Traders work on the floor at the New York Stock Exchange in New York, Aug. 10, 2022. (AP Photo/Seth Wenig, File)

Picture, if you will, a baby alligator. Big round eyes, little scaly snout, row upon row of adorable miniature baby teeth—don’t you just want to take it home, cuddle it, feed it live prey while watching nature documentaries on the couch?

For Profit: A History of Corporations
by William Magnuson
Basic Books, 368 pp.

No? Okay, fine, but bear with me. That precious little creature—it’s not an alligator. It’s a corporation. It opens its eyes to the world full of promise, charming its way into your home with offers of cheap oil or convenient taxi rides or reptilian snuggles. Time passes. It feeds off you. Those stubby claws grow long and sharp; that wicked jaw closes with a shuddering snap. And it ends by monopolizing the petroleum industry, selling your personal data to the highest bidder, and gobbling up the family cat. (Mr. Pebbles?)

From their earliest history, corporations have shown an unsettling tendency to outgrow the limitations placed on them by society. In ancient Rome, the publicans rose from a class of tax collectors and road builders to an all-powerful oligarchy that hastened the end of the Republic. Renaissance bankers began by offering loans and ended up choosing kings and popes. British merchants built the spice trade into a massive—and brutally oppressive—empire in India. And time and again in America, a charismatic visionary has arisen with a plan to transform business—the intercontinental railroad, the trust, the assembly line, the leveraged buyout, the social network. It’s not until he comes to dominate his market that the capitalist feels free to show us his teeth.

The alligator allegory isn’t mine. It belongs to William Magnuson, who deploys it about halfway through his accessible, lively new book, For Profit. A law professor and former mergers-and-acquisitions attorney, Magnuson tracks 2,300 years of corporate history, from the Roman forum to the American news feed, recognizing the myriad accomplishments and abuses of these avaricious, innovative entities. 

“Wild animals have a way of outgrowing their owners. So do corporations,” he writes. Yet in Magnuson’s telling, the alligator story has a perhaps surprising moral. Controlling corporate excesses isn’t hopeless, or beside the point, he argues. Throughout history, expectations of a greater social good have been baked into the founding charters of the world’s mightiest companies. If they eventually overcame those restraints, or ignored them, the answer isn’t to become cynical—to assume, as many do today, that corporations can only exist for the unbridled pursuit of profit. Rather, Magnuson says, present-day Americans must take a cue from the past by insisting that corporations serve more than just their shareholders. It seems like a tall order, but there are some signs, however tentative, that the pendulum has begun to swing back toward the greater good.

Magnuson’s story begins in medias res. In 215 BC, Rome was wavering in its second war against Carthage. Hannibal and his elephants had crossed the Alps and crushed three Roman armies, and now ravaged the Italian countryside as citizens cowered behind their walls. The only hope lay abroad, in Spain, where the general Scipio had opened a second front. Yet the Senate couldn’t raise money for the uniforms, weapons, and food to supply Scipio, let alone the ships to get those provisions to Spain. The fate of the Republic rested on logistics.

Out of options, Rome turned to its citizens, offering indemnity and reimbursement to anyone willing to take on the dangerous mission. Nineteen citizens, likely well-established merchants, stepped forward to form three “societates”—the earliest-known corporations. Private ships and storehouses supplied Scipio, who sailed from Spain to attack Carthage itself, forcing Hannibal to defend his own homeland. Rome was saved.

The Roman government lacked a robust civil service, so it gathered money by selling the right to collect taxes to private businessmen. These “publicans” eventually launched a civil war that brought an end to the Republic.

The public good was at the heart of the new class created by the societates publicanorum—though, as always, whether or not that good was achieved is another story. The “publicans,” as these private businessmen came to be known, carried out essential functions of the state, which remained surprisingly lightweight as the Republic grew to dominate the Mediterranean. Armed with government contracts and the personal indemnity conferred by their societates—which, much like today’s corporations, ensured that their owners couldn’t be held personally liable for the company’s debt—the publicans built roads, bridges, aqueducts, and theaters that served everyone.

