By Arman Matthews
While giant corporations plunder assets and resources abroad, they use government to economically suppress the rest of us at home, Buckminster Fuller concluded in 1981. * By the 21st Century, Fuller’s observation became common knowledge by that part of humanity not asleep at the wheel. The price, each has paid for this knowledge is revulsion, but revulsion won’t stop plunder and oppression, action alone can dissolve the source of our disgust. However, action without understanding the hows and whys is like sailing without a rudder. If we wish to undo what’s been done, we must first understand, as Fuller suggested, how it all came about in the first place. How could a number of businesses that share a common form of business organization, have developed the size and power to enable them in league to become the scourge of humanity?
Most scholars find the seed of corporate gigantism in the Supreme Court case of “Southern Pacific Railroad vs. Santa Clara County” in 1878. A careful examination of this case and its background will provide an invaluable first step toward understanding how this situation came about in the first place.
Imagine, for a moment, that someone attending the Constitutional Convention has suddenly shouted, in the midst of a debate, “Hey guys, after we finish debating, don’t forget to include in this constitution that corporations are persons with the same rights of citizenship as natural persons!” Without a doubt, guff offs would fill the room and laughter would prevail. Paradoxically, however, as a result of a compromise, the framers did insert an equally absurd concept regarding personhood into the Constitution and no one laughed or chuckled. That was the denial that Negro slave’s were persons entitled to the same rights of citizenship as other citizens in the United States. The assumption of the Declaration of Independence and the Constitution was the rights of men, been a statement was inserted in the Constitution saying some men didn’t have rights. This absurdity soon became a festering flaw in the nation’s firmware and eventually metastasized and consumed the body politic in civil war.
The Framers, and the humans for whom they wrote, were well aware of what damages to their wellbeing and country corporations could wreak. As a result of their distrust, states chartered corporations only for specific purposes determined by their legislatures to be in the public interest (e.g. building canals). Corporations were never chartered to just make a profit.
States chartered corporations long before they formed a Union. So, the right to charter corporations as they saw fit became a right reserved to the states by the Tenth Amendment: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, Reserved to the states respectively, or to people.” Prior restraints included in state corporate charters, included the following major limitations: duration (30 years or less), number of owners, and amount of their aggregated capital. The states also imposed other regulations as well as taxation, along with counties and cities. When a charter expired, corporate assets were distributed between shareholders, who were also responsible for any remaining liabilities, debts or wages.
Because Lincoln was a moderate abolitionist, the South walked out of Congress after his election in 1860. Without a Constitutional quorum, Congress is required to adjourn. However, according to parliamentary law, before adjourning, it first must set a date to reconvene. This never happened, so Congress adjourned sine die* (without a day), meaning Congress no longer existed, since there was no parliamentary means of reconvening. Lincoln, determined to hold the union together and left with no Congress to declare war, while the South readied for war, fabricated Martial Law by declaring a national emergency and issuing executive orders. This sequence of events placed the organic Constitutional government in suspended animation, and replaced it with a new de facto military government with the President as Commander in Chief.
While, Lincoln seems to have planned on restoring the Constitutional Republic after the Civil War, he never had the chance. His death morphed a Civil War into a Revolution and, as did Rome after the assassination of Caesar, the Republic became an Imperial State. The same de facto government has remained in power over the North American union of states to this day. With the Constitution no longer in place holding the body politic together, executive orders, legislation and the courts replaced that organic firmware and so began a process of continually remolding the nation’s legal landscape into whatever shape would preserve the existing de facto government at the moment. *
The Nation’s power center shifted, after the Civil War, from the Southern slave states to the corporate capitalist class in the Northeast. The new Congress was now dominated by a new breed of Republicans who were extremely contemptuous of the Constitution and more interested in promoting the business interests of the Eastern corporate establishment than in restoring the country to normalcy. Congress quickly turned into a cross between a whorehouse and an auction. For instance, instead of giving 40 acres and a mule to the former slaves, they gave the railroads enough prime farmland within the states to equal two Germany’s.
