Corporate personhood

The neutrality of this article is disputed.

Corporate personhood is a term to describe United States law that allows corporations to have "inalienable rights" (sometimes called constitutional rights) just like (human) persons. The choice of the word "person" in "personhood" arises from the way the 14th Amendment to the United States Constitution was worded and from earlier legal usage of the word person.

In the United States of America all natural persons (actual human beings) are recognized as having inalienable rights. These rights are recognized, among other places, in the United States Bill of Rights and the Fourteenth Amendment.

Corporate constitutional rights effectively invert the relationship between the government and the corporations. Recognized as persons, corporations lose much of their status as subjects of the government. Although artificial creations of their owners and the governments, as legal persons they have a degree of immunity to government supervision. U.S. corporations are endowed with the court-recognized right to influence both elections and the law-making process.

The History of Corporate Personhood

Corporations were detested by the colonial rebels in 1776 when the Declaration of Independence severed the States from Great Britain. There had been only a few corporations in colonial America, but they had been very powerful. The Dutch West India Company had founded New York. Corporations had effectively governed Virginia, Maryland and North and South Carolina. The political history of the colonies up until 1776 was largely one of conflict between citizens trying to establish rule by elected government and the corporations or King ruling through appointed governors.

The new nation or confederation of 13 sovereign states had few native business corporations. The corporations that survived the revolution were mainly non-profit institutions such as colleges (Dartmouth College v. Woodward 17 U.S. 518 1819). There was not a single bank in the United States until 1780. Most of that first bank's stock was owned by the confederate (what we would later call Federal) government, and the bank's charter was revoked in 1785. "The agrarian charges were numerous... the bank was a monstrosity, an artificial creature endowed with powers not possessed by human beings and incompatible with the principles of a democratic social order." (Hammond, Bray , Banks and Politics in America from the Revolution to the Civil War (Princeton: Princeton University Press, 1991), pp. 48-54) By 1790 four banks had been granted corporate charters by states, but these banks were not originally purely private institutions. They served as financial institutions for the states that chartered them. (Ibid. 65-67)

The federal Constitution of 1788 did not mention corporations at all. But in the late 1700s and early 1800s corporations began to be chartered by the states. This was not without opposition. Thomas Jefferson said, "I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country."

Like the banks, other early corporations were closely supervised by the state legislatures that granted their charters. When the United States Supreme Court in Dartmouth College v. Woodward 17 U.S. 518 1819, ruled that Dartmouth's charter granted in 1769 by King George III was a contract and could not be revoked by the New Hampshire legislature, a public outcry ensued. State courts and legislatures, supported by the people, declared that state governments had an absolute right to amend or repeal a corporate charter. (Richard L Grossman and Frank T. Adams, Taking Care of Business, Citizenship and the Charter of Incorporation (Cambridge: Charter, Ink., 1993), p. 11-12)

Until 1886 corporations were not considered persons. It was clear what they were: artificial creations of their owners and the state legislatures. They were regulated and taxed. They could sue and be sued. They were subject to all of the laws of the land as well as any restrictions placed in their charters. But from 1819 until 1886 the wealthiest business people sought to use the Federal government, particularly the courts, to get their corporations out from under the control of the states and their citizens.

During the 1800s the United States went through an enormous economic expansion, sometimes called the Industrial Revolution, but that term is misleading. The United States expanded geographically by grabbing native American Indian territories formerly claimed by France, Great Britain, and Mexico. The population exploded. Farm production exploded, and international trade exploded, with U.S. grain feeding both growing U.S. cities and Europe. Manufacturing in the U.S., protected by tariffs from British competition, also progressed rapidly. The favored form for large businesses became the corporation. And as these corporations came to dominate business life, they also began to dominate America's politicians, lawyers, courts and culture.

The Civil War accelerated the growth of manufacturing and the power of the men who owned the corporations. After the war corporations began a campaign to throw off the legal shackles that had held them in check. The systematic bribing of Congress was instituted by Mark Hanna, sugar trust magnate Henry Havemeyer, and Senator Nelson Aldrich and their associates. (Jonathan Shepard Fast and Luzviminda Bartolome Francisco, Conspiracy For Empire, Big Business, Corruption and the Politics of Imperialism in America, 1876-1907 (Quezon City, Foundation for Nationalist Studies, 1985), p. 92-97) Most Supreme Court judges who were appointed were former corporate lawyers.

