Front Page Titles (by Subject) Corporation Law & the Progressive Era - Literature of Liberty, Autumn 1982, vol. 5, No. 3
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Corporation Law & the Progressive Era - Leonard P. Liggio, Literature of Liberty, Autumn 1982, vol. 5, No. 3 
Literature of Liberty: A Review of Contemporary Liberal Thought was published first by the Cato Institute (1978-1979) and later by the Institute for Humane Studies (1980-1982) under the editorial direction of Leonard P. Liggio.
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Corporation Law & the Progressive Era
“Proposed Federal Incorporation in the Progressive Era.” The American Journal of Legal History 26 (April 1982): 160–183.
The rapid industrialization of America in the latter part of the nineteenth century brought not only enormous material benefits to the country but serious social, economic, and political problems as well. For many observers, the most ominous aspect of the transformation was the growth of corporate ownership and operation—most especially the huge firms resulting from mergers. The drive toward consolidation reached its peak between 1898 and 1901, when 2274 firms disappeared as a result of merger and merger capitalization totalled $5.4 billion.
Reformers of the progressive period regarded big business as a threat to democratic institutions and acted upon that perception. Louis D. Brandeis' fear of “the curse of bigness,” for example, may have rested on faulty economics, but many shared his concern. On the other hand, the defenders of big business and monopolies maintained, following the principles of laissez faire and Social Darwinism, that giant corporations had arisen from “natural causes.” To interfere with their operations would not only hinder progress but adversely affect the strength of the American economy.
Given such divergent points of view, it is surprising that both the proponents of reform and the champions of big business came to support the notion of an incorporation law on the federal level. The support of each party for the proposal, however, sprang from quite different reasoning.
Reformers had seen one state after another (beginning with New Jersey) pass incorporation laws of such leniency that little or no check was being put on the tide of corporate abuse. The laws were essentially designed to convince corporations to locate their headquarters in the state concerned. If this were accomplished, the state's tax revenues would substantially increase. In the face of this trend, progressives finally abandoned any hope that corporate reform would ever occur on the state level and saw a federal incorporation law as their only recourse.
Supporters of big business, from a different vantage point, paradoxically followed the same federal strategy. They viewed the multiplicity of state regulations as a serious hindrance to the progress of corporations, which had grown to operate on a national scale. In their eyes a federal incorporation law, strict or lax, would standardize conditions for doing business throughout the country. Such nationwide uniformity would aid the growth of corporations and stimulate the nation's economic development.
Curiously, even with widespread support for a federal law, none was ever passed. Successively proposed by Presidents Roosevelt, Taft, and Wilson, federal incorporation laws foundered on disagreements in Congress over such details as whether licenses or charters should be issued and whether labor unions should be exempt from anti-trust legislation. As a result, despite substantial agreement, Congress never enacted an incorporation law.
Nevertheless, in piecemeal fashion, Woodrow Wilson succeeded in giving businessmen and reformers much of what they had been seeking for over a decade. The Federal Reserve Act ‘rationalized’ the banking system. The Clayton Anti-Trust Act removed some of the uncertainty surrounding the Sherman Act, while the creation of the Federal Trade Commission gave businessmen an agency which could rule on the legality of their operations. As a result of these measures, federal incorporation, once an idea whose time had come, ultimately became an outmoded concept.