Wednesday, November 30, 2011

How Corporate Personhood Came into Being 3/3

by Nomad

In the previous two posts, I have charted the rise of the modern corporation in the United States and, how they quickly collected power into the hands of a few. I also attempted to show how that power was used to eliminate its rivals, namely the Southern Confederacy and to corner the market on America’s most valuable commodity, cotton.
Now it’s time I returned to my original question. How did corporations come to be thought of as equal to human beings, in terms of civil rights? Where did this strange notion that “corporations are people too (my friends)” originate?
To that question, I was offered this single clue, but from an unquestionable source.

Sotomayor’s Remark
A news item about a “provocative” comment during the discussion on the Citizens United decision from one of the dissenting Supreme Court justices, Sonia Maria Sotomayer, recently caught my eye. While debating the issue of corporations, specifically, about imposing limits on political spending, the conservative members of the bench were in agreement about the corporations’ right to freedom of speech. This was based on the supposition that corporations are endowed with the same rights given to citizens, according to earlier precedent rulings. Here is the report of the remark:
The court’s majority conservatives agreed that corporations have broad First Amendment rights and that “recent precedents upholding limits on corporate political spending should be overruled.” However, Sotomayor disagreed, and said the court should reconsider the 19th century rulings that first afforded corporations the same rights as real, live people.
Judges “created corporations as persons, gave birth to corporations as persons,” she said. “There could be an argument made that that was the court’s error to start with…[imbuing] a creature of state law with human characteristics.” [emphasis mine]
The word “provocative” never fails to pique my interest so I began hunting down the 19th century the Justice was referring to. It may surprise you- as it did me- to learn that the judicial scaffolding upon which the Citizens United case is supported is in fact quite flimsy.

The main precedent which has been referred to time and time again when considering corporate personhood dates back to a Supreme Court case in 1886. Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394 , was a matter of corporate tax law. Specifically whether, in light of certain changes to the California constitution, a corporation had "the right to deduct the amount of their debts [i.e., mortgages] from the taxable value of their property, a right which was given to individuals."

Fascinating? Well, no, not really.

When the California authorities, namely California Board of Equalization, attempted to impose and to recover the delinquent taxes on the Southern Pacific Railroad, the directors of the corporation blankly refused. It was not a small matter to the county- as well as other counties in similar circumstances with the railroad. Any success at recouping the massive losses in tax revenue stemming from Southern Pacific's refusal to pay would have been a substantial windfall. When the lower courts ruled in favor of the railroad, Santa Clara County filed a writ of error to the federal court and pursued the case all the way to the Supreme Court. It seemed like a wise move for the county; the local courts were tainted with the kind of cozy relationships in which justice is suffocated in its crib.

For example, Charles Crocker had been President of Southern Pacific Railroad prior to this case coming to the courts. Later, while the Central Pacific was still under construction, Crocker and his associates acquired control of the Southern Pacific Railroad in 1868.

Charles Crocker was the younger brother of Edwin B. Crocker, who in 1863 was appointed Justice of the California Supreme Court by the then-governor Leland Stanford (California’s first Republican governor). A year later, Justice Crocker agreed to serve as legal council for Central Pacific. If that doesn’t make a convincing case of conflict of interest, then consider this: When Central Pacific and Southern Pacific became one and the the same, the former governor Stanford would later take over as president of Southern Pacific Company from 1885 until 1890. Later, he served in the United States Senate from 1885 until his death in 1893.

When corporations, politics and the justice system are so tightly interwoven, how could anybody expect a fair decision?

Corporations, Roscoe Conkling and the Fourteenth Amendment
And so the debate moved to the Supreme Court. On one side, S.W. Sanderson, a former judge, who had made a fortune by litigating for the railroads, was matched on the opposing side by Delphin M. Delmas, who, as one source notes, had always worked on behalf of local California governments and, later, as a criminal defense attorney. Incidentally, he had passionately and single-handedly argued pro bono before the California legislature for a law to protect the nation's last remaining redwood forests.

Testifying in behalf of the railroads was the one of the most powerful politicians of his time for the most powerful state in the Union, Roscoe Conkling. His name may not mean too much today but in his time, Conkling was a man whose name carried weight. I compiled this information from his biography:
Conkling served in both the U.S. House (1859–63 and 1865–67) and the U.S. Senate (1867–81). Conkling twice turned down nominations to the U.S. Supreme Court, including a confirmed nomination in 1882. In the Senate, he fought ferociously for the continuation of political patronage—the system whereby elected officials appoint individuals to positions in the civil service and other areas of governments—and against the civil service reform efforts that would have ended it. It's that crony capitalism Palin talks about. His political machine in New York State was, according to his principal biographer, "one of the wonders of the age."