In 1886 the supreme court justices were Samuel F. Miller, Stephen J. Field, Joseph P. Bradley, John M. Harlan, Stanley Matthews, William B. Woods, Samuel Blatchford, Horace Gray, and chief justice Morrison. R. Waite. These men subjected African Americans to a century of Jim Crow discrimination, particularly in the Civil Rights Cases 109 US 3 1883; they made corporations into a vehicle for the wealthy elite to control the economy and the government; they vastly increased the power of the Supreme Court itself over elected government officials. In all fairness, Justice Harlan dissented from the infamous decision Plessy v. Ferguson 163 U.S. 537 1896, which, as he said, effectively denied the protection of the 14th Amendment to the very group of people (former slaves and their descendants) for whom it was designed.

In 1868 the 14th Amendment to the United States Constitution had become law. Section 1 of that Amendment 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.

"The one pervading purpose... [of the 14th Amendment] was the freedom of the slave race, the security and firm establishment of that freedom, and the protection of the newly-made freeman and citizen from the oppression of those who had formerly exercised unlimited dominion over him." That is exactly what Justice Samuel F. Miller said in 1873 in one of the first Supreme Court opinions to rule on the 14th Amendment. (83 U.S. 36, 81 (1873))

But the wealthy, powerful men who owned corporations wanted more power for their corporations. 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 1870s 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 cumulated in the Santa Clara decision of 1886, which has been used as the precedent for all rulings about corporate personhood since then.

Though it is not yet clear who hatched this plan or where the campaign began, the early cases mainly concerned railroads. In the late 1800s railroads were the most powerful corporations in the country. Most of the nation's farmers were dependent on them to haul their produce; even the manufacturing corporations were at their mercy when they needed coal, iron ore, finished iron, or any other materials transported. That the lawyers for the railway corporations had planned a national campaign to make corporations full, unqualified legal persons is demonstrated by the Supreme Court making several decisions in which this was an issue in 1877. In four cases that reached the Supreme Court (94 U.S. 155, 94 U.S. 164, 94 U.S. 179, 94 U.S. 180 (1877)) it was argued by the railroads that they were protected by the 14th Amendment from states regulating the maximum rates they could charge. In each case the Court did not render an opinion as to whether corporations were persons covered by the 14th Amendment. Bypassing that issue, they said that the 14th Amendment was not meant to prevent states from regulating commerce.

Similarly, in 1877, in Munn v. Illinois 94 U.S. 113 1876, the Supreme Court decided that the 14th Amendment did not prevent the State of Illinois from regulating charges for use of a business's grain elevators, ignoring the question of whether Munn & Scott was a person. Later, in Northwestern Nat Life Ins. Co. v. Riggs 203 U.S. 243 1906, having accepted that corporations are people, the court still ruled that the 14th Amendment was not a bar to many state laws that effectively limited a corporations right to contract business as it pleases.

Calling silence a victory, from 1877 to 1886 corporate lawyers assumed that corporations were persons, and their opponents argued that they were not. In Santa Clara County v. Southern Pacific Railroad Company (118 U.S. 394 (1886)), at the lower court levels the question of whether corporations were persons had been argued, and these arguments were submitted in writing to the Court. However, before oral argument took place, Chief Justice Waite announced: "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."

It is not half as strange that the Supreme Court judges would render such an opinion, given their allegiance to the propertied class, as the way that they rendered it. The Supreme Court judges generally preferred to write long-winded, complex opinions, as evidenced by any Supreme Court opinion even to this day. This question had never been covered in a Supreme Court decision; it had been avoided. Here was the perfect chance for any of nine Supreme Court judges to make his place in history. All declined. Not a single justice wanted to explain how an amendment about ex-slaves had converted artificial entities into the legal equivalent of natural persons.

