[Footnote 1:  For the full arguments on this most important question, the reader may be referred to the article by Horace L. Wilgus in the Michigan Law Review, February and April, 1904, and to the writer’s debate with Judge Grosscup, printed in the Inter-Nation Magazine for March, 1907.]

X

CORPORATIONS

The earliest trading or business corporation in the modern sense now extant seems to have been chartered in England about the year 1600, though Holt in the monopoly case dates the Muscovy Company from 1401, and, despite the Roman civic corporations, has really no actual precedent in economic history; that is to say, as a phenomenon under which the greater part of business affairs was in fact conducted.  Whether derived historically from the guild or the monastic corporation of the Middle Ages is a question merely of academic importance, for the business corporation rapidly became a very different thing from either; and, indeed, its most important characteristic, that of relieving the members of responsibility for the debts of the corporation, is an invention of very modern times indeed, the first statute of that sort having been invented in the State of Connecticut, enacted in May, 1818.  These early English corporations, such as the Turkey Company, the Fellowship of Merchant Adventurers, chartered in 1643, or the Hudson Bay Company, usually gave a monopoly of trade with the respective countries indicated, such monopolies in foreign countries not being considered obnoxious.[1] The wording of such early charters follows substantially the language of a town or guild charter, and was doubtless suggested by them.  Unfortunately, it has never been the custom to print corporation charters in the Statutes of the Realm, and it is practically impossible to get a sight of the original documents if, indeed, in many cases, they now exist.  So far as I have been able to study them, they always give the right to transfer shares freely, with the other great right, perpetual succession; but no notion appears, for at least two centuries, that the shareholders are relieved from any of the legal obligations of the corporation.

[Footnote 1:  The charter of the East India Company was attacked on this ground and successfully defended by Holt on the ground that the common law did not mind monopolies in trade with heathens!]

In order to understand this whole problem it is necessary to bear in mind certain cardinal principles of our constitutional law.  All corporations, with the exception of national banks, two or three railroad companies, and the Panama Canal, have been and are creatures of the State, not, as yet, of the Federal government, which can only create them for purposes specifically delegated to it and not merely for private profit.  The power to create corporations is essential to sovereignty, and the sovereign may decline to recognize