States initially justified owning corporate stock on public-works and control grounds.

Evidence

It seemed only natural, in the nineteenth century, for the state to act in partnership with certain corporations. In the first place, road building, banking, digging canals, and the like, were traditionally public works. Second, since each franchise was a privilege and favor, the state had the right to exact a price, which might include strict controls or even profit sharing. Third, state participation was a way to help an enterprise out, a way of priming the pump. The economy could only benefit, people thought. Fourth, public participation increased public control: if the state owned stock, and its men sat on the board, they could make sure the company acted in the public interest. And fifth, state investment could bring money into the treasury. If the dreams of the enterprise came true, big dividends would flow into public coffers. Pennsylvania, for example, not only owned stock in its banks but, after 1806, invested in turnpikes, bridge companies, canal companies, and finally in railroads. — Lawrence M. Friedman, A History of American Law, 1061

Categorization

• XREF: State-chartered quasi-public internal improvements connect to the ch24 claim about early-nineteenth-century expectations that state government actively promote development, and feed the fiscal-recklessness theme of ch24’s 1837 depression. — connects to: Colonial compulsion was justified as necessary to fund public works. — Alice L. Conklin, A Mission to Civilize_ The Republican…, 822; Post-1837 state governments barred themselves from owning corporate stock and lending credit — Lawrence M. Friedman, A History of American Law, 2978

Broader Connections

• Colonial compulsion was justified as necessary to fund public works. #corroborates (0.85) — Alice L. Conklin, A Mission to Civilize_ The Republican…, 822
• Post-1837 state governments barred themselves from owning corporate stock and lending credit #contradicts (0.80) — Lawrence M. Friedman, A History of American Law, 2978