few. This need, joined with the demand of investors for a profitable field of investment, led to the creation of a new 2 form of wealth in the shares and bonds of stock companies. With respect to those stockholders it is important to note that the principle of limited liability was applied.3

The modern private corporation, then, with single legal entity, limited liability of stockholders and continuous existence, is in truth a comparatively recent development.4 Pure and simple it is a product of industrial and to a considerable degree of social and political conditions largely peculiar to the nineteenth century of which democracy and individualism are the foundations.5 Davis in his work on "Corporations: Their Origin and Development" defines the modern private corporations as follows:6 "A corporation is a body of persons upon whom the state has

1. Emery, Speculation on the Stock Produce & Exchanges of the U.S. Published in Vol. VII., Columbia College Studies in History, Economics and Public Law. See p., 149 (431).

2. Ibid, p. 149. See also Conant, Wall Street and the Country, p. 145.

3. Conant, Wall Street and the Country, p. 145. 4. Robert L. Raymond, A Statement of the Trust Problem, in Harvard Law Review, Vol. XVI., p. 80. See also Harvard I. Rev. Vol. II, p. 110.

5. This is almost an exact quotation from Davis, Corporations: Their Origin and Development. Davis, however, says "social, political and industrial conditions, as though they were each of equal importance. To the author it seems that the industrial conditions had the most importance, while social and political conditions also contributed, but in a less degree.

conferred such voluntarily accepted but compulsorily maintained relations to one another and to all others that as an autonomous, self-sufficient and self-renewing body they may determine and enforce their common will, and in the pursuit of their private interest may exercise more efficiently social functions both especially conducive to public welfare and most appropriately exercised by associated persons."

In its inception, then, the corporation legally existed primarily for the public welfare and had only those powers specially delegated to it in its charter of incorporation. As such it was and is a potent force in the development of this country.

But it was not long before the

corporation managers and directors were able to give the "pursuit of private interest" precedence over that of the public welfare.

They were protected, too, by our political institutions and theories of the time according to which the

activity of the state was strictly limited. 1 Yet such was

the demand for canals, railways and other public utilities as well as the demand for many other factors of industrial and commercial progress that it "appeared in the minds of men to justify prodigality in the concession of public

1. Introduction, by Henry C. Adams of University of Michigan, to Dixon's State Railroad Control, pp. 4-9.