What’s the Matter with Delaware?: How the First State Has Favored the Rich, Powerful, and Criminal―and How It Costs Us All

by Hal Weitzman

How the “First State” has enabled international crime, sheltered tax dodgers, and diverted hard-earned dollars from the rest of us

The legal home to over a million companies, Delaware has more registered businesses than residents. Why do virtually all of the biggest corporations in the United States register there? Why do so many small companies choose to set up in Delaware rather than their home states? Why do wealthy individuals form multiple layers of private companies in the state? This book reveals how a systematic enterprise lies behind the business-friendly corporate veneer, one that has kept the state afloat financially by diverting public funds away from some of the poorest people in the United States and supporting dictators and criminals across the world.

Hal Weitzman shows how the de facto capital of corporate America has provided safe haven to money launderers, kleptocratic foreign rulers, and human traffickers, and facilitated tax dodging and money laundering by multinational companies and international gangsters. Revenues from Delaware's business-formation industry, known as the Franchise, account for two-fifths of the state’s budget and have helped to keep the tax burden on its residents among the lowest in the United States. Delaware derives enormous political clout from the Franchise, effectively writing the corporate code for the entire country―and because of its outsized influence on corporate America, the second smallest state in the United States also writes the rules for much of the world.

What's the Matter with Delaware? shows how, in Joe Biden’s home state, the corporate laws get written behind closed doors, enabling the rich and powerful to do business in the shadows.

Genres: Economics, Politics, Nonfiction, American, Audiobook, Law, Business

280 pages, Hardcover

First published January 1, 2022

About the author

Hal Weitzman has been on the staff of the Financial Times since 2000, and is currently Chicago and Midwest correspondent. He first joined as an editor on the FT's Op-ed desk, was named Americas News Editor in 2002, and was the newspaper's Andes correspondent from 2004 to 2007. He was based in Lima but travelled extensively, reporting from Peru, Bolivia, Ecuador, Venezuela and Chile. As well as the FT, his reporting from the region also appeared in the Los Angeles Times, The Miami Herald, New Statesman, The Irish Times, The Australian and Jane's Foreign Report. Originally from Wales, he was educated at the Kennedy School of Government at Harvard; Oriel College, Oxford; and Leeds University.

Reviews

[Stephen Bull · Rating 3 out of 5]

Through Part 1 and 2, I was learning something new and interesting on nearly every page. The final Part 3 felt a bit repetitive in my opinion. Still a good and informative book about the First State! Go Blue Hens!

[Damon · Rating 3 out of 5]

There was a lot of good information on how Delaware operates as the de facto business registrar in the United States, but I left feeling only partially satisfied. Some of that I will chalk up to Weitzman's approach: he is a journalist rather than a historian, so he leans heavily into the recent (political and economic-scandal) developments in the world of offshore finance and corporate transparency in Delaware rather than giving the historian's perspective of an evolution towards the current system.

His thesis is basically that Delaware achieved its status as the world's US business registrar by having the following combination of factors: a state that wants revenue from business registrations, a non-transparent closed-door not-really-democratic system of corporate rule-making, a state culture of presenting the veneer of unanimity.

Rather than trace the lineage of Delaware's Chancery Court or the Corporate Board, he instead raises Delaware's history with slavery and segregation as examples of how Delaware tries to paper over differences. While the history of Delaware's role in slavery and segregation is interesting (and would be the subject of a really interesting book, if he were to write it), I couldn't quite make the connection to the current corporate business practices.

In the positive category, he does give a good sense of how Delaware has been dragged into a slightly-more transparent era of corporate disclosures. His work in tracing recent political developments is really good as well. At 250 pages, it is a quick read. You get a great sense of where some of the key players are on Delaware's relations with the federal government. He gives some good anecdotes, especially in the back end of the book that keep you engaged. If you are interested in corporate transparency, then this would be a good follow-on to either Shaxon's Treasure Islands or one of the several books about the Panama or Pandora Papers.

[Richard N. Jester · Rating 5 out of 5]

As a resident of the State of Delaware since 2005, I found the book to be enlightening, entertaining and insightful. The Delaware Way is everywhere. While I knew Delaware had more corporations than living residents, I had no idea it was really this easy. The author does an amazing job of explaining the timeline of political and social events that led to the passage of some of the most important corporate laws in US history.

Highly recommended.
👍🏻👍🏻👍🏻👍🏻
⭐️⭐️⭐️⭐️

[Grant · Rating 4 out of 5]

Weitzman covers all bases but the information can be a little disjointed at times. Overall if you've never read into the Delaware problem then this is a fantastic start. If you've already delved deep into the tax evasion subject, most of what is covered is you'll probably already know yet it's still a read.

[Ben]

"Little Delaware ... is determined to get her little tiny, sweet, round, baby hand into the grab-bag of sweet things before it is too late." –The American Law Review, 1899

This is a fascinating book about a seemingly insignificant state that sets the pulse of corporate regulation across the country. Tidbits include that 2/3 of all Fortune 500 countries (45% of the U.S. GDP!) are registered in Delaware and that the Delaware corporate code is largely created by a secretive set of unelected lawyers.

Part I introduces Delaware's economy and why it depends on catering to corporations. This section is where you'll find discussion of Delaware's role as a tax haven and encouragement of predatory interest rates, "spiderweb capitalism," and all that other good stuff that lets the elites stay ahead. You'll also see some isolated quirks of Delaware's system, such as the largely defunct Delaware Loophole.