The liberal Republicans disliked Lincoln’s successor, Vice President Andrew Johnson, because he insisted on carrying on Lincoln’s compassionate policy of reintegrating the South back into the Union, rather than treating it as an occupied country. The new Republicans, however, were receptive to Johnson’s second main objective of putting closure on the slavery issue and insuring that the freed slaves unalienable rights, as citizens, were protected from abuse by the states. Johnson’s two new Amendments to the Constitution received a good reception. For, while they were intended to mend the Constitution’s fatal flaw, regarding personhood, they would eventually play into the hands of the liberal Republican’s corporate masters. Johnson’s two new Amendments were easily ratified in 1866 and 1869, and subsequently, Johnson was impeached.
The Thirteenth Amendment made slavery illegal. Besides benefiting the slaves, it also benefited the Eastern corporate establishment in two important ways: Slaves are a major capital investment in a Capitalist slave economy, and though they generated a large monetized profit for their owners, the monetized cost of maintaining them was enormous. Each slave required food, shelter, clothing, healthcare, and other miscellaneous necessities, for their “owners” can’t let them become ill or expire, least they lose their capital investment. On the other hand, a wage-slave requires no maintenance except during the period he’s paid wages to be obedient. Thus the profits made from wage slaves are considerably higher than from chattel slaves. Finally, since the monetized market rate for a wage slave’s time is the supply of wage-slaves selling their time, relative to the number of employers bidding for that time, if the demand remains constant, and the quantity of wage slaves selling their time on the market increases, the market price for a wage-slaves time will decrease. Thus, by turning chattel slaves into wage slaves, enormous profits were to be made. If the wage slave isn’t paid enough to cover his own, or his family’s food, shelter, clothing, healthcare, and other miscellaneous necessities , that’s no problem for the employer for there will always be another wage slave, waiting in the wings, happy to sell his time to the employer. The Union’s victory thus opened up a vast reservoir of new profits for the corporate establishment.
The Fourteenth Amendment, put the former chattel slaves on a level playing field with all citizens of the U.S. “A level playing field” is a metaphor for “Fairness”: When everyone plays by the same rules, everyone gets an even break. The 14th Amendment, mandated that “no state may make or enforce a law which abridged the Constitutional privileges or immunities of citizens or deprives any person of life, liberty, or property without due process of law, or denies any person within its jurisdiction equal protection of the laws.” In spite of its noble motive, within a few years, the Fourteenth Amendment would be twisted, by subterfuge, within the Supreme Court, into a tool for corporations to escape the prior restraints enforced on them by states, and protected by the Tenth Amendment.
Having made vast fortunes supporting the Union during the Civil War, the owners and management of the railroads, and several other corporations, were well armed, by the ‘70s and ‘80s, with batteries of lawyers, and would fight relentlessly to expand their powers, while the courts, reflecting the new era, would give them everything they wanted.
* * *
In Part 2, we’ll examine the event itself (The Supreme Court case of “Southern Pacific Railroad vs. Santa Clara County”) which gave birth to the Corporate expansion and dominance.
To this day, apologists for corporate personhood, still refer to “Union Pacific Railroad vs. Santa Clara County” as the Constitutional authorization of corporate personhood. For example, we read in the Seattle Law Journal,
The subject of corporate personhood is a longstanding and recurring topic that continues to vex and excite, as seen in the U.S. Supreme Court‘s 1886 decision confidently asserting that corporations are legal persons for purposes of the Fourteenth Amendment and in its more splintered 5–4 decision granting corporations First Amendment free speech rights in 2010. *
This is not merely a careless disregard for facts an instance of willful blindness. So many people now have vested interests in this lie that none dare rock the boat. Nonetheless, the historical records still tell a quite different story.
Shortly, after ratification of the 14th Amendment, corporate lawyers for the railroads saw a way to escape state regulation and taxation. If they convinced the Supreme Court that corporations are “persons”, they could twist the intend of the 14th Amendment into denying states the right to enforce chargers which abridge the rights of corporate person without due process of law, thus freeing their corporate masters form the 10th Amendment’s protection of state supervision. So they constructed the following argument template: (a) The 14th Amendment guarantees protection of all person’s Constitutional rights under the law. (b) A corporation is a person. (c) Therefore, corporations must receive the same protections that are accorded to all other persons in like circumstances. Although this argument makes a syllogism, its second premise is unwarranted. No previous decision by the Supreme Court has ever justified that claim. Nevertheless, the Railroads use it as a battering ram, repeatedly using this argument over and over again, whenever possible, against different states, counties and cities.
