Adams on Schocket, _Founding Corporate Power in Early National Philadelphia_

[eh.net-review at eh.net]

Published by EH.NET (July 2007)

Andrew M. Schocket, _Founding Corporate Power in Early National 
Philadelphia_. DeKalb, IL: Northern Illinois University Press, 2007. 
xiii + 274 pp. $42 (cloth), ISBN: 978-0-87580-369-2.

Reviewed for EH.NET by Sean Patrick Adams, Department of History, 
University of Florida.


In January of 1827, citizens from Mount Carbon, Pennsylvania wrote a 
joint letter to the editors of the _Miner's Journal_ in nearby 
Pottsville to protest the influence of corporate mining enterprises 
in the anthracite coal fields of Pennsylvania. "This system of 
monopoly if not strangled in the cradle," the letter went, "will one 
day render our republican form of government even worse than 
monarchy." Even though Mount Carbon's coalfields remained the 
province of individual proprietors, the threat of incorporated mining 
companies posed a worrisome threat to not just the individual miners, 
but to the future of the nation itself. In order to ram this point 
home, the letter concluded that if corporations were allowed to run 
unchecked in the area, then "we shall be the shadow without 
substance." [1]

Such unbridled fear of incorporated enterprises seems naïve, even 
quaint, to the ears of a modern American. In an era when anyone can 
incorporate for a small fee, it might seem absurd to argue that the 
corporate form of organization only serves as the vehicle for the 
rich and powerful. After all, entities ranging from ExxonMobil, 
international charities, and even local churches have incorporated 
these days. And yet, if you read about the emerging political 
struggles over environmental protection, health insurance, or the 
influence of political lobbyists and you'll find "corporations" still 
the central targets for public condemnation. Throughout American 
history, then, the parallel development of an increasingly expansive 
democratic form of government and the intimidating concentration of 
economic power facilitated by business corporations appear to be at 
odds with one another. This is the specter that the Mount Carbon 
miners feared in 1827; in an era of expanding suffrage among the 
white male population, the opportunity for those same voters to 
prosper in the business world appeared limited by the growth of 
"soulless" corporations.

Andrew Schocket tackles this apparent paradox head on in his new 
book, _Founding Corporate Power in Early National Philadelphia_. 
Schocket argues that a "corporate class" of Americans stood at odds 
with democratic principles during the nation's formation and that 
although weaker and less developed than their modern manifestations, 
corporate enterprises helped build the foundation for American 
economic growth during the Early Republic and beyond. Rather than 
view large corporations as an emergent force in the years following 
the Civil War, as most narratives of business history are wont to do, 
Schocket claims that "the founding and development of corporations 
and corporate power were bound inextricably with the founding and 
development of American democracy" (p. 13). In this regard, _Founding 
Corporate Power_ is an innovative work that seeks to place the 
political origins of the corporation on equal footing with its 
economic utility. Schocket has produced a solid work of scholarship 
that chronicles the rise of corporations during the Early Republic 
and offers a provocative view of Philadelphia's elites that formed 
them.

_Founding Corporate Power_ injects some familiar and widely-known 
national figures like Robert Morris into a narrative that otherwise 
is quite narrowly focused on Philadelphia's upper crust. Corporations 
in the Early Republic, Schocket argues, slipped into a no-man's land 
between private and public initiative at a time when internal 
improvement projects and banking ventures lay beyond the ability of 
private proprietors. State officials wary of doing such business in 
the political realm only too happily passed off these activities to 
corporations like the Bank of North America or the Schuylkill 
Navigation Company. Although Schocket is careful to chronicle the 
strong opposition to the increased use of corporate chartering during 
this period, he finds that by the first decade of the nineteenth 
century, corporations and their creators became a permanent fixture 
on Philadelphia's economic landscape.

