Hostile Takeovers and Modern Corporations in Antebellum Georgia

Michael Gagnon, PhD
Georgia Gwinnett College
Presented at the annual meeting of the American Historical Association
Session 90, “Modernizing Capitalism in the Antebellum American South”
Atlanta, January 8, 2016

Historians have regularly discussed the importance of understanding the history of the corporate form of business organization in antebellum America. Before the Civil War, state legislatures authorized the formation of most corporations through special legislation that delineated the privileges and responsibilities as well as the date of expiration of the specific incorporated business. These privileges might include exemption from taxation, the granting of a geographic monopoly, or the extension of the right of eminent domain. While most studies of incorporation focus on specific northern states, or use aggregate information to track national or regional trends, this paper will explore how citizens understood the first efforts to establish general incorporation in Georgia as well as the impact the limited form of general incorporation had on the state’s economy.

Important economic history monographs published since the 1940s explored the transformation of incorporation before the Civil War in Massachusetts, Pennsylvania, and New York, concluding in each study that these important states already sufficiently adopted general incorporation laws to establish the legal requirements for the rise of large scale interstate enterprises that, following the war, resulted in the “visible hand” of a new managerial class that came to direct much of the nation’s economy. More recently scholars placed the shift from special incorporation to general incorporation regimes within the context of general reforms in eliminating all special acts by a state legislature, laws that only applied to a specific person or place, as violating the concept of equality before the law. Other scholars demonstrated the inclusion of general incorporation clauses in state constitutions written in the late antebellum period were meant to remedy state indebtedness arising from “taxless” economic development projects in the 1830s, such as from state bonds guaranteeing railroad construction. The shift throughout the states was to attempt to reduce the influence peddling within state legislatures so that businesses could organize using an administrative structure that equalized the costs of creating the firms, which also acted to reduce the general privileges of incorporation to limited liability. Limited liability meant shareholders were only responsible for payment of a firm’s debt to the investment in stock each shareholder held (The flip side of this concept is equity shielding, in which a corporation’s assets cannot be attached to pay off a stockholder’s individual debts). The most recent trend in economic history is to consider the financialization and commodification processes taking place in antebellum America as the history of capitalism. One article in this vein compared the growth of corporations in the US and Europe and found rates of incorporation did not vary greatly between states within the US, but that the US certainly led the world in the process of incorporation, which contributed to the overall rate of growth of the US economy. Georgia participated in adopting the modern form of business organization in the antebellum years, as capitalism was “taking command.”1

The legislative session for Georgia in November and December, 1847, proved productive for the formation of business corporations. The outgoing governor’s annual message that opened the real business of the session included a call for a general incorporation act for textile factories. In addition to fashioning an act suitable for passage in a legislature roughly evenly split between Jacksonian Democrats and States’ Rights Whigs, the legislature also passed twenty-eight laws chartering (or altering charters of) businesses by special acts of incorporation. Included in this group of new specially incorporated businesses was the Southern Mutual Insurance Company.2

Reverend J. U. Parsons of Cuthbert, Georgia, applied to the legislature for incorporation of insurance company on the mutual principle in 1847 to be headquartered in Griffin, Georgia. Everyone who purchased a policy from the Southern Mutual Insurance Company would both participate in the company’s profits, and in the company’s governance, as a voting shareholder. Southern Mutual began with five policy lines: fire, life, marine, storage, and slave insurance. A mutual fire insurance company was incorporated in Athens, Georgia, the same year. However, sufficient policies had been issued by Southern Mutual in Athens, that elite townsmen of Athens (with proxy votes from those who could not attend) packed the first shareholders meeting in 1848 and voted to move the company’s headquarters to their own town. Athenian Asbury Hull, former Speaker of the Georgia General Assembly, was voted the company president, while retaining Rev. Parsons as the company secretary and general agent. By 1851, Parsons was forced out under a cloud of suspicion as an embezzler, and Hull’s fellow Methodist, Albon Chase, who was the retired editor of the town’s ultra-Jacksonian newspaper, took Parson’s place as secretary and general agent. Chase had already editorialized the town on the need for life insurance in 1846, when only a New York firm sold policies through University of Georgia Mathematics Professor, Charles F. McCay. Once Athens captured the insurance company, Southern Mutual hired McCay as its actuary, and eventually sold him the life division of the company when McCay moved to South Carolina College in 1854. By 1855, the company jettisoned the life and slave life lines, keeping fire insurance its principle line, with marine and storage insurance as secondary lines. Like other people of property in America, the people of Athens sought to manage the level of risks to their property or to their lives through access to insurance policies over which they had some control. The form of business is important too, in that the mutual principle looked backward toward a form of cooperative capitalism, whose goal was to share the risks in order to reduce final costs to the consumer, rather than to maximize a profit for shareholders.3

