Business Incorporations in the United States, 1800-1943

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This PDF is a selection from an out-of-print volume from the National Bureau of Economic Research

Volume Title: Business Incorporations in the United States, 1800-1943

Volume Author/Editor: George Heberton Evans, Jr.

Volume Publisher: UMI

Volume ISBN: 0-87014-048-5

Volume URL: http://www.nber.org/books/evan48-1

Publication Date: 1948

Chapter Title: Introductory pages to "Business Incorporations in the United States, 1800-1943", including preface

Chapter Author: George Heberton Evans, Jr.

Chapter URL: http://www.nber.org/chapters/c0668

Chapter pages in book: (p. -7 - 0) Business Incorporations in the United States 1800-1943

GEORGEHEBERTON EVANS, JR.

Professor of Political Economy ¶the 7ohns Hopkins University

NATIONAL BUREAU OF ECONOMIC RESEARCH, INC. Copyright, i,.8, by

National Bureau of Econcnnic Research, inc. i8i9 Broadway, New York 3, N. Y.

Alt Rights Reserved

Printed in the U. S. A. by

Waverly Press, Inc., Baltimore, Md.

Bound by

H. Wolff, New York Publications of the National Bureau of Economic Research, Inc.

Number 9

BUSINESS INCORPORATIONS IN THE UNITED STATES 1800—1943 OFFICERS Relation of the Directors to the Work (1948) and Publications of the C. Reinold Noyes, Chairman H. W. Laidler, President National Bureau of Economic Research W. W. Riefier, Vice-President George B. Roberts, Treasurer 1. The object of the National Bureau of Economic Research is W. J. Carson, Executive Director to ascertain and to present to the public important economic Martha Anderson, Editor facts and their interpretation in a scientific and 'impartial manner. The Board of Directors is charged with the responsi- bility of ensuring that the work of the National Bureau is DIRECTORS AT LARGE carried on in strict conformity with this object. Arthur F. Burns, Columbia University W. L. Crum, University of California 2. To this end the Board of Directors shall appoint one or more Oswald W. Knauth, New York City Directors of Research.. Simon Kuznets, University of Pennsylvania 3. The Director or Directors of Research shall submit to the H. W. Laidler, Executive Director, League for Industrial members of the Board, or to its Executive Committee, for their Democracy formal adoption, all specific proposals concerning researches to Shepard Morgan, Vice-President, Chase National Bank be instituted. C. Reinold Noyes, New York City George B. Roberts, Vice-President, National City Bank 4. No report shall be published until the Director or Directors Beardsley Rum], Chairman, Board of Directors, of Research shall have submitted to the Board a summary drawing attention to the character of the data and their utiliza- B. H. Macy & Co. tion in the report, the nature and treatment of the problems Harry Scherman, President, Book-of-the-Month Club involved, the main conclusions and such other information as George Soule, New York City in their opinion would serve to determine the suitability of the N. I. Stone, Consulting Economist report for publication in accordance with the principles of the 3. Raymond Walsh, WMCA Broadcasting Co. National Bureau. Leo Wolman, Columbia University. 5. A copy of any manuscript proposed for publication shall also be submitted to each member of the Board.For each manu- DIRECTORS BY UNIVERSITY APPOINTMENT script to be so submitted a special committee shall be appointed by the President, or at his designation by the Executive Direc- E. Wight Bakke, Yale tor, consisting of three Directors selected as nearly as may be C. C. Balderston, Pennsylvania one from each general division of the Board. The names of the C. D. Edwards, Northwestern special manuscript committee shall be stated to each Director G. A. Elliott, Toronto when the summary and report described in paragraph (4) are sent to him.It shall be the duty of each member of the com- H. M. Groves, Wisconsin mittee to read the manuscript.If each member of the special Gottfried Haberler, Harvard committee signifies his approval withinthirty days, the manu- Clarence Heer, North Carolina script may be published.If each member of the special committee has not signified his approval within thirty days of the R. L. Kozelka, Minnesota transmittal of the report and manuscript, the Director of Wesley C. Mitchell, Columbia Research shall then notify each member of the Board, request- Paul M. O'Leary, Cornell ing approval or disapproval of publication, and thirty addi- W. W. Riefier, Institute for Advanced Study tional days shall be granted for this purpose. The manuscript shall then not be published unless at least a majority of the T. 0. Yntema, Chicago entire Board and a two-thirds majority of those members of the Board who shall have voted on the proposal within the time DIRECTORS APPOINTED BY OTHER ORGANIZATIONS fixed for the receipt of votes on the publication proposed shall have approved. Percival F. Brundage, American Institute of Accountants Arthur H. Cole, Economic History Association 6. No manuscript may be published, though approved by each Frederick C. Mills, American Statistical Association member of the special committee, until forty-five days have Boris Shishkin, American Federation of Labor elapsed from the transmittal of the summary and report. The Warren C. Waite, American Farm Economic Association interval is allowed for the receipt of any memorandum of Donald II. Wallace, American Economic Association dissent or reservation, together with a brief statement of his reasons, that any member may wish to express; and such memo- RESEARCH STAFF randum of dissent or reservation shall be published with the manuscript if he so desires.Publication does not, however, Arthur F. Burns, Director of Research imply that each member of the Board has read the manuscript, Geoffrey H. Moore, Associate Director of Research or that either members of the Board in general, or of the special Moses Abramovitz Thor Hultgren committee, have passed upon its validity in every detail. Harold Barger Simon Kuznets Morris A. Copeland Clarence D. Long 7. A copy of this resolution shall, unless otherwise determined Daniel Creamer Ruth P. Mack by the Board, be printed in each copy of every National Bureau Solomon Fabricant Frederick C. Mills book. Milton Friedman Wesley C. Mitchell Millard Hastay Raymond J. Saulnier W. Braddock Hickman George J. Stigler (Resolution adopted October 25, 1926 F. F. Hill Leo Wolman and revised February 6, 1923 and February 24, 194/) PREFACE

