Corporations’ rise to dominance: From the early years to the 1970s and 1980s
Responding to changing economic and political conditions was nothing new for corporations; they had long been an essential component of American society and had learned how to adapt to modifications in the political climate. Corporations were first created in the late seventeenth century in Holland, Great Britain, and elsewhere to mobilize capital for public development projects such as railroads or shipping canals that were too big for individual investors, and for colonization. In the mid–nineteenth century, they played an important role in creating the infrastructures for American industrialization, and by the late nineteenth century, they had become central players in the American economy. Later, through federal legislation, they received additional legal protections such as limited liability, constitutional protections, and extended lifespan. By the end of the twentieth century, most observers across the political spectrum agreed that corporations dominated the global economy and served as the principal agents for modern capitalism.
In some periods, corporations and their allies were more successful in achieving their business and political objectives than others. In the 1880s, for example, the “robber barons”—the corporate leaders of the steel, oil, and railroad industries—were able to win new government protection for trusts; and in the 1920s, prior to the Great Depression, business persuaded the federal government to keep taxes low, tariffs high, and regulation weak. At other times, popular movements won important victories from business, including the creation of the Food and Drug Administration in 1906, the right for workers to organize labor unions, and, during the New Deal, the creation of new regulatory agencies such as the Securities and Exchange Commission and the Federal Communications Commission. In 1936, campaigning for reelection, Franklin D. Roosevelt articulated this populist theme, “We now know that government by organized money is just as dangerous as government by organized mob.” Even in these more populist moments, however, corporate leaders were able to play major roles in structuring reforms and government regulations to ensure that their long-term interests were not sacrificed.