on in the second
quarter of the nineteenth century. Then, both in Europe and in
America, the corporate form of organization was extended to a greater
number, and to other kinds, of enterprises. It proved itself to be
well adapted to enterprises for the construction and operation of
canals and railroads, requiring a larger amount of capital than
usually could or would be risked by one person. The investor in a
corporation bought shares, and his liability for debts and losses
was limited by charter to his share capital. It is an advantage that
permanent enterprises of that kind are owned by corporations
with charters perpetual or for long periods. It is possible for
corporations to make investments running for longer periods than would
be safe for individuals. The corporation with an unlimited charter
has legally an immortal life. Sale and change of management are not
necessary on the death or failure in health of any one owner. As the
factory system and large production developed, the corporate form of
organization was found to have these same advantages in manufacturing.
It appeared in textile, iron, mercantile, and other industries. After
1865 the corporate form of organization increased at a cumulative
rate, until now it is applied to many enterprises of small extent and
local in operation. There are 300,000 corporations making returns
to the United States Commissioner of Internal Revenue.[1] There were
70,000 manufacturing corporations, which were 26 per cent of the whole
number of manufacturing establishments, but which employed 76 per cent
of all wage earners and turned out 79 per cent of the whole product.

Sec. 3. #Beginning of corporation problems.# With the corporations
came "the corporation problem," a single name for a complex of
problems--legal, political, moral, and economic--which arise out of
the relations of corporations to their individual stockholders, to
their employees, to the state, to the general public, and to their
competitors in business. The problems differ also in corporations of
different sizes and in different businesses. We shall discuss in
this and succeeding chapters but a few of the larger aspects of the
corporation problem, the railroad, the industrial trust, and certain
other kinds of monopolistic industry.

Of the various forms of corporations, banks first presented problems
calling for economic legislation and regulation. This is explained by
the fact that it was the first kind of