As he had done in testifying for preceding railroad cases, Conkling attempted to convince the court that railroads should be allowed equal protection under the law as guaranteed by the Fourteenth Amendment. The Equal Protection clause applied, he argued, applied to corporate entities as well as natural persons. The amendment, which had always appeared to have been written in regards to the newly freed slaves, states:
Section 1. 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.
This amendment to the Constitution gave the rights of citizenship- with all its protections- to all persons born or naturalization in the United States. Clearly there is no direct mention of corporations. Despite that, The corporation owners, mostly from the railroads, decided that the power that they possessed was too limited. So, according to the theory, they devised a rather remarkable plan to subvert the amendment protecting the rights of the freed slaves. William Meyers in The Santa Clara Blues: Corporate Personhood versus Democracy, gives this excellent summary of the background:
Their lawyers came up with the idea that corporations, which might be said to be groups of persons (though one person might in turn belong to (own stock in) many corporations), should have the same constitutional rights as persons themselves. If they could get the courts to agree that corporations were persons, they could assert that the States, which had chartered the corporations, would then be constrained by the 14th Amendment from exercising power over the corporations.

Beginning in the 1870's corporate lawyers began asserting that corporations were persons with many of the rights of natural persons. It should be understood that the term "artificial person" was already in long use, with no mistake that corporations were claiming to have the rights of natural persons. "Artificial person" was used because there were certain resemblances, in law, between a natural person and corporations. Both could be parties in a lawsuit; both could be taxed; both could be constrained by law. In fact the corporations had been called artificial persons by courts in England as early as the 16th century because lawyers for the corporations had asserted they could not be convicted under the English laws of the time because the laws were worded "No person shall..."
The need to be freed from legislative and judicial constraints, combined with the use of the word "person" in the U.S. Constitution and the concept of the "artificial person," led to the argument that these "artificial persons" were "persons" with an inconsequential "artificial" adjective appended. If it could be made so, if the courts would accept that corporations were among the "persons" talked about by the U.S. Constitution, then the corporations would gain considerably more leverage against legal restraint.
These arguments were made by corporate lawyers at the State level, in court after court, and many judges, being former corporate attorneys and usually at least moderately wealthy themselves, were sympathetic to any argument that would strengthen corporations. There was a national campaign to get the legal establishment to accept that corporations were persons. This culminated in the Santa Clara decision of 1886, which has been used as the precedent for all rulings about corporate personhood since then.
Conkling, in particular, had an unquestionable influence on the court because of his direct involvement in the drafting of the amendment some 20 years earlier in the years following the Civil War. As a congressman, Conkling served on the Joint Committee on Reconstruction which rafted the Fourteenth Amendment to the United States Constitution back in 1868. That committee had been controlled by the Radical Republicans and had required southern states to approve that amendment before being readmitted to representation in Congress.

And this is where suspicious begin to creep in to the story.

To support his claims Conkling even brought what he claimed to be notebooks written by the framers of the amendment. However, in “The ‘Conspiracy Theory’ of the Fourteenth Amendment” in The Yale Law Journal in 1938, Howard Jay Graham wrote that the notebook evidence Conkling offered the court, which purported to show that that the committee had vacillated between the terms “citizen” when referring to the non-economic Privileges or Immunities clause, and “person” in reference to Due Process and Equal Protection. The impression he tried to create in the minds of the judges was that the framers had finally settled on “persons” in an effort to cover corporate “persons.”

However, what Graham discovered was that the word “citizen” had never been used in any of the due process-equal protection drafts, and that “person” had been used throughout. Graham concludes: “This part of Conkling’s argument was a deliberate, brazen forgery” The notebook used in his argument was displayed but never entered into evidence, nor apparently was it shown to anyone, nor was it saved.

On the whole, Conkling’s testimony might have been an interesting one but the court hesitated to take the bait. Unlike the Supreme Court of our times, the court of that day was not quite prepared to go beyond the issues brought before it. (Dissenting judges in the Citizens United case made this charge against the decision.)

In any event, The Court agreed with the railroad that the county had no jurisdiction and cited that the California constitution had denied "railroads and other quasi public corporations" equal protection of laws as guaranteed by the Fourteenth Amendment to the Constitution. They did not wish to debate the details of the amendment on what they considered a matter of tax law.

Nevertheless, the decision-making process was deeply flawed. Up until that time, there had been no ruling formally accepting that corporations would retain Fourteenth Amendment rights. Thus, when Supreme Court Chief Justice Morrison Remick Waite announced orally, (before the arguments were ever even presented) that the Court then unanimously conceded corporations to be persons within the meaning of the Equal Protection Clause, his remark had no legal basis.
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.

