Did corporations exist before the civil war ? – History, Politics & Society

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A few did, but it was much more difficult to obtain a corporate
charter in those days. Nowadays all it takes to make a corporation
is to write up a certificate of incorporation, amounting to maybe a
page and a half of boilerplate, file that with the secretary of
state in the state where you want to do business with the
appropriate fee ($90 in my state), wait to get the certified copy
back, and file that at the county courthouse in the town where
you’ll be doing business, and you have a corporation. You also want
to buy a “corporate kit” from a business supply company, tailored
for your state, complete with a corporate seal for impressing the
embossed seal of your corporation into appropriate documents, like
a notary’s seal, very official looking. Following the guidelines of
the corporate kit will keep you from losing your “corporate shield”
of limited liability. This limited liability was the reason
legislatures of the states were reluctant in the 1800s to make it
easy to incorporate. So long as the corporate formalities are
properly observed, anyone injured by the corporation can only sue
the corporation, and can recover money damages only from the assets
of the corporation. A plaintiff can not go after the assets of the
shareholders, officers of the corporation, or of the directors. But
if a plaintiff can show that the corporate formalities have not
been observed, then he can “pierce the corporate veil” and go after
the assets of officers, directors, and even shareholders, who in
small corporations today are usually the same people, and are the
people, after all, who ordered done whatever it was that resulted
in the plaintiff’s injuries.

To incorporate today, you merely state in the certificate of
incorporation you file with the secretary of state in the state
capital that the purpose of the corporation is “any lawful
purpose”. In the 1800s, those who did succeed in incorporating had
to be very specific about exactly what business the corporation was
going to be doing. If a corporation engaged in activities outside
what it was chartered specifically to do (without obtaining an
amendment to the corporate charter from the legislature to do so,
and seeking which of course provided the occasion for state
legislators to extract a new round of bribes and emoluments), this
was grounds for “piercing the corporate veil”. And in the 1800s,
you didn’t just mail in a certificate of incorporation. You had to
get an Act of Incorporation passed by the state legislature to
obtain your corporate charter. So if you were well-connected, or
rich enough to spread bribes around, maybe gift some shares of
stock of the new venture here and there, you stood a much better
chance of getting your bill through the legislature (essentially
getting a law passed) than you would if you were just some schmuck
nobody knew, who hadn’t even bothered to show his appreciation in
any material way. So, basically, only some banks, railroads, canal
companies, steamship lines and other large scale ventures, the
successful creation and operation of which could be claimed to
provide benefits to the public at large, were allowed to operate
with the corporate limited liability. Of course, many of these
turned out to be run by the biggest crooks and swindlers around,
who had the determination to do what it took to obtain a corporate
charter.

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