Corporations Never Have Rights
(Not even when up-puffed powderkegs
of platitudinous prevarication pretend otherwise.)

On October 28, 1886 the brand-new Statue of Liberty, a gift from the French people, was dedicated before delighted spectators. Unfortunately, the throng didn't appreciate what the U.S. Supreme Court had done to undermine Her foundation that very same year. And this was hardly one score years after the abolition of African slavery which had motivated sculptor Frédéric-Auguste Bartholdi and some friends to consider such a monument in the first place.

Corporate laywers of that day's oligarchs, especially railroad men and bankers, had gained the upper hand and begun to build a legal system compatible with their version of free trade. In fact, the Supreme Court used section one of the 14th amendment (passed to protect freed slaves and their descendants), to invent a doctrine now called corporate personhood, the myth that corporations are like living people and so have real rights. This confabulation has been perpetuated ever since through use of the judicial doctrine stare decisis, a Latin phrase meaning "to stand by things that have been settled."

Lawyers, busy beavers that they are, have been successful in spreading the gospel to places like Canada, Europe and Asia, too. In Hong Kong, another former colony of England, corporations were granted, in 1997, the privilege of voting for representatives to Hong Kong's legislature. Even better, thirty seats were set aside (out of just 60) for "functional constituencies," coded language used to include corporations themselves.¹ That's some republic they have in Hong Kong. Benito Mussolini would have called it corporatism, the merger of state and corporate power.

A lawyer will tell you that corporations are treated like citizens "for the purposes of the law." What does this mean for ordinary folks? It means that the purpose of the law is to help us ignore and deny the realities that corporations are property, that property is not a person, and that people cannot be property. In technical terms, corporate personhood is a violation of the Law of Identity. A corporation, rightly conceived, is an artificial and intangible creation of the state and not another thing, e.g. like a packaged product a person.

Back in the USA, the aforementioned prevaricators, especially the Holy Robed Ones, have been acting ultra vires for a very long time. (They were never given the power to pretend that property can be a person, not that such a power exists to be delegated to government.) But we now understand this fact and can restate, with 100% confidence, the relevant provision of the supreme law of the land: Corporations never have rights. 'Tis now an administrative matter to correct misconceptions in the minds of lawyers and to delete all related errors now printed in law school texts, the Congressional Statutes at Large (Stat.), the United States Code (U.S.C.), various compilations of state laws e.g. the Michigan Compiled Laws, collections of case law like the United States Reports, the Federal Register (Fed. Reg.), and so forth. Neo-liberal lawyers at the American bar may become grumpy and put up a fuss, but never you mind these self-fooled individuals.

Completing this modest reform ought to please free market ideologues for we would eliminate one more government distortion of the marketplace. And what if today's corporate behemoths find themselves unable to compete and survive without the benefits of the judicial activism described above? That would be the free market's way of saying that their goods and services are neither wanted nor needed at the prices, terms and conditions which buyers and sellers can make a mutually-beneficial agreement.

(What are the rights corporations don't have? Would you like to do your own research from here on?)

"If it looks like bread, smells like a bread, tastes like bread,
then it is bread. To believe otherwise is to give up the basis for
all knowledge based on sensory experience."

Robert Todd Carroll, paraphrasing the arguments of the
Archbishop of Canturbury and others against the Catholic doctrine
of transubstantiation, in The Skeptic's Dictionary.

A rigged system of commerce was neither the intent of America's founders nor the inevitable result of a free market, but it's a fine arrangement for helping a few to dominate commerce, government, and most of society. It also uses the hand of government to cloak the brute force corporations would otherwise need to acquire and maintain such dominance, sometimes at the expense of small businesses. How does corporate personhood rear its head in Illinois, for example?

• United Airlines and its competitors asked for deregulation and got it in the 1980s. Then they cut corners on security, allowed the 9/11 attacks to occur, and were rewarded with billions more in federal subsidies in the form of loan guarantees. (UAL declared bankruptcy, anyway, and in May 2005 got a judge to shift its pension liabilities to the federally-sponsored Pension Benefit Guaranty Corp.)
  
• In 2000, Accenture Ltd. (formerly Andersen Consulting) splits itself off from Arthur Andersen, the accounting firm founded in Chicago. Andersen implodes less than two years later after the Enron accounting scandal. Accenture Ltd. relocated to Bermuda to evade taxes, but on Tuesday, June 1, 2004, Accenture LLP, a Virginia-based affiliate, is rewarded by the Department of Homeland Security (the LARGEST U.S. federal bureaucracy ever) with a contract worth up to $10 billion.
• Texas-based SBC wants to buy Ameritech, lobbies Illinois regulators, and is granted its wish to become a lot more like the old AT&T monopoly. SBC later decides that competition is bad and successfully sponsors a bill in Illinois designed to undermine its long distance competitors.
  
• Wal-Mart lobbies Chicago aldermen for special exemptions to zoning ordinances in two city wards. In May 2004, Wal-Mart is granted its wish on the West Side in spite of a long track record for destroying local businesses and abandoning stores—black-top deserts—only a few years old.

How is this corporate welfare possible? Because corporations are allowed to badger Congressmen and other public servants for preferential treatment even though they aren't citizens, can't (yet) vote, are immortal, can be almost everywhere simultaneously, and frequently pay no taxes through clever accounting legerdemain and ad hoc provisions buried in statute law. Sometimes campaign contributions or other favors are traded in what Cecil Heftel (U.S. Representative from Hawaii, 1976-86) called legalized bribery. With a cult of corruption like this, who needs terrorists to destroy freedom?

