Pando

Awkward! The idea of "corporate personhood" relies on the same Amendment that gives birthright citizenship

By Mark Ames , written on August 31, 2015

From The History Desk

“Neither the history nor the language of the Fourteenth Amendment justifies the belief that corporations are included within its protection.” —Supreme Court Justice Hugo Black

We’ve all heard about Donald Trump’s crazy immigration policy. But what most people don’t realise is that, compared to most other candidates, Trump is late to this “anchor baby”-bashing game. In fact, most of the GOP candidates want to change the 14th Amendment to deny birthright citizenship to children born here to foreign parents.

Rand Paul, Silicon Valley’s favorite boy-disrupter, launched his crusade against birthright citizenship literally his first week in the Senate, and he hasn’t stopped bashing “anchor babies” since, sponsoring bills and Constitutional amendments and yammering away in that squeaky voice of his about anchor babies.

But beyond the twisted racist dementia fueling this, there’s another problem for these GOP candidates: Section One of the 14th Amendment, granting birthright citizenship to anyone born in the US, is also the same section of the same amendment interpreted by our courts to grant corporations “personhood.”

And as we know, every GOP candidate supports corporate personhood. (There’s a question about where Trump stands on corporate personhood because of his public attacks on Citizens United—he criticizes SuperPACs and somewhat criticizes CU, although he’s obviously in favor of CU’s predecessor, Buckley v Valeo, which allows Trump to finance his own run for president.)

So to repeat: GOP candidates from Trump and Bush down the line to Silicon Valley’s boy-disrupter Rand Paul want to revoke citizenship to living humans born in the US to foreign parents; but they support granting citizenship rights and guarantees to artificial persons –corporations – which are really legal fictions granted by the states, allowing a pool of investors legal liability and tax advantages in order to profit more than they otherwise would as mere living humans.

How this country got saddled with this utterly counterintuitive, counter-democratic legal fiction known as corporate personhood—granting corporations rights and protections as US citizens, including First Amendment rights to spend as much money as the corporations want to influence elections and the “religious liberty” to discriminate against gays and lesbians; Fourth Amendment rights to “privacy” from prying government regulators, OSHA inspectors and environmental protection agency “jackboots”; fifth amendment protections from being forced to give self-incriminating testimony; and so on down the absurdum line—is worth a quick retelling, not least because of its connections to Silicon Valley and the founder of Stanford.

Yep, we have a 130-year-old Silicon Valley lawsuit to thank for America’s corporate personhood: Santa Clara County v Southern Pacific, the railroad that made a small-time grocer named Leland Stanford into a filthy rich robber baron, thanks to government handouts, government bribes, and asset stripping on a scale that would’ve made Boris Berezovsky stand up and clap.

Briefly, the massive spending and technological advances during the Civil War created a handful of super-wealthy and ambitious robber barons using corporate charters to amass unparalleled wealth and power. And no corporation was more powerful at this time than the railroads, which, somewhat like Internet commerce, reorganized space and time in a revolutionary way, massively shrinking spaces not just geographically, but shrinking spaces between resources and factories, between cattle ranchers and butchers, and between goods and markets.

The effect (like today) was a massive reorganization of America’s political economy, and powerful centralization under the new corporations and trusts, led first by the railroad companies. Just as the Internet and affiliated technologies were first developed by the government and privatized to individual businessmen, so the railroads were created by the federal government in the form of massive land grants, and government-backed mortgage bonds on the land granted by the government.  

Southern Pacific was the second major railroad line to the California coast that Stanford and his partners like Collis Huntington took control of (the first being the Central Pacific) essentially with zero money down. Leland Stanford was California’s governor and then Senator; it was said of Stanford that,

“[N]o she-lion defending her whelps or a bear her cubs will make a more savage fight than will Mr. Stanford in defense of his material interests.”

While Leland worked his contacts to get land grants, his grocer-partner from Sacramento, Collis Huntington, traveled to Washington DC with suitcases full of cash. From DC, Huntington sent letters to Stanford and his other partners, telling them, “It has cost money to fix things,” and “I believe with $200,000 we can pass our bill [to grant federal land for the Central Pacific Railroad].”

They got the grants; floated the bonds; used the money to start building the railroad lines; and then issued more stock and bonds based on the assets that they were building, all granted to them and backed by the federal government. While watering down the railroads’ stocks and bonds, Stanford, Huntington and partners, known as “The Associates,” set up a separate construction company, “Credit & Finance Corporation” which won all the exclusive contracts to construct the railroads, charging exorbitant prices and thus draining value from the railroad companies, which, when bankrupted, were eventually dumped on the public. As an old book I’ve been reading on the robber barons described the Associates’ business model:

“The Federal government seems . . . to have assumed the major portion of the risk and the Associates seem to have derived the profits.”

Plus ca change...

