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75 Com. L.J. 241 (1970)
The Evolution of the Corporation as a Social Institution

handle is hein.journals/clla75 and id is 241 raw text is: The Evolution of the Corporation
as a Social Institution*
Carl Avner**
of Jamaica, New York

The most widely accepted definition of a corporation
and the one most often cited and quoted for that form of
business enterprise was given in one of the earliest Su-
preme Court decisions by Chief Justice Marshall, a cor-
poration is an artificial being, invisible, intangible, and
existing only in the contemplation of law.'
The corporation has become a dominating institution in
our modem industrial society. It has thoroughly perme-
ated our society and our entire civilization and its role
and importance in our society is very aptly described in
the following quote: The modern stock corporation is a
social and economic institution that touches every aspect
of our lives; in many ways it is an institutionalized expres-
sion of our way of life. During the past 50 years, industry
in corporate form has moved from the periphery to the
very center of our social and economic existence. Indeed, it
is not inaccurate to say that we live in a corporate soci-
This legal person created by law, which plays such a
dominant role in our society has in the past generation
taken on a new look. It has developed characteristics,
qualities and a personality which closely resemble those
attributed to human beings. In short it has acquired a soul
and a social conscience. The new term of reference cur-
rently used to describe this creature is the modem corpora-
This paper concerns itself mostly with this modem cor-
poration which is generally a large private corporation
(as distinguished from a government owned public cor-
poration) whose stock is owned and widely dispersed
among the public. A distinction should also be made with
the nonprofit corporation which supposedly has an ex-
plicit social function and which is operated solely for the
purpose of fulfilling that function.
There are approximately 1,423,980 active corporations
in the U.S.3 They comprise 571h% of all the manufactur-

ing establishments which are responsible for more than
90% of the total sales; 21% of all the retail establishments
responsible for 62% of the total sales and 64% of all the
wholesale establishments accounting for 83% of the total
The brief statistics offered in the preceding paragraph of
the three segments of our industrial society clearly illu-
strates the relative importance of the corporation in our
economic system. It is not surprising therefore, that this
form of organization should have assumed a social char-
acter and play a dominant role in our cultural develop-
ment; our standards of living; the shaping of our values
and conduct; in the determination of the pace for our de-
veloping technology; in our political system and in our
way of life generally.
Historical Background
Clearly it is not the purpose of this paper to delve
deeply into the historical development of the corporation
except as it begins to emerge and to assume significance as
a social institution. But it is material to point out that it is
a commonly accepted thesis among legal historians that the
corporate form of enterprise had its origin in the Roman
Law which gave recognition to the concept of contractual
Although our story really begins in the second quarter
of this century, it is interesting to note that during the
first half of the nineteenth century, the corporations in
America were generally restricted in their scope of opera-
tions.. They mostly limited their activity to a single line of
business and were only of modest size. The management
consisted of the substantial stockholders, who were com-
paratively few in number. During the next half of that cen-
tury and the early part of the twentieth century, the
industrial revolution took root in this country and mass pro-
duction methods were introduced and developed which

*The above article was written and submitted as a paper in
partial fulfillment for a course in Social Justice at New
York University Graduate School of Law.
*Assistant Professor of Business Law, Norwalk Conmunity
College, Norwalk, Conn., since 1966; Vice President and Gen-
eral Manager of Elgin National Watch Co., Elgin, Ill. 1964-
1966; Treasurer, Vice President and Executive Vice President,
Helbros Watch Co., New York City 1946-1964. Member of the
New York Bar, New York State Bar Assn.; Director New York
Credit and Financial Management 1957-1961; Director and
Vice President American Watch Assn. 1952-1963; Member of

National Panel American Arbitration Assn. since 1956. Mr.
Avner has accepted an Assistant Professorship at the New York
Law School and will be teaching in the Fall.
1. Dartmouth College v. Woodward, 4 Wheat. (U.S.) 518,
4L.ed 629 (1819)
2. William T. Cossett, Corporate Citizenship, (Lexington,
Va.: Washington and Lee University, 1957), p. 157.
3. Source: Internal Revenue Service, as reported in 1968
Statistical Abstract of U.S.
4. Source: U.S. Department of Commerce, Bureau of the
Census, U.S. Census of Business: 1963

AUGUST  1970

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