_Founding Corporate Power_ employs an interesting chapter structure 
which follows the use of the corporate form through various 
manifestations. After a few chapters establishing the origins of the 
corporation in Philadelphia, Schocket traces the institution's impact 
upon banking, city governance, and canal construction. Along the way, 
a familiar cast of characters weaves their way through each distinct 
phase of corporate development. These actors cast a huge shadow over 
early Philadelphia. Joseph S. Lewis, for example, served on the 
boards of large banks, canal and insurance companies, and as chair of 
the Watering Committee he oversaw the construction of the city's 
groundbreaking public works project, the Fairmount Waterworks. This 
interconnectivity was no coincidence and had a major impact on the 
city's economic development. If corporations simply acted as big 
proprietors did, then we would expect them to compete not only with 
non-corporate firms, but also with each other. This, Schocket 
maintains, was not the case, as about 300 individuals emerged during 
the 1810s and 1820s as a distinct "corporate class." He argues that 
successful cooperation between this "small corporate oligarchy of 
several hundred men" pushed Philadelphia's economic development 
forward and allowed them "to put themselves in position to reap 
disproportionately the rewards of that growth, and to use their 
leverage to further their greater class, economic, and policy goals" 
(p. 173) _Founding Corporate Power_ then ends with an eye toward the 
present-day ubiquity of corporate institutions. As the story of 
Philadelphia during the Early Republic demonstrates, corporations 
were hardly interlopers in the political and economic history of the 
United States; they were present at the creation.

Schocket's exploration of the early corporation provides a 
much-needed corrective to the instrumentalist view sometimes employed 
by economists and economic historians. Far too often, the political 
nature of corporations drops from the equation as we focus on the 
many efficiencies brought by the corporate form, such as limited 
liability of shareholders or the ability to raise unprecedented sums 
of capital. Although at times his "corporate class" sometimes comes 
across as conspiratorial and self-serving, Schocket employs ample 
evidence to demonstrate the effective ways that these insiders 
negotiated the tangled web of Pennsylvania's legislative and 
municipal political structure.

But in its zeal to demonstrate the self-interested agenda of 
Philadelphia's corporate class, _Founding Corporate Power_ may run 
afoul of some recent trends in economic history. The depictions of 
banks here offer a key example. In his recent work on antebellum 
banking in the United States, Howard Bodenhorn makes the case that 
American banks served as energetic and creative actors in 
constructing the financial system of the United States.[2] In his 
depiction of Philadelphia's banking community, Schocket finds banks 
to be no less energetic, but with another purpose in mind. 
"Regardless of party," he argues, "early republic banks were 
state-sanctioned institutions used by the rich to make themselves 
richer using methods that no elected legislature would ever undertake 
directly" (p. 84). The neo-Beardian implications of documenting a 
"corporate class" certainly adds a good historical counterbalance to 
overly theoretical models of economic growth. But the argument is 
less persuasive when framed in such stark terms, and at times 
_Founding Corporate Power_ veers in this portentous direction.

The idea of a "corporate class" lording it over Philadelphia's 
economy in the Early Republic is an interesting, if a bit overdrawn, 
approach to a familiar subject of scholarship. In addition to 
informing our view of Philadelphia's early economic growth, 
Schocket's work has implications for the modern day. Today's global 
corporations seem less and less accountable to a single governing 
body and the multinational elites staffing those organizations 
probably have more in common with each other than fellow citizens 
lower down the socio-economic scale. Many critics wonder if 
nation-states -- no matter how democratic or well-meaning -- are even 
capable of regulating these new extra-national corporate bodies. As 
economic power outpaces the political authority to control its 
excesses, the Jacksonian visions of corporations as "soulless 
monsters" or "many-headed hydras" might haunt the public sphere once 
again. Were the good folks of Mount Carbon so far off the mark when 
they worried about becoming "shadow without substance"?

References:

1. _Miner's Journal_ (Pottsville, PA), 20 January 1827.

2. Howard Bodenhorn, _State Banking in Early America: A New Economic 
History_ (New York: Oxford University Press, 2003).


Sean Patrick Adams is Associate Professor of History at the 
University of Florida. He is the author of _Old Dominion, Industrial 
Commonwealth: Coal, Politics, and Economy in Antebellum America_ 
(2004) and is working currently on a project on the political economy 
of home heating in nineteenth-century America.

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