The public control of corporate power: Revisiting the 1909 U.S. corporate tax from a comparative perspective

Theoretical Inquiries in Law

Volumn 11, Issue 2, 2010, Pages 497-538

  Mehrotra, Ajay K ^a  

^a INDIANA UNIVERSITY   (United States)

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[No Author keywords available]

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EID: 77954468525     PISSN: None     EISSN: 15653404     Source Type: Journal    
DOI: 10.2202/1565-3404.1250     Document Type: Article

References (236)

1. GLENN PORTER, THE RISE of BIG BUSINESS, 1860-1910 (1973);
2. MORTON KELLER, REGULATINGANEWECONOMY:PUBLICPOLICYANDECONOMICCHANGE INAMERICA, 1900-1933 (1990);
3. OLIVER ZUNZ, MAKING AMERICA CORPORATE, 1870-1920 (1990);
4. ALAN TRACTENBURG, THE INCORPORATION of AMERICA: CULTURE and SOCIETY in THE GILDED AGE (1982).
5. ALFRED D. CHANDLER, JR., THE VISIBLE HAND: THE MANAGERIAL REVOLUTION in AMERICAN BUSINESS (1977);
6. LOUIS GALAMBOS, THE PUBLIC IMAGE of BIG BUSINESS in AMERICA, 1880-1940 (1975);
7. MARTIN J. SKLAR, THE CORPORATE RECONSTRUCTION of AMERICAN CAPITALISM, 1890-1916 (1988);
8. DAVID BUNTING, THE RISE of LARGE AMERICAN CORPORATIONS, 1889-1919 (1987).
9. On the importance of Chandler's work to the development of modern business history see Richard R. John, Elaborations, Revisions, Dissents: Alfred D. Chandler, Jr.'s, the Visible Hand After Twenty Years, 71 BUS. HIST. REV. 151 (1997).
10. See, e.g., ALLAN NEVINS, STUDY in POWER: JOHN D. ROCKEFELLER, INDUSTRIALIST and PHILANTHROPIST (1953);
11. MAURY KLEIN, THE CHANGE MAKERS: FROM CARNEGIE to GATES, HOW THE GREAT ENTREPRENEURS TRANSFORMED IDEAS INTO INDUSTRIES 2-3 (2004).
12. CHARLES FRANCIS ADAMS, JR. & HENRY ADAMS, CHAPTERS of ERIE and OTHER ESSAYS 30 (Boston, Osgood&Co. 1871)
13. quoted in THOMASK.MCCRAW, PROPHETS OFREGULATION: CHARLES FRANCISADAMS, LOUIS D. BRANDEIS, JAMES M. LANDIS, ALFRED E. KAHN 16 (1984);
14. MATTHEW JOSEPHSON, THE ROBBER BARONS: THE GREAT AMERICAN CAPITALISTS, 1861-1901 (1934).
15. JAMES WILLARD HURST, THE LEGITIMACY of THE BUSINESS CORPORATION in THE LAWOF THEUNITED STATES, 1780 - 1970 (1970);
16. HERBER THOVENKAMP, ENTERPRISE and AMERICAN LAW, 1836-1937 (1991).
17. NAOMI R. LAMOREAUX, THE GREAT MERGER MOVEMENT in AMERICAN BUSINESS, 1895-1904 (1988);
18. RALPH L. NELSON, MERGER MOVEMENTS in AMERICAN INDUSTRY, 1895-1956 (1959).
19. SIDNEY RATNER, AMERICAN TAXATION: ITS HISTORY AS A SOCIAL FORCE in DEMOCRACY (1942);
20. W. ELLIOT BROWNLEE, FEDERAL TAXATION in AMERICA: A SHORT HISTORY (1996);
21. STEVEN R. WEISMAN, THE GREAT TAX WARS: LINCOLN TOWILSON-THE FIERCE BATTLES OVERMONEY and POWER THAT TRANSFORMED THE NATION (2002).
22. Letter from H.S. Wilson to Nils P. Haugen, Wis. Tax Comm'r (Sept. 1, 1910) (Box 56, Nils P. Haugen Papers, the State Historical Society of Wisconsin, Madison, Wisconsin).