If you want to stop the abuses and restore real free trade, then what we need is not more or different regulation. Been there, done that. What we need are honest judges, lawyers and businesspeople to start telling the truth:

Corporations are artificial legal entities, not real-live people. This is why corporations never have rights no matter how many people pretend otherwise.

In 1776, American colonists declared their independence not only from British rule, but also from the corporations of England that controlled trade and extracted wealth from the U.S. (and other) colonies. Thus, in the early days of our country, we only allowed corporations to be chartered - licensed to operate - to serve explicitly as a tool to gather investment and disperse financial liability in order to provide public goods, such as construction of roads, bridges or canals.

After fighting a revolution for freedom from colonialism, America's founders retained healthy fear of the similar threats posed by corporate power and wisely limited corporate freedom. These state laws, many of which remain on the books today, imposed conditions such as:

• A charter was granted for a limited time.
  
• Corporations were explicitly chartered for the purpose of serving the public interest--profit for shareholders was the means to that end.
  
• Corporations could engage only in activities necessary to fulfill their chartered purpose.
  
• Corporations could be terminated if they exceeded their authority or if they caused public harm.
  
• Owners and managers were responsible for criminal acts they committed on the job.
  
• Corporations could not make any political contributions, nor spend money to influence legislation.
  
• A corporation could not purchase or own stock in other corporations, nor own any property other than that necessary to fulfill its chartered purpose.

For 100 years after the American Revolution, citizens and legislators tightly controlled the corporate chartering process. Having thrown off English rule, the revolutionaries made certain that legislators issued charters one at a time and for a limited number of years. Authority was wielded through state laws like those summarized here.

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 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 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.

In 1819 the U.S. Supreme Court tried to strip states of this sovereign right by overruling a lower court's decision that allowed New Hampshire to revoke a charter granted to Dartmouth College by King George III. The Court claimed that since the charter contained no revocation clause, it could not be withdrawn. The Supreme Court's attack on state sovereignty outraged citizens. Laws were written or re-written and new state constitutional amendments passed to circumvent the Dartmouth ruling. Over several decades starting in 1844, nineteen states amended their constitutions to make corporate charters subject to alteration or revocation by their legislatures. As late as 1855 it seemed that the Supreme Court had gotten the people's message when in Dodge v. Woolsey it reaffirmed state's powers over "artificial bodies."

But the men running corporations pressed on. Contests over charter were battles to control labor, resources, community rights, and political sovereignty. More and more frequently, corporations were abusing their charters to become conglomerates and trusts. They converted the nation's resources and reasures into private fortunes, creating factory systems and company towns. Political power began flowing to absentee owners, rather than community-rooted enterprises. The industrial age forced a nation of farmers to become wage earners, and they became fearful of unemployment--a new fear that corporations quickly learned to exploit. Company towns arose and blacklists of labor organizers and workers who spoke up for their rights became common.

Business has returned to power, and brought with it...
"the vulgarization [of society] which has been the almost
invariable consequence of business supremacy."

- Arthur Schlesinger, Jr., in the 1950s

When workers began to organize, industrialists and bankers hired private armies to keep them in line. They bought newspapers to paint businessmen as heroes and shape public opinion. Corporations bought state legislators, then announced legislators were corrupt and said that they used too much of the public's resources to scrutinize every charter application and corporate operation. Government spending during the Civil War brought these corporations fantastic ealth. Corporate executives paid "borers" to infest Congress and state capitals, bribing elected and appointed officials alike. They pried loose an avalanche of government financial largesse. During this time, legislators were persuaded to give corporations limited liability, decreased citizen authority over them, and extended durations of charters.

Attempts were made to keep strong charter laws in place, but with the courts applying legal doctrines that made protection of corporations and corporate property the center of constitutional law, citizen sovereignty was undermined. As corporations grew stronger, government and the courts became easier prey. They freely reinterpreted the U.S. Constitution and transformed common law doctrines.

One of the most severe blows to citizen authority and free trade was seeded in the 1886 Supreme Court case Santa Clara County v. Southern Pacific Railroad [118 U.S. 394.] 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 private corporation was a "natural person." This meant that the 14th Amendment, enacted to protect rights of freed slaves, was used to grant corporations Constitutional rights...then Jim Crow laws effectively nullified the 14th amendment as far as Negroes were concerned. Justices have since struck down hundreds of local, state and federal laws enacted to protect people - and local businesses - from the vultures armed with civil rights.

Corporate power, now virtually unchecked, owned resources, production, commerce, trade, prices, jobs, politicians, judges and the superficial legitimacy of the law. Over the next half century, as a United States Congressional committee concluded in 1941, "The principal instrument of the concentration of economic power and wealth has been the corporate charter with unlimited power...." Today, many U.S. corporations are trans-national, but the corrupted charter remains the legal basis for their existence. A new generation of American patriots is learning this hidden history and recognizing that it contains many keys to successful action today.

[Editor's Note: The second half of this article, beginning with "In 1776, American colonists...", is from the article Our Hidden History, available at www.reclaimdemocracy.org.]

A patient man is better than a warrior,
and he who rules his temper,
[better] than he who takes a city.

Proverbs 16:32

1. Ted Nace, Gangs of America: The Rise of Corporate Power and the Disabling of Democracy, (Berkeley: self-published in pdf and avail. on the World Wide Web, 2003), p. 221. See chapter 16, "Global Rule: How international trade agreements are creating new corporate rights." Ted Nace is a successful entrepreneur in the computer book business.