We the Corporations Read online

  WE THE

  CORPORATIONS

  HOW AMERICAN BUSINESSES

  WON THEIR CIVIL RIGHTS

  ADAM WINKLER

  LIVERIGHT PUBLISHING CORPORATION

  A Division of W. W. Norton & Company

  INDEPENDENT PUBLISHERS SINCE 1923

  New York London

  To Margo and Irwin Winkler

  for their generous love, infinite support,

  and enduring inspiration

  CONTENTS

  INTRODUCTION: ARE CORPORATIONS PEOPLE?

  PART ONE CORPORATE ORIGINS

  CHAPTER 1 In the Beginning, America Was a Corporation

  PART TWO THE BIRTH OF CORPORATE RIGHTS

  CHAPTER 2 The First Corporate Rights Case

  CHAPTER 3 The Corporation’s Lawyer

  PART THREE PROPERTY RIGHTS, NOT LIBERTY RIGHTS

  CHAPTER 4 The Conspiracy for Corporate Rights

  CHAPTER 5 The Corporate Criminal

  CHAPTER 6 Property, Not Politics

  PART FOUR THE RISE OF LIBERTY RIGHTS FOR CORPORATIONS

  CHAPTER 7 Discrete and Insular Corporations

  CHAPTER 8 Corporations, Race, and Civil Rights

  CHAPTER 9 The Corporation’s Justice

  CHAPTER 10 The Triumph of Corporate Rights

  CONCLUSION Corporate Rights and Wrongs

  ACKNOWLEDGMENTS

  CHRONOLOGY OF CORPORATE RIGHTS

  NOTES

  CREDITS

  INDEX

  STATUE OF ROSCOE CONKLING, FRAMER OF THE FOURTEENTH AMENDMENT AND ATTORNEY FOR THE SOUTHERN PACIFIC RAILROAD, IN NEW YORK’S MADISON SQUARE PARK.

  INTRODUCTION

  Are Corporations People?

  IN DECEMBER 1882, ROSCOE CONKLING, A FORMER SENATOR and close confidant of President Chester Arthur, appeared before the justices of the Supreme Court of the United States to argue that corporations like his client, the Southern Pacific Railroad Company, were entitled to equal rights under the Fourteenth Amendment. Although that provision of the Constitution said that no state shall “deprive any person of life, liberty, or property, without due process of law” or “deny to any person within its jurisdiction the equal protection of the laws,” Conkling insisted the amendment’s drafters intended to cover business corporations too. Laws that referred to “persons” have “by long and constant acceptance . . . been held to embrace artificial persons as well as natural persons,” Conkling explained. This long-standing practice was well known to “the men who framed, the Congress which proposed, and the people who through their Legislatures ratified the Fourteenth Amendment.”

  Conkling’s claim was remarkable. The Fourteenth Amendment had been adopted after the Civil War to guarantee the rights of the freed slaves, not to protect corporations. Conkling, however, had unusual credibility with the justices. For two decades, he had been the leader of the Republican Party in Congress and was often said to be the most powerful man in Washington. He had twice been nominated to the Supreme Court himself, most recently in the spring of the same year he appeared on behalf of the Southern Pacific Railroad. The Senate voted to confirm him but he declined the position, citing poverty from his career in public service—becoming the last person to turn down a seat on the Supreme Court after having been confirmed. More than most lawyers then, Conkling was considered by the justices to be their peer. And when it came to the history surrounding the drafting of the Fourteenth Amendment, Conkling’s expertise was unparalleled. As a member of Congress during Reconstruction, Conkling had been on the very committee that wrote the amendment. If anyone could testify to the intent of the Fourteenth Amendment’s drafters, it was Conkling, who was one himself.

  To back up his improbable story, Conkling produced a musty, never-before-published journal that purported to detail his committee’s deliberations. A close look at the journal, Conkling suggested, would show that while the nation was focused on the rights of the freedmen, he and the other members of Congress had also been worried about laws that unduly burdened business. It was for this very reason that the Fourteenth Amendment used the word person. An early draft of the amendment had guaranteed the rights of “citizens,” Conkling said, but the language was later changed specifically to include corporations, which were often deemed by the law to be persons for various purposes. As a result, Conkling argued, the Fourteenth Amendment guaranteed the Southern Pacific Railroad the same rights of equal protection and due process as the former slaves.

  There was just one small problem with Conkling’s account of the drafting of the Fourteenth Amendment: it was not true. The drafters of the Fourteenth Amendment did not try to secret into the Constitution broad new protections for corporations, nor was the wording of the amendment ever altered in the way Conkling suggested. As we will see, one of the preeminent figures in American politics had attempted to deceive the justices of the Supreme Court in an effort to win constitutional protections for the Southern Pacific Railroad.1

  Although a procedural snafu prevented the Supreme Court from issuing a final ruling in Conkling’s case, the justices soon after embraced Conkling’s argument that corporations had rights protected by the Fourteenth Amendment. In the years that followed, the Supreme Court would invoke those corporate rights to invalidate numerous laws governing how businesses were to be run, supervised, and taxed. Between 1868, when the amendment was ratified, and 1912, when a scholar set out to identify every Fourteenth Amendment case heard by the Supreme Court, the justices decided 28 cases dealing with the rights of African Americans—and an astonishing 312 cases dealing with the rights of corporations. At the same time the court was upholding Jim Crow laws in infamous cases like Plessy v. Ferguson (1896), the justices were invalidating minimum-wage laws, curtailing collective bargaining efforts, voiding manufacturing restrictions, and even overturning a law regulating the weight of commercial loaves of bread. The Fourteenth Amendment, adopted to shield the former slaves from discrimination, had been transformed into a sword used by corporations to strike at unwanted regulation.