Incorporation should be a matter of concern not merely stand the nature and the significance of the newly char- to persons interested in an enterprise that uses the cor- tered units. This volume tries to describe in some detail porate form of business organization. A community in the size and the nature of the additions to the popula-. which the corporation is utilized is likely to be very tion of artificial persons.. different from one in which it is not utilized. The cor- The corporation, in contrast to most other forms of poration may be regarded as a catalytic agent. Intro- business organization, must leave some public records duce it into a community and many things occur outside of its existence. These records are not adequate for mdi- the particular business units incorporated. The invest- vidual histories, but in the aggregate they reveal much ments of individuals, for example, would be rearranged about the general outlines of a large segment of business to take advantage of new opportunities to diversify enterprise. The task of putting together the pieces of holdings. Enterprises could be launched that formerly public record left by the separate corporations is enor- could not have been*startedbecause of the large mous. A portion of the task is attempted here; much amounts of capital required. In turn, enterprises de- more can be done. pendent upon the existence of such large undertakings A complete set of time series dealing with the number could be started after the large ones had begun to of charters granted by all states in the United States and function. a definitive analysis of each series is not presented here. Despite the potent and conspicuous role of the cor- Some of the state incorporation series could have been poration in the development of the economy of the extended; a few more states could have been covered for Ijnited States, published data on corporations seem re- at least brief periods; and the various state incorpora- markably meager. For ony about two years have we tion series that have been compiled could have been ex- lad a regular publication of the number of charters amined more intensively. But I have reached that point granted by each state. Dun & Bradstreet collects and of diminishing returns at which I feel it desirable to set publishes this information monthly. Previously an index forth what I have done. If it is found interesting, others based upon the experience of four states recorded the can use it, add to it, or correct it. To facilitate addition variations in the number of incorporations, but the in- and correction, I have tried to give in the numerous ap- dividual state figures upon which the index was con- pendices my sources and methods. Despite careful structed were not readily obtainable. The index, more- checking of the compilations and calculations, errors over, covered only a short period. The Census and the have doubtless been made, but it is hoped that they are Statistics of Income data on corporations supply other not many. basic information. Of course, much can be learned • My indebtedness to others in connection with this about the large corporations of the country from the research is large. A grant from the Carnegie Corpora- financial manuals, and a few governmental and private tion made it possible for me to spend a year at the Na- studies have contributed to our knowledge of corpora- tional Bureau of Economic Research. Upon my return tions. But the information on our population of artificial to Johns Hopkins University, the Rockefeller Founda- persons—our corporations—is at best small when com- tion provided funds that enabled me to continue the pared with that concerning the population of natural collection and analysis of data. Without these two persons. When it is said that a certain number of natural grants I could not have assembled the basic data that persons were born in the United States during any appear in this volume. The Lessing Rosenthal Fund for recent year, the statement carries a rather definite Economic Research, established some years ago at meaning. A continuation of the sex ratio, a high degree Johns Hopkins University to assist economic inquiry, of constancy in the relationship between white and has contributed liberally toward the cost of publishing colored births, etc. are, with reason, assumed. But even the study. The three grants are gratefully acknowl- when the number of incorporations in a year is known, edged. much additional material is needed in order to under- Professor Joseph S. Davis and Dean Homer B. Van- V VI BUSINESS INCORPOBATIONS IN THE UNITED STATES, 1800—1943 derblue allowed me to use their unpublished data on Moore, and David Durand have helped me at many New York incorporations, which are embodied in Table stages of my efforts. Some have encouraged me and 9. Their kindness is deeply appreciated. made valuable criticisms; some have carefully read the The National Bureau of Economic Research and its manuscript and made helpful suggestions. Martha An- staff have contributed greatly to my study. Much was derson has painstakingly edited the manuscript. H. accomplished on my book during the year I spent at the Irving Forman prepared the charts for publication. To Bureau; discussions with my colleagues were most help- all I am very much indebted, and' I gratefully acknowl- ful, and my assistants gave excellent service. My year edge their assistance. there is to me a memorable one. The Committee of the G. H. E., Jr. National Bureau Directors that examined my manuscript—Arthur H. Cole, G. A. Elliot, and George Soule —made criticisms that led to a number of improve- ments. The 'map' of the study, which appears in the first chapter, and other smaller passages are the direct result of a pleasant conference with Professor Cole. Wesley C. Mitchell, Arthur F. Burns, Leo Wolman, The Johns Hopkins University William J. Carson, Moses Abramovitz, Geoffrey H. April 1948 CONTENTS

