The Evolution of Corporations: From Historical Origins to Modern Day
Corporation: A Historical Perspective
The term "corporation" is derived from the Latin word "corpus," meaning "body." In Korean, it is accurately translated as "단체(團體)." The concept of corporations, also known as joint-stock companies, emerged from the necessity to mitigate risks and accumulate substantial capital in the high-risk, high-reward realm of international trade.
The Birth of Corporations
The concept of joint-stock companies, or corporations, was born out of the need to disperse risks and attract significant capital in the realm of international trade. In 1613, the East India Company issued permanent stocks, transforming from a union of traders to a unified entity. However, it was not treated as a legal person but rather as a separate legal identity, representing the owners and their distinct legal entity.
Corporations as Entities
Essentially, corporations represent the transactions between nations and groups of people, where a state bestows privileges upon a group. The East India Company, for instance, operated its own criminal courts and prisons, effectively becoming a sovereign state with the world’s largest army at the time. With a quarter of a million soldiers under its command, the company generated significantly more revenue from taxation than from trade. It functioned as a taxing authority, collecting and redistributing taxes from the Indian population, akin to a nation-state.
Corporations and Legal Status
The creation of corporations raised significant legal and constitutional debates, particularly regarding the authorization of charters and the allocation of power between state and federal governments. James Madison proposed that in cases where public interest demanded it and single-state authority was insufficient, the federal government should hold the power to grant charters to corporations. However, the legislature decided that states should possess the authority to grant and revoke charters for corporations.
Legal Precedents and the Civil War
Pre and post the Civil War, enormous railroad corporations emerged in the United States, leading to debates over their tax obligations. Railroad company advocates argued that corporations historically were not considered legal persons but rather artificial persons. They contended that the government could not regulate or tax their actions, citing the 14th Amendment as protection against discriminatory laws and taxes.
Landmark Legal Rulings
In 1886, the Southern Pacific Railroad sued Santa Clara County over taxes imposed on its lands and tracks. The court ruling is often misconstrued to have granted corporations the status of natural persons. However, this interpretation stemmed from a headnote written by a court reporter, rather than an actual judicial decision. Nonetheless, this incident marked a significant shift, as corporations began to be legally recognized as persons and entitled to the protections of the 14th Amendment.
The Evolution of Corporations
The evolution of corporations from their classical form before 1860 to their modern iteration after 1900 marks a substantial transformation in their legal and societal standing.
In conclusion, the historical evolution of corporations reflects their journey from mere joint-stock entities in the realm of international trade to becoming legal persons entitled to constitutional protections.
References:
- The Corporation: Origins, History, and Contemporary Relevance (Documentary)
- "The English Language Page." corporation의 어원
- "Unequal Protection" by T. Hartmann
- "Gangs of America" by T. Nace
- "The Transformation of American Law" by M. Horwitz