This opinion without explanation, given before argument had even been heard, became the law of the United States of America. No state or federal legislature passed or even discussed it; no Amendment to the Constitution was deemed necessary; the citizens were simply informed that they had a mistaken view about corporations, if they were informed at all. Future Supreme Courts refused to even consider the question, preferring to build on it, though occasionally future justices unsuccessfully sought to raise the question again.

Was the 14th Amendment about corporations? One of the 1886 judges, Samuel F. Miller, had not thought so in 1872, only 6 years after the Amendment had become law, when the court was "called upon for the first time to give construction to these articles." In the Slaughterhouse Cases 83 U.S. 36 1872, he stated (quoted at length because it is important not only to the question of corporate personhood, but to the question of civil rights):

The most cursory glance at these articles discloses a unity of purpose, when taken in connection with the history of the times, which cannot fail to have an important bearing on any question of doubt concerning their true meaning. Nor can such doubts, when any reasonably exist, be safely and rationally solved without a reference to that history, for in it is found the occasion and the necessity for recurring again to the great source of power in this country, the people of the States, for additional guarantees of human rights, additional powers to the Federal government; additional restraints upon those of the States. Fortunately, that history is fresh within the memory of us all, and its leading features, as they bear upon the matter before us, free from doubt.

The institution of African slavery, as it existed in about half the States of the Union, and the contests pervading the public mind for many years between those who desired its curtailment and ultimate extinction and those who desired additional safeguards for its security and perpetuation, culminated in the effort, on the part of most of the States in which slavery existed, to separate from the Federal government and to resist its authority. This constituted the war of the rebellion, and whatever auxiliary causes may have contributed to bring about this war, undoubtedly the overshadowing and efficient cause was African slavery.

...

They [Negroes] were in some States forbidden to appear in the towns in any other character than menial servants. They were required to reside on and cultivate the soil without the right to purchase or own it. They were excluded from many occupations of gain, and were not permitted to give testimony in the courts in any case where a white man was a party. It was said that their lives were at the mercy of bad men, either because the laws for their protection were insufficient or were not enforced.

These circumstances, whatever of falsehood or misconception may have been mingled with their presentation, forced upon the statesmen who had conducted the Federal government in safety through the crisis of the rebellion, and who supposed that, by the thirteenth article of amendment, they had secured the result of their labors, the conviction that something more was necessary in the way of constitutional protection to the unfortunate race who had suffered so much. They accordingly passed through Congress the proposition for the fourteenth amendment, and they declined to treat as restored to their full participation in the government of the Union the States which had been in insurrection until they ratified that article by a formal vote of their legislative bodies.

...

We repeat, then, in the light of this recapitulation of events, almost too recent to be called history, but which are familiar to us all, and on the most casual examination of the language of these amendments, no one can fail to be impressed with the one pervading purpose found in them all, lying at the foundation of each, and without which none of them would have been even suggested; we mean the freedom of the slave race, the security and firm establishment of that freedom, and the protection of the newly made freeman and citizen from the oppressions of those who had formerly exercised unlimited dominion over him.

It has been argued that the men who wrote the 14th Amendment specifically meant for the word person to be a loophole which you could drive a giant corporation through. Apparently in one of the railroad cases an attorney who had been on the committee that drafted the amendment waived a paper before the court claiming that it documented such; but the paper was not entered as evidence, nor apparently was it shown to anyone, nor was it saved. However, careful research has shown that, John A. Bingham the member of Congress who is known to have been chiefly responsible for the phraseology of Section One when it was drafted by the Joint Committee in 1866, had, during the previous decade and as early as 1856-1859, employed not one but all three of the same clauses and concepts he later used in Section One. More important still, Bingham 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.

(Graham, Howard Jay, Everyman's Constitution, State Historical Society of Wisconsin, 1968. See also Graham, Howard Jay, "The Conspiracy Theory of the Fourteenth Amendment," The Yale Law Journal, Vol. 47: 341, 1938)

Before the Supreme Court determined that corporations were persons and hence had constitutional rights female citizens had decided that the Fourteenth Amendment should be interpreted to give them the right to vote. In Minor v. Happersett the Supreme Court ruled that "women" were not persons for the purposes of the Fourteenth Amendment.

