The Dirty Little Secret of How Corporations Became "Persons"

  

"The American Frankenstein": Inspired by Mary Shelley’s novel about a man-made monster who turned upon its creator, this cartoon depicted the railroad trampling the rights of the American people. “Agriculture, commerce, and manufacture are all in my power,” the monster roared in the cartoon’s caption. “My interest is the higher law of American politics.” Through large subsidies and land grants to railroads, the federal government helped create the nation’s first large, powerful corporations. Growing rapidly after the Civil War, these corporations and the men who ran them quickly transformed their enormous economic power into political influence, winning for themselves even more subsidies, land grants, and protection from regulation and taxation.

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I am an admirer of the Texas history professor, Walter Prescott Webb and, in particular, his book, The Great Frontier. Though written in 1952, Webb’s “frontier thesis” of history—American history in particular—is incredibly cogent and surprisingly pertinent to the problems we are seeing in the daily news here in 2010. You can read about The Great Frontier in my essay at this link: Walter Prescott Webb's Boom Hypothesis of Modern History


It turns out Professor Webb also self-published an obscure little book titled Divided We Stand: The Crisis of Frontierless Democracy. I recently acquired a copy of this book and have found it remarkably insightful. In another online essay I tell the story, from the book, of how American farmers, once independent, were brought under the domination of large corporate interests. You can read the story at this link: How Farmers Became Slaves to the Corporate Masters


Divided We Stand also tells the little-known story of how American corporations acquired the ability to rise to the position of incredible power and influence that they now have in this country. As a historian, looking at the big picture of history, Webb saw these corporations as a serious threat to the American Republic as it was originally established.  


Though published in 1937, Webb’s concerns about the usurpation of power and control by corporations in America were spot on. How could this have  happened? It happened by some very clever manipulation of the US Constitution in the late 1800s. This manipulation did not create corporations, it gave them unprecedented protections and, thus, unprecedented power; it created a monster.


The following excerpts from the book are somewhat lengthy but they are vitally important for every concerned American to understand. I’m sure that not one in a hundred Americans know the devious machinations that the corporate powers employed over 100 years ago to foster their survival and promote their domination.


What follows is a fundamental lesson in the Constitution. I suspect that Professor Webb’s students were exposed to such wonderful teaching. Now you can be too. (please note that the bold emphasis are mine)


The title of the chapter I’m excerpting here is The Rise of America’s Feudal System.

We have long understood that we live under two governments, complimentary one to the other. The nature of our constitution, providing as it does for a federal form of government, tells us clearly that we live under the jurisdiction of the state and the nation. We have not always seen that within this system a third form has arisen which threatens to become more powerful than either or both of the others. It may be noted that the legally constituted forms—federal and state—exercise a political jurisdiction while the third government confines itself primarily to an economic jurisdiction. The political government is democratic, securing its power from all the people; the economic government is not democratic, but subject to the will of a few legal entities.


This third government comprises a few individuals, whose rise has been sketched briefly in the preceding chapter, and the great corporations. In reality this third government does not consist of one government but, like the old feudal system, consists of many “governments,” each powerful in its own sphere.


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When the medieval feudal lords became sufficiently powerful, the king made a virtue of necessity and granted them immunities from central government interference... Likewise in America the central government granted an immunity to corporations—the legal rights of an individual.... By this immunity, which is in reality a charter of liberty, the corporation has been made free to do what it most wishes to do in its own fief—granted a large measure of independence and freedom from interference by the state and the nation.


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The sole motive of the American feudal system has been the economic one of making profits. It has had no other duty, no other purpose, no other responsibility.... And this fundamental truth should not be obscured by the altruistic tone of advertising, such as is put out by Henry Ford, the Metropolitan Life Insurance Company, the American Telephone and Telegraph Company, and others. Our common sense inclines us to believe that most of the talk of service is for public consumption, intended to promote goodwill and to increase the number of buyers—and the profits. the real purpose would doubtless be revealed if we could overhear the discussion that goes on in the directors’ meetings. It is difficult to believe that the men there are primarily interested in service. They render service only to gather profits, and not because they are moved by a compassion to serve humanity. A favorable balance sheet is of necessity the goal of every business lord.


