To Restore Democracy : First Abolish Corporate Personhood

By Thom Hartmann

02/17/07 "ICH" -- -- Thomas Paine said it best.

“It has been thought,” he wrote in The Rights of Man in 1791, “…that government is a compact between those who govern and those who are governed; but this cannot be true, because it is putting the effect before the cause; for as man must have existed before governments existed, there necessarily was a time when governments did not exist, and consequently there could originally exist no governors to form such a compact with. The fact therefore must be, that the individuals themselves, each in his own personal and sovereign right, entered into a compact with each other to produce a government: and this is the only mode in which governments have a right to arise, and the only principle on which they have a right to exist.”

Thus, Paine and others of the Revolutionary Era reasoned, any institution made up by and of humans - from governments to churches to corporations - must be subordinate to individual living people in terms of the rights and powers held by the institution.

Because of the unique frailties and depths of passion unique to humans, just after the United States Constitution was ratified Thomas Jefferson and James Madison began a campaign to amend it with a 12-point explicit statement that would clearly and unambiguously place humans - who had created government - above their creation. This was the birth of what would become the Bill of Rights, and it originally had twelve - not ten - protections for citizens’ rights.

On December 20th, 1787, Jefferson wrote to James Madison about his concerns regarding the Constitution. He said, bluntly, that it was deficient in several areas. “I will now tell you what I do not like,” he wrote. “First, the omission of a bill of rights, providing clearly, and without the aid of sophism, for freedom of religion, freedom of the press, protection against standing armies, restriction of monopolies, the eternal and unremitting force of the habeas corpus laws, and trials by jury in all matters of fact triable by the laws of the land, and not by the laws of nations.”

Such a bill protecting natural persons from out-of-control governments or commercial monopolies shouldn’t just be limited to America, Jefferson believed. “Let me add,” he summarized, “that a bill of rights is what the people are entitled to against every government on earth, general or particular; and what no just government should refuse, or rest on inference.”

The following year, Jefferson wrote about his concerns to several people. In a letter to Mr. A. Donald, on February 7th, 1788, he defined the items that should be in a bill of rights: “By a declaration of rights, I mean one which shall stipulate freedom of religion, freedom of the press, freedom of commerce against monopolies, trial by juries in all cases, no suspensions of the habeas corpus, no standing armies. These are fetters against doing evil, which no honest government should decline.”

Jefferson kept pushing for a law, written into the constitution as an amendment, which would guarantee liberties for citizens, prevent companies from growing so large they could dominate entire industries or have the power to influence the people’s government, and reduce the possibility of the nation being taken over by a military coup.

On February 12th, 1788, he wrote to Mr. Dumas about his pleasure that the US Constitution was about to be ratified, but also expressed his concerns about what was missing from the Constitution. He was pushing hard for his own state to reject the Constitution if it didn’t protect people from the dangers he foresaw.

“With respect to the new Government,” he wrote, “nine or ten States will probably have accepted by the end of this month. The others may oppose it. Virginia, I think, will be of this number. Besides other objections of less moment, she [Virginia] will insist on annexing a bill of rights to the new Constitution, i.e. a bill wherein the Government shall declare that, 1. Religion shall be free; 2. Printing presses free; 3. Trials by jury preserved in all cases; 4. No monopolies in commerce; 5. No standing army. Upon receiving this bill of rights, she will probably depart from her other objections; and this bill is so much to the interest of all the States, that I presume they will offer it, and thus our Constitution be amended, and our Union closed by the end of the present year.”

By mid-summer of 1788, things were moving along and Jefferson was helping his close friend James Madison to write the Bill of Rights. On the last day of July, he wrote to Madison: “I sincerely rejoice at the acceptance of our new constitution by nine States. It is a good canvass, on which some strokes only want retouching. What these are, I think are sufficiently manifested by the general voice from north to south, which calls for a bill of rights. It seems pretty generally understood, that this should go to juries, habeas corpus, standing armies, printing, religion, and monopolies.”

But on the issues of banning a standing army and blocking corporations from gaining monopolistic control over industries, Jefferson was getting resistance. The nation had just fought a bloody war against England, and there was little sentiment for completely dismantling the army. And the Federalists who were in power - a party largely made up of what Jefferson called “the rich and the well born” - were opposed to government constraints on business activities.

Thus only ten of his twelve visions for a Bill of Rights - all except “freedom from monopolies in commerce” and his concern about a permanent army - were incorporated into the actual Bill of Rights, which James Madison shepherded through Congress and was ratified as the first ten amendments to the constitution on December 15, 1791.

Monopolies as persons

As the new country grew, so did its institutions. Trading companies, banks, and eventually railroads all used the corporate form to conduct business, reduce shareholder liability, and accumulate profits. America boomed through the early 19th Century, then experienced a severe economic depression in the decade just before the Civil War, then boomed again, starting in the post-war years of the late 1860s.

And then a curious thing happened.

