elled. In its essence it represented the governing body of the philanthropists whose contributions it administered. The colonists were a class dependent upon them, and therefore normally subject to their government.

Not only were American governmental institutions largely derived from corporations, but American conceptions of political liberty were colored by conceptions of corporate activity. If they were not so colored, it may at least be said that they were given greater vigor and effectiveness through forms of organization derived from corporations. The growth of political liberty in England was hampered by the presence of feudal institutions; it has had to be developed even to the present day under restrictions imposed on it by the necessity of expressing itself through forms not fitted for it or of

though constituting a most important part of it, and transforming it into the province. They existed prior to the colony, and derived their authority from a source outside of it" (pp. 261, 262). It may fairly be inferred from the statements quoted that the term 'colonial corporation" is intended to be restricted to corporations identical with colonies. Such a restriction would hardly be justifiable; corporations created for the founding of colonies, even if they do not develop into identity with them, ought not to be excluded; the London Company and Plymouth Company, notwithstanding express terms of incorporation were not used in the charter of 1606, were certainly corporations. On the other hand, Massachusetts, Rhode Island and Connecticut were hardly corporations, though the first was evolved from one, and the second and third were expressly called corporations in their charters. A corporation is a group of persons within a greater body of persons politically organized in the state or a subordinate part of it, and endowed with a particular social form of structure; the structure is capable of use for other than strictly corporate purposes; when it comes to be used, by expansion of membership or otherwise, as the political constitution of a state or of an entire subordinate part of it, its content is no longer a corporate group. The members of a corporation, moreover, enjoy exceptional rights and are burdened with exceptional duties in the society of which they are a part; such was not the case in Massachusetts, Rhode Island and Connecticut, for all (and not merely a part) of the colonists (subject only to the qualifications for the franchise) enjoyed the rights and duties described in the charters. They may best be viewed as self-governing provinces.

expressing itself in actual opposition to them. In America, however, the field was almost clear; feudal institutions took no firm root in the new soil. In England, corporations had been the framework within which society had made most of its progress out of the feudal organization; in America, then, where there were few remnants of feudalism, it might have been expected that corporate organization would afford the means of rapid social progress. It was the presence of the feudal element in England and its absence in America that, more than any other difference, widened the breach between the motherland and the colonies until it could not be closed again. The theory of voluntary association, with the subsequent obligation of maintaining the relations assumed until the purpose of the association is attained-the theory on which the corporation is based-is identical, when applied to the state, with the theory of the "social contract." The relations assumed by the American colonists seemed to be voluntarily assumed, but the consequences of assuming them could not be avoided; the existence of a power higher than that of the colonies, from which the latter derived its validity, obscured the element of necessity in colonial institutions, and substituted the less substantial idea of their corporate origin. A corporation is created by the state, by a higher power, before which it is strong because it may rely on it for the protection of its exceptional rights and weak because it depends on the higher power for its existence. Its strength and its weakness both demand a strict definition of its rights and duties; it must therefore have a charter. The perpetual recourse to charters taught the American colonists to value a written constitution. Corporations and colonies modelled on them did not rely for stability and certainty of rights and duties on a body of customs; when the colonies became States and later the States became part of a Federal state, the habit of relying on charters mani

fested itself in the formation of written constitutions.' The principle of the "strict construction" of constitutions, so familiar to students of American public law, is merely an application to the state of the principles applied in ascertaining the rights and duties of corporations; the theory of "implied powers," which has been partially expressed in the Federal constitution, extends no further in American public law than in the law of corporations; if a corporation be granted existence for certain purposes and the right to exercise certain powers, it is granted by implication the powers incidental to its corporate existence, powers clearly in harmony with the purposes for which it is created and the powers incidentally necessary for the exercise of its expressed powers. In truth, as far as concerns the system of public law developed in the United States, the people have simply created corporations of themselves and construe their rights and duties accordingly. Quite in harmony with their attitude towards themselves is the organization of the state behind the constitution-the state that has created corporations of itself with a supreme court to stand between the state as state and as corporation, and to protect it in either capacity against itself in the other capacity. When the

As the constitution of the United States "is itself primarily a body of written law, so it is based upon successive strata of written constitutional law. . . . The general frame of government established by the [federal] constitution and the general guarantee of rights contained in it, are themselves the result of historical growth through a series of written constitutions. 1. The worship of a written constitution, which has sometimes been satirized as a sentiment peculiar to the American people, has its explanation in the fact that the genesis and growth of political liberty in this country, whether considered in the early colonial period

or in the later national period, have taken place in great measure within what may be called the sphere of written law."-William C. Morey, in "The Genesis of a Written Constitution," Annals of American Academy of Political and Social Science, April, 1891.

As an illustration of the effect of the "corporation idea" on views of political institutions, the language used by Professor Franklin H. Giddings

colonies became independent States, they simply substituted the American people for the king of England as the source of political power and left themselves as politically organized where they had been before, midway between themselves as sovereign and themselves as subjects.

in his Principles of Sociology (p. 177) may be quoted. "In the constitution of the state the most important subordinate bodies are the public corporations. The state first incorporates itself, defining its territory and its membership, describing its organization and laying upon itself the rules of procedure by which it will systematically conduct its affairs. It next in like manner incorporates the local subdivisions of society, such as counties, townships and cities, and assigns to each certain rights, duties and powers." The expression by which the state is described as incorporating itself is plainly not used figuratively; but the performance of such an act by the state is contrary to any sound conception of the nature of corporations or of the process by which they are created.

VII

THE LEGAL CONCEPTION OF CORPORATIONS

THE

HE conception of an institution found in a prevailing system of law is not always identical with a sociological conception of it; it would be nearer the truth to say that such identity never exists. The system of law lingers behind society in its progress and delays to translate newly formed social relations into enforceable rights and obligations until (in many cases) long after they have been fully formed. Not only does the law negatively fail to interpret promptly and fully new social relations, but it positively preserves decadent social relations in form long after they have (in many respects) ceased to be effective in substance. Even when the point is reached at which new social relations can be no longer left without legal expression, they are expressed in terms of the existing system of law with the least possible disturbance of the principles of which it is composed; if necessary to reduce the new relations to harmony with the old in the system of law, resort will even be had to fictions-intentional assumptions of things as facts that are in truth not facts. In a perfect system of law there would be no fictions; the use of them is a confession of weakness, of the inability of the system to faithfully reflect and support social relations. The failure of a system of law to adequately express new social relations is very apparent in the United States at the present time, where the principles of equality before the law, freedom of contract and the preservation of private property seem

VOL. II.-14.