Democratic Dividends: Stockholding, Wealth, and Politics in New York, 1791–1826

2012 Journal of Economic History  
This paper analyzes the early history of corporate shareholding, and its relationship with political change. In the late eighteenth century, corporations were extremely rare and were dominated by elites, but in the early nineteenth century, after American politics became significantly more democratic, corporations proliferated rapidly. Using newly collected data, this paper compares the wealth and status of New York City households who owned corporate stock to the general population there both
more » ... ulation there both in 1791, when there were only two corporations in the state, and in 1826, when there were hundreds. The results indicate that although corporate stock was held principally by the city's elite merchants in both periods, share ownership became more widespread over time among less affluent households. In particular, the corporations created in the 1820s were owned and managed by investors who were less wealthy than the stockholders of corporations created in earlier, less democratic periods in the state's history. 3 earlier dominance of a relatively small number of elite merchants and institutions was diminished. Hammond (1957: 145) puts it well: "business was becoming democratic. It was no longer a select and innumerous aristocracy-business opportunities were falling open to everyone." Likewise corporations were no longer innumerous, and many new entrants contested the markets formerly dominated by the established firms, or entered new ones. Although state legislatures facilitated enormous numbers of incorporations, petitions for charters remained contentious, and the familiar tropes of eighteenth-century anti-corporate rhetoric found continued use. Much of this rhetoric was directed at the owners of these institutions. Bank stockholders were called "Englishmen and Foreigners," "Federalists and tories," and a "Gentry," drawn from the "unproductive part of society" or the "wealthy and aristocratic class," with the power to "corrupt and subdue republican notions." 4 To a lesser extent similar arguments were made about all corporations, which were likened to "aristocracies" and "monopolies," often controlled by "parcels of speculators." 5 Defenders of corporations argued that were owned by huge numbers of investors, including ordinary people and "widows and orphans," and that stockholding was open to anyone with the resources to purchase a share. 6 Some even argued that access to the corporate form could enable those of "small means" to "come into fair and safe competition with the skillful and wealthy." 7 Did corporations remain dominated by elites, or were those of the "middle order of citizens" able to incorporate their enterprises, or at least purchase shares, in the era of Republican governments? As politics became more democratic, did corporate ownership become more democratic as well? The answers to these questions are central to our understanding of the lacked a market orientation. For example, the very early market orientation among agrarian households in
doi:10.1017/s0022050712000058 fatcat:jkpnlnkr3jgfnlhx4gyrn3duua