In 1877, California ratified a new constitution that included a provision giving humans the right to deduct their debts*6 from the taxable value of their property. Railroads weren’t given the same deduction. So, Southern Pacific wouldn’t pay San Mateo’s County its taxes. Along with other taxpaying railroads, Southern Pacific challenged this new state law in court by using another federal statute giving them privileges inconsistent with state taxation. San Mateo County and neighboring counties struck back and won a counter suit in the California Supreme Court. Southern Pacific’s in turn twisted a Federal law designed, like the Fourteenth, to protect the rights of newly freed slaves denied justice by Southern courts, by tacitly assuming corporations were legal persons and inserted themselves as victems of state injustice and appealed the case all the way up to the Supreme Court.
Just three years before Southern Pacific’s case reached the Supreme Court, the Chief Justice gave the following explanation for the majority opinion regarding the 14th Amendment:
“One pervading purpose [for the Fourteenth Amendment] was the freedom of the slave race, the security and firm establishment of that freedom, and the protection of the newly made-made freeman and citizen from the oppression of those who had formerly exercised unlimited dominion over him.” * *Justice Samuel F. Miller
Nonetheless, before the Southern Pacific’s case reached the Supreme Court, the
Court would hear four more cases used the 14th Amendment template. Finally in 1886, the Court heard “Santa Clara County vs. Southern Pacific Railroad”. Perhaps because the Southern Pacific’s lawyers appeal had tacitly assumed corporations are 14th Amendment persons, the new Chief Justice, Morris R. Waite, a former railroad attorney, made this prefatory remark,
The Court won’t consider the question of whether the provision in the Fourteenth Amendment to the Constitution, which forbids a state to deny any person within its jurisdiction equal protection under the Constitution, applies to these corporations. We are all of the opinion that it does.
A year passed before Waite could announce the court’s decision in favor of Southern Pacific. While, one of the six defenses Southern Pacific used used was standard Fourteenth Amendment template, it was ignored and the actual decision was based on an argument involving the placement of the company’s fences. Afterwards, the Recorder of the Court, J.C.Bancroft Davis, who just happened to previously been president of the Newburgh and New York Railway, rushed up and passed Waite a note asking him if his prefatory statement, before hearing the arguments, could be inserted into the Court’s headnotes. Waite replied, “I think you’re expressing with sufficient accuracy what was said before the arguments began in the California Rail Road tax case. I leave it with you to determine whether anything need be said about it in the report inasmuch as we avoided meeting the Constitutional question in the decision.” So while Waite’s remark seems reasonable enough, considering the nature of Southern Pacific’s appeal, this was all Bancroft needed and he rushed back to his office and inserted the following headnote:
The defendant Corporations are persons within the intent of the clause in section One of the Fourteenth Amendment to the Constitution of the United States, which forbids a State to deny to any person within its jurisdiction the equal protection of the laws.
We’ll probably never know whether Waite and Bancroft were in collusion. Waite died before Bancroft’s headnotes were published. While Headnotes are seldom followed, the Supreme Court has since, repeatedly reaffirmed them and Corporate apologists consistently gloss over Bancroft’s misrepresentation. Both take the Headnote remark as a declaration of the court ipse dixit*3. Here this means, “The Court declares this claim to be intrinsic and unchangeable.” The following contemporary statement is a typical example of this maneuver,
The subject of corporate personhood is a longstanding and reoccurring topic that continues to vex and excite as seen in the 1886 decision confidently asserting that corporations are legal persons for purposes of the 14th Amendment.*4
While this caveat is still the primary justification for Bancroft’s indiscretion, in present day legal and administrative decisions the term ipse dixit is generally used to criticize arguments based solely on the authority of the speaker. After all, “Ipse dixit” (Latin for “he himself said it”) is called in Logic an informal fallacy (“Argument to Authority). This claim is based solely on the Authority of the Speaker. In other words, regardless of the issue of Waite’s falsification, Waite’s prefatory statement is not based on a majority decision by the court, but is merely an arbitrary, dogmatic statement. In Bancroft’s personal notes, later discovered in the Twentieth Century, was found his own admission of falsifying the Court’s Headnotes. After sixty years, one Supreme Court Justice (William O. Douglas) finally admitted, “There was no history, logic or reason given to support that view.”
