Early American factories were usually owned by individuals, families, or partners. As mechanization became more widespread and the scale and complexity of businesses increased, a substantial capital investment was required to open a factory. Although it was a slow process, these factors led more and more firms to “incorporate” ownership.
Prior to the 1860s, most manufacturing was conducted by unincorporated companies. Organizing a corporation required a special act of a state legislature. Many people believed that only projects that were in the public interest, such as roads, railways, and canals, were entitled to the privilege of incorporation. Businessmen also often viewed corporations as monopolistic and corrupt and as a threat to the individual enterprise. It took years for corporations to be regarded as agencies of free enterprise.
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