History of Corporations in the U.S.

The first American corporations were developed in the 1790s, becoming institutions in the young nation’s economy. The role of the American corporation has affected the global economy and influenced innovation throughout the centuries.

The First Corporations

Small banking corporations existed in the first years after the American Revolution. However, most historians note that the first industrial corporation was the Boston Manufacturing Co. in 1813. Its business model was imported from Great Britain, where textile corporations helped spark the Industrial Revolution.

Corporations could raise capital from diverse sources, providing a mechanism for savers and producers. Voting rights were much less protected in the early years through processes of “graduating” certain shareholders, but corporations still embodied a new type of investment.

An Industrial Revolution

Corporations have played a crucial role in the economic, political, and cultural identity of the United States. Easy access to capital and business development provided by the corporate structure was the force behind the Industrial Revolution.

Industrial growth created a new group of wealthy industrialists and a prosperous middle class and grew the blue-collar working class comprised of newly arrived immigrants.The U.S. became the world’s greatest innovator and one of its leading economic powers during the “Gilded Age,” as the latter half of the 19th century was dubbed.

Corporate development was dealt a blow toward the turn of the 20th century with the introduction of antitrust legislation which aimed to prohibit anticompetitive behavior and corporate mergers that deprived American consumers of the benefits of competition. Corporation structure has changed over its more-than-200-year history, which may be attributed to the imposition of government regulations, savvy shareholder demands, and foreign competition.

The Gilded Age

Mark Twain dubbed the decades after the Civil War the “Gilded Age.” It was a period dominated by political scandal and the “Robber Barons,” the growth of railroads, the economization of oil and electricity, and the development of America’s first giant national and international corporations.

Some wealthy corporations soon became rent-seekers, reinforcing Henry Clay’s idea of state-assisted industrialization. Historian Charles A. Beard wrote that government gifts tended to go to the largest investments. Ironically, two influential names in American corporate history, John Rockefeller and Andrew Carnegie, were noteworthy for fighting against government favors and subsidized competitors.

After the Stock Market Crash of 1929, corporations and the financial sector were attributed blame for the onset of the Great Depression. Reinforcing this sentiment was the book “The Modern Corporation and Private Property,” published in 1932, in which authors Adolf Berle and Gardiner Means argued that those who legally have ownership over public companies, the shareholders, have been separated from their control, leaving management and the directors to manipulate the resources of companies to their advantage without scrutiny.

Post-World War II and the 21st Century

The public perception of corporations rebounded after World War II. After 1945, American corporations grew. As a leading power, the United States took an active role in rebuilding the war-torn cities abroad and saw the restoration of Western European economies as an investment to protect markets for American goods.

U.S. corporations were challenged by multinational Japanese companies in the 1980s and 1990s. Management style and industrial policies of Japanese companies, from bottom-up decision-making to quality control, boosted the country’s economy. Japan’s trade surpluses concerned the United States. 

A decade or more later, many corporations, like AIG, found themselves embroiled in scandals during the 2008 financial crisis. According to Gallup polling in 2010, only 49% of Americans held a positive view of U.S. corporations. By 2021, that figure fell to 46%.

The Role of Technology

As of 2023, several American technology corporations were ranked in the global top ten corporations by market capitalization. Apple (AAPL), Amazon (AMZN), Microsoft (MSFT), Meta (META), and Alphabet (GOOG) help transform other industries, such as real estate, manufacturing, and retail with digital advancements to support innovation. In a McKinsey Global Survey of technology executives, the COVID-19 crisis changed how companies in all sectors and regions do business by accelerating the digitization of their customer and supply-chain interactions and internal operations.

The Bottom Line

Since the American Revolution, corporations have formed in the United States and have influenced the global economy. A corporation is owned and overseen by a group of shareholders, and its board of directors executes its business plan.