A brief history of America Inc.

Guard goodwill. It's worth a lot.

The enterprise that would become a multi-trillion-dollar behemoth in the 21st century began life in the 17th century as a scattering of small businesses on the Atlantic seaboard in North America. As small businesses do, these firms specialized. The one in Virginia produced tobacco for export. Massachusetts focused on fish and self-righteousness. New York commenced with Indian traders from Holland who found new sponsors in London. Pennsylvania was a land play by Quakers. Georgia was a non-profit halfway house for English felons.

There were thirteen in all. They had little to do with one another, rather looking to Britain for customers and capital. But when Britain, leveraging the firms’ dependence against them, changed the terms of trade in the 1770s and 1770s, the thirteen formed a kind of trade association – a congress, they called it. In time they talked themselves into breaking off and collectively forming a new company.

The divorce was messy. Many of the shareholders wanted to stick with the status quo. But the rebels made good their break, under a corporate charter they dubbed the Articles of Confederation. Timely investment by Britain’s rival France kept the new company afloat until it could stand on its own.

Though the Articles sufficed to secure independence, influential shareholders thought them insufficient for long-term growth. These men formed a shadow board of directors that drafted a new corporate charter, which was put to the shareholders in meetings held in the original thirteen divisions. The advocates of the new charter stressed the need for centralized decisionmaking. They decried the redundancy and rivalry the Articles allowed. Skeptics feared that a stronger corporate leadership would fall out of touch with the diversity of stakeholders in the enterprise.

The insurgents won. The Articles were retired in favor of the Constitution. The reconfigured company based itself initially in New York, then in Philadelphia, and finally in Washington, a company town built afresh on the banks of the Potomac River.

During the next several decades the company focused on agriculture and other forms of resource extraction. In keeping with this corporate mission, it sought and secured new sources of supply, expanding rapidly westward. Its agents encountered existing firms, mostly small, doing business as they had done for centuries or millennia. They swept these firms aside and seized their lands. When they encountered larger firms controlling supplies and markets they coveted, they adopted various methods to achieve the same end. They purchased Louisiana, conquered Texas and California, and struck a bargain with Britain over Oregon.

Within the company tensions developed between modernizers and traditionalists. The former sought a new business model for the firm, based on technology and a flexible labor force of hired workers. The latter remained rooted in agriculture, chiefly cotton, and preferred the predictability of the fixed labor costs of a workforce of slaves. The traditionalists, trying to reprise the breakaway from Britain, bolted and took a third of the company with them. The modernists, citing the corporate charter and their vision of the future, refused to acquiesce in the destruction of the company they all had inherited.

As corporate battles go, this was a bloody one, lasting four years and leaving scars that would last much longer. The modernizers prevailed. And without the uncertainty that had hung over its head for a generation, the company entered a period of sustained rapid growth.

It experienced growing pains. Workers thought management was keeping too much of the profits. They watched directors like Carnegie, Rockefeller and Morgan get rich and powerful beyond precedent. The workers wanted more for themselves. They formed unions and staged strikes.

But the strikes rarely succeeded, for the managers cunningly pitted different groups of the employees – factory workers, white collar workers, farmers – against each other.

By the beginning of the 20th century, America Inc. was the largest firm in the world, though its activities still centered on North America. Yet it was vulnerable to events overseas. And when several European firms, following dustups over markets in Africa, engaged in a titanic struggle, America Inc. felt obliged to enter, albeit late, to defend its interests. CEO Woodrow Wilson hoped to restructure the international market to the benefit of American Inc. and of consumers globally.

A corporate summit in Paris of the big four firms was riven with dissension. They papered over their differences, but the pact they produced was dead on arrival with American shareholders.

In the turmoil that followed, America Inc. expanded its influence by shrewd lending practices. But all proved for naught when a financial crash caused nearly everyone to default on nearly everything.

A second battle royal ensued. One result was the reenergizing of America Inc. Another was the company’s capture of new market share, in the vacuum left by the destruction of its chief rivals.

In 1945 America Inc. towered over the international landscape. Its industrial production equaled that of all competitors combined. Its financial grip on the world was even greater. It dictated access to markets for all competitors. Because its subdivisions were the most efficient on the planet, this translated to privileged access for America Inc.

Remarkably, though, the company’s dominant position generated comparatively little resentment. During this period business analysts paid close attention to the value of a firm's goodwill. Physical assets had always figured in accounting. Likewise patents, trademarks and other forms of intellectual property. And existing business relationships. But goodwill felt toward a corporation was seen as increasingly important.

It could be very valuable. For companies like Coca-Cola, goodwill – memories from childhood of Cokes shared with friends, for instance – had greater value than their tangible assets.

Goodwill felt toward America – by German kids who received chocolates rather than rifle butts from GIs at the end of the war, by Japanese allowed to keep their emperor, by Filipinos granted independence from America without the need for rebellion, by recipients of Marshall Plan aid – allowed America to construct a liberal world order based on national equality and the rule of law.

The sphere America created was sometimes called an empire, but it was an empire unlike any in previous history. Nations joined the American empire by choice. They left when they pleased.

A moment in the 1960s epitomized the American model. France under Charles de Gaulle decided to leave NATO. Lyndon Johnson said he was sorry France was leaving but America would hold France’s seat open in case she wished to return. American troops were withdrawn from France without objection. As Johnson told an aide, “When a man tells you to leave his house, you don’t argue. You take your hat and go.”

Shortly thereafter reformers in Czechoslovakia tried to take their country out of the Warsaw Pact, the Soviet counterpart to NATO. The Kremlin sent tanks to Prague and crushed the rebellion. The world noticed the difference between America’s modus operandi and that of Russia.

Goodwill as a corporate asset isn’t infinite. It has a limited shelf life. It has to be renewed. America Inc.’s misbegotten venture in Southeast Asia cost it valuable goodwill. The terrorist attacks of September 2001 won sympathy for the company, but this was squandered by a feckless foray into Iraq. What people in many countries perceived as America’s blind support of Israel eroded the goodwill further.

In 2025 America Inc. remains the largest enterprise in the world. Its annual revenues of $30 trillion are half again as great as China Inc’s. Its physical assets are several times revenues.

But its goodwill has diminished, and under the recently installed leadership it appears likely to diminish further. Tariffs against longtime allies antagonize those allies and make other allies suspicious. Even threats of tariffs do damage. The new leadership seems to think keeping others off-balance is a sound business practice. Perhaps it is for scrappy real estate developers.

But it's a pernicious approach for an established firm with a reputation for probity and fair play. Goodwill accrues slowly. It can dissipate quickly. Its loss can’t always be seen. It is inevitably felt.