Balkinization  

Monday, October 15, 2012

Debunking a Progressive Constitutional Myth; or, How Corporations Became People, Too

Guest Blogger


John Fabian Witt

In the past year or two, a DaVinci Code-like story about the history of the Supreme Court and corporations has made its way through the progressive blogosphere and the Occupy encampments around the country. The story is about a grand conspiracy to give corporations special privileges in American law.  Like most conspiracy narratives it promises to make disturbing developments in the world around us a little easier to understand – rising inequality and the domination of political campaigns by moneyed interests chief among them.  And like the best conspiracy stories, it mixes grains of truth with invention and sheer fancy.

Naomi Lamoreaux of the Yale history department will be delivering a much-anticipated lecture at Columbia in a few weeks that gets far more deeply into the topic than anyone else has before.  In advance of Professor Lamoreaux’s lecture I thought it might be interesting to point out some of the grave historical flaws in the progressive conspiracy theory.

Everyone agrees on the basic outlines of the story.  In 1886, the Supreme Court heard a case called South  Pacific Railroad v. Santa Clara County.  The railroad was contesting taxes the county said it owed under California law.  At the oral argument, Chief Justice Morrison Waite, told the parties that the Court did not  want to hear argument on the question of whether the Fourteenth Amendment’s guaranty of equal protection  of the laws to “any person” applied to corporations because the Court was persuaded that they were.  A man named Bancroft Davis, who held the job of publishing the Supreme Court’s decisions, included that as a statement of law in his draft of an unofficial syllabus of the case (a part of the reported decision that had no authoritative status). 

In 1963, Chief Justice Waite’s biographer, a distinguished scholar named C. Peter Magrath, now the president of Binghamton University in New York, discovered correspondence in the Morrison Waite papers in the Library of Congress indicating that Davis and Waite corresponded in the months  after the decision was issued but before it was published by Davis.  The Chief Justice told Davis that his  syllabus (then in draft) expressed “with sufficient accuracy what was said before the argument began.”  But Waite also said that there was no need to include it if Davis wanted to leave it out because the Court had avoided deciding the constitutional issue the case had raised.

Here’s where things get a little tricky, for Magrath inadvertently misconstrued the Waite-Davis exchange in a way that has misled subsequent students of the case.  Magrath thought that Waite was saying that the court had not had to focus on the constitutional question of whether the Fourteenth Amendment’s protection for “any person” reached corporations. Today a legion of progressive activists has seized on this idea to argue that the corporate-railroad-insider Davis planted the doctrine of corporate personality in the law virtually by himself. 

But there was no controversy about that question on the Court.  All nine of the justices agreed that the Fourteenth Amendment’s guarantee of equal protection to any person extended to corporations.  What  Waite actually meant was that the Court had not in the end needed to decide whether the Santa Clara County taxation scheme violated the constitutional guarantee in the case of the South Pacific Railroad by denying the railroad the equal protection of the laws.  Under Waite’s skilful and often understated leadership, the Court had skirted that question altogether by deciding the case under the terms of the California tax code.  On this narrow and utterly uncontroversial ground, the South Pacific Railroad won.

There was no great political controversy about the Santa Clara County case at the time it was decided, and for good reason.  Morrison Waite, to whose dictum at oral argument Davis gave such prominent billing, is best known today as the author of a pro-farmer decision that authorized wide regulation of businesses such as railroads and grain elevators. 

Waite knew that treating corporations as persons under the Fourteenth Amendment did not mean that they would be granted dangerous powers.  In the eyes of the law, corporations had long been persons for some purposes and not for others.  In the words of the philosopher John Dewey, they are “rights-and-duties-bearing agents.”  Unlike, say, a dog or a cat, they can contract and they can act and speak through agents. They can hold property, and they can sue.  But also unlike the family pet they can be sued and even prosecuted.  And they cannot marry, vote, or run for office.  In 1886, Chief Justice Waite’s notion that they were persons under the Fourteenth Amendment did not mean that legislatures would be unable to take into account relevant characteristics of the corporate form, such as its capacity to amass capital and promote certain moneyed interests, when designing regulations.  That only came later. 

The grain of truth in the conspiracy story of the origins of corporate personhood is that within a few decades of South Pacific Railroad v. Santa Clara County, the U.S. Supreme Court had become an institution closely connected in the political culture of the day with some of the plutocratic excesses of the era.  It struck down the federal income tax as unconstitutional.  It lifted regulations such as the eight-hour day and the minimum wage, regulations that had designed by labor unions, consumer groups, and other progressive organizations against the lobbying of commercial interests.  In many of these cases, though not all, the inclusion of corporations within the Fourteenth Amendment was a necessary precondition to striking down the regulation in question.  The idea that the Supreme Court had given corporations the rights of natural persons soon became a powerful shibboleth in the hands of progressive critics of the Court’s decisions.

This history has come back to roost in our own Gilded Age of inequality.  In the end the important question is not whether corporations are persons or not.  We can call them persons, or we can call them artificial persons.  We can even call them bananas, so long as we figure out a way to respond to the distinctive challenges their vast agglomerations of money poses for our democratic process.

John Fabian Witt is Allen H. Duffy Class of 1960 Professor of Law and Professor of History at Yale Law School. You can reach him by e-mail at john.witt at yale.edu

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