Roman capitalists had another crucial function: tax collection. Since the government lacked a robust civil service, it gathered money by “tax farming”: selling the right to collect taxes to the highest private bidder. In public auctions at the Forum, each manceps, or CEO, bid on contracts in Hispania, Gaul, and what was then called “Asia” (roughly western Turkey). The winners would collect a percentage of those provinces’ income, hoping to make back their investments and more. Perhaps predictably, this led to horrific abuse. Publicans became brutal overseers of Hispania’s silver mines, working men to death for maximum profit. Those strong enough to endure the unceasing labor, the Greek historian Diodorus Siculus wrote, “prefer[red] dying to surviving because of the extent of their suffering.”

Over time, the publicans became too big to fail, their power rivaling that of the central government. In 60 BC, the legendary orator Cicero begged the Senate to bail out a group of publicans who had overbid on the tax contract for Asia, and were in danger of dragging the economy down with them. Resentful of the publicans’ growing influence, the patrician senators refused, and later passed laws limiting their power. The oligarchs responded by backing a new generation of great men powerful enough to stand outside the law: Pompey, Julius Caesar, and the ur-publican Crassus, known for sponsoring fire brigades that stood by and demanded exorbitant payment as houses burned. The Triumvirate briefly governed together before launching a civil war that brought an end to the Republic, in 27 BC. It took 200 years, but the monster birthed by the Senate had grown large enough to devour its creator.

In 1397, usury was a sin punishable by a hefty fine. To charge interest on a loan was un-Christian, better left to the Jewish moneylenders who dotted the mercantile quarters of Renaissance Europe. But a guild of Florentine bankers developed techniques, perfected by the Medici family, that would bring about an economic revolution not seen since the creation of the societates, 1,600 years earlier. 

Arrayed along benches in the public squares of Florence, guild bankers took deposits, made withdrawals, and exchanged currencies, marking down each transaction in a two-sided ledger of debts and credits—an early form of double-entry bookkeeping. Banks, at their core, are simple. They take depositors’ money for safekeeping and pay  interest for the privilege. And to make back that interest, they turn around and lend the principal sum to someone else—preferably at a higher rate. But what happens when the pope has forbidden charging interest, the core of the business? To get around usury law, the Medici and their colleagues devised a Goldbergian structure of financial workarounds. There was the currency “exchange,” where a borrower received money in one currency and promised to pay it back later in another place and coin, along with a percentage fee. And the “dry exchange,” where, on the spot, a borrower took out money in one currency, changed it to another, and back again—once again paying some percent of the total.

The Medici did not invent these methods alone. But they perfected them, and more than that, they took them abroad. Their bank built a mind-bogglingly complex international logistics network, balancing ledgers in multiple countries to make sure each branch had enough at hand. The family also reduced risk by making each branch its own local company, whose debts couldn’t be charged to the main bank in Florence.

The business brought incredible wealth and power to the Medici, who showered Florence in beautiful artwork and architecture. But as the family prospered, its ambitions grew, and strayed from finance and the arts to politics. Through patronage and outright bribery, the Medici placed one of their own in the Vatican. To further their desire for territory and clout, the family lent money to foreign rulers who were liable not to pay it back—or who might arrive with an army when they felt misused. Within three generations of Giovanni di Bicci de’ Medici’s founding of the family business, the Medici bank went into steep decline after backing the wrong side in the English Wars of the Roses, along with a number of other questionable deals. After a French invasion and the rise of the demagogue friar Savonarola in 1494, the family lost its political power and the bank closed. Its methods, however, lived on.

On New Year’s Eve of the year 1600, Queen Elizabeth I of England granted a royal charter to some 200 merchants, nobles, and sundry seedy speculators who called themselves the “Company of Merchants of London Trading in the East Indies.” On that day, the joint stock enterprise—perhaps the most powerful single innovation in corporate history—was born. 

