words of a decision rendered fourscore years ago, it is important to inquire whether the substance to which those words were then attached is really the same as that to which we now attach them. When our forefathers spoke of corporations, did they not perhaps refer to a thing so different from the organizations that now bear that name, that their words and decisions are precedents only in a verbal and formal sense? Hence a study of constitutional law cannot begin with the Constitution. The men who framed that document, and the judges who first worked it over into a system of public law, were men who had been in close touch with their economic surroundings. We must look at their words through contemporary spectacles. And contemporary life had its roots in colonial America. This is my excuse for the first chapter of this book. CHAPTER II THE BEGINNINGS OF AMERICAN LAW OF FOREIGN CORPORATIONS To the early American colonist, the term corporation connoted a great privileged trading company the foreign corporation par excellence of the sixteenth and seventeenth centuries. These huge corporate aggregations, controlling foreign trade, exploring unknown lands, governing dependencies, dickering with foreign princes, raising armies, and levying war, were the principal objects of the "dollar diplomacy " of those days. Their relations with foreign sovereignties were constantly in the minds of statesmen. As early as the laws of Æthelred, there is an Institute of London referring to the Hanseatic League, the "Men of the Emperor, who, coming in their ships, were held worthy of good laws, like unto ourselves... but they must not engross the market against the burghers" of London.1 From the thirteenth to the sixteenth century, the League had a charter to trade in England, and owned wharves in the " Steelyard" quarter on the Thames. But the burghers of London at length rebelled against the special privileges which it enjoyed, and Queen Elizabeth revoked the charter.2 English chartered corporations, also, were deemed worthy of good laws abroad. The Merchant Adventurers long held franchises in Germany, Holland, and elsewhere.3 Ivan the Terrible gave trade privileges to the Russia Company, chartered by Queen Mary in 1 Liebermann, Gesetze der Angelsachsen, I, 234; Thorpe, Ancient Laws and Institutes of England, I, 300. See Anderson, An Historical and Chronological Deduction of the Origin of Commerce, 125. 2 Cawston and Keane, The Early Chartered Companies, 6 ff. • Ibid., 27. ΤΟ 1554.1 The Eastland Company monopolized the Baltic trade, and the Turkey Company that of the Levant. The great East India Company, chartered in 1600, was authorized to trade in Asia, America, and Africa," any statute, usage, diversity of religion or faith, or any matter to the contrary notwithstanding, so as it be not in any country already possessed by any Christian potentate in amity with her Majesty, who shall declare the same to be against his or their good liking." Its history is familiar. It did not lose its monopoly till 1833.3 So far as the foreign potentates were Christian, it was obvious that the reception which these corporations would receive rested on comity, and generally on express comity. In partibus infidelium, the corporations were themselves an arm of sovereignty, exercising political and diplomatic functions. Where her sovereignty extended, England could give the members of her incorporated trading companies a full monopoly of commerce; but with foreign Christian nations, the monopoly would be good only against English traders.* King James seems once to have tried to give the Russia Company exclusive whaling privileges around Greenland, valid even against foreigners; and he sent seven armed vessels along to make good the grant. They proceeded to annex the archipelago to the British Empire. But ultimately the Dutch sent a fleet of eighteen fighting ships, and the franchise remained a piece of parchment." This was, in truth, a time when statesmen troubled themselves less whether legal theory required 1 See their Russian charter in Anderson, op. cit., II, 102. The arrangement seems to modern eyes to have been somewhat one-sided, as for instance the following: (Clause vii) "In case any English be wounded or killed, due punishment shall be inflicted; and in case the English shall wound or kill any, neither their nor the company's goods shall be forfeited on that account." 2 For an illuminating account of the functions of these trading companies, see John P. Davis, Corporations, Their Origin and Development, II, chs. 3-5. New York, 1905. 3 Cawston and Keane, 86, 152; Davis, II, 114. 4 Cawston and Keane, 40. Ibid., 45-60. the recognition of a foreign corporation, than over the number of war ships that accompanied it, or the wealth of the trade which it might bring. The special privileges with which they were endowed were of course the very life of these companies. The privileges might belong to the merchants individually, as in the earlier form of "regulated Company." Each member employed his own capital -"traded on his own bottom" was absolutely liable for all his debts, and held a non-transferable membership. The object of membership was to confer the privilege of trading in the parts covered by the charter. The regulated company was the application, in foreign trade, of the principle of the gilds, which at that time monopolized the principal trades, not only in England, but throughout Europe.1 Or again the privileges might be vested in the corporation itself, as with the great joint stock companies. The East India Company was of this sort. They resembled more closely the modern corporation, with limited liability, transferable shares, and trading capital owned in the name of the company. In either case the foremost object of incorporation was to give special privileges not enjoyed by other citizens. "Liberty," "privilege," "franchise," "charter," were about synonymous terms. The distinguishing feature of these companies was not legal personality, but monopoly. These institutions were familiar in the colonies. Indeed many of the colonies were themselves no more than foreign corporations, at least from the point of view of the Indians. The charters of Massachusetts Bay, of Plymouth, of Virginia, of Carolina, were the charters of trading companies; their governmental functions were incidental to trade and commerce.2 It was the Dutch West India Company, chartered by the States General in 1621, which colonized the New Nether1 Baldwin, Modern Political Institutions, 161 ff. 2 Ibid., 166, 167. And see the chapter on Colonial Companies in John P. Davis, op. cit., II, ch. 6. lands.1 This company, besides its exclusive trading privileges, had authority to "make contracts, engagements and alliances, with the princes and natives of the countries comprehended in the grant, and power to enforce these treaties and protect its trading rights, if need be, by war. To the north lay the domain of the wealthy Hudson's Bay Company, chartered in 1670, and assured "the sole trade and commerce of all those seas, straits, bays, rivers, lakes, creeks, and sounds " about the Bay, a vast region, in which no English subject might "visit, frequent or haunt or adventure or trade" without its permission.2 The proprietary colonies resembled these trading companies in general structure, although not in corporate form.3 Georgia, on the other hand, was more akin to a charitable corporation, but even there to "increase the trade, navigation and wealth" of Great Britain was an important consideration.1 There were a few monopolistic trading companies aside from the colonies themselves. In Pennsylvania, William Penn, before coming to his new domains, had already chartered the "Free Society of Traders in Pennsylvania," but he declined to accept on its behalf an offer of exclusive trading privileges with the Indians, the charter reciting, instead, that all should have "the same Liberty of private Traffique, as though there were no Society at all." The corporation was above the control of the colonial legislature, however, and of such dignity that it at once began negotiations with the "Emperour of Canada" for trading arrangements." 1 O'Callaghan, History of New Netherland, I, 89. * John P. Davis, op. cit., 191. 4 Ibid., 182. Joseph S. Davis, Essays in the Earlier History of American Corporations, Cambridge (1917), I, 41 f. This valuable study, in two volumes, appeared when the present work was almost completed. I have been able, however, to make substantial use of Mr. Davis' extensive researches in revising this chapter. • Baldwin, American Business Corporations before 1789, 8 Amer. Hist. Rev. No. 3, 453. |