23. JOHN D. BUENKER, THE INCOME TAX and THE PROGRESSIVE ERA (1985);
24. RATNER, supra note 7;
25. Marjorie E. Kornhauser, Corporate Regulation and the Origins of the Corporate Income Tax, 66 IND. L.J. 53 (1990);
26. Reuven S. Avi-Yonah, Corporations, Society, and the State: A Defense of the Corporate Tax, 90 VA. L. REV. 1193 (2004) [hereinafter Avi-Yonah, Corporations, Society];
27. Avi-Yonah, Why Was the U.S. Corporate Tax Enacted in 1909?, in 2 STUDIES in THE HISTORY of TAX LAW 377 (John Tiley ed., 2007).
28. Steven A. Bank, Entity Theory as Myth in the Origins of the Corporate Income Tax, 43 WM. & MARY L. REV. 173 (2001);
29. Steven A. Bank, A Capital Lock-In Theory of the Corporate Tax, 94 GEO. L.J. 889 (2006);
30. Steven A. Bank, Entity Theory as Myth in the U.S. Corporate Excise Tax of 1909, in 2 STUDIES in THE HISTORY of TAX LAW, supra note 9, at 393 [hereinafter Bank, Entity Theory].
31. CHRISTOPHER J. SCHMITZ, THE GROWTH of BIG BUSINESS in THE UNITED STATES and WESTERN EUROPE, 1850-1939 (1995);
32. MANSEL G. BLACKFORD, THE RISE of MODERN BUSINESS in GREAT BRITAIN, THE UNITED STATES, and JAPAN (1998);
33. ALFRED D. CHANDLER, JR., SCALE and SCOPE: THE DYNAMICS of INDUSTRIAL CAPITALISM (1990).
34. For a succinct comparative history of the beginnings of income taxation in these countries see generally Bernard Grossfeld & James D. Bryce, A Brief Comparative History of the Origins of Income Taxation in Great Britain, Germany, and the United States, 2 AM. J. TAX POL'Y 211 (1983). Since German tax policy at the time varied by province, this Article focuses on Prussia, the largest and most industrial of German states, as the leading representation of German corporate tax policy.
35. MARTIN DAUNTON, TRUSTING LEVIATHAN: THE POLITICS of TAXATION in BRITAIN, 1799 - 1914, at 210-18 (2001);
36. MARTIN DAUNTON, JUST TAXES: THE POLITICS of TAXATION in BRITAIN, 1914-1979, at 89-94 (2002) [hereinafter DAUNTON, JUST TAXES];
37. PETER A. HARRIS, CORPORATE/SHAREHOLDER INCOME TAXATION (1996).
38. in recent years, the U.S. has provided some relief from double taxation by taxing shareholder returns on corporate profits (dividends and capital gains) at lower rates. See Jobs and Growth Tax Relief Reconciliation Act of 2003, Pub. L. No.108-27, 117 Stat. 752.
39. HUGH J. AULT & BRIAN J. ARNOLD, COMPARATIVE INCOME TAXATION: A STRUCTURAL ANALYSIS, 273-277 (2004);
40. VICTOR THURONYI, COMPARATIVE TAX LAW 281-285 (2003);
41. HARRIS, supra note 13.
42. Legal historians have identified similar paradoxes in contrasting nineteenth-century Anglo-American trust law. See, e.g., Joshua Getzler, Transplantation and Mutation in Anglo-American Trust Law, 10 THEORETICAL INQUIRIES L. 355 (2009).
43. For a sample of the broad literature on comparative-historical political economy see generally ANDREW SHONFIELD, MODERN CAPITALISM: THE CHANGING BALANCE of PUBLIC and PRIVATE POWER (1969);
44. CREATING MODERN CAPITALISM: HOW ENTREPRENEURS, COMPANIES, and COUNTRIES TRIUMPHED in THREE INDUSTRIAL REVOLUTIONS (Thomas K. McCraw ed., 1997);
45. VARIETIES of CAPITALISM: THE INSTITUTIONAL FOUNDATIONS of COMPARATIVEADVANTAGE (Peter A. Hall & David Soskice eds., 2001).
46. Steven A. Bank, the Dividend Divide in Anglo-American Corporate Taxation, 30 J. CORP. L. 2 (2004). Comparative differences in corporate governance may be explained, as Colleen Dunlavy has recently contended, by institutional variations in the intergovernmental division of policymaking power and in the diversity of shareholder rights across place and time.
