As a legal form of organization, the corporation can be traced to Roman times. In the Middle Ages corporations were used to organize universities, monasteries, and guilds. The voyages of exploration and discovery in the 16th and 17th centuries stimulated the use of the corporate form of organization, not only for the pursuit of trade but also to carry to distant lands the power of the governments that chartered the corporations. A joint-stock chartered company such as the British East India Company was both a business enterprise and a form of government. The American colonies were established by corporate bodies chartered by the British Crown with the authority both to govern and to engage in trade.
A boom in joint-stock ventures in the early 18th century led to overdevelopment and excessive speculation, resulting in the collapse of some large corporate enterprises, including the South Sea Company in England (in the South Sea Bubble scandal) and John Law’s Louisiana Company in France. In 1720 the British Parliament passed the Bubble Act, which for more than a century after its passage severely restricted the use of corporate organization in business.
In the 19th century the Industrial Revolution brought a tremendous increase in the number of business opportunities that required large amounts of financial capital for their exploitation. In all the industrial nations laws were changed or enacted to permit corporate growth. Thus, industrialization provided the impetus for the emergence of the modern corporation, especially the corporate giants that now dominate much of the world economy.