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Corporations in the U.S., part 2
NewsNotes, March-April 2009

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

In the first article of this series we discussed how, for over 100 years, corporations in the United States were created in order to serve the public good. Corporations had severe limits placed on them and were regularly disbanded for breaking the strict rules of their charters. Yet, despite our founders’ intentions, since 1886 courts have drastically decreased the ability of the legislative or executive branches to control corporations. As we show in the following article, an errant summary of an 1886 court case that pitted a railroad against a California county resulted in corporations obtaining the same constitutional rights allowed to humans.

In his book, Unequal Protection: The Rise of Corporate Dominance and the Theft of Human Rights, Thom Hartmann writes about the conclusion of the 1886 case, “No laws were passed by Congress granting that corporations should be treated the same under the constitution as living, breathing human beings, and none have been passed since then. It was not a concept drawn from older English law. No court decisions, state or federal, held that corporations were ‘persons’ instead of ‘artificial persons.’
“The Supreme Court did not rule, in this case or any case, on the issue of corporate personhood. In fact, to this day there has been no Supreme Court ruling that could explain why a corporation - with its ability to continue operating forever, a legal agreement that can’t be put in jail and doesn’t need fresh water to drink or clean air to breathe - should be granted the same Constitutional rights our Founders explicitly fought for, died for, and granted to the very mortal human beings who are citizens of the United States…

“But something happened in 1886, even though nobody to this day knows exactly what or why.”

Ratified in 1868, the 14th Amendment was ostensibly created to extend constitutional rights to former slaves. Section 1 of the Amendment states in part, “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...”

Yet soon after its passage, railroad barons sought to expand the amendment’s protections to cover corporations as juridical “persons” under the law. After numerous failures, a simple tax case provided the opportunity.

The 1886 case cited by Hartmann – Santa Clara County vs. South Pacific Railroad – was a rather tedious case about taxes on a fence running along a railroad. The county planned to tax railroads at a higher rate than citizens, but the railroad sued, arguing that the South Pacific Railroad should be considered a “person” under the recently passed 14th Amendment and, as such, could not be taxed at a different rate.
Despite being settled on other grounds, the case has provided corporations the opportunity to acquire incredible rights and privileges. Its ramifications are rarely discussed, yet they have radically changed the power and influence of corporations in the U.S. and around the world.

Before arguments in the Santa Clara case, Chief Justice Morrison Waite, a former attorney for the railroads, was heard saying, “The court does not wish to hear argument on the question whether the provision in the 14th Amendment to the Constitution, which forbids a state to deny to any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are of the opinion that it does.” Yet in the official decision of the court, it clearly states that the case was not decided on the 14th Amendment issue.

In personal correspondence between Waite and J.C. Bancroft Davis, a court reporter who also served as president of the board of directors for the Newburgh and New York Railroad Company, the chief justice reiterated that “we avoided meeting the constitutional question in the decision.” Yet in his book United States Reports: Cases Adjudged in the Supreme Court at October Term 1885 and October Term 1886, Davis began his summary of the case with, “The defendant corporations are persons within the intent of the clause in section I of the Constitution of the United States, which forbids a State to deny to any person within its jurisdiction the equal protections of the law.”

Despite not having any legal weight, Davis’ summary of the case has since become accepted as jurisprudence. Various authors have different theories of which of the three principal characters (Waite, Davis, or Justice Stephen Field) is most responsible for this monumental non-decision. But what is clear is that it has resulted in corporations gaining constitutional rights in case after case in  years since. Indeed, of the 307 14th Amendment cases brought before the Supreme Court from 1886 to 1910, only 19 dealt with African Americans while 288 were lawsuits brought by corporations seeking to expand their newly acquired rights as Constitutional “people.”

As we will see in future parts of this series, the results of granting corporations the same rights as everyday citizens has drastically reshaped our law system and radically shifted the relationship between we the people, the government, and corporations. In a 1912 book The Fourteenth Amendment and the States, Charles Wallace Collins wrote, “Although [the 14th Amendment] was a humanitarian measure in origin and purpose and was designed as a charter of liberty for human rights, it has become the magna carta of accumulated wealth and organized capital.”

A few resources on corporations in the U.S.:

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