Town leaders successfully stole a corporation from another town because they had already experienced the same thing happen to them. Although Athenians proposed and built the Georgia Railroad in the 1830s by outmaneuvering the opposition of Augusta’s influential merchants, by 1841 Augusta’s leadership purchased a controlling share of the railroad’s stock and voted to move the company headquarters to their town. Thereafter, Athens’ newspapers regularly protested the lack of service the town received as a result of the hostile takeover. Athens’ Democratic newspaper complained about the takeover, that Augusta, “Like the wily serpent, … first charms and entertains, then swallows her victim.” But turnabout seemed fair play to Athens when it came to the insurance company. This time no one objected in the town’s newspapers in 1848. Perhaps such a takeover now seemed normal, or perhaps the mutual principle made it acceptable since most policies had been written in Athens. In either event, the attitude that this is just business seemed to have overcome previous qualms.4

While Athens was assuming control over the insurance company, the town’s democratic editor, now Hopkins Holsey, complained that other Jacksonian presses seemed less concerned about the liberalization of incorporation rules for textile factories. Holsey’s Southern Banner regularly opposed all incorporation, but particularly a general incorporation regime that removed scrutiny of chartering a business from the political process. When Governor Crawford, Georgia’s only Whig governor, recommended enacting liberal charters for textile factories, Holsey refuted the three main contentions given for the change, that general incorporation would attract foreign capital to the state, that it would help develop the state’s resources, and that it would keep capital at home. Instead he replied that in addition to failing at those three goals, the new law would allow the rich to steal from the public as speculators would hide a firm’s deficiencies which would result in the bankruptcy of the firm. As far as incorporating factories, Holsey sounded somewhat like Thomas Skidmore by claiming that capital and labor were natural enemies, and that artificial persons like corporations would undermine the rights of real persons. Similar partisan presses in the state’s interior initially agreed with Holsey, but the editors of Augusta’s papers uniformly, regardless of party, supported liberalization of incorporation charters. After passage, Holsey continued his opposition, attacking the railroads incorporated under special laws and attacking industrial manufacturing in general. Following the next election cycle, in November 1848, he raised the specter of Georgia cities being “Lowellized” with manufacturers marching their workers to the polls to vote the Whig ticket, all the result of general incorporation.5

The product enacted by the Georgia legislature in December 1848 was surprisingly straightforward. General incorporation only applied to white applicants involved in textile manufactures. The law included limiting stockholder personal liability for the corporation’s debts, but required proof that capital was paid in the form of gold, silver, notes of specie paying banks, or property at a sworn valuation. Application would be sworn before local officials, and recorded in the county superior court. Stockholders of the firm were personally responsible for all debts if the declared assets were not bona fide, and corporate officers were individually responsible for all debts or contracts that exceeded the authorized capital of the company. The new factories were prohibited from obstructing navigable rivers and, finally, all charters granted under the law expired thirty years after incorporation. This was only a half-step towards what would eventually emerge as the accepted stipulations of general incorporation elsewhere. However, local factories soon took advantage of the new form. The Athens Factory partnership had invested approximately $90,000 in the factory in the 1830s, but death of two of the partners by 1844 made reorganization as a corporation desirable. Thus in August 1848, the Athens Manufacturing Company incorporated under the new general incorporation law and recorded a capital of $92,600 with the Superior Court of Clarke County. In neighboring Morgan County, the High Shoals Factory also reorganized under the general incorporation law, proving their funding of $44,000 capital in January 1850. Under the new incorporation law, various family members and descendants of the original partners to these factories could share in the profits of the business without needing to learn the business itself.6