The moral and legal depravity of the Supreme Court during this period (though of course they saw their job as securing the property of those of their class), and the absurdity of treating corporations as persons with natural and constitutionally recognized rights, is illustrated by the deterioration of the legal position of the former slaves and their descendants during this time. A series of Supreme Court judgements (92 U.S. 214 (1875), 92 U.S. 542 (1875), 106 U.S. 629 (1882), and, in particular, the infamous Civil Rights Cases 109 U.S. 3 1883) of cases where men classified as Negroes sought the protection of the 14th Amendment narrowed the scope of that protection. Finally, in the infamous Plessy v. Ferguson 163 U.S. 537 1896 decision, the Supreme Court ruled that a man who was 1 part slave by ancestry and 7/8 of white/free ancestry could be forced to sit in a "separate but equal" section of a passenger train. In effect this decision declared people with non-European ancestors to not be persons with constitutional rights. The decision would not be overruled by a future Supreme Court, not even by Brown v. Board of Education of Topeka 347 US 483 1954; it would take Title II of the Civil Rights Act of 1964 to overturn it.

Only justice John M. Harlan dissented in Plessy v. Ferguson. Of the justices who had ruled that corporations were people in Santa Clara County v. Southern Pacific, three were still justices and rules that natural persons of the wrong skin color were not persons in Plessy v. Ferguson. These infamous three were Stephen J. Field, Samuel Blatchford, and Horace Gray.

Two Supreme Court judges, Hugo Black and William O. Douglas, later rendered opinions attacking the doctrine of corporate personhood. Quoted here is most of justice Black's opinion:

But it is contended that the due process clause of the Fourteenth Amendment prohibits California from determining what terms and conditions should be imposed upon this Connecticut corporation to promote the welfare of the people of California.

I do not believe the word "person" in the Fourteenth Amendment includes corporations. "The doctrine of stare decisis, however appropriate and even necessary at times, has only a limited application in the field of constitutional law." This Court has many times changed its interpretations of the Constitution when the conclusion was reached that an improper construction had been adopted. Only recently the case of West Coast Hotel Company v. Parrish, 300 U.S. 379, 57 S.Ct. 578, 108 A.L.R. 1330 [1931], expressly overruled a previous interpretation of the Fourteenth Amendment which had long blocked state minimum wage legislation. 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 (303 U.S. 77, 86). The historical purpose of the Fourteenth Amendment was clearly set forth when first considered by this Court in the Slaughter House Cases, 16 Wall. 36, decided April, 1873-less than five years after the proclamation of its adoption. Mr. Justice Miller, speaking for the Court, said:

Among the first acts of legislation adopted by several of the States in the legislative bodies which claimed to be in their normal relations with the Federal government, were laws which imposed upon the colored race onerous disabilities and burdens, and curtailed their rights in the pursuit of life, liberty, and property to such an extent that their freedom was of little value, while they had lost the protection which they had received from their former owners from motives both of interest and humanity.

These circumstances, whatever of falsehood or misconception may have been mingled with their presentation, forced ... the conviction that something more was necessary in the way of constitutional protection to the unfortunate race who had suffered so much. (Congressional leaders) accordingly passed through Congress the proposition for the fourteenth amendment, and ... declined to treat as restored to their full participation in the government of the Union the States which had been in insurrection, until they ratified that article by a formal vote of their legislative bodies. (16 Wall. 36, at page 70.)

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. This Court, when the Slaughter House Cases were decided in 1873, had apparently discovered no such purpose. The records of the time can be searched in vain for evidence that this amendment was adopted for the benefit of corporations. It is true (303 U.S. 77, 87) that in 1882, twelve years after its adoption, and ten years after the Slaughter House Cases, supra, an argument was made in this Court that a journal of the joint Congressional Committee which framed the amendment, secret and undisclosed up to that date, indicated the committee's desire to protect corporations by the use of the word "person." Four years later, in 1886, this Court in the case of Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394, 6 S.Ct. 1132, decided for the first time that the word "person" in the amendment did in some instances include corporations. A secret purpose on the part of the members of the committee, even if such be the fact, however, would not be sufficient to justify any such construction. The history of the amendment proves that the people were told that its purpose was to protect weak and helpless human beings and were not told that it was intended to remove corporations in any fashion from the control of state governments. The Fourteenth Amendment followed the freedom of a race from slavery. Justice Swayne said in the Slaughter Houses Cases, supra, that: "By "any person" was meant all persons within the jurisdiction of the State. No distinction is intimated on account of race or color." Corporations have neither race nor color. He knew the amendment was intended to protect the life, liberty, and property of human beings.

