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Corporation Law and the Shift toward Open Access in the Antebellum United States

In: Organizations, Civil Society, and the Roots of Development

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  • Eric Hilt

Abstract

This paper analyses the general incorporation statutes for manufacturing firms adopted by the American states up to 1860. Prior to the enactment of a general law, a business could only incorporate by obtaining a special act of their state legislature; general statutes facilitated incorporation through a routine administrative procedure. A new chronology of the adoption of these statutes reveals that several states enacted them much earlier than previous scholarship has indicated. An analysis of the contents of these laws indicates that many imposed strict regulations on the corporations they created, whereas others granted entrepreneurs near-total freedom. Many Southern states enacted particularly liberal statutes, but sometimes also prohibited nonwhites from incorporating businesses or gave a government official discretion over access to the law. Finally, an analysis of the volume of incorporation through special charters reveals that the states that failed to adopt general incorporation laws tended to offer unusually generous access to incorporation through special legislative acts. Taken together, these results imply that the adoption of a general incorporation statute did not always represent a discrete transition to open access to the corporate form. Instead, general statutes sometimes included highly restrictive provisions governing access, and some states generously accommodated demands for incorporation in the absence of a general statute.
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  • Eric Hilt, 2016. "Corporation Law and the Shift toward Open Access in the Antebellum United States," NBER Chapters, in: Organizations, Civil Society, and the Roots of Development, pages 147-177, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:13508
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    Cited by:

    1. Guinnane, Timothy W. & Schneebacher, Jakob, 2020. "Enterprise form: Theory and history," Explorations in Economic History, Elsevier, vol. 76(C).
    2. Timothy W Guinnane & Susana Mart�nez-Rodr�guez, 2018. "Choice of Enterprise Form: Spain, 1886–1936," Journal of Law, Economics, and Organization, Oxford University Press, vol. 34(1), pages 1-26.
    3. Rochat, Jean, 2016. "Change for continuity: the making of the société anonyme in 19th century france," Working Papers unige:90196, University of Geneva, Paul Bairoch Institute of Economic History.
    4. Howard Bodenhorn, 2017. "Opening Access: Banks and Politics in New York from the Revolution to the Civil War," NBER Working Papers 23560, National Bureau of Economic Research, Inc.
    5. Timothy Guinnane & Jakob Schneebacher, 2018. "Capital Structure and the Choice of Enterprise Form: theory and history," Working Papers 1061, Economic Growth Center, Yale University.

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    More about this item

    JEL classification:

    • K2 - Law and Economics - - Regulation and Business Law
    • N0 - Economic History - - General
    • N41 - Economic History - - Government, War, Law, International Relations, and Regulation - - - U.S.; Canada: Pre-1913
    • N81 - Economic History - - Micro-Business History - - - U.S.; Canada: Pre-1913

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