Douglas W. Rae, in this Yale lecture from Capitalism: Success, Crisis and Reform, traces how the scale of American railroads in the nineteenth century forced new forms of business organization. He explains the double challenge railroads faced: operating a technically complex system across long distances required professional managers, and financing that system required raising capital far beyond what individual owners or partnerships could supply. Rae walks through the joint stock corporation and its main alternatives, comparing them on liability, liquidity, financial scalability, accountability, and the role of ownership. He argues the corporation proved remarkably efficient at raising large sums even though it introduced principal-agent problems between owners and managers. The lecture runs about forty-four minutes and is the sixth session of the course, recorded in Fall 2009 and drawn from Yale's Open Courses materials.