Are Corporations People? Supreme Court Revisionism?

The Supreme Court will soon make another decision, perhaps giving corporations more rights as people.  Or reducing the rights of corporations as people.  Such rulings are critical to the limits of corporate free speech, campaign financing, and lobbying etc.

Today the New York Times has an editorial, The Rights of Corporations <read>.  The Times argues the case for the Court to limit the rights of corporations:

To us, as well as many legal scholars, former justices and, indeed, drafters of the Constitution, the answer is that their rights should be quite limited — far less than those of people.

This Supreme Court, the John Roberts court, seems to be having trouble with that. It has been on a campaign to increase corporations’ legal rights — based on the conviction of some conservative justices that businesses are, at least legally, not much different than people…

Chief Justice Roberts disagreed: “A large corporation, just like an individual, has many diverse interests.” Justice Antonin Scalia said most corporations are “indistinguishable from the individual who owns them.”

The Constitution mentions the rights of the people frequently but does not cite corporations. Indeed, many of the founders were skeptical of corporate influence.

John Marshall, the nation’s greatest chief justice, saw a corporation as “an artificial being, invisible, intangible,” he wrote in 1819. “Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly, or as incidental to its very existence.”…

One of the main areas where corporations’ rights have long been limited is politics. Polls suggest that Americans are worried about the influence that corporations already have with elected officials. The drive to give corporations more rights is coming from the court’s conservative bloc — a curious position given their often-proclaimed devotion to the text of the Constitution.

The founders of this nation knew just what they were doing when they drew a line between legally created economic entities and living, breathing human beings. The court should stick to that line.

The  rights of corprations as persons has a curious history.  It seems that providing rights as persons to corporations goes against the intent of the founders.  Changes to increase corproate rights would be revisionist.  Changes to restrict and rein in corporations would be a return to traditional American Constitutional values.  Here is one summary of a very facinating and surprising history <read>

When American colonists declared independence from England in 1776, they also freed themselves from control by English corporations that extracted their wealth and dominated trade. After fighting a revolution to end this exploitation, our country’s founders retained a healthy fear of corporate power and wisely limited corporations exclusively to a business role. Corporations were forbidden from attempting to influence elections, public policy, and other realms of civic society…

For 100 years after the American Revolution, legislators maintained tight controll of the corporate chartering process. Because of widespread public opposition, early legislators granted very few corporate charters, and only after debate. Citizens governed corporations by detailing operating conditions not just in charters but also in state constitutions and state laws. Incorporated businesses were prohibited from taking any action that legislators did not specifically allow.

States also limited corporate charters to a set number of years. Unless a legislature renewed an expiring charter, the corporation was dissolved and its assets were divided among shareholders. Citizen authority clauses limited capitalization, debts, land holdings, and sometimes, even profits. They required a company’s accounting books to be turned over to a legislature upon request. The power of large shareholders was limited by scaled voting, so that large and small investors had equal voting rights. Interlocking directorates were outlawed. Shareholders had the right to remove directors at will.

In Europe, charters protected directors and stockholders from liability for debts and harms caused by their corporations. American legislators explicitly rejected this corporate shield. The penalty for abuse or misuse of the charter was not a plea bargain and a fine, but dissolution of the corporation…

One of the most severe blows to citizen authority arose out of the 1886 Supreme Court case of Santa Clara County v. Southern Pacific Railroad. Though the court did not make a ruling on the question of “corporate personhood,” thanks to misleading notes of a clerk, the decision subsequently was used as precedent to hold that a corporation was a “natural person.”

That same site has extensive additional articles and web links.

The Santa Clara County v. Southern Pacific Railroad case is highly instructive, especially this history as described by Tom Hartmann in a Buzzflash interview <read>

What was really amazing to me was that when I went down to the old Vermont State Supreme Court law library here in Vermont, and read an original copy of the Court’s proceedings in the 1886 “Santa Clara County v. Southern Pacific Railroad” case, the Justices actually said no such thing. In fact, the decision says, at its end, that because they could find a California state law that covered the case “it is not necessary to consider any other questions” such as the constitutionality of the railroad’s claim to personhood.

But in the headnote to the case — a commentary written by the clerk, which is NOT legally binding, it’s just a commentary to help out law students and whatnot, summarizing the case — the Court’s clerk wrote: “The defendant Corporations are persons within the intent of the clause in section 1 of the Fourteenth Amendment to the Constitution of the United States, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws.”

That discovery — that we’d been operating for over 100 years on an incorrect headnote — led me to discover that the clerk, J.C. Bancroft Davis, was a former corrupt official of the U.S. Grant administration and the former president of a railroad, and in collusion with another corrupt Supreme Court Justice, Stephen Field, who had been told by the railroads that if they’d help him get this through they’d sponsor him for the presidency.

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