  * * *

  WE THE PEOPLE. Revered by so many, those three words that begin the Constitution have also been criticized for being inaccurate. When the Constitution went into effect in 1789, African Americans were enslaved in eleven states, and women were not allowed to vote in any. The Framers used the phrase We the People to identify who was responsible for enacting this charter of liberty and self-government, but their description was misleading. More than half the nation’s population was prohibited from participating in the process by which the Constitution was adopted; most were also denied many of the rights the Constitution purported to guarantee. For those left out, the phrase was not a description but an aspiration, and American history has often pivoted around their struggles to gain equal rights, their fight to finally take their rightful place among We the People.

  While the civil rights movements for women, racial minorities, and other oppressed groups have been thoroughly studied, there has been another centuries-long push for equal rights that has remained largely unnoticed: the “corporate rights movement.” Roscoe Conkling’s case was neither the first nor the last time corporations asked the Supreme Court to recognize their constitutional rights. Despite the fact that corporations have never been subjected to systemic oppression like women and minorities, they too have pushed to gain constitutional protections since America’s earliest days. Indeed, today corporations have nearly all the same rights as individuals: freedom of speech, freedom of the press, religious liberty, due process, equal protection, freedom from unreasonable searches and seizures, the right to counsel, the right against double jeopardy, and the right to trial by jury, among others. Corporations do not have every right guaranteed by the Constitution; they have no
right to vote or right against self-incrimination, and none to date has gone to court asserting a right to keep and bear arms. Yet corporations have won a considerable share of the Constitution’s most fundamental protections. Corporations, too, have fought to become part of We the People.

  In the past decade, the issue of constitutional rights for corporations was thrust into the public spotlight by the Supreme Court’s controversial 2010 decision in Citizens United. By a narrow 5–4 majority, the justices ruled that corporations have a First Amendment right to spend their money to influence elections. The decision was wildly unpopular, with polls showing an overwhelming majority of both Democrats and Republicans opposed. Citizens United also helped inspire Occupy Wall Street, where protestors carried signs declaring “Corporations Are NOT People.” “I don’t care how many times you try to explain it,” President Barack Obama said. “Corporations aren’t people. People are people.” As of 2016, sixteen states and hundreds of municipalities had endorsed a constitutional amendment to overturn Citizens United and clarify that constitutional rights belong to human beings, not corporations.2

  The backlash had little effect on the justices. Four years after Citizens United, the Supreme Court expanded the rights of corporations once again in the Hobby Lobby case. The court held that Hobby Lobby Stores, a chain of craft stores with 23,000 employees and over $3 billion in annual revenue, had religious liberty rights under a federal statute. The company, which was founded by a religious family and remains closely held, was allowed an exemption from a federal rule requiring large employers to include birth control in their employees’ health plans. The Hobby Lobby decision has since been cited to support the claims of businesses whose owners do not wish to provide wedding services to same-sex couples on grounds of religion.3

  These Supreme Court decisions came as a surprise to many people, lawyers included. Law students are taught about civil rights, women’s rights, Native Americans’ rights, gay rights, even states’ rights—but not about corporate rights. Yet, as the corporate transformation of the Fourteenth Amendment in the wake of Conkling’s deception suggests, the Citizens United and Hobby Lobby decisions are just the proverbial tip of the iceberg, the most visible manifestations of a larger, and largely hidden, phenomenon. Over the course of American history, corporations have pushed relentlessly, and with noteworthy success, to gain the same rights as individuals under the Constitution.

  * * *

  CORPORATIONS DID NOT WIN their constitutional rights in quite the same way as women, racial minorities, or gays and lesbians. Historians of those more familiar civil rights movements emphasize how activists pursued their claims in both courts of law and the court of public opinion. To achieve lasting constitutional change, scholars say, required more than just judicial victories. These movements also had to change public opinion. Lawsuits were backed up by broad-based, popular social movements that demanded rights for those who had been denied the original promise of We the People. Activists mobilized the masses, and through protests, marches, and public advocacy persuaded not just judges but the larger society that these excluded groups deserved equal rights. According to one scholar, the Supreme Court “usually pays attention to an actual or emerging moral consensus, certainly with respect to fundamental rights.”4