47. See Colleen A. Dunlavy, Social Conceptions of the Corporation: Insights from the History of Shareholding Voting Rights, 63 WASH. & LEE L. REV. 1347 (2006);
48. Colleen Dunlavy & Thomas Welskopp, Myths and Peculiarities: Comparing U.S. and German Capitalism, 41 BULL. GERMAN HIST. INST. 33 (2007).
49. Kimberly J. Morgan & Monica Prasad, the Origins of Tax Systems: A French- American Comparison, 114 AM. J. SOC. 1350 (2009).
50. For more on how historical American political responses to concentrated economic power shaped the structure of U.S. corporate governance see generally MARK J. ROE, STRONG MANAGERS, WEAK OWNERS: THE POLITICAL ROOTS of AMERICAN CORPORATE FINANCE (1994).
51. SVEN STEINMO, TAXATION and DEMOCRACY: SWEDISH, BRITISH, and AMERICAN APPROACHES to FINANCING THEMODERN STATE (1993).
52. in a variant of this view, the American legal historian, Robert Stanley, has argued that the origins of the U.S. income tax can be traced to a "centrist" political ideology that used the income tax to placate more radical calls for redistribution. ROBERT STANLEY, DIMENSIONS of LAW in THE SERVICE of ORDER: ORIGINS of THE FEDERAL INCOME TAX, 1861-1913 (1993).
53. ROBERT A. KAGAN, ADVERSARIAL LEGALISM: THE AMERICAN WAY of LAW (2001);
54. DAVIDVOGEL, KINDRED STRANGERS: THEUNEASY RELATIONSHIP BETWEEN BUSINESS and POLITICS in AMERICA (1996).
55. Alfred D. Chandler, Jr., Government Versus Business: An American Phenomenon, in BUSINESS and PUBLIC POLICY 1 (John Dunlop ed., 1980);
56. see also the essays contained in REGULATION in PERSPECTIVE: HISTORICALESSAYS (Thomas K. McCraw ed., 1981). "Because two sets of administrative hierarchies grew at different periods of time for different reasons to carry out different functions with different objectives, two quite different cultures appeared," explained Chandler in his classic essay. "The work, attitudes, and perspectives of the business manager and the civil servant became and remained almost as distinct and separate as those of the humanist and the scientist."
57. See Chandler, supra, at 4.
58. See, e.g., Thomas K. McCraw, Rethinking the Trust Question, in REGULATION in PERSPECTIVE, supra note 22, at 4-5.
59. James T. Kloppenburg, Institutionalism, Rational Choice and Historical Analysis, 28 POLITY 125 (1995).
60. If one conceptualizes jurisprudence and economic thought as subsets of national cultures and traditions, the conventional narratives of American corporate taxation can be seen as cultural histories of taxation. Scholarly debates over regulation versus remittance often turn on the meanings of corporate personality, and such conceptions of the corporation are perhaps embedded in differing cultures and traditions.
61. For more on the comparative-historical importance of political power, national culture, and economic policymaking in the late nineteenth century see generally FRANK DOBBIN, FORGING INDUSTRIAL POLICY: THE UNITED STATES, BRITAIN, and FRANCE in THE RAILWAY AGE (1994).
62. Tariff Act of 1909, ch. 6, $ 38, 36 Stat. 11, 112-113
63. the law excluded "amounts received by [corporations] as dividends upon stock of other corporations." Id.
64. See sources cited supra notes 9-10.
65. Act of June 30, 1864, ch. 173, $ 117, 13 Stat. 223, 281-82. the law provided that "the gains and profits of all companies whether incorporated or partnership . . . shall be included in estimating the annual gains, profits, or income of any person entitled to the same, whether divided or otherwise." Id.
66. Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429 (1895).
67. Tariff Act of 1894, ch. 349, $ 32, 28 Stat. 509.
68. Act of June 13, 1898, ch. 448, $ 27, 30 Stat. 448 (1898).
69. - 31 CONG. REC. 5090 (1898) (statement of Sen. Horace Chilton, an early sponsor of the 1898 law). the 1898 levy, like the 1909 law, was specifically framed as an "excise" tax to comply with the Pollock decision's prohibition on unapportioned direct taxes.