Within a couple generations, the Supreme Court removed all the prior restraints in state corporate charters. Corporations were no longer restricted to a limited duration, or shareholder liability, number of shareholders, nor the amount of capital aggregated. Some corporations were even granted the power of eminent domain. With no restraints, giant immortal super goliath corporations possessing legal personalities separate from the collective they represented, and which modern humans are compelled by their de facto government to pretend as if they are real, began emerging from the unleveled commercial playing field called America. In the end, the old festering flaw was merely replaced by a new one and the people were turned into wage slaves serving imaginary corporate masters at the behest of a de facto government whose sovereignty derived from its military
The Constitution is constructed on the premise that a government’s sovereignty derives from the consent of the governed. A well-balanced government, it follows, is obliged to protect the unalienable rights as the benefactors to whom it owes its sovereignty. In effect, the Bill of Rights can be seen as a contract between the government and the people, that its obliged to honor by protecting the unalienable rights of the governed from abridgement.
Jefferson certainly saw the Bill of Rights as was a contractual agreement guaranteeing their government wouldn’t abridge their rights. Indeed, if you read the Declaration of Independence carefully, you’ll first see that it’s meant to apply to all governments and can be applied just as easily to the newly formed government under the Constitution. Secondly, we can discern a pattern of reasoning here called modus ponens : P implies Q, P therefore Q. The three parts of the Declaration can be understood in this manner:
(P) If any form of government becomes destructive of our unalienable rights of life,
liberty, and the pursuit of happiness, then (Q) it is the right of the people to alter or to abolish it, and to institute new government.
(P) The government of the king of Great Britain has shown itself to be destructive of these rights (as shown in a long list of grievances).
Therefore (Q), these United Colonies are, and of right ought to be free and independent States.
A contract can’t be a contract if one party is immune from the consequences of breaking it. This is the point of the Declaration, and the justification of Jefferson’s assertion that, “If a law is unjust, a man not only has the right to disobey it, but the duty.”
*1 Inventor, architect, engineer, geometrician, cartographer and philosopher
* Southern capitalist slave-owners dominated the Union’s government until the mid-nineteenth century. In Presidential election of 1860, a rapidly growing anti-slave movement finally reached its boiling point. Lincoln, a moderate abolitionist Republican ran against three pro-slavery candidates. The South threatened walking out of Congress, should Lincoln become President. Lincoln won and after he took office, the South walked out of Congress and its quorum, for conducting business under the Constitution, was lost. The only lawful vote Congress could then take was to adjourn and set a date and time to reconvene. Congress, however, simply left without setting a date to reconvene. Thus, according to parliamentary law left Congress sine die.* Lincoln, determined to hold the union together and without a Congress to declare war, improvised a martial law by issuing executive orders*4 This gave the president unprecedented powers and removed the executive branch from the other branches. His first order initiated the creation of an army. His second, ordered Congress to reconvene. This was a result of a military order and not due to parliamentary procedure. Finally he ordered Congress to pass a bill justifying what he’d already done.
Unfortunately, Lincoln’s assassination prevented him from restoring his hastily created de facto government back to its original firmware. Unfortunately
Vice President Johnson’s attempt to carry on Lincoln’s policies was stopped by a new breed of Republicans that began dominating Lincoln’s Congress. No longer old school abolitionists, they were pro-capitalists representing the interests of the Eastern industrial establishment. They impeached Johnson and General Grant became the new President.
No one knows who, if anyone, runs it, since it’s decisions are made in back rooms. Grunch didn’t invent this world, he says, it never invents anything, but monopolizes know-where and know-how while being devoid of know-why. Today much of this information has become common knowledge and this corporate complex of giants is usually referred to as the “Oligarchy”.
“The Grunch of Giants.*1
*22 Fuller maintained that a complex of “giant persons” controls politicians, world banks, and world events, as well as a vast invisible empire of airwaves, satellites, factories, research laboratories and large cities
*Ratified in 1868“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 privilege 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 any person within its jurisdiction the equal protection of the laws.”
maintaince to generate monetized income to employ nonliving capital generate monetized income. in the When we compare the non-monetized cost of chattel slave-capital maintenance is measured monetarily, is enormous in comparison to monetized cost of employing wage slaves to generate monetized income. a monetized cost of wages is expressed in monetized terms, the cost far outweighs the monetized cost of wages.