A HISTORY OF THE AMERICAN CORPORATIST OLIGARCHY
How a farcical series of events in the 1880s produced an enduring and controversial legal precedent
Lincoln. like the original founders thought corporations were one of the most dangerous entities to liberty.
What is a corporation? Ambrose Bierce's Devil's Dictionary defines it as 'an ingenious device for obtaining profit without individual responsibility'. It is a legal construct, a charter granted by the state to a group of investors to gather private funds for a specific purpose. Originally, charters were granted in the service of a public purpose, and could be revoked if this were not fulfilled. The relationship between state and corporation is a complex one.
Over the past 400 years corporations have conquered territory and brought in resources for the state, breaking laws put in place to constrain them and gaining in power and privilege. History shows a repetitive cycle of corporations over-reaching, causing such social turmoil that the state is forced to reign them back in through regulation.
First in an ignoble line was the East India Company, set up by British merchant adventurers and granted the Royal Charter of Queen Elizabeth I in 1600. Partners combined their personal stock, turning it into company stock to create the world's first commercial corporation. It shipped out gold and silver to Asia in return for spices, textiles and luxury goods. The East India Company expanded into a vast enterprise, conquering India with a total monopoly on trade and all the territorial powers of a government. At its height, it ruled over a fifth of the world's population with a private army of a quarter of a million.
The American revolution In America, resentment was brewing against British rule, including corporations that ran American colonies with ruthless monopoly powers. Royal charters decreed that raw material was shipped from the colonies to Britain for manufacture, with the colonies forced to purchase the finished goods.
The American Revolutionary War began in 1776 with a determination to rout the British. Adam Smith, the father of free-trade theories, who published Wealth of Nations in the same year as the Declaration of Independence (1776), argued that large business associations limit competition: 'The pretence that corporations are necessary to the better government of the trade is without foundation.' Ending colonial monopoly After Independence, American corporations, like the British companies before them, were chartered to perform specific public functions - digging canals, building bridges. Their charters lasted between 10 and 40 years, often requiring the termination of the corporation on completion of a specific task, setting limits on commercial interests and prohibiting any corporate participation in the political process.
In 1886 a landmark decision by a US court recognized the corporation as a 'natural person' under law. The 14th amendment to the Constitution: 'no state shall deprive any person of life, liberty or property' - adopted to protect emancipated slaves in the hostile South - was used to defend corporations and strike down regulations: Southern Pacific Railroad Company, 118 U.S.394 (1886), is a corporate law case of the United States Supreme Court concerning taxation of railroad...
https://newint.org/features/2002/07/05/history
‘Corporations Are People’ Is Built on an Incredible 19th-Century Lie How a farcical series of events in the 1880s produced an enduring and controversial legal precedent By Adam Winkler That corporation was the Southern Pacific Railroad, owned by the robber baron Leland Stanford. In 1881, after California lawmakers imposed a special tax on railroad property, Southern Pacific pushed back, making the bold argument that the law was an act of unconstitutional discrimination under the Fourteenth Amendment. Adopted after the Civil War to protect the rights of freed slaves, that amendment guarantees every “person” the “equal protection of the laws.” Stanford’s railroad argued that it was a person too, reasoning that just as the Constitution prohibited discrimination on the basis of racial identity, so did it bar discrimination against Southern Pacific on the basis of its corporate identity. That corporation was the Southern Pacific Railroad, owned by the robber baron Leland Stanford. In 1881, after California lawmakers imposed a special tax on railroad property, Southern Pacific pushed back, making the bold argument that the law was an act of unconstitutional discrimination under the Fourteenth Amendment. Adopted after the Civil War to protect the rights of freed slaves, that amendment guarantees every “person” the “equal protection of the laws.” Stanford’s railroad argued that it was a person too, reasoning that just as the Constitution prohibited discrimination on the basis of racial identity, so did it bar discrimination against Southern Pacific on the basis of its corporate identity. The head lawyer representing Southern Pacific was a man named Roscoe Conkling. A leader of the Republican Party for more than a decade, Conkling had even been nominated to the Supreme Court twice. He begged off both times, the