70. Bank, Entity Theory, supra note 10, at 396.
71. KOSSUTH KENT KENNAN, THE INCOME TAX: METHODS and RESULTS in VARIOUS COUNTRIES 275 (1910); Bank, Entity Theory, supra note 10, at 399.
72. Spreckels Sugar Refining Co. v. McClain, 192 U.S. 397 (1904).
73. Bank, Entity Theory, supra note 10, at 398-399
74. in 1897, Standard Oil was the largest industrial corporation in the country, with over $256 million in total assets, and American Sugar was the third largest with $116 million in total assets. BUNTING, supra note 2, at 149.
75. Although neither Kornhauser nor Avi-Yonah examine the 1898 excise tax in detail, the historical record surrounding the sugar and oil excise taxes supports their claims about the regulatory roots of the American corporate tax. See Kornhauser, supra note 9; Avi-Yonah, Corporations, Society, supra note 9.
76. Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429 (1895);
77. Spreckels Sugar Refining Co., 192 U.S. 397.
78. Kornhauser, supra note 9, at 94-113;
79. Bank, Entity Theory, supra note 10, at 401-404
80. U.S. PRESIDENT, TAX ONNET INCOME OFCORPORATIONS, S. DOC. NO.61-98 (1909).
81. Taft's message is favorably quoted by all the leading accounts. See RATNER, supra note 7, at 286-87;
82. BUENKER, supra note 9, at 106-08;
83. Kornhauser, supra note 9, at 95-99;
84. Avi-Yonah, Corporations, Society, supra note 9, at 1218-20;
85. Bank, Entity Theory, supra note 10, at 405-413
86. S. DOC. NO.61-98, at 1.
87. Id. at 3.
88. Bank, Entity Theory, supra note 10, at 406 ("The notion that the corporation was a 'source' rather than the 'object' reinforced the tax's status as a surrogate for the income tax and the corporation's status as a surrogate for the stockholder."). Others have argued that Taft's express "reference to the corporation's ability to pay (as opposed to the shareholders') has a real entity overtone." Avi-Yonah, Corporations, Society, supra note 9, at 1219.
89. S. DOC. NO.61-98, at 3.
90. MICHAELMCGERR, A FIERCEDISCONTENT: THERISE and FALL of THE PROGRESSIVE MOVEMENT in AMERICA, 1870-1920, at 169-174 (2003);
91. MORTON KELLER, THE LIFE INSURANCE ENTERPRISE, 1885-1910: A STUDY in THE LIMITS of CORPORATE POWER 12-14, 27-28 (1963).
92. S. DOC. NO.61-98, at 3.
93. For a sample of the conflicting congressional justifications see generally 44 CONG. REC. 4415-4498 (1909).
94. John Dewey, the Historical Background of Corporate Legal Personality, 35 YALE L.J. 655, 669 (1926).
95. Bruce Yandle, Bootleggers and Baptists: The Education of a Regulatory Economist, 7 REGULATION 12 (1983).
96. the early tax treatise writers consistently examined subnational as well as transnational comparisons as part of their comprehensive studies of taxation. See, e.g., EDWIN R.A. SELIGMAN, THE INCOME TAX (1914); KENNAN, supra note 34;
97. HENRY CARTER ADAMS, SCIENCE of FINANCE, AN INVESTIGATION of PUBLIC EXPENDITURE and PUBLIC REVENUES (New York, H. Holt & Co. 1898). More ecently, scholars working within the framework of historical institutionalism have returned to the significance of subnational comparisons.
98. See, e.g., ELIZABETH S. CLEMENS, THE PEOPLE'S LOBBY: ORGANIZATIONAL INNOVATION and THE RISE of INTEREST GROUP POLITICS in THE UNITED STATES (1997);
99. R. RUDY HIGGENS-EVENSON, THE PRICE of PROGRESS: PUBLIC SERVICES, TAXATION and THE AMERICAN CORPORATE STATE, 1877-1929 (2003).
