Corporate Citizenship: How Public Dissent In Paris Sparked Creation Of The Corporate Person
WASHINGTON -- Of all the Occupy Wall Street refrains, one of the most memorable is, "I refuse to believe that corporations are people until Texas executes one." But, clever as it is, the quip looks to the wrong end of the life cycle: The only thing more corrupt than the legal concept of corporate personhood is the way a Gilded Age judge birthed it.
The discontented have been occupying the streets for a long time. But the convulsions with which the ruling class in America reacted to the Paris Commune of 1871 make Fox News' coverage of Occupy Wall Street sound fawning.
The Paris Commune was the first international incident followed daily in the United States. While President Barack Obama complains about the 24-hour news cycle today, its roots stretch back to Cyrus Field's transcontinental telegraph cable, which allowed the elites of America to focus intently on the two-month uprising and ultimate slaughter of thousands of Parisians. Cyrus Field's brother and his family were in Paris at the time, and a third brother, Supreme Court Justice Stephen Field, obsessively tracked the news back in the states. It was the Paris uprising that transformed Stephen Field from a mundanely corrupt judge in the paid service of the railroads to a zealous crusader for all corporations, with the aim of suppressing what he and other leaders saw as the threat of democracy from below.
For much of the first U.S. century, it was an accepted fact that the people, through their legislators, had the power to pass laws that businesses were required to obey. After the Civil War, Reconstruction-era statutes and constitutional amendments -- particularly the 14th Amendment -- strictly limited the ability of legislators to restrict the rights of the recently freed African Americans.
In a historic irony, it was the protections contained in those Reconstruction laws that corporations sought to grab for their own. Justice Field was the hand they used.
The common understanding of how the corporation became a legal person says that a Supreme Court reporter of decisions erroneously said as much in a case summary and that error became an unremovable stain, coloring every decision after. But that reading of history whitewashes what was, in fact, a coordinated effort to win citizenship for corporations.
The idea of corporate personhood was once viewed as nonsense. A corporation was formed to limit the financial liability of its owners in pursuing their business: If the corporation went broke, debtors couldn't come after its owners. That such a company might also have all the rights of citizens was a concept on the fringes. Yet by force of judicial will, Field pulled it right into the mainstream.
He began with his dissenting opinion in the 1873 Slaughter-House cases, decided by the Supreme Court on a 5-4 vote. Writing for the minority, Field asserted that the freedom of a corporation to pursue its business interests was "the distinguishing privilege of all citizens of the United States."
The Louisiana Legislature, then controlled by a majority coalition of African Americans and white Reconstructionists known as "Radical Republicans," had passed a law insisting that all butchers move their business south of New Orleans, so the butchers' entrails didn't pollute the city's water supply. The Court upheld the law, and the city's pattern of repeated cholera outbreaks stopped cold. Field argued, however, that it was a corporation's God-given right to dump pig intestines wherever it saw fit, regardless of the public health consequences or laws on the books.
Field was as much concerned with protecting business investments as he was with working the Lord's will. He was heavily invested in railroads and other industries that came before the Court, so much so that the chief justice at the time pressed him not to weigh in on certain cases. "There was no doubt of your intimate personal relations with the managers of the Central Pacific, and it would tend to discredit the opinion if it came from someone known as the personal friend of the parties representing these railroad interests," the chief justice warned Field, according to Jack Beatty's "Age of Betrayal: The Triumph of Money in America, 1865-1900."
Field didn't have the votes of his high court colleagues to directly insert corporate personhood into law, so he exploited another aspect of the Reconstruction-era legal system to work the railroads' will. Congress had forbidden the Court from reviewing certain cases, (presciently) concerned that the justices would undermine the work legislators was doing, even the new constitutional amendments. As a compromise, Congress allowed justices to continue to sit occasionally on the circuit courts. When sitting on the U.S. Court of Appeals for the 9th Circuit in California, Field repeatedly wrote into his decisions that corporations were persons. Those decisions became precedents in the 9th Circuit, but nowhere else.