second time after the Senate had confirmed him. (He remains the last person to turn down a Supreme Court seat after winning confirmation). More than most lawyers, Conkling was seen by the justices as a peer. It was a trust Conkling would betray. As he spoke before the Court on Southern Pacific’s behalf, Conkling recounted an astonishing tale. In the 1860s, when he was a young congressman, Conkling had served on the drafting committee that was responsible for writing the Fourteenth Amendment. Then the last member of the committee still living, Conkling told the justices that the drafters had changed the wording of the amendment, replacing “citizens” with “persons” in order to cover corporations too. Laws referring to “persons,” he said, have “by long and constant acceptance … been held to embrace artificial persons as well as natural persons.” Conkling buttressed his account with a surprising piece of evidence: a musty old journal he claimed was a previously unpublished record of the deliberations of the drafting committee. Years later, historians would discover that Conkling’s journal was real but his story was a fraud. The journal was in fact a record of the congressional committee’s deliberations, but, upon close examination, it offered no evidence that the drafters intended to protect corporations. It showed, in fact, that the language of the equal-protection clause was never changed from “citizen” to “person.” So far as anyone can tell, the rights of corporations were not raised in the public debates over the ratification of the Fourteenth Amendment or in any of the states’ ratifying conventions. And prior to Conkling’s appearance on behalf of Southern Pacific, no member of the drafting committee had ever suggested that corporations were covered. There’s reason to suspect that Conkling’s deception was uncovered back in his time too. The justices held onto the case for three years without ever issuing a decision, until Southern Pacific unexpectedly settled the case. Then, shortly after, another case from Southern Pacific reached the Supreme Court, raising the exact same legal question. The company had the same team of lawyers, with the exception of Conkling. Tellingly, Southern Pacific’s lawyers omitted any mention of Conkling’s drafting history or his journal. Had those lawyers believed Conkling, it would have been malpractice to leave out his story.
When the Court issued its decision on this second case, the justices expressly declined to decide if corporations were people. The dispute could be, and was, resolved on other grounds, prompting an angry rebuke from one justice, Stephen J. Field, who castigated his colleagues for failing to address “the important constitutional questions involved.” “At the present day, nearly all great enterprises are conducted by corporations,” he wrote, and they deserved to know if they had equal rights too. Rumored to carry a gun with him at all times, the colorful Field was the only sitting justice ever arrested—and the charge was murder. He was innocent, but nonetheless guilty of serious ethical violations in the Southern Pacific cases, at least by modern standards: A confidant of Leland Stanford, Field had advised the company on which lawyers to hire for this very series of cases and thus should have recused himself from them. He refused to—and, worse, while the first case was pending, covertly shared internal memoranda of the justices with When the Court issued its decision on this second case, the justices expressly declined to decide if corporations were people. The dispute could be, and was, resolved on other grounds, prompting an angry rebuke from one justice, Stephen J. Field, who castigated his colleagues for failing to address “the important constitutional questions involved.” “At the present day, nearly all great enterprises are conducted by corporations,” he wrote, and they deserved to know if they had equal rights too.
Rumored to carry a gun with him at all times, the colorful Field was the only sitting justice ever arrested—and the charge was murder. He was innocent, but nonetheless guilty of serious ethical violations in the Southern Pacific cases, at least by modern standards: A confidant of Leland Stanford, Field had advised the company on which lawyers to hire for this very series of cases and thus should have recused himself from them. He refused to—and, worse, while the first case was pending, covertly shared internal memoranda of the justices with Southern Pacific’s legal team. The rules of judicial ethics were not well developed in the Gilded Age, however, and the self-assured Field, who feared the forces of socialism, did not hesitate to weigh in. Taxing the property of railroads differently, he said, was like allowing deductions for property “owned by white men or by old men, and not deducted if owned by black men or young men.” So, with Field on the Court, still more twists were yet to come. The Supreme Court’s opinions are officially published in volumes edited by an administrator called the reporter of decisions. By tradition, the reporter writes up a summary of the Court’s opinion and includes it at the beginning of the opinion.