100. As late as 1902, property taxes accounted for more than half of total state tax revenue. 5 HISTORICAL STATISTICS of THE UNITED STATES 40 (Susan B. Carter et al. eds., millennial ed. 2006) (Series Ea247-275);
101. John Joseph Wallis, American Government Finance in the Long Run, 1790 - 1990, 14 J. ECON. PERSP. 61 (2000).
102. CLIFTON K. YEARLEY, THE MONEY MACHINES: THE BREAKDOWN and REFORM of GOVERNMENTAL and PARTY FINANCE in THE NORTH, 1860-1920 (1970);
103. MORTON KELLER, AFFAIRS of STATE: PUBLIC LIFE in LATE NINETEENTH CENTURY AMERICA 114 (1977);
104. GLENN W. FISHER, THEWORST TAX? A HISTORY of THE PROPERTY TAX in AMERICA (1996).
105. JOHN TEAFORD, THE RISE of THE STATES: EVOLUTION of AMERICAN STATE GOVERNMENT 43-45 (2002).
106. On the global historical importance of "quasi-voluntary compliance" to the effectiveness of tax systems, see MARGARET LEVI, of RULE and REVENUE (1988).
107. Edwin R.A. Seligman, the Taxation of Corporations I, 5 POL. SCI. Q. 269, 269 (1890) [hereinafter Seligman, Taxation of Corporations I]. Seligman was among the economic experts who underscored the uncertainty of determining the incidence of corporate taxes.
108. See generally EDWIN R.A. SELIGMAN, THE SHIFTING and INCIDENCE of TAXATION (1892).
109. RICHARD T. ELY, TAXATION in AMERICAN STATES and CITIES 131 (New York, T.Y. Crowell 1888).
110. HIGGENS-EVENSON, supra note 52, at 15.
111. Act of Apr. 23, 1823, ch. 267, $$ 14-15, 1823 N.Y. Laws 390, 395 (1823).
112. Seligman, Taxation of Corporations I, supra note 57, at 271.
113. Id. at 273 (citing MASS. GEN. LAWS $ 2, 158 (1832)).
114. Edwin R.A. Seligman, the Taxation of Corporations III, 5 POL. SCI. Q. 636 (1890).
115. Act to Revise, Amend, and Consolidate the Several Laws Taxing Corporations, Brokers, and Bankers, 1868 Pa. Laws 108, $$ 4, 6;
116. Seligman, Taxation of Corporations I, supra note 57, at 299.
117. U.S. DEP'T of COMMERCE & LABOR, BUREAU of THE CORPS., TAXATION of CORPORATIONS II - MIDDLE ATLANTIC STATES 8 (1910). Seligman had earlier made the same claim in his characteristically eloquent style: "We have in the United States a chaos of practice - a complete absence of principle."
118. Seligman, Taxation of Corporations I, supra note 57, at 269.
119. TONY ALLAN FREYER, PRODUCERS VERSUS CAPITALISTS: CONSTITUTIONAL CONFLICT in ANTEBELLUM AMERICA 92-136 (1994).
120. YEARLEY, supra note 54;
121. HIGGENS-EVENSON, supra note 52.
122. TEAFORD, supra note 55, at 135-137
123. Even with regards to sales taxes, some state governments attempted to legislate the incidence of these rather ambiguous levies. See ROBERTMURRAY HAIG ET AL., THE SALES TAX in THE AMERICAN STATES: A STUDY MADE UNDER THE DIRECTION of ROBERTMURRAY HAIG 29-37 (1934).
124. Kornhauser, supra note 9, at 65-68;
125. SKLAR, supra note 2, at 282-85;
126. see also Melvin I. Urofsky, Proposed Federal Incorporation in the Progressive Era, 26 AM. J. LEGAL HIST. 160 (1982).
