requiring a larger amount of capital than usually could or would be risked by one person.  The investor in a corporation bought shares, and his liability for debts and losses was limited by charter to his share capital.  It is an advantage that permanent enterprises of that kind are owned by corporations with charters perpetual or for long periods.  It is possible for corporations to make investments running for longer periods than would be safe for individuals.  The corporation with an unlimited charter has legally an immortal life.  Sale and change of management are not necessary on the death or failure in health of any one owner.  As the factory system and large production developed, the corporate form of organization was found to have these same advantages in manufacturing.  It appeared in textile, iron, mercantile, and other industries.  After 1865 the corporate form of organization increased at a cumulative rate, until now it is applied to many enterprises of small extent and local in operation.  There are 300,000 corporations making returns to the United States Commissioner of Internal Revenue.[1] There were 70,000 manufacturing corporations, which were 26 per cent of the whole number of manufacturing establishments, but which employed 76 per cent of all wage earners and turned out 79 per cent of the whole product.

Sec. 3. #Beginning of corporation problems.# With the corporations came “the corporation problem,” a single name for a complex of problems—­legal, political, moral, and economic—­which arise out of the relations of corporations to their individual stockholders, to their employees, to the state, to the general public, and to their competitors in business.  The problems differ also in corporations of different sizes and in different businesses.  We shall discuss in this and succeeding chapters but a few of the larger aspects of the corporation problem, the railroad, the industrial trust, and certain other kinds of monopolistic industry.

Of the various forms of corporations, banks first presented problems calling for economic legislation and regulation.  This is explained by the fact that it was the first kind of business corporation to become important, and further by the fact that its work was in various ways closely connected with the coinage and regulation of money, which had already become a governmental function.  The railroad was the form of corporation next in point of time to become a great problem; this because of the peculiarly vital and far-reaching effects that such railroad transportation has upon all other kinds of business in the community, as appears in what follows.

Sec. 4. #The era of canals.# Canals were used in the ancient empires for irrigating, for the supplying of cities with water, and for navigation.  In the late eighteenth and the early nineteenth centuries they were rapidly built in England and America.  Six canals had been built in the United States before 1807, but the “canal-era” in America dated from the beginning of work on the Erie canal in 1817, and continued until about 1840, when nearly all new work ceased; over 4000 miles of canals had been built at a cost of $200,000,000.