…..I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. As a result of the war, corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed. I feel at this moment more anxiety than ever before, even in the midst of war.
In 1864 Abraham Lincoln wrote this to his friend Col. William Elkins. *
Prior to the Civil War and the Fourteenth Amendment to the U. S. Constitution, corporations were prohibited by their charters from lobbying legislatures or participating in elections in any way. Because of their experience with British corporations our citizens retained a healthy fear of all corporations, hence onerous restrictions such as state charters of limited duration. The large revenues to U.S. corporations occasioned by the Civil War gave corporate America the resources to break out of the old mold including the hiring of private armies to limit union organization and the buying of newspapers to mold public opinion. The precedents rescinding these restrictions on corporations are shaky and could be reversed by the courts. “Corporate free speech” is a good example of such a shaky precedent and very pertinent to this issue.
Corporations are chartered by the states and these charters could (and can) be revoked. The Revolutionary War was fought not only for political independence from Great Britain, but also for independence from the British corporations which controlled trade and extracted wealth from all British colonies.
So the root of this problem dates from the Civil War, prior to which corporate regulation had been performed by the states in which corporations were chartered. Among the restrictions of these charters: corporations were prohibited from lobbying or engaging in political campaigns. The legal concept of “corporate free speech” dates from a Supreme Court decision of 1886 in a tax case, Santa Clara County vs. The Southern Pacific R. R. Before the arguments in the case had started, Supreme Court Justice Morrison Remick Waite stated (let me remind you that The Fourteenth Amendment was added after the Civil War to ensure that all the rights of citizenship would be bestowed on freed slaves):
The court does not wish to hear argument on the question whether the provision of the Fourteenth Amendment of the Constitution, which forbids the state to deny any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does.
The opinion, which I have read in its entirety, of the Supreme Court of California in this case did not rely on corporate personhood in deciding Santa Clara County vs. The Southern Pacific R. R.; but the court reporter entered in the summary record:
……The defendant Corporations are persons within the intent of the clause in section 1 of the Fourteenth Amendment of the Constitution of the United States, which forbids a state to deny any person within its jurisdiction the equal protection of the laws.
The foregoing is the legal precedent for “corporate personhood” and the doctrine of “corporate free speech” equating money with speech. When the state charters governed corporations, lobbying and engaging in political campaigns was prohibited for corporations. A vestige of common sense: corporations have seldom pleaded the Fifth Amendment against self-incrimination. Corporate money in political campaigns cannot be, and should not be, countered by individual campaign contributions. In this unfortunate precedent the U.S. Supreme Court stated in Buckley vs. Valeo 424 US 1 (1976) that money was the equivalent of free speech so that expenditures of money from a political candidate’s own resources or the resources of independent organizations not related to the candidate’s campaign could not be restricted by the laws governing elections. In 1978 the U.S. Supreme Court decided that corporations were entitled to this free speech right to give money to political causes. In a dissenting opinion Chief Justice Rehnquist (after referring to the flawed precedent of Santa Clara vs. The Southern Pacific R.R) said:
“This Court….decided at an early date, with neither argument nor discussion, that a business corporation is a ‘person’ entitled to the protection of the Equal Protection Clause of the Fourteenth Amendment.”
So we have some allies in high places. Here is some more related history. Fear of corporate power was the basis for the draconian measures cited above in the state charters of all U. S. Corporations. These measures remain in corporate charters. After the Civil War railroads quickly became vital for farmers to get their crops to distant markets. The farmers were convinced, in some instances justifiably so, that industry frequently obtained special freight rates compared to the rates the farmers were paying. Compare with modern insurance plans paying much lower drug prices than individual consumers. As a result The Interstate Commerce Commission (ICC) was established in 1887, partly to set maximum freight rates. Establishing meaningful freight rate reductions for farmers took nearly ten years, so dissatisfaction simmered. The railroads were also dissatisfied and began to invest in unrelated businesses with many unfortunate losses. An egregious example: in the 1960s the about to go bankrupt Pennsylvania Railroad invested in an airline without the ICC paying attention even though investing in competing transportation industries was illegal. The ICC ceased to exist in 1995 with few tears shed by anyone as other regulators assumed its functions without as much irksome regulation.
Similar fear of corporate power led to the Public Utilities Holding Companies Act of 1935. This act required all such enterprises to register with the Securities Exchange Commission (SEC) if they engaged in any business across state lines, even the selling of stock. A beneficial result was that the states established public service commissions to regulate rates and ensure adequate profits for public utilities. Both of these activities greatly benefited the public until more recently when deregulation has produced some disasters: 1) from utilities investing in unprofitable outside businesses and requesting permission to raise rates charged to their customers to try to cover these losses and 2) failing to keep up with long term maintenance and supply needs. Example include electric rates in California rising out of sight in recent years. Even some mid-western electric utilities were able to make non-performing investments in South America. Deregulation sought by the utilities themselves, not by the public, explains these events.
Here we see a cycle of needed regulation such as the Public Utilities Holding Companies Act of 1935 followed by inertia on the part of the regulators and counter measures by the regulated without adequate surveillance by the politicians in charge---mostly because of dependence of politicians on corporate campaign contributions. So, the absence of corporate personhood would greatly facilitate regulation of industry for the public good because there would be much less legislative initiative required.
To set the stage for rescinding corporate personhood we need more public awareness of possible actions. Here are some examples:
· Reverse corporate personhood as a constitutionally provided privilege. Write to your congressional representatives and The American Civil Liberties Union (ACLU), which has erroneously accepted corporate personhood. Tell the ACLU you will join when they shape up or join to help them shape up. Thus eliminating “corporate free speech” (soft political money) would be a very good incremental beginning.
· Vigorously support campaign finance reform even if it takes public financing of elections—a bargain compared to trying to compete financially with corporate fat cats as a private citizen of merely adequate wealth.
· When you have done this homework, recruit a number of advisers knowledgeable about the following: constitutional law, American history, the Age of Pericles, to suggest the details of how to craft the restrictions on corporate personhood so there are a minimum of unintended consequences.
Some intended consequences include 1) almost automatic continuing incremental success in maintaining campaign finance reform; 2) easier success in regulating monopolies, for example, our current problems with the pharmaceutical industry; 3) efforts to help the family farm without spilling over to subsidize corporate agriculture; 4) the ability to restrict advertising of tobacco and other harmful (but legal) products; 5) many more: formulate the details and write to your congressmen. Your congressional representatives will much more truly represent you after corporate personhood is abolished.
A final thought, preserving mental health in the face of adversity is best accomplished by striving mightily to be part of the solution to the problem.
John A. Frantz, M.D.
August 23, 2004
* This quotation has been widely attributed to Lincoln himself. It first appeared bout 20 years after his death in material from his former personal secretary. For more details see: www.snopes.com/quotes/lincoln.htm
Slavery is the legal fiction
that a Person is Property.
Corporate Personhood is the legal
fiction that Property is a Person.
Further reading: 1) The Divine Right of Capitalism, Dethroning the Corporate Aristocracy by Marjorie Kelly, Berrett Koehler, 2001
2) Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes by William H. Gates, Sr. and Chuck Collins, Beacon Press 2003
3) The Mystery of Capital, Why Capitalism Triumphs in the West and Fails Everywhere Else by Hernando DeSoto, 2000, Basic Books