127. CHARLES J. BULLOCK, SELECTED READINGS in PUBLIC FINANCE 350 (1906);
128. TEAFORD, supra note 55, at 52.
129. REPORT of THE COMMISSION ON TAXATION of CALIFORNIA 77 (1906) [hereinafter CAL. TAX COMM'N].
130. Id. at 79-80.
131. TEAFORD, supra note 55, at 53-54.
132. Charles W. McCurdy, American Law and the Marketing Structure of the Large Corporation, 1875-1890, 38 J. ECON. HIST. 637 (1978);
133. Richard Sylla, the Progressive Era and the Political Economy of Big Government, 5 CRITICAL REV. 531 (1991);
134. DOBBIN, supra note 25, at 58, 116.
135. EDWIN R.A. SELIGMAN, ESSAYS in TAXATION 182-184 (New York, Macmillan & Co. 1895).
136. ADAMS, supra note 4;
137. FRANK NORRIS, THE OCTOPUS (1901).
138. TEAFORD supra note 55, at 51-54;
139. HIGGENS-EVENSON, supra note 52, at 98-99.
140. Ajay K. Mehrotra, Envisioning the Modern American Fiscal State: Progressive-Era Economists and the Intellectual Foundations of the U.S. Income Tax, 52 UCLA L. REV. 1793 (2005).
141. GEORGE CLAPPERTON, TAXATION of CORPORATIONS: REPORT ON SYSTEMS EMPLOYED INVARIOUS STATES PREPAREDUNDER THEDIRECTION of THE INDUSTRIAL COMMISSION 8-9 (1901);
142. Favors an Income Tax, N.Y. TIMES, Mar. 28, 1901, at 5.
143. U.S. DEP'T of COMMERCE & LABOR, BUREAU of THE CORPS., TAXATION of CORPORATIONS I, at 3 (1909).
144. Id. at 7.
145. Id. at 16.
146. CAL. TAX COMM'N, supra note 72, at 14.
147. Nils P. Haugen, the Wisconsin Income Tax, 6 ST. & LOCAL TAX'N 324, 324 (1913).
148. JOHN D. BUENKER, THE HISTORY of WISCONSIN, VOL.IV: THE PROGRESSIVE ERA, 1893-1914 (1998);
149. W. ELLIOT BROWNLEE, PROGRESSIVISM and ECONOMIC GROWTH: THE WISCONSIN INCOME TAX, 1911-1929 (1974);
150. Ajay K. Mehrotra, Forging Fiscal Reform: Constitutional Change, Public Policy, and the Creation of Administrative Capacity in Wisconsin, 1880-1920, 20 J. POL'Y HIST. 94 (2008).
151. Alfred D. Chandler, Jr., the Emergence of Managerial Capitalism, 58 BUS. HIST. REV. 473 (1984) [hereinafter Chandler, Managerial Capitalism];
152. see also CHANDLER, supra note 11.
153. For a reinterpretation of Chandler's comparison of Anglo-American business history, see Geoffrey Jones, Great Britain: Big Business, Management, and Competitiveness in Twentieth-Century Britain, in BIG BUSINESS and THE WEALTH of NATIONS 102 (Alfred D. Chandler, Jr., Franco Amatori & Takashi Hikino eds., 1997).
154. Chandler, supra note 22;
155. Thomas K. McCraw, Business and Government: The Origins of the Adversary Relationship, 26 CAL. MGMT. REV. 33 (1984).
156. Morton J. Horwitz, Santa Clara Revisited: The Development of Corporate Theory, 88W. VA. L. REV. 173 (1985);
157. Gregory A. Mark, the Personification of the Business Corporation in American Law, 54 U. CHI. L. REV. 1441 (1987);
158. Ron Harris, the Transplantation of the Legal Discourse on Corporate Personality Theories: From German Codification to British Political Pluralism and American Big Business, 63 WASH. & LEE L. REV. 1421 (2006).
159. DAUNTON, JUST TAXES, supra note 13, at 93;
160. Harris, supra note 89.
161. ROE, supra note 19, at 60-61, 171-173
162. HARRIS, supra note 13 , at 82-83.
163. Bank, Entity Theory, supra note 10, at 394-95;
164. Avi-Yonah, Corporations, Society, supra note 9, at 1212-1215
165. See sources cited supra notes 9-10.
166. W. Elliot Brownlee, Wilson and Financing the Modern State: The Revenue Act of 1916, 129 PROC. AM. PHIL. ASS'N 173 (1985);
167. W. Elliot Brownlee, Historical Perspective on U.S. Tax Policy, in DOES ATLAS SHRUG? THE ECONOMIC CONSEQUENCES of TAXING THE RICH 44 (Joel B. Slemrod ed., 2000).
