The Legacy of the Founding Parents
by Jane Anne Morris
The people who founded this nation didn't fight a war so that they could
have a couple of "citizen representatives" sitting in on meetings
of the British East India Company. They carried out a revolution in order
to be free of oppression: corporate, governmental, or otherwise; and to
replace it with democratic self-government.
It seems that things have slipped a little. Today, as soon as any group
or movement puts together a coherent critique of the role of corporations,
tongues start clucking. Politicians, mainstream reformers, degreed experts,
and media commentators fall all over each other in an effort to dismiss
such clear, practical, focused thinking as mere "conspiracy theories"
cooked up by unbalanced "crackpots."
They forget that 17th century political philosopher Thomas Hobbes called
corporations "worms in the body politic." Adam Smith condemned
them for their effect in curtailing "natural liberty." And most
of the so-called "founding fathers" of this nation shared an opinion
of corporations that today would earn them the label "lunatic fringe"
from the same mainstream tongue-cluckers.
Those who won independence from England hated corporations as much as they
hated the King. For it was through state-chartered corporations that the
British government carried out some of its most pernicious oppression. Governments
extending their power by means of corporations, and corporations themselves
taking on the powers of government, are not new problems.
Because they were well aware of the track record of government-chartered
corporations, and because they guarded their freedom so jealously, citizens
of the newly independent United States of America chartered only a handful
of corporations in the several decades after independence.
On those few occasions when states did charter a corporation, "the
powers which the corporation might exercise in carrying out its purposes
were sparingly conferred and strictly construed," Justice Louis Brandeis
wrote in 1933.
But inevitably, the generation that had fought against injustices perpetrated
by corporations like the British East India Company and the Hudson Bay Company
was followed by others whose memories of corporate oppression were less
vivid. Still, the warnings against corporations continued.
On the eve of his becoming Chief Justice of Wisconsin's Supreme Court, Edward
G. Ryan said ominously in 1873,
"[There] is looming up a new and dark power ... the enterprises of
the country are aggregating vast corporate combinations of unexampled capital,
boldly marching, not for economical conquests only, but for political power....
The question will arise and arise in your day, though perhaps not fully
in mine, which shall rule-wealth or man [sic]; which shall lead -money or
intellect; who shall fill public stations -educated and patriotic freemen,
or the feudal serfs of corporate capital...."
The feudal serfs of corporate capital made a lot of headway during the next
fifteen years. But in 1888 President Grover Cleveland, in his Fourth Annual
Message to Congress, echoed Justice Ryan's sentiments:
"Corporations, which should be the carefully restrained creatures of
the law and the servants of the people, are fast becoming the people's masters,"
Well into the twentieth century corporate excesses were acknowledged and
condemned by some pretty prominent persons. Louis D. Brandeis, a multimillionaire
(from his own law practice and astute investments) by the time he became
a Supreme Court Justice in 1916, referred to corporations as "the Frankenstein
monster which States have created by their corporation laws."
Far from being "radical," harsh criticism of corporations has
a long, respectable, and mainstream political lineage. Now that you know
you're in good company, let's dream a little. Imagine what grassroots environmental
activism would be like if corporations were restructured to be responsive
to the people and to serve the public interest.
All of these provisions were once law in the state of Wisconsin. And similar
ones were on the books in most other states.
- corporations were required to have a clear purpose, to be fulfilled
but not exceeded.
- corporations' licenses to do business were revocable by the state legislature
if they exceeded or did not fulfill their chartered purpose(s).
- the state legislature could revoke a corporation's charter for a particular
reason, or for no reason at all.
- the act of incorporation did not relieve corporate management or stockholders/owners
of responsibility or liability for corporate acts.
- as a matter of course, corporation officers, directors, or agents could
be held criminally liable for violating the law.
- state (not federal) courts heard cases where corporations or their agents
were accused of breaking the law or harming the public.
- directors of the corporation were required to come from among stockholders.
- corporations had to have their headquarters and meetings in the state
where their principal place of business was located.
- corporation charters were granted for a specific period of time, like
20 or 30 years (instead of being granted "in perpetuity," as is
now the practice.)
- corporations were prohibited from owning stock in other corporations
in order to prevent them from extending their power inappropriately.
- corporations' real estate holdings were limited to what was necessary
to carry out their specific purpose(s).
- corporations were prohibited from making any political contributions,
direct or indirect.
- corporations were prohibited from making charitable or civic donations
outside of their specific purposes.
- state legislatures set the rates that corporations could charge for
their products or services.
- all corporation records and documents were open to the legislature or
the state attorney general.
There is no reason why grassroots activists can not insist that we once
again impose similar laws to direct corporate actions. But because education
and media corporations are silent about the power of the sovereign people
literally to dictate terms to corporations, we instead spend our time fighting
in regulatory agencies and courts where the odds are against us from the
Much activism today concerns itself with struggling to induce government
agencies to enforce their own laws, or exerting superhuman efforts to close
gaping loopholes in existing laws. When we're not doing that, we're perhaps
trying to add an obviously toxic chemical to a list of prohibited substances.
Or maybe we're trying to coax a corporation that profited greatly from poisoning
our air and water to pay for even a small portion of the cleanup costs.
One reason that we the sovereign people don't know our own strength is that
too often we think of corporations and business as more or less synonymous.
But corporations are not simply big businesses. You don't need a corporate
charter to sell apples on the corner, or to operate a widget factory. Individuals,
sole proprietorships, partnerships and other business forms can do business
without obtaining a corporate charter from a state. Corporations are a special
A corporate charter granted by a state gives special privileges not possessed
by other businesses. And in return, the state retains the power to alter,
amend, or repeal said charter. The legislature of a state thus possesses
not only the power to grant charters but to revoke them. This power is laid
out in what is called the "reserved power clause," and is explicitly
spelled out in the laws or constitution of almost every state. Corporations
are all set up by states to serve a "public need" and act "in
the public interest." This is a long-established doctrine.
The corporation, insofar as it is a legal entity, is a creation of the state
... It is presumed to be incorporated for the benefit of the public.
Corporations are instrumentalities of the state, not independent entities.
How have we strayed so far from this notion?
Next month, we will outline some of the legal doctrines that were built
up as obstacles to the sovereign people's ability to direct corporate actions.
Then we will explore the potential of specific provisions - similar to the
ones enumerated above - that we can add to state constitutions, corporation
laws, or corporate charters themselves, to reclaim our historic right to
make corporations serve the public interest.
Jane Anne Morris is a corporate anthropologist working on corporation
issues as part of Democracy Unlimited of Wisconsin Cooperative. Contact
them at 29 E. Wilson, Suite 201, Madison WI 53703; phone 608-255-6629 or
fax 608-255-6643. She is author of Not in My Back Yard: The Handbook (San
Diego: Silvercat Publications, 1994). Reprinting of this article is encouraged
for nonprofit causes.
News | Current Issue | Back
Issues | Essays | Links
About the Progressive Populist | How
to Subscribe | How to Contact Us
Copyright © 1995-1996 The Progressive Populist