Maryknoll Office for Global Concerns

Home | Contact us | Search
Our mission | MOGC publications | Staff members | Our partners | Contact us
Africa | Asia | Middle East | Latin America | United Nations |
War is not the answer | Arms control/proliferation | U.S. military programs/policies | Security | Alternatives to violence
Maryknoll Land Ethic Process | Climate change | GMOs | Water | U.S. energy policy | Earth Charter |
Trade/Investment | Foreign debt | Millennium Devel. Goals | Corporate accountability | Int'l financial institutions | Work | Economic alternatives
Indigenous peoples | Migrants | Children | Women | People with HIV/AIDS
Educational resources | Contact policymakers | Links | MOGC publications |
Subscribe | NewsNotes archive

Special series: Corporations in the U.S., part 1
NewsNotes, January-February 2009

Ed: The following article is slightly edited from its original form.

In every area of public policy (foreign affairs, health care, education, trade, ecology, energy, etc.) governmental decisions are heavily influenced by a handful of large corporations. Yet, for the first 100 years of this country, states prohibited corporations from participating in politics and shut down those that did become involved. How then, did corporations become so powerful today? In this six part series, we will trace the history of the corporation in the U.S. and examine concrete alternatives to rein in their power and influence.

Founding of an anti-corporate nation

The U.S. Constitution does not mention the word corporation, yet as former Supreme Court Justice Felix Frankfurter said, the history of constitutional law is “the history of the impact of the modern corporation upon the American scene.” Thomas Jefferson warned about the threat of corporations saying, “I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country.”

Rarely portrayed as such, the American Revolution was as much anti-corporation as it was anti-England. Before the revolution, most of the entities that we now know as states were run like corporations chartered by the British government. The Virginia Company and other “pre-states” were granted to individuals and run by their will. The Virginia Company was known for being especially ruthless in its treatment of workers, including children. In an effort to get the Company’s charter revoked, one stockholder in 1664 complained that of the approximately 6,000 adult and child workers who had been sent to the colony since its foundation, an estimated 4,800 had died from overwork and terrible working and living conditions. In Gangs of America: The Rise of Corporate Power and the Disabling of Democracy, Ted Nace paints a harrowing description of life in Virginia at the same time that reports to Virginia Company investors and potential workers portrayed a utopia for workers – not too dissimilar from corporate reports today describing their workshops overseas.

The Boston Tea Party was as much a protest against the East India Tea Company as it was against the British crown that was helping to create its monopoly. The company was deeply in debt due to overexpansion and was facing heavy competition from small businessmen in the colonies who were buying tea from Dutch traders and smuggling it in small ships. After pressure from the Tea Company, the British government passed the Tea Act of 1773. Some think the Act only increased the taxes on tea paid by colonists, but it went far beyond that: It exempted the Company from taxes on tea exported to the colonies and even gave a tax refund on the millions of pounds of tea they hadn’t been able to sell. Since the Company didn’t have to pay taxes, it was able to lower its prices and undercut small businesses in the colonies -- much like the experience of Mexico under NAFTA and of small towns in the U.S. trying to stop big box stores like Wal Mart. Thom Hartmann’s Unequal Protection quotes original documents from people involved in the Boston Tea Party who sound quite similar to people today struggling against trade agreements, including solidarity protests in England by people affected by the Tea Act there.

When the same merchants who fought the Tea Act and experienced life under the Virginia Company wrote their new Constitution, they were very careful to place strong controls on corporations, in the same way that they wanted to restrict the power of government officials. The chartering of corporations – establishing the existence of corporations and the rules by which they operate – was placed in the hands of state governments, which at the time were the only directly elected bodies. They didn’t want corporations to be able to become so powerful again. For the first 100 years of the new nation, corporations were created to do public works without the direct involvement of the government.

The states, almost unanimously, wrote charters with the following characteristics. First, charters were rarely granted, and only if necessary to serve the common good; the corporation was established for a set period of time ranging from three to 50 years, usually 10 to 20 years; banks were limited to three year charters in many states; the corporation had a specific purpose (for example, to build two bridges across a river); it was only allowed to own as much land and capital as was necessary to complete its purpose; it could not be involved in politics; it could not own stock in other corporations; and it was limited to operating only within a state or even county. Some states only chartered banks through direct referendums. Corporations’ charters were routinely revoked for breaking any of these, and other, statutes, and the company was divided up among its investors. The idea of the corporation was to serve a public purpose while making an adequate profit for its investors.

So how did we get from there to where we are now, where the tail wags the dog and corporations control government? What can we do now to reestablish popular control over corporations? In NewsNotes during 2009 we will explore these questions, continuing in the next issue with an important 1886 court case that gave corporations much of the power and influence we are dealing with today.

About us | Privacy Policy | Legal  |  Contact us
© 2010 Maryknoll Office for Global Concerns