This section is from the book "Business Finance", by William Henry Lough. Also available from Amazon: Business Finance, A Practical Study of Financial Management in Private Business Concerns.
The general adoption of the corporate form of organizing business enterprises has opened up new and previously un-thought-of fields and methods of exploitation. The corporate form is singularly well adapted for exploiting activities. Through the creation of a small corporation, an individual may wholly or partially hide his own identity and rid himself of personal responsibility. The large corporation with its thousands or tens of thousands of shareholders, few of whom know much about or take a personal interest in the fortunes of their corporation, offers an inviting opportunity for exploitation. It requires a man of really strong character and of unusual conscientiousness to avoid the temptation of using an important office in a corporation of this character for the prime purpose of building up his personal bank account. To the credit of corporate officers and directors it must be said that the great majority devote their undivided efforts to the service of their corporation and the stockholders whose interests they represent.
The legal fiction of "corporate entity" which has been more rigorously upheld and applied in American courts than in English courts, has undoubtedly been a highly important factor in favoring exploitation. Any individual who so desires may readily organize and control a corporation in which he may not personally appear either as a director or an officer; indeed, he may not even be on the books as a stockholder of record. With this corporate mask over his face, the exploiter may go ahead boldly looking for victims, and may even, under this new guise, operate successfully on the pocketbooks of those whom he has previously robbed.