The following introduction to the notion of “corporate personhood” is an excerpt from the ReclaimDemocracy site:
Today, corporations wield immense power over our government, public lands, even our schools. But this was not the intent of our country’s founders.
In 1776 we declared our 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 meet public needs, such as construction of roads, bridges, or canals.
After fighting a revolution for freedom from colonialism, our country’s founders retained a healthy fear of the similar threats posed by corporate power and wisely limited corporations exclusively to a business role. These state laws, many of which remain on the books today, imposed conditions such as these:
- 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 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 and authority was wielded through laws like those summarized here in each state.
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. Woolseyit 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 treasures into private fortunes, creating factory systems and company towns. Political power began flowing to absentee owners, rather than community-rooted enterprises…..
FOR MORE INFORMATION:
222 South Black Avenue
Bozeman, MT 59715
Program on Corporations, Law & Democracy (POCLAD)
PO Box 246
S Yarmouth, MA 02664
Women’s International League for Peace and Freedom
1213 Race St.
Philadelphia, PA 19107
Community Environmental Legal Defense Fund
2244 Lindsay Lot Rd
Shippensburg, PA 17257
…and an incredible research resource:
Public Information Network
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Seattle WA 98145