 66–77.CrossRefGoogle Scholar
  38. Hartz, Louis, Economic Policy and Democratic Thought: Pennsylvania, 1776–1860, Cambridge, Mass.: Harvard University Press, 1948.CrossRefGoogle Scholar
  39. Heath, Milton S., Public Co-operation in Railroad Construction in the Southern United States to 1861, Unpublished Ph.D. dissertation, Harvard University, 1937.Google Scholar
  40. Heath, Milton S., “Laissez Faire in Georgia, 1732–1860,” Journal of Economic History, Vol. 3, 1943, pp. 78–100.CrossRefGoogle Scholar
  41. Heath, Milton S., Public Co-operation in Railroad Construction in the Southern United States to, “North American Railroads: Public Railroad Construction and the Development of Private Enterprise in the South before 1861,” Journal of Economic History, Vol. 10, 1950, pp. 40–53.CrossRefGoogle Scholar
  42. Henderson, Gerard Carl, The Position of Foreign Corporations in American Constitutional Law: A Contribution to the History and Theory of Juristic Persons in Anglo-American Law, Union, N.J.: Lawbook Exchange, 1999.Google Scholar
  43. Henn, Harry G., Handbook of the Law of Corporations and Other Business Enterprises, St. Paul, Minn.: West Pub. Co., 1970.Google Scholar
  44. Hirschman, Albert O., Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States, Cambridge, MASS: Harvard University Press, 1970.Google Scholar
  45. Hollander, Stanley C., “Nineteenth Century Anti-Drummer Legislation in the United States,” The Business History Review, Vol. 38, No. 4, 1964, pp. 479–500.CrossRefGoogle Scholar
  46. Horwitz, Morton J., The Transformation of American Law, 1780–1860, Cambridge, Mass.: Harvard University Press, 1977.Google Scholar
  47. Hurst, James Willard, Law and the Conditions of Freedom in the Nineteenth Century United States, Madison: University of Wisconsin Press, 1956.Google Scholar
  48. Hurst, James Willard, Law and Economic Growth: The Legal History of the Lumber Industry in Wisconsin 1836–1915, Cambridge, Mass.: Belknap Press of Harvard University Press, 1964.Google Scholar
  49. Hurst, James Willard, Law and Social Process in United States History, Buffalo, N.Y.: W. S. Hein, 1987.Google Scholar
  50. Hurst, James Willard, Law and the Conditions of Freedom in the Nineteenth Century United States, Madison: University of Wisconsin Press, “The Release of Energy,” in Lawrence M. Friedman and Harry N. Scheiber eds., American Law and the Constitutional Order: Historical Perspectives, Cambridge, Mass.: Harvard University Press, 1988, pp. 109–120.Google Scholar
  51. Kessler, William C., “Incorporation in New England: A Statistical Study, 1800–1875,” The Journal of Economic History, Vol. 8, No. 1, 1948, pp. 43–62.CrossRefGoogle Scholar
  52. Kobayashi, Bruce H., & Larry E. Ribstein eds., Economics of Federalism, Cheltenham, Northampton, Mass: Edward Elgar, “Nevada and the Market for Corporate Law,” Seattle University Law Review, Vol. 35, No. 4, 2012, pp. 1165–1188.Google Scholar
  53. Lamoreaux, Naomi R., The Great Merger Movement in American Business, 1895–1904, New York: Cambridge University Press, 1985.Google Scholar
  54. Lamoreaux, Naomi R., “Entrepreneurship, Business Organization, and Economic Concentration,” in Stanley L. Engerman & Robert E. Gallman eds., The Cambridge Economic History of the United States, Volume II, Cambridge University Press, 2000, pp. 403–434.CrossRefGoogle Scholar
  55. Lively, Robert A., “The American System: A review article,” The Business History Review, Vol. 29, No. 1, 1955, pp. 81–96.CrossRefGoogle Scholar
  56. Mark, Gregory A., “The Court and the Corporation: Jurisprudence, Localism, and Federalism,” The Supreme Court Review, Vol. 1997, 1997, pp. 403–437.CrossRefGoogle Scholar
  57. Mashaw, Jerry L., “Federal Administration and Administrative Law in the Gilded Age,” Yale Law Journal, The Yale Law Journal, Vol. 119, No. 7, 2010, pp. 1362–1472.Google Scholar
  58. McCarthy, F. Ward Jr., “The Evolution of the Bank Regulatory Structure: A Reappraisal,” Federal Reserve Bank of Richmond Economic Review, 1984, Issue Mar/Apr., pp. 3–21.Google Scholar
  59. McCurdy, Charles W., “American Law and the Marketing Structure of the Large Corporation, 1875–1890,” The Journal of Economic History, Vol. 38, No. 3, 1978, pp. 631–649.CrossRefGoogle Scholar
  60. Merkel, Philip L., “Going National: The Life Insurance Industry’s Campaign for Federal Regulation after the Civil War,” The Business History Review, Vol. 5, No. 3, 1991, pp. 528–553.CrossRefGoogle Scholar