Georgia was not alone in considering some form of general incorporation when the extended economic depression of the 1840s finally ended. Ohio’s governor pointed out the success of a general incorporation law in Massachusetts, and called for a similar law limited to manufacturing companies in December 1847, with proper limitations, “to call into active use dormant capital, to build up manufactures, to aid young men of small means to begin business, … to develop the resources of the state, and to repress emigration from [Ohio].” Louisiana’s new general incorporation law did not limit its use by race, and an abolitionist press in 1849 noted the unintended consequence of a lodge of “colored Freemasons” in New Orleans attempting to utilize the law to form a “secret society.” When the governor of Illinois announced the convening of a special session of the legislature in October 1849, its second order of business was to provide for a constitutional change to allow for “liberal general laws of incorporation” to encourage internal improvements, which the legislature subsequently passed. Vermont also began exploring general incorporation for manufacturing companies in 1849. Newspapers announced similar laws under consideration in California and Maine in the 1850s. The secondary literature demonstrates that state constitutions adopted or amended between 1844 and 1857 provided for forms of general incorporation in New Jersey (1844), Louisiana (1845 and 1851), New York (1846), Iowa (1847 and 1857), Illinois (1848), Wisconsin (1848), California (1849), Michigan (1850), Indiana (1851), Maryland (1851), and Ohio (1851). One could say that Georgia partook in a modernizing trend, but that its steps toward modern practices proved more modest than those being carried to completion in many other parts of the nation. Such caution was probably merited, given the outcome of the limited form of general incorporation in Georgia.7

The general incorporation act in Georgia probably had an effect on the increase in the number of textile factories in Georgia, although it is hard to tell which had the most effect on the other: the general incorporation act, or the number of successful textile factories already in operation when the act was passed. In 1840, the US Census enumerated fourteen textile factories in Georgia. Industrial investment seemed a favorable strategy in 1847 when compared to the failures of agricultural, commercial, banking or transportation investments to return a profit during the long depression from 1839 to 1845. The Athens Factory paid a dividend of twenty-four per cent in 1844, and one of the state’s industrialists claimed that his factory averaged eighteen per cent dividends in the early 1840s. That this information became general knowledge might explain why Georgians became enamored of building so many cotton factories around the time of the general incorporation law that historians came to refer to this era as the antebellum mill building boom. By 1850, thirty-five cotton factories were in operation in Georgia and newspapers reported that another six were being organized. By the mid-1850s, several sources estimated that Georgians operated between fifty to sixty cotton factories. Many of these new factories would fail due to lack of managerial or marketing skill, to lack of technical knowledge or to lack of funding resulting from stockholders demanding dividends not supported by profits. As a result of these failures, the 1860 census enumerated only thirty-three cotton factories in Georgia, but also noted a sixty-nine per cent increase in the value of the product of Georgia cotton factories since 1850.8

This increase of industrial facilities resulted in the growth of other industrial and financial systems. Entrepreneurs created machine shops and wood lathing establishments in Georgia to provide the new factories with the ability to repair equipment or replace expendable items necessary for the manufacturing process without having to wait for shipment of needed items from New England or from the Middle Atlantic states. More importantly, insurance companies like Southern Mutual specifically serviced the risks of loss by fire or the perils of shipping or storing raw materials or finished products. The insurance industry in Georgia established rules for insuring factories which can be found in Southern Mutual’s directors minutes: The factory must first be inspected by the company’s general agent, or by members of the company’s board of directors who were knowledgeable of the fire risks associated with cotton factories. If the factory was found insurable, the insurance company limited its risk to not more than ten per cent of the value of the property. The factory could obtain additional insurance from other companies, with the approval of Southern Mutual’s board, but total insurance could not exceed fifty per cent of the total value of the property, in order to discourage owners from torching their own factories for the insurance money. And cotton factories were a known fire hazard, with all the combustible cotton lint floating around in the factory air anytime the factory was in operation. Ample policies were issued and renewed to indicate that the factories deemed insurance desirable, and Southern Mutual paid plenty of claims, which indicates their premiums were sufficient to pay claims on factory losses on a regular basis. Thus the increase in the number of factories that accompanied the institution of Georgia’s general incorporation law of 1847 stimulated the growth of financial services as well.9