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The instruments of ... economic control—the great corporations—rapidly expanded over the nation, gathering the natural resources of all three sections, separating society into three classes, capital, labor and agriculture. Two obstacles stood in the way of these new powers—the state governments and the federal government. As might be expected, the first salvo in the war against corporations was fired by the states, and—as might have been predicted—by western states. At the time (1870-1880) the railroads were the most powerful and the most visible enemy, and on them the guns of state legislation began to boom. The marksmanship was excellent and the shells were hitting the enemy where it hurt most. The farmers, seeing their chance to get from under the corporation paw, rallied to the fight. The Granger movement grew like a mushroom, and the farmers believed for a time that they were going to count for something in American life.


For the corporations the case was critical. The trouble was that they... were having to make their way in a democracy wherein the people had power. Under an absolute king they could have obtained a concession or royal permit, and the people would have been helpless to oppose them. But they were operating in a democracy where the people could rule, people who instinctively recognized an enemy—to them and to democracy—when they saw it. After all, the governments did belong to the people, and the state governments were courageously doing the people’s will. What the corporations needed, and needed badly, was an immunity that would protect them from the people and the people’s government...


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Feudalism’s Search For Immunity
How could a feudal lord expect to secure an immunity in a democracy with its troublesome theories of equality and popular sovereignty? The answer to that question is a revelation of the most amazing transmorgrification known to political science, most amazing because of its simplicity. the corporations had to search for something, for someone, that had such an immunity as they desired, and then have themselves defined by the supreme authority as that thing or person.


This brings us to the constitution of the United States and of the separate states, the double bulwark of democracy.


The federal constitution is a remarkably simple instrument, simply written. In the preamble, “We the People of the United States...,” it implies the democratic principles of government and serves notice that the people are going to try to govern themselves. The first three articles provide for the setting up of a central government and for the creation of the machinery of that government—legislative, executive, and judicial. The fourth establishes the relationship between the component states and the central government...


The federal constitution granted one special immunity, the greatest than any government had ever given, at the time the constitution was formed. This immunity, commonly known as the bill of rights was granted to the individual, to every free American citizen. Though the constitution granted but one broad immunity, it gave it broadly to all, as was becoming a democracy.


The meaning of the bill of rights, and of the constitution itself, becomes clear when seen in the light of the conditions under which the framers wrote the document. In order to study the constitution intelligently, we must put ourselves in the mental position of the men who made it. We must view its purpose through their eyes, from behind, and not be confused by the warping and twisting of later interpretation and amendment.


There was behind the constitution, viewed through the eyes of its makers, the specter of a great fear, a specter so visible to the makers as they worked that it controlled their purpose, guided their pens, shaped the document, and molded the government.


What was this specter? What was this great fear? It was the fear of a strong government, one that would not respect human rights. it was fear of such governments as Europe had in the seventeenth and eighteenth centuries, absolute or near-absolute, that actuated the framers of the constitution. Their past experiences, extended by a knowledge of history, gave them grounds for fear—not of bandits, kidnapers, or corporations, but of government and of nothing else. in this spirit of fear the revolutionaries set out to make the government responsible and weak. they provided frequent elections to make it responsible and checks and balances throughout to make it weak or to keep it—or any agent of it—from being too strong. Their whole thought was to create a government that could be neither arbitrary nor tyrannical.


For some reason the constitution makers failed to provide for the relationship between the government and the individual citizen, but when they returned to their constituencies to secure ratification they were reminded in no uncertain terms of the oversight. Some of them let it be known that the individual would be taken care of in a series of amendments—a bill of rights.


This brings us to the first ten amendments, or the bill of rights. A casual reading, or even a critical one, will reveal that the bill  of rights was made to protect the individual in a special way. The same fear that shaped the main body of the document shaped the amendments. What was it that the framers of the bill of rights feared for John Doe and Richard Roe? Against what force, what power, did they seek to protect them? The answer must be that they feared the government—weak as it was—that they had made. If fear of the government appears in the background of the main document, it stands in the foreground of the ten amendments.


In the ten amendments the fathers drew a ring around each individual or “person,” and said to the government that they had set up: Into this sacred circle you shall not go. We have done all we can to keep you from being too strong, or at all tyrannical, but we still do not trust you; here we build a second line of defense for the people, and we propose to make it impregnable to you. Behind this defense the individual shall always be safe from the government. He shall be safe from arrest or search without a warrant, from imprisonment without a trial, and by jury; safe to speak, write and believe as he desires. The government may not take his arms or quarter soldiers in his home in time of peace. it shall not compel him to testify if he committed a crime or try him twice for the same offense. Finally, and of  most importance to this discussion, the fifth amendment stated that “No person shall be deprived of life, liberty, or property without due process of law.”
Here was a barricade which the constitution built for people—and behind it the people could always find protection from the government itself. here was the immunity under which men could be free, equal before the law, and independent. It was not the immunity of absolutism, not a concession of special privileges as in feudalism, but the general immunity of a democracy, granted in a democratic way and guaranteed to every person, or more accurately, every citizen.