  Corporations, in contrast, gained their rights without winning over hearts and minds. Ronald McDonald and the Pillsbury Doughboy never marched on Washington or protested down Main Street with signs demanding equal rights for corporations. Corporations unquestionably benefited from popular mobilizations for states’ rights, small government, and free markets. Yet there was never an effort to convince the public that corporations, as such, should have individual rights too. Corporate rights were won in courts of law, by judicial rulings extending fundamental protections to business, even in the absence of any national consensus in favor of corporate rights. As Adolf Berle and Gardiner Means, two especially influential thinkers about the corporation, once wrote, “It is the essence of revolutions of the more silent sort that they are unrecognized until they are far advanced.” The corporate rights revolution was not exactly silent; in fact, the controversies that led to these important judicial rulings were often well publicized in their day. The larger pattern, however, remained hidden—at least until Citizens United.5

  We the Corporations focuses on one central element of the corporate rights movement: how corporations pursued and won constitutional protections through the courts, especially the Supreme Court. Although Americans often think of the Supreme Court as a bulwark to protect minority rights against the tyranny of the majority, the court’s record of protecting women and racial minorities was dishearteningly bad prior to the 1950s. For most of American history, the Supreme Court failed to protect the dispossessed and the marginalized, with the justices claiming to be powerless in the face of hostile public sentiment. As we will see, however, the court’s record on corporate rights was much different. In 1809, the Supreme Court decided the first case on the constitutional rights of corporations, decades before the first comparable cases for women or racial minorities. And unlike women and minorities, who lost nearly all of their early cases, corporations won that first case—and have compiled an impressive list of victories in the years since. For corporations, the court has insisted that broad public sentiment favoring business regulation must bend to the demands of the Constitution. To the extent the Supreme Court is a bulwark against the tyranny of the majority, powerful and wealthy corporations have been among the primary beneficiaries.6

  In our daily discourse, Supreme Court justices are often labeled “liberal” or “conservative.” Yet what has often united justices across the left/right spectrum is a tendency to side with business. In recent years, scholars have increasingly noticed that even in the ideologically divided Roberts court, the justices regularly find common ground in business cases. This pattern, however, is not unique to the contemporary Supreme Court. For most of American history, the court has been decidedly favorable to business, regardless of whether the majority of justices was liberal or conservative. There are a number of ways this business tilt can be measured, from the number of cases business interests win to the adoption of legal rules that promote free enterprise. One prominent yet understudied illustration is the historic and self-conscious expansion of constitutional rights for corporations.7

  Corporate constitutional protections were not merely, however, a product of a business-friendly Supreme Court. In many instances, corporations gained constitutional rights when their cases became tangled up in larger political battles or jurisprudential developments. In the early 1800s, for example, the renowned Chief Justice John Marshall sought to protect corporate rights as a way of enhancing the power of the fledgling federal government. After the Civil War, Justice Stephen Field, undoubtedly the most colorful justice to sit on the nation’s highest court—he remains the only sitting justice ever arrested, for murder no less—saw corporate rights as necessary to stem the rising tide of socialism. As the Supreme Court embraced new, more libertarian understandings of free speech a century ago, the justices also extended First Amendment rights to newspaper corporations, without which the freedom of the press would be much less meaningful in a modern society.

  Indeed, the history of corporate rights sheds new light on, and complicates, our understanding of “liberal” and “conservative” Supreme Courts. Chief Justice Roger Taney, the author of the infamous Dred Scott case, whose reactionary views on race have left him one of the most reviled figures in the history of the Supreme Court, was one of the most forceful advocates for limiting the constitutional rights of corporations. In the early twentieth century, the Lochner court, which became notorious for its frequent rulings siding with business against government regulation, was also the first to articulate clear boundaries to corporate constitutional rights. Corporations were entitled to property rights, the Lochner court said, but not rights associated with personal liberty, like free speech. Ironically, it was the famously
liberal New Deal and Warren courts of the mid-twentieth century that first extended liberty rights to corporations.

  This long view also illuminates the nuanced role of corporate personhood in the story of corporate rights. Many critics of Citizens United believe that corporations have the same rights as individuals because the Supreme Court defines them as people. The proposed constitutional amendment to overturn Citizens United is based on this idea, declaring that only human beings are people under the terms of the Constitution. Yet corporate personhood has played only a secondary role in the corporate rights movement. While the Supreme Court has on occasion said that corporations are people, the justices have more often relied upon a very different conception of the corporation, one that views it as an association capable of asserting the rights of its members. This alternative way of thinking about the corporation has paved the way for the steady expansion of corporate rights. Indeed, as we will see, corporate personhood has traditionally—and surprisingly—been used to justify limits on the rights of corporations.

  * * *

  CORPORATIONS AND THE CONSTITUTION are more intimately linked than one might imagine. Our story will begin in the colonial era, when even before corporations sought individual rights in the Supreme Court, they nonetheless exerted considerable influence on American ideas of government. It was a corporation, after all, that planted the first seeds of democracy in the colonies, and the goal was to secure profit, not promote liberty. Moreover, the Framers built from what they knew, and the colonies had been originally organized as corporations operating under written charters that, like the Constitution, set the rules for lawmaking and imposed limits on the power of officeholders. As a result, numerous distinctive features of the American Constitution can trace their roots to the nation’s corporate origins.