2.4.2. The Mid-Atlantic States (1865-1900): New Jersey, Mother of Trusts

  • New Jersey grew rapidly after the Civil War; as a result, it needed more government revenue than its deal with Camden & Amboy Railroad could provide.   The Camden & Amboy’s dominance of state government ended in 1871when it was acquired by Pennsylvania Railroad.  After that, public support for general incorporation laws and higher taxes on railroads grew quickly. 
  • In 1875, New Jersey became the first state to constitutionally prohibit special corporate charters.  In 1884, Governor Leon Abbett persuaded the legislature to enact a reform law closely regulating railroad fares and increasing taxes, but the following year the New Jersey supreme court ruled that the law would apply only to railroads created after the law was passed.  Abbett then persuaded most of the state’s railroads to accept increased regulation and taxes in return for an agreement that the state would give up the purchase rights it had inserted in the charters of most railroads created before 1880. 
  • New Jersey lawmakers realized that even this agreement would not bring the state the revenue it needed to function in the future.  Accordingly, they looked for ways to attract more corporations to New Jersey. Starting in 1888, they found the solution:  a series of pioneering laws that gave corporations wider latitude to operate than they enjoyed in any other state.  James B. Dill, a Standard Oil lawyer who practiced in New York and New Jersey, was the principal author of the laws. 
  • Delaware began copying New Jersey’s laws in 1899 and eventually became the national leader in liberal corporate laws, but by that time New Jersey was known as “The Mother of Trusts” and it has maintained its reputation as a corporation-friendly state to this day. 

"Nursery Rhymes for Infant Industries, No. 15: 'O' is the Oil Trust, a modern Bill Sikes; he defies the police, and does just as he likes" (1900) - Courtesy Library of Congress