168. Although business historians have disagreed about when managerial capitalism finally replaced family capitalism in the U.K, most would concur that "prior to 1914 family dominance was very much the prevalent pattern in the U.K.'s public companies." Brian R. Cheffins, Law, Economics, and the UK's System of Corporate Governance: Lessons from History, 1 J. CORP. L. STUD. 71, 82 (2001).
169. For more on the history of British corporate governance, see generally CHANDLER, supra note 11, ch. 7;
170. LESLIE HANNAH, THE RISE of THE CORPORATE ECONOMY chs. 7-9 (1976).
171. Chandler, Managerial Capitalism, supra note 87, at 496;
172. see also, CHANDLER, supra note 11.
173. Chandler, supra note 22.
174. On the rise of American national administrative capacity, see generally STEPHEN SKOWRONEK, BUILDING A NEW AMERICAN STATE: THE EXPANSION of NATIONAL ADMINISTRATIVE CAPACITIES, 1877-1920 (1982).
175. RON HARRIS, INDUSTRIALIZING ENGLISH LAW: ENTREPRENEURSHIP and BUSINESS ORGANIZATION, 1720 - 1844, at 112-13, 43-45 (2000).
176. Id. at 112-114
177. Chandler, supra note 22;
178. McCraw, supra note 88.
179. Horwitz, supra note 89, at 179-180
180. ERNST FREUND, THE LEGAL NATURE of CORPORATIONS (Chicago, Univ. of Chi. Press 1897).
181. Harris, supra note 89, at 1460-1461
182. Id. On the relationship between academic ideas and the British judiciary see generally NEIL DUXBURY, JURISTS and JUDGES: AN ESSAY ON INFLUENCE 1-4, 61-116 (2001)..
183. Mark, supra note 89, at 1465-66;
184. DUXBURY, supra note 105, at 5-22;
185. NORRIS, supra note 77.
186. See, e.g., SELIGMAN, supra note 76;
187. KENNAN, supra note 34.
188. Mersey Docks & Harbour Board v. Lucas, (1883) 8 App. Cas. 891;
189. ARTHUR M. ELLIS, A GUIDE to THE INCOME TAXACTS FOR THEUSE of THE INCOME TAX PAYER (London, Stevens & Sons 1886) (citing 53 L.R.Q.B. 4).
190. ELLIS, supra note 108, at 92.
191. See, e.g., Income Tax Act, 1842, 5 & 6 Vict., c. 35, $ 54 (Eng.).
192. SEAN REAMONN, THE PHILOSOPHY of THE CORPORATE TAX 29 (1970);
193. HARRIS, supra note 13, at 76.
194. DAUNTON, JUST TAXES, supra note 13, at 55-57;
195. Martin J. Dauton, How to Pay for the War: State, Society and Taxation in Britain 1917-1924, 111 ENG. HIST. REV. 882 (1996).
196. J.C. Stamp, the Special Taxation of Business Profits in Relation to the Present Position of National Finance, 20 ECON. J. 411 (1919).
197. HARRISON B. SPAULDING, THE INCOME TAX in GREAT BRITAIN and THE UNITED STATES 86-87 (1927).
198. Id. at 92.
199. Id. at 93-94. Modern British historians have bolstered Spaulding's interpretation: Corporate taxation did not have a purchase in British fiscal policy, for it contradicted the assumption that firms were agents rather than taxable entities. Corporation taxation did not, as in the United States, connect with hostility to big business or with opposition to a federal income tax. On the contrary, the income tax was seen as the most equitable system of taxation. DAUNTON, JUST TAXES, supra note 13, at 93.
200. MARK HEWITSON, WILHELMINE GERMANY in IMPERIAL GERMANY, 1871-1918, at 40-60 (James Retallack ed., 2008);
201. EDGAR FEUCHTWANGER, IMPERIAL GERMANY, 1850-1918, at 61-62, 104-05 (2001).
202. Grossfeld & Bryce, supra note 12, at 235-36;
203. HARRIS, supra note 13, at 82.
204. See supra text accompanying notes 103-106
205. MORTON HORWITZ, THE TRANSFORMATION of AMERICAN LAW 1870-1960: THE CRISIS of LEGAL ORTHODOXY 71-72 (1994).
206. CHANDLER, supra note 11, at 12.
207. For a recent reassessment of the contrasts between U.S. and German political economy during the turn of the twentieth century, see Dunlavy & Welskopp, supra note 18.
