1. CHAPTER 1 DISCUSSION QUESTIONS
1) Who were jobbers?
2) In 1720, what did the English Parliament do in response to corporate high jinks?
3) What was the South Sea Company?
4) What did the Bubble Act make a criminal offense?
5) What is the genius of the corporation as a business form and its reason for its remarkable rise?
6) What does "limited liability" mean?
7) How did NJ & Delaware seek to attract valuable incorporation business to their jurisdictions?
8) Between 1898 & 1904, America went from having 1,800 corporations to having how many?
9) By the end of the 19th century, courts had fully transformed the corporation into a what?
10) In 1886 the Supreme Court decided that corporations should be protected by what Amendment?
11) In 1908, AT&T launched an advertising campaign, the first of its kind, that aimed at doing what?
12) What term is used to describe the trend of corporations crafting softened images of themselves with
promises of good corporate citizenship & practices of better wages & working conditions?
13) What package of regulatory reforms designed to restore economic health by, among other things, curbing
the powers & freedoms of corporations, did President Roosevelt create in 1934?
14) What was formed in 1973 which operated in cartel-like fashion to control the world's oil supply?
15) What was introduced in 1948 that enabled corporations to take advantage of their newfound mobility without
suffering punishing financial penalties?
16) The deregulatory logic of economic globalization was deepened in 1993 with the creation of what?
17) Fill in the blank: Corporations now ______________ society, perhaps more than governments themselves do.
18) What do corporations use today to create unique & attractive personalities for themselves?
2. WHAT COMES TO MIND WHEN YOU HEAR/READ THE WORD
“CORPORATION”
CORPORATION VS BUSINESS
3. CLIP 1: WHAT IS A CORPORATION?
WHAT IS A CORPORATION?
4. -CORPORATION: A GROUP OF INDIVIDUALS WORKING TOGETHER TO SERVE A
VARIETY OF OBJECTIVES.
-“CORPUS”: LATIN “BODY OF PEOPLE.”
-THE MAIN OBJECTIVE:
-TO EARN LARGE, GROWING, SUSTAINED, LEGAL RETURNS ($$$) FOR THE
PEOPLE WHO OWN THE BUSINESS.
-FORMS:
-BUSINESS
-GOVERNMENT
-POLITICAL
-RELIGIOUS
-CHARITABLE (NON-PROFIT)
5. ADVANTAGES/DISADVANTAGES
ADVANTAGES:
1) LIMITED LIABILITY
-A PERSON’S FINANCIAL LIABILITY IS LIMITED TO THE
VALUE OF A PERSON’S INVESTMENT
2) PERPETUAL SUCCESSION
-THE CONTINUATION OF A CORPORATION’S EXISTENCE
DESPITE THE DEATH, BANKRUPTCY, EXIT FROM THE
BUSINESS, ETC. OF ANY OWNER/MEMBER
DISADVANTAGES:
1) COST & TIME TO ESTABLISH & MAINTAIN
2) LEGAL REQUIREMENTS & REGULATORY RED TAPE
6. THE CORPORATION HAS BECOME THE WORLD’S DOMINANT ECONOMIC
INSTITUTION
WE ARE INESCAPABLY SURROUNDED BY THEIR CULTURE, ICONOGRAPHY, &
IDEAOLOGY
CORPORATIONS:
GOVERN OUR LIVES
DETERMINE WHAT WE EAT
WHAT WE WATCH
WHAT WE WEAR
WHERE WE WORK
WHAT WE DO
7. “THE CORPORATION’S DRAMATIC RISE TO
DOMINANCE IS ONE OF THE REMARKABLE
EVENTS OF MODERN HISTORY, NOT LEAST
BECAUSE OF THE INSTITUTION’S INAUSPICIOUS
BEGINNINGS.”
HISTORY
CLIP 2: BIRTH & EVOLUTION
8. THE RISE OF THE CORPORATION IN EUROPE
•EARLY ON, THE CORPORATION WAS ENGULFED IN CORRUPTION & FRAUD.
•JOBBERS
STOCKBROKERS WHO PROWLED LONDON’S COFFEE SHOPS IN SEARCH OF INVESTORS TO SELL SHARES IN
BOGUS COMPANIES.
•SOUTH SEA COMPANY:
CORPORATION FORMED TO CARRY ON EXCLUSIVE TRADE (MONOLOPY) WITH SPANISH COLONIES OF SOUTH
AMERICA. IN EXCHANGE, IT ASSUMED THE NATIONAL DEBT ENGLAND INCURRED DURING THE WAR OF SPANISH
SUCCESSION.
•SOUTH SEA BUBBLE:
TO WIN OVER POLITICIANS, THE COMPANY GAVE STOCKS IN THEIR BUSINESS. THE POLITICIANS THEN SOLD
THEM BACK TO THE COMPANY FOR PROFIT.
