T. Coleman Du Pont, Pierre S. Du Pont, and Alfred I. Du Pont (l to r)
Delaware’s one million plus registered corporations include two-thirds of Fortune 500 companies. More businesses than residents call the state ‘home.’
Why the Chancery Court Matters
Delaware’s emergence as the premier state for incorporation is marked by 3 key factors: 1) the Chancery Court plays a vital role in drawing companies to the state by offering specific solutions that fit the situation when traditional legal remedies are insufficient; 2) conglomerates are reassured by Delaware’s extensive body of case law stemming from the strategic legal frameworks of the 1899 General Corporation Law; 3) incorporators can depend upon sophisticated banking support from specialized entities, such as the Wilmington Trust Company. The du Ponts similarly reevaluated all pre-existing banker agreements, in which they had smaller controlling interests. Such arrangements might put them at a bargaining disadvantage in any future expansion.
To avoid this, they sought to create a new bank, Wilmington Trust Company, where they would have a commanding interest. Coleman and Pierre du Pont organized their institution (Alfred du Pont was on the board but was less hands on) only one month after the state passed the General Corporation Law. The statute’s favorability readily drew industry corporators to charter in Delaware. The du Ponts wanted a piece of the new business.
The Dupont’s made a calculated decision, believing that they had something unique to offer similarly complex businesses. Wilmington Trust’s staff, seasoned by work for DuPont, were expected to offer a level of sophistication. This expertise was predicted to draw large corporate clients to Delaware from far and wide. Their gamble worked.
Wilmington Trust began conducting business on July 8, 1903, in the first constructed section of the DuPont building campus. The three cousins debated over the name for the blockwide complex.
Alfred, ever the idealist, proposed honoring family ancestors by naming it the “du Pont de Nemours Building.” Coleman, the most pragmatic of the three, suggested shortening the name to “the DuPont Building,” arguing that’s what the public would call it anyway.
Pierre, the most driven of the three cousins in the banking sector, suggested naming the hub the “Wilmington Trust Company Building.”
He believed that associating the 1907 complex with the subsidiary’s name would allow them to leverage the Du Pont reputation. This strategy, in his estimation, would effectively advertise the growing banking business.
It’s no accident that Delaware’s ascent as a global nexus for business formation began during this decade.
Legislators in Delaware were already embracing company-friendly policies, including low fees and high secrecy chartering laws. This approach stemmed from the 1899 General Corporation Law (GCL). Amendments to the GCL in 1907 further facilitated an advantageous business environment. Wilmington Trust rose to become the state’s largest bank in 1912, a position it held for over 100 years.
A Century of Corporate Dominance
Delaware’s unparalleled status as a corporate haven is a testament to intentional innovation and adaptation. The steady rise of institutions like Wilmington Trust, flexible corporate law, specialized banking support, and political acumen have all contributed to the state’s reputation. As a stable, appealing domicile for business entities, Delaware has earned its place as the corporate capital of America.
This legacy of business and industry growth, which spans over a century, underscores the state’s continuing prominence.