Published by EH.Net (September 2015)

Brian Phillips Murphy, Building the Empire State: Political Economy in the Early Republic. Philadelphia: University of Pennsylvania Press, 2015. xi + 287 pp. $50 (cloth), ISBN: 978-8122-4716-9.

Reviewed for EH.Net by Edwin Perkins, Department of History, University of Southern California.

This book focuses on the highly active political maneuverings associated with the creation of corporate enterprises in the United States in the half century after independence.  Today, we take the corporate form of business enterprises for granted without applying moral judgments, but that acquiescence was not always the norm in the late eighteenth and early nineteenth centuries.  Many citizens had numerous concerns about the underlying legitimacy of creating corporations organized for the financial gain of private individuals.  Critics were especially worried about the possibility of creating restrictive monopolies.

The British heritage was profoundly negative.  Only a few corporations had received Parliament’s authorization to incorporate.  In the British financial sector, only the Bank of England held a corporate charter.  In the colonies there were no businesses organized with corporate privileges.   But after 1780, everything in American society was suddenly in flux — and particularly with regard to the potential advantages of allowing certain enterprises to assume a corporate framework.

Brian Murphy has narrowed his vision to activity occurring exclusively within the borders of the state of New York, but similar events presumably occurred throughout the new nation. The author has separate chapters on the creation of corporate charters linked to the Bank of New York, the Manhattan Water Company (and bank), the steamboats operating on the Hudson River, and finally the construction of the Erie Canal.   All four cases had their share of political intrigue.  Readers are given a blow-by-blow account of the behind-the-scenes encounters that led to the final authorization of corporate charters for these various ventures.  Politics and the private business sector were increasing intertwined.  State governments periodically became investors in a series of public-private joint projects in both the financial and transportation sectors of the economy.

In trying to fit these revelations into their proper historiographical context, I concluded that the author’s interpretative framework coincides with the general outlook of Gordon Wood, the eminent historian of the early national period.  Wood sees the election of Thomas Jefferson to the presidency in 1800 and the rise of the Democratic/Republican political party as perhaps the most truly “revolutionary” events in the nation’s history.  I draw the connection with Wood because Murphy demonstrates that the main defenders of the older anti-corporate ideology were primarily those aligned with the Hamiltonian-led Federalist Party that held sway in the 1780s and 1790s.  The Jeffersonians, in contrast, had a more middle class orientation, and the creation of incorporated enterprises gave them the opportunity to raise sufficient funds from multiple sources to participate more vigorously in the marketplace.

For economic historians with an interest in the complicated intricacies of institutional change this volume has much to offer.  While the story may seem endlessly and unnecessarily tedious at times, it convincingly reflects the realities of the times. Political history, in particular, can be a frustratingly messy exercise.  Even today it can take years to move forward any given bill, with numerous possible modifications, through a legislative body.

I think the book could have been improved, at the very outset, with a brief introduction centered on the British background with respect to the evolving status of corporate enterprises through the late eighteenth century.  That way readers could understand more fully how institutionally innovative the American experience was in the Early National Era.

Meanwhile, I find it very encouraging to see a greater number of mainstream scholars focusing their research on the political aspects of the nation’s economic and business history.   The author has added numerous explanatory endnotes that draw on a wide range of prior publications.  Admirably, he left no stone unturned.

Edwin Perkins is emeritus professor, University of Southern California, and the author of American Public Finance and Financial Services, 1700-1815 and in a later period, Wall Street to Main Street: Charles Merrill and Middle Class Investors.

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