England, then a minor maritime power clinging to the western edge of Europe, faced a dilemma. Over the previous century, the Portuguese and Dutch had charted a sea route to spice-rich India and Java, opening a path to massive profit for anyone willing to take on the long and risky voyage. Yet few English merchants were. Sailing to Asia around the southern cape of Africa required a huge up-front investment—ships, men, provisions, trade goods—that wouldn’t pay back for years, and might easily be lost to pirates or a storm. The East India Company hit on a solution: allow investors to purchase shares in the company for a piece of future profits. The risk would be spread among many individuals, rather than one merchant, and together the shareholders could raise a much larger sum, enough for many voyages. This simple formula created the richest and most powerful corporation the world had ever seen. (There were other joint stock corporations around this time, and some historians argue that ancient capitalists like the publicans operated on the same principles. Magnuson focuses on the East India Company as the most prominent early example.)

Elizabeth I’s charter granted the East India Company huge concessions—beyond limited liability for its shareholders and other usual corporate privileges, the corporation received a monopoly on trade between England and Africa, Asia, and America. Yet the queen also had expectations, Magnuson is careful to note. The merchants were to work “for the honour of this our realm of England, as for the increase of our navigation, and advancement of trade of merchandize.”

The first voyages were bound for the “Spice Islands”—modern-day Indonesia—but fierce and violent competition from the Dutch soon pushed the company to India. The Mughal Empire, famous for its textiles, became a primary trading partner, flooding England with fine cloth, the words for which are familiar today: bandana, calico, chintz, seersucker, dungaree. The imports were incredibly profitable, and they so inundated the domestic market that, in 1700, the English wool industry successfully pushed Parliament to ban Indian calico. But the formula was a success. The East India Company expanded into coffee, tea, saltpeter, and slaves.

Coffeehouses sprang up around London, full of gentlemen and ne’er-do-wells swilling hot Joe or beer, speculating over the success of ventures happening thousands of miles away. Stock-jobbers like Robert Clive, the first company governor of Bengal, took advantage of the burgeoning market, spreading rumors to manipulate prices for profit. The avarice fueled by joint stock carried down to managers like Clive, who hired private soldiers and pushed ever harder on the faltering Mughals for concessions. Eventually they provoked an outright war, which they won, becoming sovereigns of an ever-growing private empire in India. 

By 1800, the East India Company commanded an army of 200,000 men and a territory of hundreds of thousands of square miles, every inch of it mined with the sweat and blood of locals. A series of revolts against British misrule contributed to a takeover by the Crown, in 1858, and the company’s dissolution, in 1874. But the wealth extraction—some might say looting—continued apace. Before British rule in the 1700s, India’s economy was an estimated 25 to 35 percent of world GDP; by the time of independence, in 1947, it was 2 percent. 

The rest of For Profit unfolds in the United States from the late 19th century through the early 21st—a period of extraordinary innovation and excess. Time and again, corporate leaders rethought the nature of business, and ended by so dominating a market that the people, through their government, were forced to intervene. Both of those aspects—corporate dynamism and government regulation—offer valuable lessons.

By 1800, the East India Company commanded an army of 200,000 men and a territory of hundreds of thousands of square miles in India, every inch of it mined with the sweat and blood of locals.

During the Civil War, President Abraham Lincoln’s eye frequently wandered from battle reports and drafts of speeches to plans for a project he hoped would unite America: the intercontinental railroad. Founded in 1862 by an act of Congress, the Union Pacific Railroad Company knitted together a fractured nation after the war, traversing the Rockies and threading Native American territory (not to their benefit). But in 1873, the unscrupulous magnate Jay Gould took control. He bought out other railroads, gaining control of more than 10,000 miles of track by 1879, and 15 percent of the entire market by 1882. Then he began to increase prices, squeezing farmers who relied on the system to sell their crops. It was a pattern that raised hackles throughout the 1870s and ’80s: Gould, John D. Rockefeller, Andrew Carnegie, and others monopolized American industry and accumulated enormous wealth at the expense of small businesses and regular citizens. 

