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Foundations of Business & Society

Foundations of Business & Society. Lecture 5: The Rise of the Corporation. Pre-independence America. Why did “Americans” mistrust corporations? Trading companies, e.g. East India Co. American Economic Development (Independence – Civil War). Heavy use of tariffs (protectionism)

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Foundations of Business & Society

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  1. Foundations of Business & Society Lecture 5: The Rise of the Corporation

  2. Pre-independence America Why did “Americans” mistrust corporations? Trading companies, e.g. East India Co.

  3. American Economic Development(Independence – Civil War) • Heavy use of tariffs (protectionism) • Strict control of corporations (see below) • Slavery • North (manufacturing); South (agriculture)

  4. U.S. CORPORATE LAW(ANTEBELLUM) Corporate charters regulated: • Function • Lifespan • Corporate property ownership • Location • Use of profits • Share ownership • Shareholder liability

  5. Trusts and holding companies Trusts (e.g. Standard Oil; American Cotton Oil Trust) founded in 1880s Federal states combat trusts (1880s): dissolution 1890: Sherman Act Trusts’ response: incorporate

  6. Trusts and holding companies (cont.) 1889/1890s: New Jersey relaxes property law 1889: American Cotton Oil Trust incorporates (holding company) W. N. Cromwell: legal representative of American Cotton Oil Trust

  7. Effects of NJ legislation • Corporations relocate in NJ • Trusts incorporate in NJ • Inflow of revenue to NJ; outflow from other states • Other states follow suite

  8. The origins of globalization? “Race to the bottom”: States compete with each other for mobile resources; they compete by offering mobile resources favourable conditions on which to do business, e.g.: lax environmental standards, lax labour safety laws, low wages, low corporate tax rates, etc.

  9. The modern corporation What are modern corporations permitted to do? Are there constraints on corporation? Alien Tort Claims Act

  10. Wordlist p. 41: stymied; quintessentially p. 43 consignees p. 54: scofflaw

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