208. CHANDLER, supra note 11, at 393.
209. CHANDLER, supra note 11, at 398;
210. ROE, supra note 19, at 171-173
211. VINCENT P. CAROSSO, INVESTMENTBANKINGINAMERICA:AHISTORY25-45 (1970).
212. CHANDLER, supra note 11, at 398.
213. More recent historical investigations have called into question the extent to which the German "great banks" (Großebanken) monitored or controlled large-scale German firms. Dunlavy & Welskopp, supra note 18, at 42. Still, the historical contrast in corporate financing between Germany and the U.S. remains relatively pertinent.
214. JURGEN KOCKA, INDUSTRIAL CULTURE and BOURGEOIS SOCIETY: BUSINESS, LABOR, and BUREAUCRACY in MODERN GERMANY 170 (1999);
215. JEFFREY R. FEAR, ORGANIZING CONTROL: AUGUST THYSSEN and THE CONSTRUCTION of GERMAN CORPORATEMANAGEMENT 15 (2005).
216. Detlev F. Vagts, Railroads, Private Enterprise, and Public Policy: Germany and the United States, 1870-1920, in LAW and THE FORMATION of THE BIG ENTERPRISES in THE NINETEENTH and EARLY TWENTIETH CENTURIES 604, 613 (Norbert Horn & Jurgen Kocka eds., 1979).
217. Dunlavy & Welskopp, supra note 18, at 50-52;
218. DOBBIN, supra note 25, at 3, 87.
219. TONY FREYER, REGULATING BIG BUSINESS: ANTITRUST in GREAT BRITAIN and AMERICA, 1880-1990, at 25-26 (1992);
220. Dunlavy & Welskopp, supra note 18, at 51.
221. Morton Keller, Regulation of Large Enterprise: The United States Experience in Comparative Perspective, in MANAGERIAL HIERARCHIES: COMPARATIVE PERSPECTIVES ON THE RISE of THE MODERN INDUSTRIAL ENTERPRISE (Alfred D. Chandler, Jr. & Herman Daems eds., 1980);
222. Jurgen Kocka, Entrepreneurs and Managers in German Industrialization, in THE CAMBRIDGE ECONOMIC HISTORY of EUROPE, VOL.VII, THE INDUSTRIAL ECONOMIES: CAPITAL, LABOUR, and ENTERPRISE 492 (Peter Mathias & M.M. Postan eds., 1978);
223. CHANDLER, supra note 11, at 423-425
224. CHRISTOPHER GRANDY, NEW JERSEY and THE FISCAL ORIGINS of MODERN AMERICAN CORPORATION LAW (1993).
225. Dunlavy & Welskopp, supra note 18, at 55-56.
226. Id. at 56. in the context of shareholder voting rights, even English company laws and norms adhered more to a democratic conception of the corporation, with limits on voting rights. Dunlavy, supra note 18, at 1360-1361
227. CHANDLER, supra note 11, at 12.
228. FEAR, supra note 126, at 18-19 (paraphrasing Hilferding);
229. see also RUDOLPH HILFERDING, FINANCE CAPITAL: A STUDY of THE LATEST PHASE of CAPITALIST DEVELOPMENT (Routledge 1981) (1910).
230. Section 1 of the Prussian Income Tax Law of June 24, 1891. English translation provided in HARRIS, supra note 13, at 82.
231. Section 12 of the Prussian Income Tax Law of June 24, 1891. the 1891 Prussian fiscal reforms also relegated a business tax (Gewerbesteuer) assessed on business profits to local governments. Joseph A. Hill, the Prussian Business Tax, 8 Q.J. ECON. 77 (1893).
232. More specifically, the Prussian law calculated corporate taxable income "after deducting 3.5 percent of the share capital paid-in." HARRIS, supra note 13, at 83;
233. HENRY J. GUMPEL & CARL BOETTCHER, TAXATION in THE FEDERAL REPUBLIC of GERMANY 129 (1963).
234. Joseph A. Hill, the Prussian Income Tax, 6 Q.J. ECON. 207, 223 (1892).
235. HARRIS, supra note 13, at 90-91.
236. SELIGMAN, supra note 76, at 329.