As the public began to fight back—first by punishing individual abuses like fraud or nonpayment of government debts, and then by passing the nation’s first antitrust laws—the robber barons didn’t just give in. Instead, they bent and twisted the rules of democracy to have their way. Union Pacific directly intervened in state legislatures, threatening lawmakers who opposed them and sponsoring their opponents. Rockefeller’s Standard Oil leaned heavily on the attorney general of Ohio, David K. Watson, who brought a landmark suit against the trust that eventually forced it to flee the state.

Present-day Americans must take a cue from the past by insisting that corporations serve more than just their shareholders. It seems like a tall order, but there are some signs, however tentative, that the pendulum has begun to swing back toward the greater good.

American corporations continued to evolve during the half-century-long struggle against monopolists that ended in the federally supervised economy of the New Deal. Magnuson spends a great deal of time with Henry Ford, a visionary whose assembly line churned out millions of affordable cars through the early 20th century. Ford paid his employees well, but he also worked them to the bone, hiring efficiency experts to track their every motion in a foreshadowing of Amazon’s digital monitoring of warehouse workers. His paternalistic attitude toward his laborers—the company’s “Sociological Department” visited their homes and interviewed neighbors to ascertain whether they drank or gambled—led to bloody battles against union organizers and the creation of the National Labor Relations Board.

Later in the American Century came Exxon, an inheritor of Standard Oil that became one of the first truly world-spanning multinationals. During the 1973 OPEC embargo, Exxon executives met as equals with heads of state, coordinating the worldwide distribution of oil through a thicket of regional rivalries. Yet the company’s multinational status raised questions about its loyalties that echo today. “I’m not a U.S. company and I don’t make decisions based on what’s good for the U.S.,” CEO Lee Raymond once declared. Meanwhile, as the role of fossil fuels in climate change became better known, Exxon paid for pseudoscientific research sowing doubt and lobbied fiercely to prevent further study or regulation of carbon emissions. We reap the rewards of Exxon’s innovations today with freak weather, outsourced factories, and offshore accounts controlled by the world’s foremost CEOs and politicians.

The last chapters track the rise of the corporate raiders, who bought and sold companies themselves as commodities, and of information technology, which gave rise to the truth-twisting panopticon of social media. In these pages there are fewer lessons to be learned, only reminders of present-day crises to which American society hasn’t yet found solutions.

Magnuson ends the book with a list of prescriptions for a healthier capitalism, one that at times sounds as broad and wishful as Google’s now-discarded motto: “Don’t be evil.” (His first piece of advice: “DON’T OVERTHROW THE REPUBLIC.”)

Though his suggestions include many necessary reforms—crafting evidence-based regulation, reviving antitrust oversight—Magnuson doesn’t mention one potential change that addresses the central question of his book: What (or who) are corporations for? Whether a corporation exists to benefit shareholders, managers, or the public as a whole—many of those assumptions are laid out, implicitly and explicitly, in corporate charters, the founding documents that lay out the privileges, responsibilities, and governance structure of companies. Today, anyone can start a corporation by filing a form and paying a fee. But American colonies and the early states regulated corporate charters much more closely, in some cases requiring direct approval by legislatures. Charters once clearly described the kind of business that corporations were allowed to conduct, and the benefit that it would bring to all. It was for violating the scope of its charter that Standard Oil lost its 1890 suit in Ohio and was forced to leave the state. Today, progressive politicians such as Bernie Sanders and Elizabeth Warren are calling for social responsibility to once again be baked into corporate governance. Under plans they released during the 2020 primaries, America would require corporations to include employees on their governing boards; in Sanders’s plan, employees would also receive a minimum stake in the company. Though unlikely to become law anytime soon, these policies are already in place in Germany and other successful capitalist countries, and they represent a wider recognition that something is amiss in the corporate firmament. 

With Magnuson’s book, present-day Americans have the context to see that their misgivings are far from unusual. Human beings have struggled to be seen as more than profit engines for as long as corporations have existed; whether that is a comfort or a worry depends, perhaps, on individual outlook. By giving us weapons sharpened in previous battles, Magnuson reminds us that the outcome is in our hands.

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Rob Wolfe is an editor at the Washington Monthly.