The stage was set when, just after the Civil War on July 9, 1868, three-quarters of the states ratified the Fourteenth Amendment to the US Constitution as part of a set of laws to end slavery.

The intent of Congress and the states was clear: to provide full constitutional protections and due process of law to the now-emancipated former slaves in the United States. The Fourteenth Amendment’s first article says, in its entirety:

“All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

Along with the Thirteenth Amendment (“Neither slavery nor involuntary servitude … shall exist within the United States”) and the Fifteenth Amendment (“The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude”), the Fourteenth Amendment guaranteed that freed slaves would have full access to legal due process: “equal protection of the laws.”

Corporations aspire to personhood

During this same period, because everybody understood Paine and Jefferson’s argument that human-made institutions must be subordinate to humans themselves; virtually every state had laws on the books that regulated the behavior of corporations.

The corporate form is, after all, just a legal structure to facilitate the conversion of products or services into cash for stockholders. As Buckminster Fuller wrote in his brilliant essay The Grunch of Giants, “Corporations are neither physical nor metaphysical phenomena. They are socioeconomic ploys-legally enacted game-playing-agreed upon only between overwhelmingly powerful socioeconomic individuals and by them imposed upon human society and its all unwitting members.”

Thus, states made it illegal for corporations to participate in the political process: politicians were doing the voters’ business, and corporations couldn’t vote, so it didn’t make sense they should be allowed to try to influence votes. States made it illegal for corporations to lie about their products, and required that their books and processes always be open and available to government regulators. States and the Federal government claimed the right to inspect companies and investigate them when they caused pollution, harmed workers, or created hazards for human communities, even if in the early years that right was unevenly used.

These constraints and oversights had been a thorn in the side of the barons of trade and industry from the earliest days of the new American republic. But what to do about it?

With the passage of the Fourteenth Amendment, the owners of the what were then America’s largest and most powerful corporations - the railroads - figured they’d finally found a way to reverse Paine’s logic and no longer have to answer to “we, the people.” They would claim that the corporation is a person. They would claim that for legal purposes, the certificate of incorporation declares the legal birth of a new person, who should therefore have the full protections the voters have under the Bill of Rights.

It was an amazing irony, given that one of Jefferson’s original proposed Amendments was an explicit ban on corporations becoming so large as to gain monopoly power and be able to easily crush or stifle small, local entrepreneurs. But, setting the irony aside, the railroads threw massive resources into their new campaign to be given full human rights.

Acting on behalf of the railroad barons, attorneys for the railroads repeatedly filed suits against local and state governments that had passed laws regulating railroad corporations. They rebelled against restrictions, and most of all they rebelled against being taxed.

The main tool the railroad’s lawyers tried to use was the fact that corporations had historically been referred to under law not as “corporations” but as “artificial persons.” Based on this, they argued, corporations should be considered “persons” under the free-the-slaves Fourteenth Amendment and enjoy the protections of the constitution just like living, breathing, human persons.

Using this argument for their base, the railroads repeatedly sued various states, counties, and towns claiming that they shouldn’t have to pay local taxes because different railroad properties were taxed in different ways in different places and this constituted the creation of different “classes of persons” and was, thus, illegal discrimination under the Fourteenth Amendment.

For almost twenty years, these arguments did not succeed.

In 1873, the Supreme Court made its first explicit comment on the Fourteenth Amendment. The Amendment’s “one pervading purpose,” Justice Samuel F. Miller wrote in the majority opinion, “was the freedom of the slave race, the security and firm establishment of that freedom, and the protection of the newly-made freeman and citizen from the oppression of those who had formerly exercised unlimited dominion over him.”

The railroads, however, had a lot of money to pay for lawyers, and railroad lawyer S. W. Sanderson had the reputation of a pit bull. Undeterred, the railroads again and again argued their “corporations are persons” position all the way to the Supreme Court.

The peak year for their legal assault was 1877, with four different cases reaching the Supreme Court in which the railroads argued that governments could not regulate their fees or activities, or tax them in differing ways, because governments can’t interfere to such an extent in the lives of “persons” and because different laws and taxes in different states and counties represented illegal discrimination against the persons of the railroads under the Fourteenth Amendment.

By then, the Supreme Court was under the supervision of Chief Justice Morris Remick Waite, himself a former railroad attorney. Associate Justice Stephen Field, who was so openly on the side of the railroads in case after case that he annoyed his colleagues, also heavily influenced the court. In each of the previous four cases, the Court ruled that the Fourteenth Amendment was not intended to regulate interstate commerce and therefore not applicable. But in none of those cases did Waite or any other Justice on the court muster a majority opinion on the issue of whether or not railroad corporations were “persons” under the constitution, and so Miller’s “one pervading purpose” of the Fourteenth Amendment (to free slaves) prevailed, and year after year, the railroads were told that they’re not persons.

Having lost four cases in one year took a bit of the wind out of the sails of the railroads, and there followed a few years of relative calm. The railroads continued to assert they were “persons,” but states and localities continued to call them “artificial persons” and pass laws regulating their activities.