Through such means, a handful of corporations and figures amassed unparalleled wealth and power, and deployed the corporate structure in new and innovative ways to amass that power and protect their wealth and properties. One of the “problems” that railroads found themselves running into in the 1870s and 1880s was unpredictable taxation, from county to county, locale to locale. Never mind that the railroads, by their sheer power, had already essentially blackmailed and bullied locales during the building of the lines—cities and commercial hubs were literally created, or strangled out of existence, based on whether or not they bent to the railroad companies’ demands for land rights, payoffs, and infrastructure.

According to journalist Matthew Josephson, for example, the Southern Pacific Railroad bosses demanded that Los Angeles County essentially pay the railroad owners five percent of the assessed valuation of all the county land and assets to get the Southern Pacific line to run through that county rather than through somewhere else, thereby strangling LA. The county agreed, paying up the equivalent to $100 (in mid-19th century dollars) from every man, woman, child and Native American in the county, straight into the pockets of the four Associates—Stanford, Huntington, Charles Crocker and Mark Hopkins.

However, when the counties started to assess each their own separate property taxes and toll taxes on the railroads a few years after they were built, the railroad companies cried foul and claimed they were were suffering from discrimination and “unequal protection” before the law.

It was over this—variable taxation rates in different counties—that corporate personhood was originally pressed into being. Not to protect the “free speech rights” of all “persons” and “entities” from an alleged slippery slope towards totalitarianism, as billionaire tycoon Pierre Omidyar’s in-house defender of Citizen United repeatedly argues.

To get a sense of the sudden power of corporations—according to Thom Hartmann’s excellent history “Unequal Protection,” of the 307 Fourteenth Amendment cases brought to the Supreme Court between the mid-1880s and 1910, 288 were suits brought by corporations seeking personhood rights, while only 19 were brought on behalf of African-Americans.

Let’s go back and remind ourselves again why the Fourteenth Amendment was passed in 1868: It was one of three new amendments to the Constitution passed after the deadliest war in US history had just ended, in which hundreds of thousands of Americans (and a president) died to end slavery—the Thirteenth Amendment, outlawing slavery; the Fourteenth Amendment, granting full US citizenship rights to all former slaves; and the Fifteenth Amendment, prohibiting governments from denying the right to vote to citizens based on their race, color, or “previous condition of servitude.”

In the 1882 case San Mateo County v. Southern Pacific, Leland Stanford’s lawyers argued that the Fourteenth Amendment, Section One, was meant to protect all persons, including artificial persons like corporations, and grant these various “persons” artificial or natural “equal protection under the law.” In practice this would mean that San Mateo County would not have the right to assess a different tax on Southern Pacific than other counties. Southern Pacific withheld its tax payment for years while the case worked its way through the courts. The 9th Circuit Court in San Francisco, led by Stephen Field—who also happened to be simultaneously a Supreme Court Judge, and was called one of the most corrupt men in all of California in his time—ruled in favor of the railroads, granting them Fourteenth Amendment personhood.  But when the case went up from the 9th Circuit to the Supreme Court, Field’s ruling was struck down by the full court, and corporate personhood didn’t make it.

In Santa Clara County v Southern Pacific, brought before the Supreme Court in 1885, the railroad company protested against having to pay a tax of about $30,000 on properties with $30 million in mortgages — or something like .001% tax. Way too much for Leland’s pals. Communism! Totalitarianism! (Or in e-commerce-speak, “Why should we pay the same sales tax everyone else pays? Can’t you see you’re stifling innovation!”) Santa Clara County took Southern Pacific to court to get them to pay their taxes, which the railroad refused to do for several years, citing six key defenses, including the argument that the railroad was a person granted rights and protections by the Fourteenth Amendment.

And here’s where it gets weird: Because in the decision Santa Clara County v Southern Pacific, you won’t find an actual ruling by the justices declaring that corporations are people protected by the Fourteenth Amendment. Instead, what you have is a line in the headnote to the ruling—a headnote written by the court reporter, not by the justices themselves, and stuck in there with or without the consent of some of the justices. The court reporter at the time, J. C. Bancroft Davis, was a heavyweight in his own right—both a deputy and interim Secretary of State, as well as a director of a railroad line in the east coast.

Headnotes by court reporters are not law; but the headnote, alleging to quote the Chief Justice stating, “The defendant Corporations are persons within the intent of the clause in section 1 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.”

That’s from Davis’ court reporter headnote to the decision—but the decision itself explicitly avoids ruling on the case on any but technical grounds, that Santa Clara County assessed the railroads fences as property to be taxed, which the court ruled was not fair. The actual SCOTUS decision rests solely on that point, and makes zero mention of corporate personhood or the Fourteenth Amendment.

But American law, like British law, follows common law precedent, and once it became possible for other courts to cite the court reporter’s headnote to the Santa Clara County decision, corporations attained personhood by precedence, rather than by ruling.

And here we are today—where we have an Amendment meant to protect vulnerable and abused minorities now under attack from Lincoln’s party, who at the same time want to use the same section in the same amendment to protect fictitious artificial persons and allow them greater rights and powers than even those of us born here to American parents.

[Note: Read Thom Hartmann’s excellent history on corporate personhood, “Unequal Protection” to get a better sense of how crazy this is.]