Following the Panics of 1837 and 1839, the American government and Americans generally had developed a skepticism about corporations. Some states even “rewrote their constitutions in the 1840s” to forbid their state government from stock ownership. See Daniel Walker Howe, What Hath God Wrought: Transformation of America, 1815-1848, 557.
Corporations of the 1840s did not play by the rules that modern Americans have come to know. For example, shareholders voted not based on how much stock they owned but each had one vote. See id. at 558 citing Colleen Dunlavy, “From Citizens to Plutocrats: Nineteenth-Century Shareholder Voting Rights and Theories of the Corporation,” in Constructing Corporate America, ed. Kenneth Lipartito and David Sicilia (Oxford, 2004), 66-93.
A corporation could only come into existence with the state’s blessing, and there was a general “sense that corporations received special favors,” which “did not enhance their universal popularity.” Daniel Walker Howe, What Hath God Wrought: Transformation of America, 1815-1848, 558. There was skepticism of incorporated business. For example, in 1835, “the journeymen cordwainers of Newark, New Jersey” passed a resolution that read: “We entirely disapprove of the incorporation of Companies, for carrying on manual mechanical business, inasmuch as we believe their tendency is to eventuate and produce monopolies, thereby crippling the energies of individual enterprise, and invading the rights of smaller capitalists.” See id. quoting Susan Hirsch, Roots of the American Working Class (Philadelphia, 1978), 86.
Regardless of this skepticism, states enacted laws that freely permitted incorporation so long as there was compliance with the state’s particular rules. See Daniel Walker Howe, What Hath God Wrought: Transformation of America, 1815-1848, 558.
Corporations, while transformative as an entity, were slow to take hold in American society, but by the mid-Nineteenth Century, they had become much more commonplace. Only then would states begin to create the vast regulatory framework that corporations must comply with in order to conduct business in each state.
The spread of corporations also increased the level of investment that Americans could enjoy. With that came new responsibilities, such as shareholders’ rights, which would continue to evolve over the coming decades. While corporations were the subject of scrutiny and animosity by some, much of that spirit continues to this day.