For twenty years corporate personhood was debated. Across America, politicians were elected repeatedly on platforms that included the regulation of corporations, particularly the railroads. But the legal fight continued - and in 1886 the railroad hit paydirt.

The Supreme Court ruled on an obscure taxation issue in the Santa Clara County vs. The Union Pacific Railroad case, but the Recorder of the court - a man named J. C. Bancroft Davis, himself formerly the president of a small railroad - wrote into his personal commentary of the case (known as a headnote) that the Chief Justice had said that all the Justices agreed that corporations are persons.

And in so doing, he - not the Supreme Court, but its clerical recorder - inserted a statement that would change history and give corporations enormous powers that were not granted by Congress, not granted by the voters, and not even granted by the Supreme Court. Davis’s headnote, which had no legal standing, was taken as precedent by generations of jurists (including the Supreme Court) who followed and apparently read the headnote but not the decision.

What is especially ironic about this is that Davis knew the Court had not ruled on this issue. We found a handwritten note in the J.C. Bancroft Davis collection in the Library of Congress, from Chief Justice Waite to reporter Davis, explicitly saying, “we did not meet the constitutional issues in the case.” (In other words, the Court had decided the case on lesser grounds, which it always prefers to do when possible.)

Yet Davis wrote that the constitutional issue of corporate personhood had been decided, and his headnote was published the year Waite died, most likely after Waite’s death. The railroads were persons, he wrote (in the headnote), implying that they’re entitled to the same rights as persons. And Davis attributed this new legal reality to Chief Justice Waite who had specifically, in writing, disavowed it (although that note wouldn’t become public for over a hundred years - it’s now on my website).

Another great irony of this event is that the Bill of Rights was designed to protect human persons because of their vulnerability in relations with other human persons who may be much more powerful. But corporations are bestowed with potential immortality, can change their identity in a day, or even tear off parts of themselves and instantly turn those parts into entirely new “persons.” Yet regardless of all these superhuman powers, corporations are now considered persons.

These non-living, non-breathing persons are now, according to the pronouncements of their own attorneys and spokespeople who cite the headnotes of the Santa Clara County case, fully entitled to the protections that Thomas Jefferson and James Madison wrote into the Bill of Rights to shield human persons from abuse by such powerful institutions as governments. Even the American Civil Liberties Union, in a recent and misguided effort, argued before the Supreme Court that corporations should have the free speech right to lie (or say anything else they want) that’s granted to humans by the First Amendment.

A few of the world’s largest corporations referenced Santa Clara and successfully claimed the protection of the First Amendment, then lobbied Congress and the FCC to relax local ownership rules so they could take control of our media. Once that was done, they claimed First Amendment free speech rights to tell us whatever serves their interest and call it “news” without consideration of its truthfulness or having to worry about giving fair and equal time to other viewpoints. They claim the protection of the Fourth Amendment (search and seizure) so they can prevent the EPA and OSHA from inspecting factories for environmental or labor violations without first obtaining the corporation’s permission - which they say can be withheld for any reason.

They now have the protection of the Fifth Amendment so they are protected from double jeopardy and don’t have to answer questions about their own crimes. They now have the protection of the Fourteenth Amendment so they can sue local towns or counties or states that try to pass laws to protect local small businesses against their predations.

The structure for this displacement of humans by corporations under the constitution has been in place since 1886, but only since the 1980s have our largest corporations aggressively used the courts to claim human rights. (Interestingly, small and medium-sized corporations almost never use this argument: to them if corporate personhood vanished nothing would change.)

But a human backlash is now developing.

In ten Pennsylvania townships, the Community Environmental Legal Defense Fund (CELDF) has helped local governments pass ordinances denying corporate personhood in order to block large corporate factory farms from setting up in areas previously the sole territory of family farms. In the city of Point Arena, California, voters passed a resolution declaring corporate personhood a threat to democracy, and encouraging a debate on it by other communities.

The Woman’s International League for Peace and Freedom (WILPF), America’s oldest and most prestigious women’s rights group (founded in 1919 by Jane Addams, with two Nobel Prize Winners as past presidents), declared at their July, 2002 annual meeting the kick-off of a three-year “Abolish Corporate Personhood” educational and legislative campaign.

And elected officials across the nation are discovering that meaningful campaign finance reform, effective environmental protections, and human-friendly health-care will only happen when corporations can no longer use the extraordinary power of the Bill of Rights to insinuate themselves into politics and legislation.

An internet search on the phrase “corporate personhood” will find thousands of sites discussing or devoted to the topic, and models of legislation to remedy the error of 1886.

But the first step, as always, is awakening people to the root cause of the problems we face - the use of corporate personhood by a handful of the world’s largest enterprises to insinuate themselves into governments and seize control of legislative and regulatory agendas. As enough voters learn the history and realize the consequences of this, the solution - ending corporate personhood - will become more and more possible, and Paine’s and Jefferson’s original idea of democracy representing “we, the people” will come back to life.