The Justice in the Southern Pacific case made an aside before the proceedings began, legally known as Obiter Dicta, that “this case is not about corporate personhood, that has already been decided”
The reporter in the 1880s was J. C. Bancroft Davis, whose wildly inaccurate summary of the Southern Pacific case said that the Court had ruled that “corporations are persons within … the Fourteenth Amendment.” Whether his summary was an error or something more nefarious—Davis had once been the president of the Newburgh and New York Railway company—will likely never be known. Field nonetheless saw Davis’s erroneous summary as an opportunity. A few years later, in an opinion in an unrelated case, Field wrote that “corporations are persons within the meaning” of the Fourteenth Amendment. “It was so held in Santa Clara County v. Southern Pacific Railroad,” explained Field, who knew very well that the Court had done no such thing. His gambit worked. In the following years, the case would be cited over and over by courts across the nation, including the Supreme Court, for deciding that corporations had rights under the Fourteenth Amendment. Indeed, the faux precedent in the Southern Pacific case would go on to be used by a Supreme Court that in the early 20th century became famous for striking down numerous economic regulations, including federal child-labor laws, zoning laws, and wage-and-hour laws.
Meanwhile, in cases like the notorious Plessy v. Ferguson (1896), those same justices refused to read the Constitution as protecting the rights of African Americans, the real intended beneficiaries of the Fourteenth Amendment. Between 1868, when the amendment was ratified, and 1912, the Supreme Court would rule on 28 cases involving the rights of African Americans and an astonishing 312 cases on the rights of corporations. The day back in 1882 when the Supreme Court first heard Roscoe Conkling’s argument, the New-York Daily Tribune featured a story on the case with a headline that would turn out to be prophetic: “Civil Rights of Corporations.” Indeed, in a feat of deceitful legal alchemy, Southern Pacific and its wily legal team had, with the help of an audacious Supreme Court justice, set up the Fourteenth Amendment to be more of a bulwark for the rights of businesses than the rights of minorities.
Adam Winkler is a professor at the UCLA School of Law. He is the author of We the Corporations: How American Businesses Won Their Civil Rights and Gunfight: The Battle Over the Right to Bear Arms in America.
https://www.theatlantic.com/business/archive/2018/03/corporations-people-adam-winkler/554852/
A HISTORY OF THE AMERICAN CORPORATIST OLIGARCHY
Adam Winkler is a nationally recognized expert on American constitutional law. His most recent book We the Corporations: How American Businesses Won Their Civil Rights, was a finalist for the 2018 National Book Award for Nonfiction, the National Book Critics Circle Award, the American Bar Association's Silver Gavel Award, the California Book Award, and received the Scribes Book Award. The book chronicles the astonishing story of one of the most successful yet least well-known “civil rights movements” in American history. Uncovering the roots of Citizens United v. FEC, Winkler shows how that controversial Supreme Court decision was the capstone of a two-hundred-year struggle over corporate personhood and constitutional protections for business. The book brings to life the legendary lawyers and justices involved in the dramatic yet often overlooked cases that extended our most fundamental rights to corporations—Daniel Webster, Louis Brandeis, Stephen Field, and even Thurgood Marshall—and reveals how the nation’s most powerful companies transformed the Constitution into a bulwark against the regulation of big business and a tool to serve the ends of capital. On We the Corporations, Zephyr Teachout in a New York Times Sunday cover book review said “Winkler’s chief contribution is to show how corporations have been some of the most important innovators in American law, shaping it for good and often ill.” Another review by Vox held “it is deeply shocking that We the Corporations is not boring” and United States Supreme Court Justice Stephen Breyer was quoted as saying "it is a good book."
Winkler's writing on the right to bear arms, which is notable for nuanced position—recognizing both the individual right to possess firearms and the legitimacy of effective gun control—has been cited by the U.S. Supreme Court and numerous lower courts. His book Gunfight: The Battle over the Right to Bear Arms in America details the importance of the right to bear arms throughout American history, while also showing how that right has been balanced with laws to enhance gun safety since the founding era. The New Yorker called the book "remarkably nuanced" and the Wall Street Journal called it "an engaging and provocative legal drama … and a fascinating survey of the misunderstood history of guns and gun control in America.” Gunfight was later the subject of question on the American game show Jeopardy!
Winkler has also written extensively on legal history topics including the origins of campaign finance law, the women's suffrage movement,[16] the regulation of political parties. He has also done quantitative research on constitutional law issues including a study that disproved the well accepted legal maxim that strict scrutiny is "'strict' in theory, but fatal in fact." He found that federalism was a hidden factor in free speech jurisprudence, with nearly 56% of federal laws burdening core speech rights upheld, compared to 23% of state laws and only 3% of local laws. Along with Pulitzer Prize-winning historian Leonard Levy and UCLA School of Law professor Kenneth Karst, Winkler edited the six-volume Encyclopedia of the American Constitution.