What then are we to make of the industrial changes taking place in Georgia in the late 1840s through 1860 (and beyond)? First of all, that Georgia was doing much of what contemporaries in other states – north, south or west – were doing. This fits nicely into the historiography of modernization studies of the South. But it also suggests that Southerners, albeit not all of them (or even a majority of them), but some of them sought to create a more balanced economy, one in which industry and financial services played a role beyond the needs of agriculture. At least in Georgia, this more balanced economy was sufficiently important that the state boosters frequently referred to Georgia as “the Empire State of the South,” suggesting that Georgia would be as important to the Southern economy as New York was to the Northern economy. While we don’t know how many factories actually took advantage of the 1847 general incorporation act due to their local registration, neither did the act prohibit factories from seeking special incorporation acts. One can surmise that some manufacturers continued to seek special incorporation in order to obtain the sorts of perks frequently doled out today by state agencies attempting to attract manufacturers to an over-abundance of factory sites: exemption from taxation or rent or regulation. What was done by special legislation in the antebellum years is now done routinely by economic development agencies without citizen input or inquiry as to how these special considerations affect the rest of the state. The effectiveness of general incorporation of manufacturing in Georgia will have to await a greater accounting of how many such incorporations took place, and the success of those corporations compared to others organized by special legislation, and then finally how those special considerations became regularized through a bureaucratic process rather than by passing special legislation.10


1. Oscar Handlin and Mary Flug Handlin, Commonwealth; A Study of the Role of Government in the American Economy: Massachusetts, 1774-1861 (Cambridge, Mass: Belknap Press, 1947). Louis Hartz, Economic Policy and Democratic Thought: Pennsylvania, 1776-1860 (Cambridge, Mass.: Harvard University Press, 1948). Ronald E. Seavoy, The Origins of the American Business Corporation, 1784-1855; Broadening the Concept of Public Service During Industrialization (Westport, Conn.: Greenwood Press, 1982). L. Ray Gunn, The Decline of Authority: Public Economic Policy and Political Development in New York, 1800-1860 (Ithaca, NY: Cornell University Press, 1988). Alfred D. Chandler, Jr., The Visible Hand: The Managerial Revolution in American Business (Cambridge, Mass.: Belknap Press, 1977). Paul A. Gilje, “The Rise of Capitalism in the Early Republic,” Journal of the Early Republic, Vol. 16, No. 2 (Summer, 1996), pp. 159-181. Robert M. Ireland, “The Problem of Local, Private, and Special Legislation in the Nineteenth-Century United States,” American Journal of Legal History, Vol. 46, No. 3 (Jul., 2004), pp. 271-299. John Joseph Wallis, “Constitutions, Corporations, and Corruption: American States and Constitutional Change, 1842 to 1852,” Journal of Economic History, Vol. 65, No. 1 (Mar., 2005), pp. 211-256. Eric Hilt, “When Did Ownership Separate from Control? Corporate Governance in the Early Nineteenth Century,” Journal of Economic History, Vol. 68, No. 3 (Sep., 2008), pp. 645-685. Eric Hilt, Abstract of “Incorporating Industry: Nineteenth-Century Incorporation of Manufacturing Companies,” a paper presented at the Economic History Association meeting, Journal of Economic History, Vol. 69 (2009), p. 569. Robert E. Wright, “Capitalism and the Rise of the Corporation Nation,” Chapter 6 in Michael Zakim and Gary Kornblith (eds), Capitalism Takes Command: The Social Transformation of Nineteenth-Century America (Chicago: University of Chicago Press, 2012), Kindle Edition. Richard Sylla and Robert E. Wright, “Corporate Formation in the Antebellum United States in Comparative Context,” Business History, Vol. 55, No. 4 (2013), pp 650-666. Seth Rockman, “Review Essay: What Makes the History of Capitalism Newsworthy?” Journal of the Early Republic, Vol. 34, No. 3 (Fall, 2014), pp. 439-466. Return to Text

