Corporations Are Not Humans : Not Even Close----Episode 6

       The First Civil War (1861-65) Was A Turning Point For 
                                              Corporations 

   The U.S. Civil War marked a turning point for corporate rights. Violent anti-draft riots rocked the cities and left the political system in disarray. The huge profits pouring in from military procurement contracts allowed industrial interests to take advantage of the disorder and rampant political corruption to virtually buy legislation that gave them massive grants of money and land to expand the Western railway system. The greater its profits, the tighter the emergent industrial class was able to solidify its hold on government to obtain further benefits. Seeing what was unfolding, President Lincoln observed just before his death : 

     Corporations have been enthroned. . . An era of corruption in high places will follow and the money power will endeavor to prolong its reign by working on the prejudices of the people . . . until wealth is aggregated in a few hands . . . and the Republic is destroyed. 

   The nation was divided against itself by the war ; the government was weakened by the assassination of Lincoln and the subsequent election of alcoholic war hero Ulysses S. Grant as president. The nation was in disarray.  Millions of Americans were rendered jobless in the subsequent depression, and a tainted presidential election in 1876 (similar to 2000) was settled through secret negotiations. Corruption insider deal-making ran rampant. President Rutherford B. Hayes, the eventual winner of those corporate-dominated negotiations, subsequently complained : "This is a government of the people, by the people, and for the people no longer. It is a government of corporations, by corporations, and for corporations." In his classic The Robber Barons, Matthew Josephson wrote that during the 1880s and 1890s, "The halls of legislation were transformed into a mart where the price of votes was haggled over, and laws, made to order, were bought and sold." { Sounds mighty damned familiar.} 
   These were the days of such upstanding citizens as John D. Rockefeller, J. Pierpont Morgan, Andrew Carnegie, James Mellon, Cornelius Vanderbilt, Philip Armour, and Jay Gould. Wealth begot wealth as corporations took advantage of the disarray to buy tariff, banking, railroad, labor, and public lands legislation that would FURTHER ENRICH THEM.  Citizen groups committed to maintaining corporate accountability continued to battle corporate abuse at state levels, and corporate charters continued to be revoked both by courts and state legislatures. 

    Corporations Got Enough Power To Rewrite  Laws That 
                    Governed Their Own Creation { Big step forward. }

   Gradually corporations gained sufficient control over key state legislative bodies to virtually rewrite the laws governing their own creation. Legislators in New Jersey and Delaware took the lead in watering down citizens' rights to intervene in corporate affairs. They limited the liability of corporate owners and managers and issued charters in perpetuity.  Corporations soon had the the right to operate in any fashion not explicitly prohibited by law. 

   A conservative court system that was consistently responsive to the appeals and arguments of corporate lawyers steadily chipped away at the restraints a wary citizenry had carefully placed on corporate powers. Step by step, the court system set new precedents  that made the protection of corporations and corporate property a centerpiece of constitutional law. These precedents made it virtually impossible for victims to recover damages in cases involving corporate-caused harm, and took  away the right of states to oversee corporate rates of return and prices. Judges sympathetic to corporate interests were quick to grant summary judgments that workers were responsible for causing their own injuries on the job, and declared wage and hours laws unconstitutional. They interpreted the common good to mean maximum production, no matter what was produced or who it harmed. These were important concerns to an industrial sector in which, from 1888 to 1908, industrial accidents killed 700,000 workers---roughly 100 per day.

              The Santa Clara Case and Corporate Theory

   The 1886 decision of the U.S. Supreme Court in Santa Clara v. Southern Pacific Railroad  has always been puzzling and controversial. From the time Progressive constitutional historians began to mount their attack on the Supreme Court after the Lochner decision in 1905, the Santa Clara case became one of the prominent symbols of the subservience of the Supreme Court during the Gilded Age to the interests of big business. { For the benefit of our non-- lawyer readers, the Lochner case involved the overturning by the SCOTUS of a New York statute limiting the number of hours individuals could work in bakeries per week. The reason for the statute was the health and safety of employees exposed to dust in the bakeries. The SCOTUS held that the Fourteenth Amendment created a right of contract and that New York's state legislature unconstitutionally abridged the right of workers and bakery employers to enter into employment contracts.} 

  The Santa Clara case held that a corporation was a person under the Fourteenth Amendment and thus was entitled to its protection. For such a momentous decision, the opinion in the Santa Clara case is disquietingly brief ---just one short paragraph ---and totally without reasons or precedent. Indeed, it was made without argument of counsel. It declared : 

     The court does not wish to hear argument on the question whether the provision in the Fourteenth 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 all of the opinion that it does. 

   Can it be that so casual a declaration as this did in fact represent a major controversial step in American constitutional history ? Did the decision actually represent a significant departure from American constitutional jurisprudence ? I, and others, think not.  The Santa Clara decision was not thought of as an innovation but instead was regarded as following a line of cases going back almost seventy years to the Dartmouth College Case, which I've already mentioned. 

   My interest, and the interest of many others, in the Santa Clara case extends far beyond the question of whether it was consistent with previous constitutional decisions. Whatever the SCOTUS justices had in mind, the case is usually thought to express a new theory of the corporation or, as it soon became fashionable to call it, of "corporate personality." The Santa Clara  case is thus asserted to be a dramatic example of judicial personification of the corporation, which, it is argued, radically enhanced the position of the business corporation in American law.