The language of the amendment itself does not support the theory that it was passed for the benefit of corporations.

The first clause of section 1 of the amendment reads: "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." Certainly a corporation cannot be naturalized and "persons" here is not broad enough to include "corporations."

The first clause of the second sentence of section 1 reads: "No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States." While efforts have been made to persuade this Court to allow corporations to claim the protection of his clause, these efforts have not been successful.

The next clause of the second sentence reads: "Nor shall any State deprive any person of life, liberty, or property, without due process of law." It has not been decided that this clause prohibits a state from depriving a corporation of "life." This Court has expressly held that "the liberty guaranteed by the 14th Amendment against deprivation without due process of law is the liberty of natural, not artificial persons." Thus, the words "life" and "liberty" do not apply to corporations, and of course they could not have been so intended to apply. However, the decisions of this Court which the majority follow hold that corporations are included in this clause in so far as the word "property" is concerned. In other words, this clause is construed to mean as follows:

Nor shall any State deprive any human being of life, liberty or property without due process of law; nor shall any State deprive any corporation of property without due process of law.

The last clause of this second sentence of section 1 reads: "Nor deny to any person within its jurisdiction the equal protection of the laws." As used here, "person" has been construed to include corporations. (303 U.S. 77, 89) Both Congress and the people were familiar with the meaning of the word "corporation" at the time the Fourteenth Amendment was submitted and adopted. The judicial inclusion of the word "corporation" in the Fourteenth Amendment has had a revolutionary effect on our form of government. The states did not adopt the amendment with knowledge of its sweeping meaning under its present construction. No section of the amendment gave notice to the people that, if adopted, it would subject every state law and municipal ordinance, affecting corporations, (and all administrative actions under them) to censorship of the United States courts. No word in all this amendment gave any hint that its adoption would deprive the states of their long-recognized power to regulate corporations.

The second section of the amendment informed the people that representatives would be apportioned among the several states "according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed." No citizen could gather the impression here that while the word "persons" in the second section applied to human beings, the word "persons" in the first section in some instances applied to corporations. Section 3 of the amendment said that "no person shall be a Senator or Representative in Congress," (who "engaged in insurrection"). There was no intimation here that the word "person" in the first section in some instances included corporations.

This amendment sought to prevent discrimination by the states against classes or races. We are aware of this from words spoken in this Court within five years after its adoption, when the people and the courts were personally familiar with the historical background of the amendment. "We doubt very much whether any action of a State not directed by way of discrimination against (303 U.S. 77, 90) the negroes as a class, or on account of their race, will ever be held to come within the purview of this provision." Yet, of the cases in this Court in which the Fourteenth Amendment was applied during the first fifty years after its adoption, less than one-half of 1 per cent invoked it in protection of the negro race, and more than 50 per cent. asked that its benefits be extended to corporations.

If the people of this nation wish to deprive the states of their sovereign rights to determine what is a fair and just tax upon corporations doing a purely local business within their own state boundaries, there is a way provided by the Constitution to accomplish this purpose. That way does not lie along the course of judicial amendment to that fundamental charter. An amendment having that purpose could be submitted by Congress as provided by the Constitution. I do not believe that the Fourteenth Amendment had that purpose, nor that the people believed it had that purpose, nor that it should be construed as having that purpose.

B Hugo Black, dissenting, Connecticut General Life Insurance Company v. Johnson (303 U.S. 77, 1938)

Justice Black was not alone in his questioning of the legitimacy of corporate personhood. Justice Douglas, dissenting in Wheeling Steel Corp. v. Glander 337 U.S. 562 1949, gave an opinion similar to, but shorter than, the one quoted above, to which Justice Black concurred.

External links

• Corpwatch
• Corporate Watch