Legal Aspects of Corporate Governance in Early American Railroads

TL;DRAbstract

Although the concept of a corporate entity is centuries old, corporations were uncommon in the United States until the early 1800s. Prior to the nineteenth century, few American businesses were incorporated [Friedman, 1985, p. 188]. Beginning in the 1800s, business corporations slowly began to emerge in the United States [Rogers, 1902, p. 227]. During the early part of the century, these corporations primarily were banks, insurance companies, turnpike or canal companies established under a special charter granted by the state. Special charters also were used to incorporate the first railroad corporations in the late 1820s. However, by the late 1840s, the demand for railroad charters became so common that many states enacted a "generalaw " of incorporation that allowed a railroad to incorporate without a special charter. As the corporate form evolved, it came to serve both as a vehicle for managing a firm's administrative tasks and a system for organizing the

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