That’s it. That’s where corporate personhood began.

The matter was apparently never openly discussed. Neither side of the issue was weighed nor fairly represented. It might well have been decided by a toss of a coin for all we know. This crucial point- upon which the whole personhood debate rests- is all merely a matter of a private, undocumented agreement between judges. We must accept, then, that the matter was discussed privately among the justices but there is no record of it.
As Thom Hartmann uncovered in his book, Unequal Protection: The Rise of corporate Dominance and Theft of Human Rights, the task of giving a summary of the decision for the headnotes for the case fell to a man named John Chandler Bancroft Davis. He was no doubt confused about one fine point that had to be included in the headnote.

As Wikipedia informs us:
Preceding every case entry is a headnote, a short summary in which a court reporter summarizes the opinion as well as outlining the main facts and arguments. For example, in United States v. Detroit Timber Lumber Company (1906), headnotes are defined as "not the work of the Court, but are simply the work of the Reporter, giving his understanding of the decision, prepared for the convenience of the profession.
Bancroft Davis asked the Chief justice for clarification from the leader of the court,
"Please let me know whether I correctly caught your words and oblige."
The reply was as remarkable as it was brief. Justice Waite responds:
"I think your mem. in the California Rail Road tax cases expresses with sufficient accuracy what was said before the arguments began. I leave it with you to determine whether anything need be said about it in the report inasmuch as we avoided meeting the Constitutional question in the decision."[emphasis mine]
Thus the matter of corporate personhood left up to the discretion of a minor court reporter writing a summary headnote for a rather unremarkable case.
Later would come other cases to support what corporate lawyers took to be a precedent. Minneapolis & St. Louis Railroad Co. v. Beckwith (1889) Supreme Court ruled a corporation is a “person” for both due process and equal protection, for example, and Noble v. Union River Logging R. Co. (1893) corporations. for the first time, had claim to the Bill of Rights. The 5th Amendment says: “. . . nor be deprived of life, liberty, or property, without due process of law.”And these cases, apparently, like Citizens United, were all based on a non-existent precedent, only referenced in a brief summary by a Court reporter.

Reactions and Objections
One obvious question is whether Chief Justice Waite’s statement whether it actually was unanimously agreed among the other judges that corporations were considered- according to the Fourteenth Amendment- “persons.” There’s no record of it except for the mention of it in the memo. The text of the decision, itself, refers only the corporations have similar rights as citizens in the matter at hand, property tax law, not in a civil context. It reads:
That the provisions of the constitution and laws of California, in respect to the assessment for taxation of the property of railway corporations operating railroads in more than one county, are in violation of the fourteenth amendment of the constitution, in so far as they require the assessment of their property at its full money value, without making deduction, as in the case of railroads operated in one county, and of other corporations, and of natural persons, for the value of the mortgages covering the property assessed; thus imposing upon the defendant unequal burdens, and to that extent denying to it the equal protection of the laws. [emphasis mine]
Another-perhaps more obvious- point:

If the Reconstruction committee (which had originally drafted the amendment) had wished to include the word "corporations" in their amendment, there was nothing obstructing them from doing so. Such divination might be perfectly acceptable for readings of the ancient texts like the Bible, or in documents that pre-dated the context, like the Constitution, but in this case, all of the members of the committee were familiar with corporations. And yet they did not see fit to mention them while composing the draft. So, there is really no valid reason for attempting to read other meanings into the choice of words, and no need for later re-interpretation.

In fact, as Graham pointed out, John A. Bingham, principle framer, employed these guarantees specifically and in a context which suggested that free Negroes and mulattoes (rather than corporations and business enterprise) unquestionably were the persons' to which he then referred. Whatever the lawyers for the railroad companies might have argued, there is no evidence to support their views.

If one wishes to pick at the amendment and attempt to divine secret messages in the text unnecessarily, it can easily work in the opposite direction. As the amendment states that "All persons born or naturalized.." and that opening definitely calls into question whether corporations were ever intended to be included since corporations are neither born nor naturalized, but chartered and founded. They are, after all, man-made creations made by individuals with individual civil rights. Corporations are not born any more than a foundation or a workers' union is born.

Would Republicans, like Mitt Romney, be willing to argue to a snickering crowd that other human-formed organizations are people.. like unions? The Miner's Union is a person? The Teamsters Union is person? 
So was this a case of conspiracy or merely an failure of the court? The whole matter of leaving a court reporter’s note as the only record of such an important issue seems highly suspicious.