PREFACE V APPENDIX 1 Private Nonbusiness Incorporations 89 CHAPTER 2Maryland Business Incorporations Classi- 1 The Nature of the Study 1 fied According to Authorized Capital Stock 91 2The Significance of an Incorporation 4 3Business Incorporations and Their Author- 3The Period of the Special Charter 10 ized Capital Stock 95 4Trends in Business Incorporations, 1875— 4Industrial Classification of Business In- 1943 31 corporations 153 5The Number of Incorporations and Their 5 Two Tests: Capital Stock as an Index of Authorized Capital Stock 36 the Size of a Corporation; The Charter as a Source of Information on Corporate 6Large,Medium,andSmallBusiness Purposes 171 42 Corporations 6Total Incorporations Used in Constructing 7 An IndustrialClassificationofIncor- the Monthly Aggregate Index of Incor- porations 50 porationsandinAnalyzingCyclical 8Fields of Corporate Enterprise 66 Movements 177 9 Incorporations and Business Cycles 75 INDEX 180

TABLES AND CHARTS TABLE 16 New Jersey Corporations with Authorized 1 Business Incorporation Series Compiled Capital Stock of $20,000,000 or more Char- for this Study Unless Otherwise Specified 2 tered under General Laws, 1881—1902 48 2Previous Status of Maryland Companies 17Number of New Jersey Corporations with Incorporated in 1934 and 1935 that had Authorized Capital Stock of $20,000,000 Predecessors and Remained in Business or more Chartered under General Laws, • more than One Year after Incorporation 5 1880—1918 49 3All Maryland Business Corporations Char- 18Number of Delaware Corporations with tered in 1925, 1926, and 1927 and the Authorized Capital Stock of $20,000,000 or

• Number of those Companies on the Mary- more Chartered under General Laws, land Forfeiture List of February 22, 1931 1916—1943 49 (classified by authorized capital stock) 6 19Industrial Categories used in Classifying 4Maryland Corporation Life Table 8 Incorporations 51 5Chronology of Initial State Constitutional 20 A Sample of Pennsylvania Corporations Provisions that Necessitated Incorporation Chartered in 1902 Classified on Basis of under General Laws 11 Bradstreet and Charter Descriptions 54 6BusinessIncorporations,EightStates, 21Title Guarantee and Trust Incorporations, 1800—1875 .12 Pennsylvania, December 1899—November 7Maryland Business Incorporations by Spe- 1904 58 cial Acts, 1800—1852 14 22Corporations Reporting for Income Taxa- 8 New Jersey Business Incorporations: By tion: Percentage' Distribution by Major Special Acts, 1800—1875; Under General Industrial Categories; New Jersey, Ohio, Laws, 1864—1899 15 and Pennsylvania, 1916—1918 and 1921— 9 New York Business Incorporations Under 1930 59 Special and General Laws, 1800—1845 17 23Incorporations under General Laws: Per- 10Ohio Business Incorporations: By Special centage Distribution by Major Industrial Acts, 1803—1851; Under General Laws, Categories; New Jersey, Ohio, and Penn- 1856—1899 18 sylvania, 1872—1930 60 11 IncorporationsClassified Industrially, 24 Number and Percentage of Basic Cate- Four States; Percentage Distribution by gories of Table 19 Used in Classifying In-

Decades, 1790—99 to 1890—99 20 . dustria.llythe Incorporations of Each Year, 12States in the Annual Median Index of In- 1800—1930: New Jersey, Ohio, and Penn- corporations with the Periods of Their sylvania 63 Inclusion 34 25Business Incorporations: Percentage Dis- 13Annual Aggregate and Median Indexes of tribution by One-Letter Industrial Cate- Incorporations, 1860—1943 34 gories; New Jersey,Ohio, and Penn- 14Incorporations, United Kingdom, 1863— sylvania 66 1937 35 26Mining and QuarryingIncorporations: 15OhioIncorporations,Total Authorized Percentage Distribution by Two-Letter Capital Stock, Annual Averages, 1872— Industrial Categories; New Jersey, Ohio, 1918 40 and Pennsylvania 67 VII VIII CONTENTS