2. Federal Union (Milledgeville, Georgia), November 2, 1847, p. 2, “Governor’s Message.” Donnie Summerlin, “George W. Crawford (1798-1872),” New Georgia Encyclopedia,, accessed December 16, 2015. Traditionally, Georgia’s outgoing governor gave an equivalent of a “State of the State,” speech as the legislature validated the just-held election of the new governor. A few weeks later, the new governor would give his inaugural speech explaining his agenda. Calculation of acts of incorporation extracted from Southern Recorder (Milledgeville, Georgia), January 4, 1848, p. 2, “List of Acts passed by Georgia Legislature in 1847,” and continued January 11, 1848, p. 2. Of the twenty-eight acts, twenty-two acts either incorporated or altered the charters of transportation corporations (mostly railroads), two acts specifically dealt with Georgia’s Central Bank, three laws incorporated four mutual insurance companies, and one act altered the charter of the Richmond Factory in Augusta. The twenty-ninth act allowed the general incorporation of textile factories through the offices of the local superior court. This accounting did not include incorporation of municipalities, churches, cemeteries, schools, charitable organizations, and fraternal orders, nor of bridges, ferries and mills. Return to Text.

3. History of the Southern Mutual Insurance Company, Athens, Georgia, 1848-1923: Revised as to Officers, Directors and Agents, 1931 (np: McGregor Company, printers, 1931). Michael Gagnon, Transition to an Industrial South; Athens, Georgia, 1830-1870 (Baton Rouge: Louisiana State University Press, 2012), pp. 175-178. Southern Banner (Athens, Georgia), May 5, 1846, p. 3, “Life Insurance.” Sharon Ann Murphy, Investing in Life: Insurance in Antebellum America (Baltimore: Johns Hopkins University Press, 2010), p. 26, also n63 on p. 318. Southern Mutual Insurance Company, Board of Directors Minute Book 1848-1868 (located at the offices of the company in Athens, Georgia), entry for December 27, 1854. Dalit Baranoff, “Shaped by Risk: The American Fire Insurance Industry, 1790-1920,” Enterprise & Society: The International Journal of Business History, Vol. 6, No. 4 (December 2005), pp. 561-570. Robert E. Wright and Christopher Kingston, “Corporate Insurers in Antebellum America,” Business History Review, Vol. 86 (2012), pp. 447-475. Return to Text.

4. Augusta University, Reese Library Special Collections, Georgia Railroad Minute Book 1. Southern Banner, May 14, 1841, “Convention of Stockholders”; May 13, 1842, “Railroad Convention.” 150 Years: Railroad & Banking Company of Georgia, 1833–1983 (Augusta: Georgia Railroad & Banking Company of Georgia, 1983), pp. 13, 19. Gagnon, Transition to an Industrial South, pp. 161-162. Return to Text.

5. Southern Banner (Athens, Georgia), November 25, 1847, p. 3, “Liberal Charters to Manufacturing Companies;” January 20, 1848, p. 3, “Going to Shine;” February 10, pp. 1-2, “Corporate Power” (reprint from Worcester, Mass.); March 30, 1848, p. 3, “Liberal Charter Policy,” and “The Swindling Charters;” May 4, 1848, Additional Employment to Women and Children;” June 1, 1848, p. 3, “Banking and Manufacturing Corporations and Wages;” November 9, 1848, p. 2, “Result of the Liberal Charter Policy;” November 16, 1848, p. 3, “The Augusta Chronicle and Sentinel.” Return to Text.

6. Federal Union (Milledgeville, Georgia), December 28, 1847, pp. 1-2, “General Manufacturing Bill.” Milton Sydney Heath, Constructive Liberalism: The Role of the State in Economic Development in Georgia to 1860 (Cambridge, Mass.: Harvard University Press, 1954) pp 312, 346. Southern Banner, August 17, 1848, p. 3 “Georgia, Clark County.” Southern Banner, January 24, 1850, p. 3, “Georgia, Morgan County.” Return to Text.

7. Lancaster Gazette (Lancaster, Ohio), December 10, 1847, p. 2, “Governor’s Message;” also printed in Democratic Pioneer (Upper Sandusky, Ohio), December 17, 1847, p. 3, “Governor’s Message;” and extracted in North American and US Gazette (Philadelphia), December 17, 1847, p. 2, “General Incorporation Laws.” Emancipator & Republican (Boston), June 14, 1849, p. 2, “Something Incendiary, Perhaps.” Indiana State Sentinel (Indianapolis), September 13, 1849, p. 3, “Illinois;” and November 8, 1849, “Illinois Legislature.” Ottawa Free Trader (Ottawa, Illinois), September 14, 1849, p. 2, “A Proclamation.” Glasgow Weekly Times (Glasgow, Missouri), September 20, 1849, p. 2, “Illinois.” Vermont Watchman and State Journal (Montpelier), October 18, 1849, p. 4, “Annual Message of the Governor.” Daily National Intelligencer (Washington), May 9, 1850, p. 3, “Further from California.” Frank Leslie’s Illustrated Newspaper (New York), June 28, 1856, p. 2, “Boston.” Daily Whig and Courier (Bangor, Maine), April 21, 1857, p. 2, “Closing Proceedings of the Legislature.” Wallis, “Constitutions, Corporations and Corruption,” p. 251, “Appendix Table 2 – continued: State Constitutional Provisions with Regard to Corporations.” Return to Text.