The first direct charge of a conspiracy came in 1927 by historians Charles and Mary Beard in The Rise of the American Civilization. They proposed that, back in 1866, the certain members of the Joint Congressional Committee which drafted the Fourteenth Amendment, namely Ohio Congressman John A. Bingham, had conspired on behalf of corporations and with the careful use of terms has widened the scope well beyond its intended purpose. The evidence is not all that convincing; it is a charge which would certainly involve some impressive long term planning.

Still, it’s worth a closer look. The same people who demanded the harshest possible terms for the South, The Radical Republicans, were in control of the Commission that drafted the amendment. This faction, at least by the records available to us, seem to have been motivated by the highest ideals of abolishing slavery. Thaddeus Stevens, leader of the faction, had defended and supported cases involving various minorities, Native Americans, blacks and women. His out-spoken stand against slavery was well-known to all who knew him. His desire for the emancipation of the slaves, the desire to abolish slavery as a institution in the United Sates was genuine. The history of this movement began some thirty years before as ethical, moral and religious argument.

There is not enough evidence to indicate a conspiracy among the drafters of the amendment, as far as I can detect.

Of course, had they desired to assist corporations, they could easily have been more direct about it. The ambiguity of the amendment might merely represent a method of reaching a majority, conclusive decision or approval by Congress. To the Beard conspiracy theory, I will, therefore, apply the Scottish verdict: Neither Guilty or Innocent, Unproven. There’s no argument that the Fourteenth Amendment- no matter how it might have been abused later- is a noble document.

Not every Supreme Court Justice was so easily convinced that corporation deserves to be considered “persons,” with constitutional citizen rights. For example, Justice Hugo Black, former Alabama senator turned Supreme Court Judge did not mince words about his feelings on this interpretation of the Constitution.
I do not believe the word 'person' in the Fourteenth Amendment includes corporations... This Court has many times changed its interpretations of the Constitution when the conclusion was reached that an improper construction had been adopted...When a statute is declared by this Court to be unconstitutional, the decision until reversed stands as a barrier against the adoption of similar legislation. A constitutional interpretation that is wrong should not stand. I believe this Court should now overrule previous decisions which interpreted the Fourteenth Amendment to include corporations.
Neither the history nor the language of the Fourteenth Amendment justifies the belief that corporations are included within its protection.

...Certainly, when the Fourteenth Amendment was submitted for approval, the people were not told that the states of the South were to be denied their normal relationship with the Federal Government unless they ratified an amendment granting new and revolutionary rights to corporations.
As Justice Sotomayor has correctly observed, the decision, which has formed the basis for over a century of corporate law, is questionable, to say the least, being based merely on an answer to a court reporter's summary, on false testimony from an unreliable witness and on contestable court procedure.

The fact that so many other later decisions regarding corporate personhood were based on this decision presents something of a nightmare for the courts.
For example, as author, William Meyers points out,

Corporate personhood is at the root of such Supreme Court rulings as First National Bank of Boston v. Bellotti [435 U.S. 765 (1978)], which equate corporate donations to political campaigns with free speech. They allow corporate money to govern the political process. These rulings can be reversed once the 1886 decision is reversed, since they are directly dependent upon it. Then we should be able to force corporations out of the political process. We could do this through legislation or through the chartering process. Without personhood the corporations are not entitled to First Amendment rights; they will have only what privileges the people, through our government, give them.

We can and should prohibit them from making any kind of contribution to politicians, to lobbying groups, or to campaigns involving referenda. Any advertising that does not sell products — that is, any advertising not presenting factual information about the products or services a corporation offers — should be prohibited.

Decision after decision would have to be revisited but, by repealing corporate personhood it would also allow the government to return to its proper place as protector of living citizens and not the slave of artificial persons.

Just because the same mistake is repeated over and over, it doesn't make it any less wrong. Look where it has led our country, after all. This is an issue that will not go away. It has brought millions out into the streets to protest and millions more will follow them if some kind of just and impartial review of the issue is ignored. This matter threatens to ruin the nation. We have become the very empire our own founding fathers fought and died in an effort to repulse.

I think this will soon become one of the most important issues of our time, given the national or should I say, international revolt against corporate encroachments, against the widespread thoughtless destruction of the environment and against the victimization of weaker but resource-rich nations, including our own, for the sake greater profits for our corporate slave masters.


If you’d like more detailed information about this subject, I invite you to read Unequal Protection: The Rise of Corporate Dominance and Theft of Human rights,” by Thom Hartmann.

Addition information can be found (full text) at The Santa Clara Blues: Corporate Personhood versus Democracy, by William Meyers.
Here's a important (and entertaining) documentary. If you have not yet watched it, I'd highly recommend it.

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