Apparently this was the only immunity that the corporations could find that would protect them from the government under which they lived. How to secure its benefits for themselves was the problem before them and their lawyers. To secure this immunity, they must become “persons.”


American Feudalism’s Charter of Immunity
It was not the fifth amendment, which was general, but the fourteenth, directed specifically against the states at whose hands the corporations were suffering, that offered the lawyers their opportunity.


The ostensible purpose of the fourteenth amendment was to grant citizenship to the freed slaves and to compel the states to abide by the federal will. It took from the states the right to define citizenship. There is in this fourteenth amendment a very significant word which may indicate that the framers of the amendment knew more of what they were doing than was suspected. Immunities are mentioned here, for the first time and the only time in the constitution. Here is a specific admission that “privileges and immunities” exist in a democracy, with the further implication that they belong to “citizens” or ‘persons.” It was further specifically stated that no state could alter or change in any way these privileges and immunities. The federal government was their guardian and guarantor.


In short, the states could no longer define “persons” or “citizens”: the states could no longer take from a “person” or “citizen” the immunities which the constitution had given.


But by the same token the federal government could define “citizen” or “person”; it could extend... citizenship itself, to the mules of Missouri, the hogs of Arkansas, and the longhorn steers of Texas, and no state could have raised—or can raise— a protest. Having defined these creatures [as persons], the federal government would have been compelled to grant to them the immunities contained in the bill of rights. None of them could have been deprived of life, liberty, or property, without due process of law.


Of course, no one dreamed that this right of definition would be extended beyond the freed slaves. They were the ones who should have citizenship; they were the “persons” who should enjoy the privileges and immunities. Mules, hogs, and longhorn cattle were out of the question. But what of corporations?


No one dreamed that corporation would be defined as a person either, no one except perhaps a few shrewd men, lawyers who while framing the fourteenth amendment contrived to lay a foundation for the emancipation of corporations from state control. These men saw—or said they saw—that if they could get the courts to define a corporation as a person they would thereby confer upon corporations the immunities of persons and kill the power of the states to legislate against them. They would spike the guns of the western states forever and give American feudalism a status at law, a charter of liberty, a roving commission, a license to operate as a person among the people of all the nation.


Professor Webb goes on to explain that it took another 20 years after the ratification of the fourteenth amendment to get corporations defined as persons. When a California county levied a tax against the Southern Pacific Railroad, the railroad lawyers took the case all the way to the Supreme Court. It was there that one Roscoe Conkling, a prominent New York politician, and attorney for the railroad, gave the justices a lesson in the fourteenth amendment. It so happened that Mr. Conkling was also one of the 15-member committee that drafted the fourteenth amendment.


Conkling explained that the committee worded the amendment to to protect the Negro against the states, and to protect the property rights of corporations against state legislatures. The court disregarded Conkling’s argument, but in a similar case the following year, they changed their mind. The supreme court declared that all corporations were “persons.” This new understanding was made clear in court cases in 1886 and 1889.


Thus by definition did the Supreme Court move the corporations behind the barricade erected by the framers of the constitution for the protection of human beings. The corporations, the feudal powers of America, now took the offensive in battering down the defenses of the states. Prior to 1888 only a handful of cases, based on the fourteenth amendment, came before the Supreme Court, but between 1888 and 1918 the amendment was invoked 790 times. The first ten amendments constituted a bill of rights for the people; the fourteenth has been a bill of privileges for corporations


Immunity Becomes Privilege
When the Supreme Court defined corporations as persons, it turned a page in American history and established new relationships of momentous import...


...they gained almost complete immunity from the control of the separate states and were taken under the protecting wing of the federal government. The states could no longer get at them; they could be neither controlled nor punished by local governments.


There, in a nutshell, is an explanation of how governmental power, originally granted to the individual states, was usurped by the federal government, then used to give unheard of rights to corporations. There is much more to the story, but that was how it came about.


The way it looks to me, America would be a lot better off if the 14th Amendment was repealed. Remove the shield of federal protection and special privilege that the corporations operate under. Give power back to the states.