When Was The Birth of the Corporation?

When Was The Birth of the Corporation?

Swedish mining companies played a significant role in the early development of corporations, especially with the creation of the Stora Kopparberg mining community in Falun, Sweden. Although not a corporation in the modern sense, I will lay out for you in this article how Stora Kopparberg is often cited as one of the earliest examples of a company with features that resemble a corporation, including the issuance of shares.

The history of Stora Kopparberg (also known as Stora Enso in its modern form) dates back to at least the 13th century. Many say the first stock was issued as a share of that company in 1288 AD. It began as a copper mine and over time, it evolved into an entity with many characteristics of a corporation. By the 14th century, the mine was producing a significant amount of Europe’s copper, and it was essential to the Swedish economy.

In 1288, there is a document that references the existence of shares in the mine, indicating that it operated with a system of share ownership that could be bought and sold, which is a fundamental aspect of modern corporations.

Eventually granted a charter by King Magnus Eriksson in 1347, the Stora Kopparberg mine gave shareowners claims in the returns of the enterprise as well as limited their personal liability for obligations incurred by the corporation.

However, it’s important to note that while Stora Kopparberg had features resembling a corporation, it wasn’t a corporation in the way we understand the term today.

Corporations as we know them, with legal personhood, limited liability, and a clear distinction between the owners (shareholders) and the managers, did not fully develop until later. The Dutch East India Company, established in 1602, is often recognized as the first modern corporation with all these features, including the issuance of transferable stock and limited liability for its investors.

Here are more details on the history and origins of corporations:

  • Corporations as legal entities evolved out of guilds and religious orders in medieval Europe between the 12th-16th centuries. Merchants and craftsmen organized themselves into guilds for mutual aid and established monopolies.
  • The Dutch East India Company, founded in 1602, is considered the first joint-stock, limited liability corporation. This allowed investors to buy shares of the company without taking on personal liability for its debts.
  • In England, the Russia Company (1555) and East India Company (1600) were early joint-stock companies given monopolies on trade by the Crown.
  • Adam Smith’s “The Wealth of Nations” (1776) criticized monopolies like the East India Company but promoted the benefits of joint-stock companies for business growth.
  • In 1811, New York became the first U.S. state to enact a simple incorporation statute although Massachusetts had started granting corporate charters in the 17th century. Other states soon followed.
  • By the late 19th century, corporate charters were easy to obtain as corporation laws became more general and standardized. This facilitated the rise of large monopolistic trusts and holding companies, spurring more government regulation.

So in summary, while it is a bit arguable of the definitive “birth” of the corporation, they evolved over several centuries in Europe and the U.S. through guilds, charters, monopoly grants and general incorporation laws. The 1288 date does seem to mark a major milestone in this process.

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Martin Hamilton

Martin Hamilton is the founder of Guiding Cents. Martin is a Writer, Solopreneur, and Financial Researcher. Before starting Guiding Cents, Martin has been involved in Personal Finance as a Mortgage Planning Consultant, Licensed Real Estate Agent, and Real Estate Investor.

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