The Week’s Most Interesting Reads
53 minutes ago
Reform is neither difficult nor unprecedented. Our history displays a number of means of subordinating corporate interests to the welfare of the American people. More than a century ago—in the “Gilded Age”—the nation faced a similar crisis and dealt with it successfully. And a century before that, effective mechanisms were in place to restrain corporate dominion, even though the threat of it was already visible.
This is what Thomas Jefferson said about the issue: “I hope we shall crush… in its birth the aristocracy of our moneyed corporations, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country.”
Note Jefferson’s concern was merely prospective, wary of potential. Corporate enterprise was not yet dominant, only pushing to be. At the time, corporations were very strongly circumscribed, to assure their subservience to public well-being. Perhaps Jefferson feared they would escape the control mechanisms early corporations faced:
*they were chartered for a limited period of time, typically twenty years
*they were chartered for a single specific purpose, say to construct a toll road
*the charter could be revoked if the corporation’s behavior violated public interests
*stockholders, directors, and officers of the corporation were personally responsible for the corporation’s obligations or transgressions
* a corporation could not buy or otherwise merge with another corporation
Mr. Jefferson’s fears were realized.
As the 1800’s progressed corporations in America—particularly the great railroads—fought vigorously and successfully to have these constraints relaxed, and all of them were. The corporate structure escaped any meaningful public control.
Eventually corporations could grow without limit by absorbing others; they could live in perpetuity; they could undertake multiple tasks and change them at will. Personal liability was limited to a pittance, and charter revocation virtually disappeared. Then, in 1866, corporations as artificial persons became legal persons: the Supreme Court case Santa Clara County v. Southern Pacific Railroad extended the rights of U.S. citizenship to corporate entities. They were granted equal protection under the law, their rights protected by the U.S. Constitution. (The grant of legal personhood, Thom Hartmann discovered, was technically illegal, but it has endured. See his book, Unequal Protection.)