British Crown Corporations began operating in North America with
the start of European settlement. These Crown Corporations, also
known as colonial corporations, were a tool to export wealth back
to the stockholders and the monarch that chartered them. The
creation of corporations expanded empire and made the aristocracy
wealthy. These early crown corporations were given the right to
levy taxes, wage war, and imprison people all while enjoying a
monopoly over trade in the regions where they operated. As Thomas
Hobbes stated, corporations are “chips off the old block of
It was clear though that these corporations possessed no rights of
their own, but were rather artificial creations of the monarch,
that existed for the benefit of the sovereign monarch. At any point
the sovereign could revoke a corporation’s charter (the legal
document that allows a corporation to exist).
Colonial anger and resentment against corporate power grew as the
English Parliament introduced measures that protected trade by
Crown corporations over that of local colonial merchants. In direct
protest against Parliament's tax protections that subsidized the
East India Company, colonists organized an act of civil
disobedience that came to be known as the Boston Tea Party. In that
one act of property destruction, colonists destroyed the equivalent
of one million dollars of the Company's property.
Corporations After the American Revolution
After the American Revolution sovereign power was allegedly
transferred from a monarch to “We the people.” Obviously the idea
of vesting power in the people was noble, but only about 10% of the
population counted as “people” with full citizenship rights. Those
who were not white, male and property owners were not legally
considered "people". Over the next two hundred years groups
excluded from “We the People” have struggled to be legally defined
For people immersed in a corporate world it is hard to imagine that
in the 1800s corporations were only one form of doing business
rather than the form. (As late as 1900 only 10 per cent of
manufacturing companies in California even had a corporate
charter.) The corporate form, was recognized to have certain
utility in aggregating capital for large scale projects, which is
why “the people” allowed them to exist at all.
Of course the concentration of capital also brings with it inherent
risk for the populace. For this reason the formation of
corporations was restricted to parameters set up by state
constitutions and constrained by specific limitations in the state
codes. The early 1800s frequently reiterated the fact that
corporations could only be created for public benefit.
The Supreme Court of Virginia stated in 1809 that if an applicant
for a corporate charter’s “object is merely private or selfish; if
it is detrimental to, or not promotive of, the public good, they
have no adequate claim upon the legislature for the privileges.” A
comparison of state laws from the early 1800’s shows that
corporations had limits on capitalization, debts, land holdings,
and sometimes profits. They could not own stock in other
corporations, could not have their headquarters outside their
chartering state, nor could they keep their financial books closed
to public representatives or make political or charitable
contributions. In dramatic contrast to today, corporate
stockholders and directors were often held personally responsible
for crimes and harms they committed and debts they incurred under
the name of the corporation.
Stated simply, corporations were properly understood to be public
institutions created by democratically elected representatives of
the sovereign people.
The Corporate Return to Power
"I see in the near future a crisis approaching that unnerves me
and causes me to tremble for the safety of my country. As the
result of the War, corporations have been enthroned. ... An era of
corruption in high places will follow, and the money power of the
country will endeavor to prolong its reign by working upon the
prejudices of the people... until wealth is aggregated in a few
hands... and the Republic is destroyed."
– Abraham Lincoln, 1864
Only one year after the Civil War ended, individual states began to
compete for corporate charters, and the income which charters
generated. At the same time people’s movements against corporations
were growing in strength. These movements were fueled by fear and
resentment of concentrated corporate power that had boomed as a
result of the Industrial Revolution and the Civil War.
This raging struggle led President Rutherford B. Hayes to say in
1876: "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 1886, ten years after President Hayes spoke those words, the
relationship between United States citizens and their corporate
creations changed even more dramatically: corporations became
"natural persons" under the law, sheltered by the Bill of Rights
and the Fourteenth Amendment. It all started here in California in
a court case titled "Santa Clara County v. Southern Pacific
Railroad". Later that year, the U.S. Supreme Court let the state
court ruling stand with these words: "The Court does not wish to
hear the arguments on whether the provision in the Fourteenth
Amendment to the Constitution applies to these corporations. We are
all of the opinion that it does." Sixty years later, Supreme Court
Justice William O. Douglas wrote, "There was no history, logic, or
reason given to support that view."
Shamefully, though the Fourteenth Amendment was passed to guarantee
freed slaves treatment as legal persons under the law, rights that
were not enforced until the 1950s. When women tried to argue they
were protected as persons under the fourteenth amendment (Minor v.
Happersett, 1874) they were told the 14th amendment only applied to
black males. The Fourteenth Amendment ruling has radically changed
the nature of corporations in the United States and the world, as
other countries have followed our lead.
"Corporate persons" won other Bill of Rights protections in the
decades that followed. First Amendment, free speech protections
making it virtually impossible to prohibit corporate campaign
contributions. The Fourth Amendment now protects corporations from
inspections to ensure worker safety.
Two years after the "Corporate Personhood" decision, President
Grover Cleveland worried that, "Corporations, which should be the
carefully restrained creatures of the law and the servants of the
people, are fast becoming the people's masters."
President Cleveland should have kept more careful watch on his
Attorney General if this was truly his concern. Just one year
earlier, in 1887, Mr. Olney had quietly told railroad executives
that the world's first regulatory agency, the Interstate Commerce
Commission (ICC), was to be, "a sort of barrier between the
railroad corporations and the people..." To the public, the new ICC
was justified as a way to protect people from railroad corporations
such as Southern Pacific Railroad Corporation, which was accused of
cheating farmers on land sales, making secret pacts with large
businesses to drive out smaller ones, and even destroying the
equipment of rival railroads. The large railroad companies used the
ICC as a legal way of fixing prices so upstart railroads could not
charge less than them. ICC Commissioner Charles Perkins of Chicago,
Burlington & Quincy Railroad Company said bluntly in 1888, "Let
us ask the [ICC] Commissioners to enforce the law when its
violation by others hurts us."
Since the creation of the first regulatory agency, an alphabet soup
of agencies have been created by state and federal governments: the
Food and Drug Administration (FDA), the Environmental Protection
Agency (EPA), the National Labor Relations Board (NLRB), the
California Department of Forestry (CDF), the Bureau of Land
Management (BLM), and hundreds of others.
We, the citizens of each state, have been taught to think that
these agencies exist to protect us. In fact, each has been modeled
on the example of the Interstate Commerce Commission with
bureaucrats taken directly from the ranks of the industry being
regulated. This process has resulted in the development of
regulatory agencies which merely manage - rather than prohibit -
corporate harms and abuses of the public good.
Global Corporate Capitalism
Global trade agreements such as North America Free Trade Agreement
(NAFTA), the Free Trade Area of the Americas (FTAA) and the World
Trade Organization (WTO) are ushering in a new era of corporate
dominance but the struggle remains largely the same:
Who shall rule, corporations or the people?
As the corporate system goes global, we in the United States have a
responsibility to undermine illegitimate corporate "rights" because
that concept was invented by our corporations, our legal system and
our government. Our work against corporate rule in the United
States helps those in other nations fighting the same struggle
against the corporatization of their countries.