  61. Nelson, Ralph L., Merger Movements in American Industry, 1895–1956, Princeton University Press, 1959.Google Scholar
  62. Newmyer, Kent, “History over Law: The Taney Court,” Stanford Law Review, Vol. 27, No. 5, 1975, pp. 1373–1380.CrossRefGoogle Scholar
  63. Novak, Daniel, “Economic Activism and Restraint,” in Stephen C. Halpern & Charles M. Lamb eds., Supreme Court Activism and Restraint, Lexington, Mass.: Lexington Books, 1982, pp. 77–101.Google Scholar
  64. Purcell, Edward A., Jr., Litigation and Inequality: Federal Diversity Jurisdiction in Industrial America, 1870–1958, New York and Oxford: Oxford University Press, 1992.Google Scholar
  65. Romano, Roberta, “Law as a Product: Some Pieces of the Incorporation Puzzle,” Journal of Law, Economics, and Organization, Vol. 1, No. 2, 1985, pp. 225–283.Google Scholar
  66. Romano, Roberta, “The State Competition Debate in Corporate Law,” 8 Cardozo L. Rev. 709 (1986–1987).Google Scholar
  67. Scheiber, Harry N., “The Road to Munn: Eminent Domain and the Concept of Public Purpose in the State Courts,” in Donald Fleming & Bernard Bailyn eds., Law in American History, Boston: Little, Brown, 1971, pp. 329–402.Google Scholar
  68. Scheiber, Harry N., “Federalism and the American Economic Order, 1789–1910,” Law & Society Review, Vol. 10, No. 1, Essays in Honor of J. Willard Hurst: Part One, 1975, pp. 57–118.Google Scholar
  69. Scheiber, Harry N., “Xenophobia and Parochialism in the History of American Legal Progress: from the Jacksonian Era to the Sagebrush Rebellion,” 23 Wm. & Mary L. Rev. 625 (1981–1982).Google Scholar
  70. Scheiber, Harry N., “State Law and ‘Industrial Policy’ in American Development, 1790–1987,” California Law Review, Vol. 75, No. 1, 1987a, pp. 415–444.CrossRefGoogle Scholar
  71. Scheiber, Harry N., Ohio Canal Era: A Case Study of Government and the Economy, 1820–1861, Athens: Ohio University Press, 1987b.Google Scholar
  72. Schmidhauser, John R., The Supreme Court as Final Arbiter in Federal-State Relations, 1789–1957, Chapel Hill: University of North Carolina Press, 1958.Google Scholar
  73. Schwartz, Donald E., “Federalism and Corporate Governance,” 45 Ohio St. L. J. 545 (1984).Google Scholar
  74. Seavoy, Ronald E., The Origins of the American Business Corporation, 1784–1855: broadening the concept of public service during industrialization, Westport, Conn.: Greenwood Press, 1982.Google Scholar
  75. Sklar, Martin L., The Corporate Reconstruction of American Capitalism, 1890–1916: the Market, the Law, and Politics, New York: Cambridge University Press, 1988.CrossRefGoogle Scholar
  76. Skowronek, Stephen, Building a New American State: The Expansion of National Administrative Capacities, New York: Cambridge University Press, 1982.CrossRefGoogle Scholar
  77. Steffens, Lincoln, “New Jersey: A Traitor State,” McClure’s Magazine, Vol. 24, No. 6, & Vol. 25, No. 1, 1905.Google Scholar
  78. Stoke, Harold W., “Economic Influences upon the Corporation Laws of New Jersey,” The Journal of Political Economy, Vol. 38, No. 5, 1930, pp. 551–579.CrossRefGoogle Scholar
  79. Taft, William H., “Criticisms of the Federal Judiciary,” The American Law Review, Vol. XXIX, September–October, 1895, pp. 641–674.Google Scholar
  80. Tarr, G. Alan, Understanding State Constitutions, Princeton, N.J.: Princeton University Press, 1998.Google Scholar
  81. Wallis, John Joseph, “Constitutions, Corporations, and Corruption: American States and Constitutional Change, 1842 to 1852,” The Journal of Economic History, Vol. 65, No. 1, 2005, pp. 211–256.Google Scholar
  82. Wallis, John Joseph, “The National Era,” in Price Fishback ed., Government and the American Economy: A New History, Chicago: The University of Chicago Press, 2007, pp. 148–187.CrossRefGoogle Scholar
  83. Wiecek, William M., “The Reconstruction of Federal Judicial Power, 1863–1875,” The American Journal of Legal History, Vol. 13, No. 4, 1969, pp. 333–359.CrossRefGoogle Scholar
  84. Winter, Jr., Ralph K., “State Law, Shareholder Protection, and the Theory of the Corporation,” The Journal of Legal Studies, Vol. 6, No. 2, 1977, pp. 251–292.CrossRefGoogle Scholar
  85. Yablon, Charles M., “The Historical Race Competition for Corporate Charters and the Rise and Decline of New Jersey: 1880–1910,” The Journal of Corporation Law, Vol. 32, Winter, 2006, pp. 323–380.Google Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Jinhua Cheng
    • 1
  1. 1.KoGuan Law SchoolShanghai Jiao Tong UniversityShanghaiChina

Personalised recommendations