This monograph offers a paradoxical characterization of the social and political forces that drove early American growth as seemingly competitive yet strangely cooperative, focusing on the rise of the corporate form in Philadelphia over the half century following the ratification of the Federal Constitution. In so doing, it highlights the profound changes in political influence that came with independence from England, the rise of elected leaders who stood outside the circle of Philadelphia's social and manufacturing elites, and the cautious retreat of these elites from political affairs as they shifted attention to private enterprise. Schocket attributes these changes to the emergence of an implicit institutional arrangement through which, in return for loss of political power, the nation's early entrepreneurs acquired exclusive rights to operate public improvement projects. The legislative system of corporate chartering was at the heart of this agreement. And though most improvement projects ostensibly served the public good, Schocket is quick to point out that the system allowed entrepreneurs to secure control of what might be thought of as public resources for private gain. The book is organized around a series of examples that explore aspects of this recurrent theme.

Among the most interesting is the struggle over the provision of monetary services. Though the possibility of government-issued paper money was not on the table in any serious way by the start of the nineteenth century, it remains that many of the elite who had withdrawn from the political sphere ended up acquiring legislative charters to start banks. At the same time, the State had serious misgivings about ceding control of the credit allocation process to private interests. Schocket documents how private individuals prevailed in this fundamental conflict and how the banking corporation flourished. Needless to say, the ability to create money represented an enormous power for early bankers. This is because loans could be allocated to friends and business associates of bank directors, or even the directors themselves, with little or often no public accountability at all. Once establishing a bank, it seemed to become at once necessary for the founders to prevent other banks from gaining a foothold in the market. All of this was accomplished by lobbying the state legislature to ensure that charters were granted when needed and denied to others later on. In return for support from increasingly nonelite legislators, ownership shares and thus a portion of the rents gained by the oligopolistic banking sector were siphoned off to political leaders, while banks made direct payments to the State in return for the charters themselves. The State found such arrangements so lucrative that forty-one new Pennsylvania banks were chartered in 1814 alone! Thus, while the shift of monetary services to the private sector may well have resulted in what we now call “insider lending” and may have prevented credit from diffusing more evenly through the economy, Schocket proposes that the wealth and improved living standards that bank-financed projects created did indeed help to fuel the region's economic development.

Schocket also describes how Philadelphia solved one of its first serious challenges—that of providing clean water to its residents. The feat was accomplished by incorporating the city of Philadelphia to build an engineering marvel that collected water from the Schuylkill River in the west, pumped it upwards to a reservoir located in a water tower just on the edge of the city, and then delivered running water through a series of slides to the city's residents. Since it was widely believed that financing such a project through direct taxation could not work, the decision was made to undertake the project by chartering a private corporation (i.e., the “Water Works”) through which backers could be properly compensated for the project's success. At the same time, the public, in return for the enormous benefits of clean running water, allowed the Water Works to levy fines, charge fees for services and improvements, and even have violators arrested if found diverting water flow or otherwise subverting the system. Once again, Schocket interprets this as an arrangement through which a private corporation was seen as a key vehicle for providing a public service.

The analysis goes on to describe the rise of manufacturing in Philadelphia's immediate hinterlands, a development that was facilitated by navigational improvements on and along the Schuylkill and Lehigh rivers that were once again undertaken by state-chartered private corporations, and the development of “company towns” such as Mauch Chunk that served as distribution centers for the enormous stores of natural resources that could be extracted from the area's mines. There is no doubt that the opening of these navigations created jobs and an uneasy prosperity for those employed along their lengths, yet the public at the same time surrendered control of large parcels of land to achieve it while corporate leaders amassed great wealth.

Overall, this carefully researched and well-written monograph elucidates some of the reasons why corporations, which are even today sometimes seen as classic examples of private gain at public expense, have been not just tolerated but even encouraged over U.S. history. It is a strong tribute to the advantages of the capitalist economy that Philadelphians two centuries ago were able to see the benefits that organized private interests could offer to the public, and to determine that these benefits outweighed losses in government control and supervision. At the same time, this reader wonders whether Schocket overemphasizes the powerful image of the corporation as a necessary evil in a development process that arose from an environment of political compromise. An alternate model of entrepreneurship might stress the importance of limited liability and rent-seeking opportunities as providing motivation for attempting to overcome the substantive frictions associated with bringing ideas to market. Could the State have mobilized the capital, completed the construction, and gotten these projects online as quickly? The historical record suggests that the answer is “probably not as quickly.” At the same time, the refreshing tone of this entertaining and insightful book cannot be overstated. It should surely find a place on reading lists of business historians and students of entrepreneurship for years to come.