8. Compendium of the Enumeration of the Inhabitants and Statistics of the United States, as Obtained at the Department of State, from the Returns of the Sixth Census (Washington, DC: Thomas Allen, 1841), “Recapitulation of the Aggregate Value and Produce, and Number of Persons Employed in Mines, Agriculture, Commerce, Manufactures, etc, By States” p. 361. Of the nineteen cotton “factories” listed for Georgia, four in Carroll County were very small, probably artisanal production of cotton textiles, and thus not really factories. The one listed for Union County is a duplicate for the factory in Upson County, and the Union County factory is not found in other sources. So, realistically, there were fourteen cotton factories in Georgia in 1840. See p. 208 of the 1840 Compendium for county level data. For dividend reports, see U.S. Congress, “Report of the Secretary of the Treasury,” House Executive Document #6, 29th Congress, 1st sess., 1845, vol. 2, doc. 6M, 625–27. Rpt. in “Walker Tariff Report 1846 . . . Circulars of the Secretary of the Treasury & abstract of Replies to them in regard to the Tariff,” 62nd Congress, 1st sess., Senate Document 72, pt. 3, vol. 10, ser. 6088: 1872–73. Southern Banner, August 14, 1845, “For the Southern Banner IV”; April 13, 1847, “Manufacturing in Sober Earnest, No. II” as transcribed in James L. Skinner, ed., The Autobiography of Henry Merrell: Industrial Missionary to the South (Athens: University of Georgia Press, 1991), p. 407. For a discussion of the antebellum mill building boom, see Gavin Wright, “Cheap Labor and Southern Textiles before 1880,” Journal of Economic History, Vol. 39 (1979), pp. 655–80. For 1850s factories, see Southern Whig (Athens, Georgia), July 5, 1849, p. 3, “Factories in Georgia.” J.D.B. DeBow, Statistical View of the United States … Being a Compendium of the Seventh Census (Washington, DC: A.O.P. Nicholson, Public Printer, 1854), “Cotton Manufactures – 1850”, p. 180. Southern Recorder (Milledgeville, Georgia), June 27, 1854, p. 2, “Bonner’s Map of Georgia;” April 3, 1855, p. 2 “Southern Manufactures” reprinted from New Orleans Bulletin. Federal Union (Milledgeville, Georgia), September 25, 1855, p. 1, “Cotton Manufacturing in Georgia, No. 1” (reprinted from New York Journal of Commerce, under signature of “Profit and Loss” which was the pseudonym of Henry Merell, operator of the Curtright Factory in Greene County, Georgia.) Daily Morning News (Savannah, Georgia), October 11, 1855, p. 2 – simple notes that 50-60 cotton factories exist in Georgia, probably extracted from other newspaper reports. Gagnon, Transition to an Industrial South, pp. 165-168. Manufactures of the United States in 1860; compiled from the original returns of the eighth census, under the direction of the Secretary of the Interior (Washington: Government Printing Office, 1865) Vol. 2, p. xxi, “Statistics of Cotton Goods Produced in the United States in the Year ending June 1, 1860;” also p. 82, “Georgia, Table 3: Manufactures, Totals of, 1860.” Return to Text.

9. Gagnon, Transition to an Industrial South, pp. 248-251, n71. Return to Text.

10. Lucian Lamar Knight, A Standard History of Georgia and Georgians (New York: Lewis Publishing Co, 1917), vol. 3, p. 1781. James C. Cobb, The Selling of the South: The Southern Crusade for Industrial Development, 1936-90 (Champaign/Urbana: University of Illinois Press, 1993) second edition. Return to Text.

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