27Percentages of Total Manufacturing Incor- 4RailroadIncorporations,FourStates, porations that Fitted into Certain Two- 1800—1876 25 Letter Industrial Categories: New Jersey, 5Maryland Business Incorporations(ex- Ohio, and Pennsylvnia 68 eluding Turnpike and Manufacturing) by 28Years in which Annual Incorporations in Special Acts, 1800—1852 26 Certain Manufacturing Industries First 6 New Jersey Business Incorporations (ex- Equaled or Exceeded 7 Percent of the cluding Turnpike and Manufacturing): By Total Annual Manufacturing Incorpora- Special Acts, 1800—1845; Under Special tions: New Jersey,Ohio,and Penn- and General Laws, 1846—1875 27 sylvania 68 7 New York Business Incorporations (ex- 29Public Utility Incorporations: Percentage eludingTurnpike and Manufacturing) Distribution by Two-LetterIndustrial under Special and General Laws, 1800— Categories; New Jersey, Ohio, and Penn- 1845 28 sylvania 68 8Ohio Business Incorporations (excluding 30Incorporations of Companies Supplying Turnpike and Manufacturing): By Special Services: Percentage Distribution by Two- Acts, 1803—1851; Under General Laws, Letter Industrial Categories; New Jersey, 1856—1875 29 Ohio, and Pennsylvania 69 9Business Incorporations, Sixteen States, 31Percentages of Total Incorporations of Annually, 1860—1943 32 Financial EnterprisesthatFittedinto 10Delaware Business Incorporations, Num- Certain Two-Letter Industrial Categories: ber and Authorized Capital Stock, 1916— New Jersey, Ohio, and Pennsylvania 69 1943 37 32Oil Incorporations as a Percentage of Total 11Texas Business Incorporations, Number Business Incorporations, Texas, 1901 73 and Authorized Capital Stock, 1872—1920 38 33Gas Incorporations, Ohio and Pennsyl- 12Ohio Business Incorporations, Number and vania, 1880—1893 73 Authorized Capital Stock, 1872—1918 39 34Mining and Total Business Incorporations, 13Illinois Business Incorporations, Number Colorado, 1891—1897 73 and Authorized Capital Stock, 1897—1918 40 35Indexes of Seasonal Variation in Business 14Colorado Business Iricorporations by Size Incorporations: Maine, Ohio, and Texas 76 Groups, 1891—1908 43 36States in the Monthly Aggregate Index of 15Delaware Business Incorporations by Size Incorporations with the Periods of Their Groups, 19 16—1943 43 Inclusion 79 16Illinois Business Incorporations by Size 37Seasonal Indexes Used in Computing the Groups, 1897—1918 - 44 MonthlyAggregateIndexofIncor- 17Maryland Business Incorporations by Size porations 80 Groups, 1870—1939 45 38Monthly Aggregate Index of Incorpora- 18 New Jersey Business Incorporations by tions, 1860—1941 80 Size Groups, 1875—1918 46 39States in the Monthly Median Index of 19Ohio BusinessIncorporations bySize Incorporations with the Periods of Their Groups, 1872—1918 46 Inclusion 81 20Incorporations under General Laws and 40Monthly Median Index of Incorporations, Corporations Reporting for Income Taxa- 1860—1943 83 tion: Percentage Distribution by Major 41Timing of Cycles in Total Incorporations 85 Industrial Categories 62 42Timing of Cycles in the Monthly Median 21Long Cycles in Incorporations, New Jer- Index of Incorporations 85 sey, Ohio, and Pennsylvania, 1872—1930: 43Specific-Cycle Patterns in Total Incor- Communication,Transportation,Other porations 86 Public Utilities, Building and Loan Asso- 44Reference-Cycle Patterns in Total Incor- ciations 70 porations 88 22BusinessIncorporations,FourStates, 1881—1907 77 23Public Utility Incorporations, New Jersey, CHART Ohio, and Pennsylvania, 1875—1930 78 1 BusinessIncorporations,EightStates, 24Manufacturing Incorporations, New Jer- 1800—1875 13 sey, Ohio, and Pennsylvania, 1875—1930 78 2TurnpikeIncorporations,FiveStates, 25Monthly Aggregate and Median Indexes of 1800—1877 22 Business Incorporations, 1860—1943 82 3Manufacturing Incorporations, Four 26Average Cyclical Patterns of Monthly Ag- States, 1800—1877 23 gregate Incorporations 87