Part II discusses the history of Delaware (particularly as it relates to the independence and segregation movements). I'm honestly not convinced of the author's argument that this history is essential to understanding Delaware's corporate state (via the "Delaware Way"), but it is captivating and ugly and worth reading.

Part III is where much of the heavy big-picture gold of this book is buried, including the legal foundations of Delaware's corporate code and how Delaware's fight on behalf of businesses and against transparency erodes democracy and society.

As for the caveats with this book: it is very scattered at points (especially Part I) and filled with meandering anecdotes, though most of these are interesting nonetheless. The author is also not at all shy about discussing Delaware's impacts through his own political lens (especially Part III); personally, I typically agreed with him, and many of his thoughts seem pretty universal (e.g. we should be preserving democracy! sex trafficking is bad!), but some readers may find this argumentative approach to be off-putting.

[Raymond Goss · Rating 4 out of 5]

There's something in this book for nearly every reader. I thought I was going to be reading a book about the issues around loopholes and reasons why companies incorporate in Delaware instead of their local states. That is in there, but this book goes into the history of the state, its stances on slavery and segregation, more recent issues with busing students education, President Biden's role in politics, and more.

The number one thing the author seemed to emphasis was wrong with companies incorporating in Delaware, is that they aren't required to disclose the ownership. This effectively allows people to hide money and wrong doing from authorities. There are also examples of these corporations able to avoid taxes in other states and other countries due to local, national, and international laws. The new Corporate Transparency Act was not mentioned in this book, the CTA is designed to require LLCs to disclose the ownership, at least to the government, to fix the main with ownership. For many small businesses, the cost of lawyers and other Delaware requirements make it unattractive. For large and overseas companies, many of the advantages probably still make Delaware attractive to incorporate there.

[Scott Abbott · Rating 5 out of 5]

Fascinating explanation of the role Delaware plays in the economy of the U.S., and the world more broadly through its unique relationship with corporations and what it calls “the franchise.” This book offers a critique of the current system, rooted in a clear historical explanation for how we got here. As a relatively recent transplant to Delaware, I found the author’s perspective useful to explain what is often called “The Delaware Way,” which is framed positively or negatively depending on who you ask. Coming into the state from the outside, I found the book to be instructive in clarifying both the benefits and costs of Delaware’s approach. Worth a read for anyone living in Delaware, for sure, but anyone interested in economics, corporations, or justice as well.

[Yar Bell · Rating 5 out of 5]

There is a lot wrong with the American business community and Delaware is inescapably at the center, as this book explains on issue after issue. The discussion of Delaware's early history from the 18th century was very interesting, but it felt cut short and too brief to me.
Sean Runnette does an excellent reading, I listened to most of it at around 2x.
From chapter 8: "Delaware corporate law cares not at all about employees, communities, customers, or other stakeholders except in so far as shareholders also gain. If there is a conflict, shareholders must win."

[Adam · Rating 4 out of 5]

This book has so many different sections, overall a very interesting read even if I didn't enjoy or agree with everything. Anything on corporations was very informative. The information on Delaware's race relations wasn't that interesting overall. A surprising amount on Joe Biden which I guess makes sense. The political bias was tolerable, although I wish the author would have let me draw my own conclusions in some cases, a bit fear-mongering at times. Overall very informative and eye-opening.

[Mia · Rating 3 out of 5]

Engaging material but feels a bit padded at times with repetative statements, which I assume is due to hitting the wall outlined time and time again within the text: deliberate anonymity, obfuscation & opaque "Delawarian" practices.

(I may have enjoyed this more if the audiobook narrator was different, the narrator flattened the work considerably).

[Garrett Jansen · Rating 4 out of 5]

A little disjointed at parts but connects the dots on the way that Delaware impacts both domestic and international economies. It’s a quick and easy read to wrap your head around the outsized impact of Delaware.

[Ietrio · Rating 1 out of 5]

weitzman wants his clique in power no matter what, no matter how many damage it will be done. so the problem is not a federal government that can do all that, the problem is delaware, probably the smallest state. so don't look at the elephant in the room, look at what the monkey is telling you.

[Zhen Zhu · Rating 3 out of 5]

The book is easy to read and well written. The interesting parts are the current and what we can do to stop the loopholes. The historical aspects are long and less interesting.

[Jason S · Rating 4 out of 5]

An interesting account of why Delaware relies on chartering corporations for its financial stability as a state and the negative consequences for the country as a result.

[Melinda · Rating 4 out of 5]

What a truly fascinating read. To be fair it a lot of the technical and in depth law/finance stuff went over my head….but very well researched. Probably have to read again to let more info sink in.

[Ryan · Rating 3 out of 5]

A well structured, if bland at times, look at Delaware's financial policy.

[Austin Wortley · Rating 4 out of 5]

An interesting contemporary perspective on how Delaware was shaped and shapes the modern world of business. A little deep on some of the nuances of history but an easy read nonetheless.

[Ransom Zubrod · Rating 3 out of 5]

Fun to read on vacation to Delaware.

[April · Rating 4 out of 5]

lots of great info

[Toni Smith · Rating 5 out of 5]

good palate cleanser. eye opening

[Charlene]

Delaware is Corrupt. Go figure.

52 Book Challenge #7. Delaware

[Mark · Rating 4 out of 5]

Excellent run down on how the state government of Delaware not only ignores illicit financial flows but benefits from them. I liked Part II, which is a well written historical summary from colonial times till today. This portion of the book provided valuable historical context.

[Lori · Rating 4 out of 5]

IN OUR DEFENSE we are a solidly blue state with secured LGBTQ+ and reproductive rights.