Corporations proved to be incredibly beneficial to mankind

Jul 20 2012 - 9:25pm

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E. Kent Winward
E. Kent Winward

In the early 1800s, Mary Shelley wrote a novel and created a character that has permeated pop culture and invaded every Halloween in my memory: Frankenstein's Monster.

I always liked and felt a little sorry for Franky's monster. He always reminded me of an awkward adolescent, acne and formerly dead body parts that made people run screaming when all he really wanted was a date.

Shelley's novel had a subtitle: "A Modern Prometheus." Prometheus, if you recall, was the Greek god who brought fire to humans, an immensely good thing if your meat was raw and an immensely bad thing if your house was made of straw. Dr. Frankenstein didn't bring fire, he brought life. He created a living, breathing person.

About the same time Shelley was writing of her Prometheus, a group of lawmakers in New York state was busy actually creating an entire new species of living, seemingly immortal entities that now permeate your house, your car, your food and even this fine newspaper. In 1811, New York simplified the previously onerous process of creating a corporation and allowed manufacturers to use a simple registration system to create limited liability corporations.

At the time, the United States was in turmoil with Great Britain that led to the War of 1812. Britain had imposed trade restrictions that hurt cotton manufacturers who didn't have any textile mills that could turn their cotton into cloth. No one person was willing to pay all the money necessary to open a new textile mill and carry all that risk, especially because the trade restrictions could be removed before the mill was profitable and the entire business venture could fail.

The limitation of liability meant limiting the exposure of an investor in the company to the amount they paid to get a share or interest in the company. If the business lost more money, the investor would not be responsible. The lawmakers in New York took an idea, the government charter, and simplified it and made it more accessible to address a simple problem of how to build a textile mill.

The idea was a huge success. Limiting liability attracted capital (money) to business ventures, and 200 years later you have the fashion industry focused on New York.

Like Prometheus' fire, corporations proved to be incredibly beneficial to mankind. As I wrote this column on a computer made by the corporation Hewlett Packard Inc. in a chair from Pier 1 Imports, Inc., over an Internet connection provided by CenturyLink Inc. and typing in Google Docs, supplied to me by Google Inc., my phone rang compliments of Motorola Mobility Inc. and Verizon Wireless Inc.

We need and rely on our corporations. Corporations are the legal embodiment of the power of humans to create rules and laws that foster and encourage cooperation for the greater good.

Two hundred years later, our world is faced with complex problems unimagined by the corporate creators of the New York Legislature. The legal creations have grown into a pantheon of corporate gods bringing us fire. The fire brings warmth and destruction. The fire from the corporate gods must be controlled.

We, the people, are the creators of the corporations, and we, the people, need to take responsibility to ensure that our lawmakers and courts properly control our creation. As the monster said to Dr. Frankenstein in the book, "Remember that I am thy creature; I ought to be thy Adam, but I am rather the fallen angel . . . .Make me happy, and I shall again be virtuous."

E. Kent Winward is an Ogden attorney. He can be reached at

801-392-8200 or creditcorrection@gmail.com.

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