•BUBBLE ACT:
CRIMINAL OFFENSE TO CREATE A COMPANY PRESUMING TO BE A CORPORATE BODY & TO ISSUE TRANSFERABLE
STOCKS WITHOUT LEGAL AUTHORITY.
•1720: ENGLISH PARLIAMENT OUTLAWED THE CORPORATION.
9. THE RISE OF THE CORPORATION IN AMERICA
GREW OUT OF THE INDUSTRIAL REVOLUTION
(MID 1700‘S - MID 1800’S)
-INDUSTRIALIZATION IN AMERICA INVOLVED 3 IMPORTANT
DEVELOPMENTS:
1) TRANSPORTATION
2) ELECTRICITY
3) TECHNOLOGY
11. THE 2 FEDERALLY CHARTERED ENTERPRISES THAT BUILT THE
RAILROAD:
1)UNION PACIFIC RAILROAD CORPORATION
2)CENTRAL PACIFIC RAILROAD COMPANY
12. THE RAILROAD & COPORATE AMERICA
-AS THE RAILROAD INDUSTRY GREW, SO DID THE NUMBER OF
CORPORATIONS TO RUN IT
-US LAID MORE THAN 100,000 MILES OF TRACK BETWEEN 1865-1885
-BY MIDDLE OF 19TH
CENTURY, MIDDLE-CLASS PEOPLE BEGAN TO
INVEST IN CORPORATE SHARES OF RAILROAD CORPORATIONS
-LIMITIED LIABILITY BORN
-LIABILITY OF SHAREHOLDERS LIMITIED TO THE AMOUNTS
THEY INVESTED IN A COMPANY
13. ECONOMIC PARADIGM CHANGE: AGRARIAN TO MANUFACTURING
-AS INDUSTRIES & FACTORIES AROSE, PEOPLE MOVED FROM FARM TOWNS
TO CITIES.
-BY 1900 3 AMERICAN CITIES HAD A POPULATION OVER 1 MILLION:
NEW YORK: 3.5 MILLION
CHICAGO: 1.7 MILLION
PHILADELPHIA: 1.3 MILLION
14. REVOLUTIONARY TRANSFORMATION
-NEW JERSEY & DELAWARE: SOUGHT TO ATTRACT CORPORATIONS BY
GETTING RID OF UNPOPULAR GOVERNMENT RESTRICTIONS
DEREGULATION:
-THE REMOVAL OR REDUCTION OF GOVERNMENT CONTROL ON HOW
BUSINESS IS DONE.
15. 14TH
AMENDMENT
PASSED AT END OF CIVIL WAR TO GIVE EQUAL RIGHTS TO
AFRICAN-AMERICANS.
“ NO STATE CAN DEPRIVE A PERSON OF LIFE, LIBERTY,
OR PROPERTY WITHOUT DUE PROCESS.”
CORPORATIONS ARGUED THAT THEY ARE A “PERSON” &
IN 1886 THE SUPREME COURT AGREED.
17. THE CORPORATION AS A “PERSON”
-THE SUPREME COURT DECISION RECONCEIVED THE CORPORATION AS A
FREE & INDEPENDENT BEING
-THE CORPORATION ENJOYS MANY OF THE RIGHTS OF CITIZENS SUCH AS
THE ABILITY TO:
-OWN PROPERTY
-SIGN BINDING CONTRACTS
-PAY TAXES
-HAVE CERTAIN CONSTITUTIONAL RIGHTS
-PARTICIPATE IN SOCIETY
-CORPORATIONS ALSO HAVE RIGHTS NOT GRANTED TO INDIVIDUAL CITIZENS
-THE RIGHT TO SIGN TREATIES
18. AS THE CORPORATION’S SIZE & POWER GREW, SO DID THE NEED TO
DISSUADE PEOPLE’S FEARS OF IT.
EARLY 1900’S: AMERICANS VIEWED CORPORATIONS AS THREATENING TO
THEIR SOCIAL INSTITUTIONS & GOVERNMENTS.
CORPORATIONS HAVE HAD TO DEVELOP WAYS TO SOFTEN THEIR IMAGE
WITH THE PUBLIC.
19. CORPORATE SOCIAL RESPONSIBILITY (CSR)
-The deliberate inclusion of public interest into corporate decision-
making.
-CSR honors the 3 P’s:
-People, Planet, Profit
-Shareholders vs Stakeholders
Shareholder:
-An individual, group, or organization that legally owns shares of
stock in a company.
*Has a financial stake in the company.
Stakeholder:
-A person, group, or organization that affects or can be affected by
an organization's actions.
*Has an interest in the company.