In a dispute over taxation of the Southern Pacific Railroad Co., Field cited his own "Ninth Circuit law" to declare that the "defendant, being a corporation, a person within the meaning of the 14th Amendment," is "entitled, with respect to its property, to equal protection of the laws." San Mateo County appealed to the Supreme Court, but the case dragged on. (Following oral arguments in Washington, Field adjourned with the railroad's lawyers to a dinner party thrown by railroad tycoon Leland Stanford, a close friend of Field's who had previously appointed him to run the school Stanford set up in his son's name.) In desperate need of the taxes the railroad refused to pay -- citing its freedom to do business under the same protections granted any other citizen -- the county settled with the company.
The settlement ended the Supreme Court case and denied Field one chance to enshrine personhood into law, but he was soon given another. In 1886, Santa Clara County sued Southern Pacific Railroad in a similar case, and the company again asserted its personhood. In fact, whether Southern Pacific was a citizen was irrelevant to the particular dispute, which was decided on technical issues of tax law that applied equally to a business or a person. But the Court reporter, John Chandler Bancroft Davis, who was himself financially intertwined with the railroads, wrote the following in his summary of the decision: "The defendant Corporations are persons within the intent of the clause in section I of the Fourteenth Amendment to the Constitution of the United States, which forbids a state to deny to any person equal protection of the laws."
Nothing like that was contained in Santa Clara County v. Southern Pacific Railroad Co. itself, so where did Davis get such language? The most likely answer lies with Field, who made a habit of micromanaging Davis' summaries. And Davis himself had plenty of reason to play along: In an earlier case that came before the Court, Davis had been accused of acting as an attorney and trustee of a railroad company, only to wind up with much of that company's assets in his own hands.
As merely part of a reporter's summary, Davis' statement of corporate personhood carried no legal weight. But in a 1888 decision, Field enshrined the error. Citing the Santa Clara case, he wrote, completely out of the blue and not in reaction to any facts in the new case, that a "private corporation is included under the designation of 'person' in the Fourteenth Amendment to the Constitution of the United States, Section I." That a corporation was a person had -- presto -- become settled law.
More than a century later, in the 5-4 decision of Citizens United v. Federal Election Commission, Chief Justice John Roberts would rely on this nonsensical and corrupt ruling to enshrine into law the equally perverse notion that a corporation is a person entitled to all the liberties of the First Amendment and therefore, in another leap of logic, free to spend as much of its money as it pleases to influence elections, regardless of any laws passed to the contrary.
But it didn't take a century for Field's coup to begin influencing public policy. Even before the Santa Clara case, corporations were asserting that a God-given "liberty to contract" allowed them to ignore laws regulating the workplace. When legendary labor leader Samuel Gompers persuaded New York to ban the making of cigars in tenement sweatshops, the Supreme Court overturned the law in a landmark 1885 ruling, In re Jacobs, saying it violated the cigar makers' freedom. A similar 1899 case struck down a law granting an eight-hour workday to employees of city contractors, and the majority specifically cited Field's original dissent in the Slaughter-House cases.
In short, corporations did not become citizens by accident. It took roughly a decade to usurp the liberty given to freed slaves and apply it instead to businesses.
Field's complete vision, fortunately, has not yet come to pass. The principle of "liberty of contract," despite libertarian efforts over the last two decades, has not been brought back in from the cold where the New Deal Court banished it over 70 years ago. Corporations still cannot vote even if they may now spend infinite amounts of money to influence an election. And the Second Amendment, which so far protects only the individual right to keep loaded handguns in the home for self-defense, does not give corporations the right to stockpile weapons in the workplace in case actual "class warfare" breaks out.
Nor, crucially, do corporations enjoy the Fifth Amendment privilege against self-incrimination. Such a privilege, the Supreme Court has long held, "is essentially a personal one, applying only to natural individuals." And the Fourth Amendment's ban on unreasonable searches and seizures "at the most guards against abuse only by way of too much indefiniteness or breadth," according to a 1946 Supreme Court decision. Corporations and their officers, then, can be subpoenaed to produce their records and papers without running afoul of the Fourth Amendment and cannot invoke the Fifth Amendment to escape such a court order.
But for these gaps in corporate personhood to be even small comfort in our new Gilded Age, one of those bad-acting "artificial persons" must first be charged with a crime. That's something rarely seen in today's era of corporate unaccountability, thanks largely to the influence of business over politics -- the legacy, in a twisted way, of the Paris Commune.
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First Posted: 10/12/11 03:18 PM ET Updated: 12/12/11 05:12 AM ET